Sitting of 17 July 1968

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGE FROM THE QUEEN

  GUYANA (GIFT OF TABLE AND CHAIRS)
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address, as follows:
  I have received your Address praying that I will give directions for the presentation on behalf of your House of a gift of a Clerk's table and chairs and a chair for the Serjeant at Arms to the Guyana National Assembly and assuring me that you will make good the expenses attending the same.
  It gave me the greatest pleasure to learn that your House desires to make such a presentation and I will gladly give directions for carrying your proposal into effect.

PRIVATE BUSINESS
  MID-GLAMORGAN WATER BILL [Lords]
  As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  MINISTRY OF DEFENCE

    Aircraft Accidents (Publication of Information)
    Mr. Lubbockasked the Secretary of State for Defence what consultations he has had with the West German and United States Governments on the publication of information on military aircraft crashes; and if he will make a statement.
    The Minister of Defence for Administration (Mr. G. W. Reynolds): None,Sir.
    Mr. Lubbock: Is the right hon. Member aware that the security arrangements regarding this information in the United States and West Germany are far less stringent than in this country? What value does he think the information that I have mentioned would be to a potential enemy? Is it not time that we reviewed these ridiculous secrecy arrangements in this country?
    Mr. Reynolds: I do not regard them as ridiculous. It is not only a question of security and secrecy. This policy has operated since 1927. It has been reviewed from time to time and is being reviewed at the moment.

    Naval Personnel (Local Overseas Allowance)
    Mr. Wingfield Digbyasked the Secretary of State for Defence whether, in reviewing the pay and allowances of Naval personnel serving in dollar areas, he will take early action to avoid hardship; and whether he will pay special attention to the cases of those who have their families with them and so are not necessarily covered by his formula that only three-quarters of two-thirds of all pay is spent abroad.
    The Under-Secretary of State for Defence for the Royal Navy (Dr. David Owen): I take it that the Question refers to the review of local overseas allowance now taking place.
    My right hon. Friend, the Minister of Defence for Administration, explained during the defence debate on 5th March how interim rates of these allowances had been assessed to compensate for the devaluation of the pound.
    The normal cycle of reviews has been speeded up and I am satisfied that there will be fair treatment for all Servicemen abroad, with retrospection for increases including, of course, those serving in dollar areas and those serving on accompanied tours of duty.
    Mr. Digby: May I take this opportunity of congratulating the hon. Member on his appointment and of wishing him every good fortune in it? Is it not becoming increasingly difficult, with the constant defence cuts of this country, for our Service men abroad to compete with their opposite numbers, especially when they have had to suffer a pay decrease

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    of 6 per cent. at the same time as their American opposite numbers have had an increase of 6 per cent.?
    Dr. Owen: I thank the hon. Member for his earlier remarks. The Government are very conscious of the need for speed in this review and we intend to introduce the results to the House as soon as possible.

    Far East (Military Reinforcement Exercise)
    Mr. Frank Allaunasked the Secretary of State for Defence if he will state approximately the total cost of the military reinforcement exercise planned for the Far East in 1970 and for such exercises planned for subsequent years.
    Mr. Biggs-Davisonasked the Secretary of State for Defence whether he will make a statement on the details of the exercise to be held in South-East Asia before the evacuation of British forces, with the object of demonstrating the United Kingdom's capability for reinforcement.
    The Secretary of State for Defence(Mr. Denis Healey): I am not yet in a position to add to my statement on the Five-Power Conference. The precise details of the exercise, including costs, will have to be worked out between the Governments of the five participating countries and this will naturally take some time.
    Mr. Allaun: Is the Minister saying that he has accepted this very big reinforcement without counting the cost? Secondly, does he accept the view of The Times defence correspondent that this is a considerable modification of the position taken by the Government on I6th January, which most of us warmly welcomed?
    Mr. Healey: On the second part of that supplementary question, I made it absolutely clear in January and in the defence debate that followed that we planned to train our defence forces regularly overseas after our withdrawal from east of Suez was complete. On the first part of the question, I am satisfied that since all forces participating in this exercise will be forces which would be training that year overseas in any case the incremental cost of their training in
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    the Far East will be small, but the advantages in carrying out a large-scale exercise of this nature will not only be substantial, operationally, but also of political importance, as I explained in the White Paper.
    Mr. Ramsden: Will not the great problem in connection with these new ideas about reinforcement be the problem of acclimatisation? Exercises or no exercises, how do the Government propose to cope with that?
    Mr. Healey: That is another matter. One of the great advantages in carrying out this type of exercise is that it enables us to learn more about dealing with the problems of acclimatisation and to some extent to acclimatise troops and to familiarise them with the circumstances in which they may have to operate.

    N.A.T.O. (Brussels Conference)
    Mr. Frank Allaunasked the Secretary of State for Defence if he will make a statement on the Brussels conference with particular reference to the strength of North Atlantic Treaty Organisation forces on the continent of Europe.
    Mr. Croninasked the the Secretary of State for Defence if he will make a statement on the Brussels conference and on the consideration given at that conference to the future strength of North Atlantic Treaty Organisation forces in Europe.
    Mr. Healey: I assume that the questions refer to the Ministerial Meetings on 10th May, 1968. N.A.T.O. Defence Ministers reaffirmed the need for the Alliance to maintain an effective military capability and to assure the balance of forces between N.A.T.O. and the Warsaw Pact in Europe and elsewhere. They adopted a series of force goals for the period 1969–73; these mark a further stage in the adaptation of N.A.T.O.'s force structure to the strategic concept of a balanced range of appropriate responses. Welcoming the fact that studies were now proceeding within N.A.T.O. on the subject of possible balanced force reductions, they agreed that the overall military capability of N.A.T.O. should not be reduced except as part of a pattern of mutual force reductions balanced in scope and timing. On other problems, N.A.T.O.

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    Defence Ministers adopted a concept for external reinforcement of the flanks to supplement local national forces in an emergency, and agreed that present circumstances did not justify the deployment of an anti-ballistic missile system in Europe.
    Mr. Speaker: Order. Long Answers mean fewer Questions.
    Mr. Allaun: But, at a time when America and Russia are beginning to talk sense and N.A.T.O. and Warsaw Pact troop reductions are at least being discussed, is it not crazy for Britain unilaterally to increase her commitment to N.A.T.O?
    Mr. Healey: No, Sir, that is not the case at all. There are certain gaps in N.A.T.O.'s existing capability. If we want to negotiate effectively on force reductions, we must be certain that we are starting from a firm, secure base; one of the purposes of the increased force commitments made by Britain is to fill those gaps to provide a basis from which negotiations can sensibly begin.
    Mr. Cronin: While I entirely approve in principle of my right hon. Friend's statement about our increased commitment to N.A.T.O. in Brussels, at the same time, would he make it clear that such increased commitment is not used as a reason in future years for reductions in United States commitments to N.A.T.O., which would have the effect of transferring the defence burden from the United States to our own unhappy shoulders?
    Mr. Healey: Yes, Sir. The American Administration has always made it clear that one of the problems which they face in the Congress is the feeling of many American Parliamentarians that Europe is not pulling its weight in defence. The fact that Britain is now carrying a slightly larger share of the allied burden is helping the American Administration to resist pressure for unreasonable cuts in its own commitments, but I have made it clear to the Ministers in Brussels, and have said publicly, that our readiness to continue this form of commitment will depend on other members of the Alliance carrying their fair share of the burden.
    Mr. Maudling: The right hon. Gentleman will be aware of Mr. McNamara's
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    thesis that there is now a rough balance in conventional forces between N.A.T.O. and the Warsaw Pact powers. As this appears to call in question the whole of the present N.A.T.O. strategy, will the Government give us a definitive explanation of their assessment of Mr. McNamara's assessment?
    Mr. Healey: Mr. McNamara's assessment is not shared by any of the other N.A.T.O. members, nor by the military advisers in N.A.T.O., including the Commander-in-Chief, but we are, of course, in touch within the Alliance about some of the factors which Mr. McNamara has raised on this matter. We shall hope to reach an agreed view of the relative force capabilities on both sides in the near future.
    Mr. Maudling: In view of the eminence of Mr. McNamara, and his information, will the Secretary of State explain to the House why and in what way the Government differ from his assessment?
    Mr. Healey: To give a very simple example, simply to compare the total number of effectives on both sides is one way of assessing capability. Another is to find out what number of effectives on each side are actually fighting units and what their fire power is. Mr. McNamara's assessment does not, for example, allow for the very great superiority in tanks in the forces of the Warsaw Pact.

    Armed Forces (Strength)
    Mr. Ramsdenasked the Secretary of State for Defence what is now the strength planned for each of the three Services in 1973.
    Mr. Reynolds: I should not want to be precise at this stage for a breakdown between the three Services because this will depend on detailed decisions to be taken during the next few years. But our planning figures, and I would expect these to change in detail, are in round figures for the Royal Navy about 79,000, for the Army about 166,000 and for the R.A.F. about 96,000.
    Mr. Ramsden: On the Army total, how many brigade groups available for deployment does this embrace? More generally, does not the introduction of the

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    latest Government White Paper make it clear that these target strengths are derived from the need to cut manpower for financial reasons and are not related to any true defence needs?
    Mr. Reynolds: I am not prepared at this stage to give any further breakdown, but, as the White Papers and my right hon. Friend and others on this side have constantly explained, we are tailoring our future forces to the commitments and it is the commitments being reduced which allow us to reduce the number of men.

    Vigilant
    Mr. Ramsdenasked the Secretary of State for Defence why Vigilant has been withdrawn from infantry battalions in the British Army of the Rhine; and if he will make a statement.
    The Under-Secretary of State for Defence for the Army (Mr. James Boyden):Vigilant was introduced to assess the suitability of a medium range anti-tank guided weapon portable by its crew. Its range fell short of the requirement for mechanised operations. However it is adequate for other operations and is therefore being used in non-mechanised battalions outside B.A.O.R. The exception is one battalion in B.A.O.R. which will continue to develop techniques there until a weapon with a longer range than Vigilant becomes available.
    Mr. Ramsden: In view of what the hon. Gentleman said about deficiencies in range, is the Vigilant still being used mounted on the Ferrets, as announced in the 1967 White Paper? Can he assure us that the infantry battalions in B.A.O.R. from which it has been withdrawn will get the improved type of Mobat, the Conbat?
    Mr. Boyden: Yes. On the second part of that question, there are likely to be developments, but there has been no decision whether to improve Vigilant, develop Swingfire or adopt a French system.

    Scottish Regiments (Future)
    Mr. Buchanan-Smithasked the Secretary of State for Defence what further representations he has had regarding
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    the future of Scottish regiments; and if he will make a statement.
    Mr. Boyden: My right hon. Friend and I have received three deputations since 3rd July.
    Mr. Buchanan-Smith: Has the hon. Gentleman used the time since Monday to reflect on the tremendous strength of public feeling in Scotland, particularly as reflected in the House on Monday? In view of this, is he prepared to reconsider his decision, or is it absolutely final?
    Mr. Boyden: The Ministry of Defence is given to much reflection. On the second part of the question, if the hon. Gentleman is referring to the Argyll and Sutherland Highlanders, my right hon. Friend made a statement during the debate which offered the possibility of amalgamation or disbandment.
    Mr. Gregor Mackenzie: Is my hon. Friend aware that, in common with many other Members for industrial constituencies, I have had no representations at all on this subject, and that among those who have feelings on it are many who would much prefer the disbandment of one regiment to the scrapping of two in the shape of amalgamation?
    Mr. Boyden: I do not follow my hon. Friend's language in the second part of his question. As to representations, he has made representations to me in the corridor.
    Mr. Monroasked the Secretary of State for Defence if he will now make a statement on the future of the Scottish infantry regiments.
    Mr. Dempseyasked the Secretary of State for Defence if, in view of the further representations he has received regarding the future of Scottish regiments, he will now make a statement about his plans in this respect.
    Mr. Boyden: I have nothing to add to what I said in the debate on Monday.
    Mr. Monro: Is the hon. Gentleman aware of the fury aroused in Scotland by the speech of the hon. Member for West Lothian (Mr. Dalyell) about the Argylls on Monday? Will he come to the House and make a full statement completely refuting those unworthy allegations?
    Mr. Boyden: My right hon. Friend is making a thorough and speedy investigation.
    Mr. Dempsey: Is my hon. Friend aware that, as Scotland has made its contribution to the defence cuts, there is a certain feeling that there is need for a Scottish contribution to the United Kingdom defence forces? Will he, therefore, assure us that Scottish regiments will play an important part in this new United Kingdom defence force?
    Mr. Boyden: Indeed, yes, Sir.
    Mr. Brewis: But surely there is no need to start an investigation over events which took place a year ago. As the officers and men of the Argylls cannot reply, and the hon. Gentleman is in a position to reply for them, will he categorically deny the statements made by the hon. Member for West Lothian (Mr. Dalyell)?
    Mr. Boyden: My right hon. Friend will make a statement before the Recess. These things happened some time ago, and it is necessary to consult all the parties engaged in this operation.
    Mr. Dalyell: May I welcome the permission given by the Ministry of Defence to Colonel Mitchell to reply to Mr. Chapman Pincher? I warmly welcome this. But is my hon. Friend aware that these matters, like others in this field, should be determined by one criterion only—whether there is a credible operational requirement?
    Mr. Boyden: Of course, that is one of the matters to be considered.

    Royal Scots Greys
    Mr. Monroasked the Secretary of State for Defence if he will now make a statement on the future of the Royal Scots Greys.
    Mr. Boyden: I have nothing to add to what I said in the debate on Monday.
    Mr. Monro: Is the hon. Gentleman aware that there will be grave concern in the Greys until they know that their future is assured? How soon can he put this regiment out of its misery?
    Mr. Boyden: When full discussion and examination of the problem has taken place.

    Royal Navy (Role)
    Mr. Wallasked the Secretary of State for Defence if he will now define the rôle of the Royal Navy in the 1970s.
    Mr. Croninasked the Secretary of State for Defence if he will make a further statement on the rôle of the Royal Navy in the 1970s.
    Dr. David Owen: As announced in Cmnd. 3540, Britain's defence effort will in future be concentrated mainly in Europe and the North Atlantic. The main rôle of the Navy will be to play a leading part in the maritime defence of the Atlantic Alliance.
    Mr. Wall: Is not the main rôle of the Navy to protect sea communications, without which this country cannot eat or trade? By depriving the Navy of its aircraft carriers, how can this possibly be carried out? Has not the Secretary of State made the surface Navy a coast defence force?
    Dr. Owen: The main classes of ships announced in July last year, together with our growing force of nuclear fleet submarines, will strengthen our contribution to the maritime forces of N.A.T.O. and add significantly to the defence of the oceans.
    Mr. Cronin: Bearing in mind the increasing evidence of the vulnerability of all surface ships to ship-to-ship missiles, is the hon. Gentleman satisfied that his Department is giving sufficient attention to developing this capacity and also developing an effective defence against it?
    Dr. Owen: As my hon. Friend knows, this has been the subject of a number of debates in the House. We believe that we can have an effective defence force by using helicopters, and this has been announced to the House.
    Mr. Powell: Does the maritime defence take into account the possibility of prolonged operations at sea or not?
    Dr. Owen: Yes. The Navy of the future will be able to operate at sea for a long time.
    Mr. Maudling: The Under-Secretary said that the rôle of the Navy will be

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    mainly European and Atlantic. What rôle or capability do the Government propose for the Navy east of Suez and what air cover will be available for it in that area?
    Dr. Owen: As the right hon. Gentleman knows, we have a commitment in, for instance, the Beira patrol. As was made clear in the 1966 White Paper, we would not expect to provide another country with military assistance, unless it was prepared to make the necessary facilities available for the support of our forces, and this could include shore facilities or airfields. This applies particularly east of Suez.
    Mr. Rankin: How far will the American naval vessels now lying in Victoria Harbour, Hong Kong, and the aircraft carrier lying off the New Territories take up the rôle formerly occupied by British naval units in that part of the Far East?
    Dr. Owen: I cannot see how they would be taking up our previous role, but we are in full consultation with our American allies.
    Sir Ian Orr-Ewing: Will the Undersecretary remember that the decision to plan a reduction to 79,000 in the Navy will bring our Royal Navy strength to the lowest point it has been since the end of Ramsay MacDonald's regime, and that nearly lost us the Second World War? On this occasion there are no reserve ships, whereas at that time there were many.
    Dr. Owen: We are concentrating our forces in the European area and in the Atlantic area. The Government believe that this will make an effective contribution to the defence of this country.
    Rear-Admiral Morgan Gi!es: Will the Minister arrange with the Secretary of State to make an early statement about this tremendous departure from the traditional rôle of the Royal Navy which for centuries has been to defend British trade worldwide and not just in the Atlantic?
    Dr. Owen: The hon. and gallant Gentleman will have an opportunity in next week's debate to deploy his argument, but he is aware that the Government's policy is to concentrate our defence commitment in the European area.
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    [An HON. MEMBER: "Scuttle."] This in no sense represents a scuttle but is a realistic assessment of our capabilities.

    B.A.O.R. (Strength)
    Mr. Wallasked the Secretary of State for Defence if he will give the estimated total strength of the British Army of the Rhine in 1969, 1970 and 1971, respectively.
    Mr. Boyden: Recruiting difficulties and the demands of other theatres have kept the posted strength of B.A.O.R. below its establishment of about 55,000 men. We intend to make good the shortfall as soon as possible.
    Mr. Wall: Can the Under-Secretary assure the House that there will be no further reduction in B.A.O.R. in the next three years? Can he reassure the House by saying that there will be sufficient R.A.F. aircraft to give these soldiers adequate air cover? Is he aware that there is grave anxiety on this score?
    Mr. Boyden: We shall do our best to bring B.A.O.R. up to strength.
    Mr. Sheldon: Although it made sense to have a large force in Western Germany when there was a threat, even though it contributed very largely to the German balance of payments, does not my hon. Friend agree that it makes very little sense today when there is no immediate threat and when the balance of payments disadvantage is to ourselves?
    Mr. Boyden: As has been stated on innumerable occasions, it is the intention of the Government to keep B.A.O.R. up to strength; and this is being catered for.

    Royal Dockyards
    Mr. Juddasked the Secretary of State for Defence whether he will now commission a special inquiry into the possibility of extended civil production in Royal Navy dockyards.
    Dr. David Owen: As the House knows a comprehensive dockyard review is at present under way. Its purpose is to ensure that the Royal Dockyards meet their primary task of servicing the Fleet as efficiently as possible. I intend looking at the feasibility of extending civil production in the yards when this review has been completed, but I must warn my

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    hon. Friend that there are formidable difficulties.
    Mr. Judd: May I join those who have wished my hon. Friend well in his future responsibilities? Is he aware that in the present passive attitude in the dockyards towards civil contract work there is no one responsible for seeking civil contracts? Has he studied the successful diversification which has taken place in Malta in recent years, and will he take some action as soon as possible?
    Dr. Owen: I am aware of both the facts which my hon. Friend mentions. I repeat that there are formidable objections to having extensive civil contract work carried out in Her Majesty's dockyards.
    Mr. Juddasked the Secretary of State for Defence whether he will now make a statement on the future of the Royal Navy dockyards.
    Dr. David Owen: I am not yet in a position to make a statement.
    Mr. Judd: Does not my hon. Friend agree that this is very unsatisfactory, especially in view of the high hopes for a statement before the House went into recess? Is he aware of the strain which this doubt is putting on dockyard workers and their families? Can he tell us how soon we shall have a statement?
    Dr. Owen: I can assure the House that no statement about the dockyard review will be made before the House reassembles. I am fully conscious of the need for urgency over this decision; but it affects many men and it is very important that the right decisions are made.
    Dame Joan Vickers: What does the hon. Gentleman mean by "urgency"? This has been going on for a considerable time and is causing much unnecessary disquiet in the dockyards. Does he mean two months or three months or what?
    Dr. Owen: I am in no position to give an exact indication when we will be making a statement, but I assure the hon. Lady that it will be as soon as we can do so. There must be consultations with other Government Departments.

    Medical Officers
    Mr. Goodhewasked the Secretary of State for Defence by what percentage the average earnings of general duty
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    medical officers in the Forces exceed the present average net earnings of general practitioners in the National Health Service.
    Mr. Reynolds: I regret that it is not possible to make a meaningful comparison as the effect of the 1966 award on the relevant earnings of general practitioners is not yet known.
    Mr. Goodhew: Is the right hon. Gentleman seriously going to stand there quite happily for another two years waiting to calculate this? Is he not aware that successive Secretaries of State for Defence have accepted that to compensate for the inconvenience to medical officers in the Services they should have incomes 15 per cent. ahead of those in the National Health Service? What is he going to do about it?
    Mr. Reynolds: The hon. Gentleman has his supplementaries mixed up. That should be for the next Question. On this Question he has asked me to carry out a calculation, requiring some information. One set of figures I have available. The other set is not available. The hon. Gentleman will surely agree that if one has not got the figures one cannot do the calculation.
    Sir M. Stoddart-Scott: Will the right hon. Gentleman consult the Secretary of State with a view to joining the three medical services of the three fighting forces into one, thus saving medical manpower and paying better salaries?
    Mr. Reynolds: That is a completely different Question, but I assure the hon. and gallant Gentleman that we are looking all the time at all parts of the Services to see where administrative savings can be made.
    Mr. Ramsden: In view of the shortage of doctors in the Services, will the right hon. Gentleman undertake when he gets the Kindersley Report in the autumn to make proposals for restoring the differential which experience has shown is essential for recruiting doctors? Has he got his Department back on speaking terms with the B.M.A. yet?
    Mr. Reynolds: The Kindersley Report does not cover Service doctors. They are, as with all other Service officers, now subject to the general report of the National Board for Prices and Incomes. As

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    the right hon. Gentleman will remember, the Government have asked the Board to try to deal with this matter within the next 12 months—that is, from the date of its previous report. I am always prepared to talk to the B.M.A., provided that I can get its co-operation in the usual way.
    Mr. Goodhewasked the Secretary of State for Defence what action he is taking concerning the morale of the medical branches of the Forces, and to halt the outflow of experienced medical officers.
    Mr. Reynolds: The National Board for Prices and Incomes has been asked to complete a thorough-going review of doctors' pay within a year. I am also considering what other steps can be taken.
    Mr. Goodhew: Is not the right hon. Gentleman deeply concerned at the figures he had to give me on 1st July concerning the premature retirements of medical officers, the number of short-service commissioned officers applying for permanent commissions, and the number of qualified doctors applying for direct entry into the Services? Does he intend to sit back for another year and allow the Services to fall back in the number of doctors they have?
    Mr. Reynolds: Yes, Sir. No, Sir.
    Sir T. Beamish: Does the right hon. Gentleman recognise the very great seriousness of this situation? Is it not about time that he recognised the fact that a G.P. in civil life can earn well over £3,000 a year, which is far in excess of what his military counterpart can earn?
    Mr. Reynolds: As I explained in answer to the previous Question, there are no accurate figures available as yet as to the relevant effect on general practitioners of the Kindersley Report. I hope that there will be later in the year. That will be the time when the information will be available to the Board, which will then report to the Government. I am concerned about the position, as I hope I have proved.
    Mr. Maudling: The Minister said that he was; considering taking action. How soon will he make a statement to the House about this action?
    Mr. Reynolds: The main part of any action must be to get the conditions of
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    service of these men right; and I shall make a statement as soon as I can about anything that I am able to do in this direction.

    Regiments (Amalgamation or Disbandment)
    Mr. G. Campbellasked the Secretary of State for Defence if he will make a statement on the latest position concerning the amalgamation or disbandment of regiments.
    Mr. Boyden: The position is set out in the White Paper which was published last Thursday.
    Mr. Campbell: Will the Government look at this whole question again, both in the light of the debate last Monday and of the very serious recruiting problems now facing the Ministry of Defence?
    Mr. Boyden: My right hon. Friend is not, of course, prepared to look at the whole question again, but he is certainly prepared to consider—I do not think that the hon. Gentleman was in his place when I mentioned this earlier—the question to which he referred in the debate on Monday; the amalgamation of the Argyll and Sutherland Highlanders with some other regiment if this should be the general wish.
    Mr. William Hamilton: Would my hon. Friend give an assurance that when the cuts proposed in the recent White Paper are completed, the number of Scottish regiments which will lose their separate identity will be less than the number which lost their identity under Conservative administration?
    Mr. Boyden: Yes, Sir.

    Coastal Command (Search and Rescue Operations)
    Mr. G. Campbellasked the Secretary of State for Defence if he will make a statement on the success of Coastal Command in finding a small rubber dinghy in the Atlantic and rescuing its occupant, and on the availability of aircraft for such purposes.
    Earl of Dalkeithasked the Secretary of State for Defence what has been the cost to public funds of mounting search and rescue operations necessitated by the transatlantic solo yacht

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    race; and what contribution has been offered by the sponsors of the race towards this cost.
    Mr. Reynolds: Following reports on 18th June that M. de Kat was in difficulties, Shackletons from Ballykelly and Kinloss maintained a search until his dinghy was sighted late on 20th June. Sea rescue apparatus was dropped, the Norwegian ship "Jagona" was directed to the spot and a Shackleton remained on task till M. de Kat was rescued.
    Subject to Service requirements and practicability, Shackletons are available to assist any vessel or individual in distress in waters surrounding the United Kingdom.
    Although it would be possible to cost the flying statistically, the figure would be misleading since the effort involved was largely in substitution for normal operational training. In accordance with long-standing maritime tradition, no charge is made for assistance given when life may be in danger at sea.
    Mr. Campbell: While Coastal Command is to be warmly congratulated on the success of this life-saving operation, may I ask the right hon. Gentleman if he does not consider it desirable that the organisers of such ocean races should arrange for prior basic vetting of the seaworthiness of vessels taking part? Would he also agree that there should be radar beacons in the life-dinghies?
    Mr. Reynolds: I agree with the hon. Gentleman's comments about the work of Coastal Command. To answer the latter part of his supplementary question, any conditions that might govern ships going to sea—I refer to ships of any kind— would be a matter for my right hon. Friend the President of the Board of Trade, to whom he may care to address a Question.
    Earl of Dalkeith: While applauding the Sunday Observer for its initiative in organising this event, may I ask whether the right hon. Gentleman will look closely into the whole question raised by my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) of vetting vessels for seaworthiness, since this would be an important factor and might save a great deal of the taxpayers' money, and later, possibly, the risk to life?
    Mr. Reynolds: I agree with the noble Lord about the importance of this and similar matters and assure him that we would be prepared to give advice. However, the responsibility is that of the President of the Board of Trade.
    Sir A. V. Harvey: I, too, congratulate Coastal Command on this magnificent piece of seamanship and airmanship. Would the right hon. Gentleman say what part the French Government played in supplying aircraft or ships to rescue one of its own countrymen?
    Mr. Reynolds: There was a total of 176 hours 44 minutes of flying time undertaken in this task by Coastal Command, and a total of seven sorties lasting 95 hours 54 minutes by other countries, two of which, totalling over 26 hours, were by the French Air Force.

    White Paper
    Mr.Barnettasked the Secretary of State for Defence if he will make a statementon the latest Defence White Paper.
    Mr. Healey: If I catch your eye, Mr. Speaker, I hope to make such a statement at rather greater length than is appropriate at Question Time, in the debate before the Recess.
    Mr. Barnett: Would my right hon. Friend clarify the position as shown by paragraph 3, which appears to be somewhat confusing in that the 1969–70 figures are shown as being eventually at the target figure of £2,140 million while the figure for 1972–73 is £2,014 million, all at 1968 prices, whereas this is shown to be equivalent to a reduction of £210 million to £260 million?
    Mr. Healey: I think that my hon. Friend, who is a great financier, will see, if he compares the figures, that the target which we have set for 1972–73 is £240 million less than the figure for this year.
    Mr. Ramsden: Is the right hon. Gentleman aware that it might be of assistance if we arranged to have these figures circulated in terms of 1964 prices, which I believe have been the base figures hitherto taken for the purposes of comparison?
    Mr. Healey: I have been repeatedly asked by hon. Gentlemen opposite to stop using 1964 prices. I consider it ungrateful, to say the least, in view of their past complaints for the hon. Gentleman now to make this request.
    Mr. Shinwell: Are we to understand that the reason for the debate and the White Paper issued by my right hon. Friend is because of some special event on the Rhine or in N.A.T.O.? On the other hand, is the debate to be wide-ranging and will it cover the whole of our defence organisation?
    Mr. Healey: I suggest, with your permission, Mr. Speaker, that the debate will cover all the matters recorded in the Supplementary Statement published a fortnight ago, which I strongly recommend my right hon. Friend to read.
    Mr. Shinwell: On a point of order. Are you aware, Mr. Speaker, that I have read the dccument and was merely asking for information so that I would know what the debate would be about?
    Mr. Speaker: The right hon. Gentleman cannot compel the Minister to give information.
    Mr. Crawshaw: While the build-up of our land forces in Europe is an indication that the Government at last appreciate that conventional war in Europe is a possibility, would my right hon. Friend explain how, after 1969—with the ending of the national service commitment and the ending of the Territorial Army ability— we will have this land force capability?
    Mr. Healey: The Government have often made it clear—and this was the view of former Administrations—that we do not contemplate the possibility of prolonged large-scale operations in Europe. There is a possibility of prolonged small-scale or short large-scale operations, but not operations of the kind my hon. Friend has in mind.
    Mr. Younger: As it is clear from the White Paper that there is great concern about the slump in recruiting, would not the right hon. Gentleman agree that it is foolish to select for disbandment the units best recruited?
    Mr. Healey: This matter was fully dealt with by my right hon. Friend on Monday. Owing to the shortage of time,
    1414
    he was not able to tell the House that the Argylls had to be made up by a platoon of the Black Watch because it was not up to strength when it was necessary for it to go to Aden.

    Territorial and Auxiliary Forces Associations (Former Civilian Employees)
    Sir T. Beamishasked the Secretary of State for Defence (1) if he will appoint an independent arbitrator to consider the claim of Mr. A. W. Tucker, a former employee of the Sussex Territorial and Auxiliary Forces Association, to an award corresponding to that payable under the Redundancy Payments Act, 1965, in addition to the gratuity payable on termination of service, in view of the fact that neither Ministry of Labour Tribunals nor the Parliamentary Commissioner for Administration have jurisdiction in this matter;
    (2) if he will now introduce legislation to clarify the status of former civilian employees of the Territorial and Auxiliary Forces Associations since they have been ruled outside the jurisdiction of Ministry of Labour Tribunals because the Associations are emanations of the Crown, and outside the jurisdiction of the Parliamentary Commissioner because the Associations are not part of the Ministry of Defence.
    Mr. Reynolds: The answer in both cases is "No, Sir".
    Sir T. Beamish: Does not the right hon. Gentleman understand that these men, about 800 of them, have a serious grievance in that they feel that the Minister of Defence has acted as judge and jury in this matter? Is he aware that the refusal to appoint an independent arbitrator to clear up this highly complicated matter has accentuated these feelings of gross injustice?
    Mr. Reynolds: I understand many of the feelings to which the hon. and gallant Gentleman refers. A number of hon. Members have written to my right hon. Friend and me on behalf of these men and there have been discussions about the matter in the House. I do not think it is necessary to go further into the matter.
    Mr. Maudling: Is the right hon. Gentleman aware that this is a very serious matter indeed for the men concerned?

    1415
    Is he determined to give nothing but wholly negative answers which are quite unsatisfactory?
    Mr. Reynolds: The whole idea of the arrangement under the Redundancy Payments Act was to provide benefits to people who did not have them. These benefits do not apply to people who benefit by other arrangements.

    Combat Aircraft (Future Requirements)
    Mr. Robert Howarthasked the Secretary of State for Defence what plans he has for the design and development of a supersonic vertical take-off and landing strike aircraft; and to what extent these plans run parallel with a known North Atlantic Treaty Organisation requirement.
    Mr. Healey: We are discussing with some of our N.A.T.O. allies requirements for a future combat aircraft. But it is unlikely that this would combine supersonic and vertical, as distinct from short, take-off and landing characteristics.
    Mr. Howarth: Cannot my right hon. Friend say at this stage whether the Harrier has already proved of value, having a vertical take-off and landing capability? Would it not be wise to incorporate this in a future advanced combat aircraft?
    Mr. Healey: The view of all our N.A.T.O. allies and potential partners is that there is a great need for a short take-off and landing capability for a future combat aircraft, but the price, in terms of cost and performance, for a vertical take-off aircraft other than the Harrier is likely to be too high. However, we are considering certain modifications to the Harrier to improve its performance, and this could be relevant to a future combat aircraft.

    Missile-Carrying Naval Helicopters
    Mr. Robert Howarthasked the Secretary of State for Defence what bad weather and night flying restrictions will be imposed on the new naval helicopters carrying air-to-surface missiles; and, in this respect, how their performance will compare with missile-carrying patrol boats.
    Dr. David Owen: It will seldom be necessary to impose any restrictions because of weather conditions, since the new naval helicopters will be capable of day and night operations in all but the very worst weather. The helicopters will remain operationally effective well beyond the point at which the missile-firing patrol boat is likely to be an effective threat.
    Mr. Howarth: This is an extension, I suppose, of the argument about whether these missiles should be carried on surface vessels or in helicopters. Does not my hon. Friend agree that helicopters are more limited by the weather than surface vessels, and does not this affect his argument?
    Dr. Owen: No, Sir, I do not agree. The helicopter-borne attack system is in no way inferior to a system of comparable size mounted on a ship. In fact, the reverse is the case. It has a high flexibility and range.
    Rear-Admiral Morgan Giles: Is the Minister saying that the advantages of helicopters will apply not only to missile-firing patrol boats but to larger missile-firing destroyers?
    Dr. Owen: No, Sir. The missile-firing destroyers will be dealing with air defence. The helicopters will be able to deal with surface ships, including patrol boats.

    Head of Defence Sales
    Sir C. Osborneasked the Secretary of State for Defence on what date the Government arms salesman was appointed; for what period; on what remuneration; what staff and premises he employs; what are his total annual sales; and what profit has been made up to the most recent convenient date.
    Mr. Healey: The Head of Defence Sales was appointed on 16th May, 1966, for an initial period of two years at a salary of £8,000 a year. The total staff employed under the Head of Defence Sales are 197 civil servants and six Service officers. They occupy premises in three Government buildings in London, at an establishment in Derby and at three overseas posts. Total annual sales are running at over £150 million a year of which some two-thirds are made by

    1417
    firms and about one-third by the Government. As regards sales made by the Government, we look to these to recover, in addition to our direct costs, a proportion of our expenditure on research and development and to make a contribution towards other fixed overheads.
    Sir C. Osborne: Do I understand the profit to be £150 million a year?
    Mr. Healey: No. I said "sales".
    Sir C. Osborne: Then, before I ask a supplementary question, could I ask what was the profit made?
    Mr. Healey: The hon. Gentleman will know very well that it is difficult to calculate profit when one is dealing with sales by private firms where one may not have full information of the profit that they have received.
    Sir C. Osborne—
    Mr. Speaker: Order. Mr. Emrys Hughes.
    Mr. Emrys Hughes: May I ask my right hon. Friend, first, if this arms salesman is responsible for any sales to Nigeria, and, second, what justification the Government have for paying a man £8,000 a year to act as a commercial traveller and salesman for private arms interests?
    Mr. Healey: We believe that it is important, both for financial and political reasons, for this country to play a part in providing arms and equipment for its friends in the world. One of the purposes of having a Head of Defence Sales is to enable us to do this, taking into account all the political factors which may be relevant to a possible sale.
    Mr. Emrys Hughes: Do not forget Nigeria.
    Mr. Speaker: Order. Mr. Tom Price.
    Mr. J. T. Price: Does the Minister of Defence recollect that, ever since the days of Sir Basil Zaharoff, this party has rightly condemned the employment of merchants of death? Many of us still condemn the practice and are very disturbed to see senior Ministers of the Crown associated with it.
    Mr. Healey: I am aware of the strong feelings on this matter. I am also aware of the fact that hon. Members on both
    1418
    sides protest very fiercely when a contract which might have gone to a British firm goes to a foreign one. If my hon. Friends will only talk to some of their supporters in their constituencies about the economic and technological consequences of renouncing all activity in this field, they might reflect a different view.
    Mr. James Davidson: Will the right hon. Gentleman answer his hon. Friend's question about Nigeria?
    Mr. Healey: Yes, Sir. I think that I am right in saying that the contracts with Nigeria were undertaken before the Head of Defence Sales was appointed.
    Sir C. Osborne: On a point of order, Mr. Speaker. I was not allowed a supplementary question. I was merely asking for information to enable me to frame a supplementary question.
    Mr. Speaker: Order. The hon. Gentleman has had his supplementary question.
    Sir W. Bromley-Davenport: Further to that point of order, Mr. Speaker. I have never questioned your Ruling, but my hon. Friend the Member for Louth (Sir C. Osborne) asked a Question of the Minister which the right hon. Gentleman specifically avoided. My hon. Friend then asked a supplementary question designed to get the right hon. Gentleman to answer the original Question, which was what profit has been made.
    Mr. Speaker: Order. Mr. Speaker, like the hon. and gallant Gentleman, was here when the exchange took place.

    CS GAS
    Mr. Hugh Jenkinsasked the Secretary of State for Defence what study he has made of the evidence which has been sent to him that the gas CS, originated at Porton, has proved to be lethal in use in Vietnam; and if he will make a statement on the result of this study.
    Mr. Healey: I understand my hon. Friend is referring to a letter written by Dr. Steven Rose and published in the New Statesman of 21st June, 1968. CS gas was first discovered in the United States. It was developed by Porton to produce an agent for riot control which is less toxic and more effective than the traditional tear gas, CN. No CS is exported from this country to the United States.

    1419
    While I am studying Dr. Rose's letter, I have found no evidence that CS as developed by Porton has been responsible for deaths in Vietnam.
    Mr. Jenkins: Is my right hon. Friend aware that Dr. Rose has offered to allow my right hon. Friend to sniff a quantity of CS gas recovered from Vietnam? Will he show his confidence in his Answer by accepting that offer?
    Mr. Healey: I had an opportunity to sniff CS gas at Porton yesterday, and I am glad to say that I am here today.
    Mr. Michael Hamilton: May I thank the right hon. Gentleman sincerely for the remarks he made yesterday about the work of the scientists at Porton?
    Mr. Macdonaldasked the Secretary of State for Defence what regulations govern the supply of CS gas or devices containing CS gas by his Department to police forces or other organisations in this country.
    Mr. Healey: Under Section 17 of the Firearms Act, 1937, no one other than a Crown Servant may possess a CS device without the written authority of the Defence Council. Police officers, being Crown servants for the purposes of the Act, do not require authority under the Act. Authority for the supply of CS devices to the police is a matter for the police authorities.
    Mr. Macdonald: I am delighted to see that after sniffing this substance my right hon. Friend retains his usual rude health. However, in view of public uneasiness about the substance, will he undertake not to release supplies of it to the police or any possible civilian user?
    Mr. Healey: Whether the police acquire supplies of this gas is a matter essentially for my right hon. Friend the Home Secretary and not for me. The only civilian users who have received supplies since this gas was developed in Britain have been the firm which manufactures devices for firing the gas and another firm which wished to import certain containers in order to test their suitability for the police.
    Mr. Orme: Is my right hon. Friend aware that not only in Vietnam but recently in Paris the use of this gas has had very detrimental effects on many
    1420
    students? Dr. Rose has done great service by highlighting the dangers of this gas. In the interests of health, will not my right hon. Friend restrict its use to the absolute minimum?
    Mr. Healey: I have made inquiries about the possible use of this gas in France. There is published evidence that the French police used CN gas, which is tear gas and which is more toxic than CS. Whether they used CS I have been unable to confirm so far. However, I can tell my hon. Friend and all other hon. Members that whereas in the seven years during which this gas has been in use in riots not one death has been confirmed, at least seven deaths have been confirmed from the use of its predecessor, tear gas. I think that on reflection my hon. Friend would agree that it was far more humane for British forces and police to be able to use this gas in the Hong Kong riots last year and in some of the civil disturbances in Aden than to be confined to the use of, for example, rifles and machine guns, as was the case at Amritsar, for example.

    Armed Forces (Pay and Allowances)
    Captain W. Elliotasked the Secretary of State for Defence what was the total cost of the recent 7 per cent. pay award to the services.
    Mr. Reynolds: In the current financial year about £23 million in pay and about £4 million in allowances.

    Armed Forces (Pensions)
    Captain W. Elliotasked the Secretary of State for Defence what estimate he has made of the total cost of granting a 7 per cent. increase in pensions to all Service pensioners over the age of 70 years.
    Mr. Reynolds: Such an increase would cost about £1 million.
    Captain Elliot: Would the Minister not agree that this latter sum is very small compared with the sum mentioned in reply to my earlier Question? If it was subtracted and given to those pensioners over 70, it would avoid this wide gap developing between the pensions of those retiring now and those who retired in earlier years. Will he convey these

    1421
    figures to those responsible for fixing these matters?
    Mr. Reynolds: While this sum is a comparatively small one compared with other figures, it is still very large. However, all public service pensioners are dealt with together. As for the general position, it is right that this group should remain in that of the public service pensioners, and I cannot add anything to what my hon. Friend said in the debate on 9th May.
    Captain Elliot: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible moment.

    Equipment (Performance and Reliability)
    Mr. Howieasked the Secretary of State for Defence what action the Services are taking to keep industry informed of the performance and reliability of equipment in the service with a view to improving it.
    The Minister of Defence for Equipment (Mr. John Morris): The Services fully appreciate the importance of feeding back promptly to industry information on the performance and reliability of equipment in service so that it may be improved; and so that new equipment under development and in production may benefit from experience in service. The best means of doing this are continually under review, in association with industry, and we are actively exploring the use of computers for processing the great volume of information involved. A very useful conference on the "Reliability of Service Equipment" was held in February this year and was attended by a wide cross-section of industry.
    Mr. Howie: I am grateful to my hon. Friend for his terse reply to my Question. However, I thought that I had made reference to computers. Can he say what use is being made of computers in dealing with this information?
    Mr. Morris: I think that I can help my hon. Friend. We already have a computer in use at Woolwich to process information on the performance and reliability of Army equipment. I have seen it for myself. This is now being programmed to provide output data which will be available to industry through
    1422
    maintenance advisory groups, A similar service will be provided by a computer which is to be installed for the Air Force, and the Navy Department is making a study of the use of a computer for processing information of this kind.

    University Research Departments Contracts (Official Secrets Act)
    Mr. Brooksasked the Secretary of State for Defence what obligations under the Official Secrets Act are placed upon the members of those university departments which are conducting defence research sponsored by his Department.
    Mr. John Morris: The provisions in the Official Secrets Acts relating to contractors are of general application. The attention of those concerned is, however, drawn to the provisions of the Official Secrets Acts when the contract is classified or likely to lead to access to classified information, and they are asked to sign a declaration to the effect that their attention has been drawn to the Act and that they understand its effect. None of the current Ministry of Defence research contracts with university departments is classified, and in all such cases there is a recognition in the contract conditions that it is scientific practice to publish results freely.
    Mr. Brooks: I thank my hon. Friend for that reply. Does he not agree that classified research is incompatible with academic freedom and should properly be kept to a minimum? Will he indicate the position of those representative of university departments who come into contact with those engaged on research projects let by the Ministry of Defence who may subsequently wish to publish the results of the joint research?
    Mr. Morris: As I told my hon. Friend, none of the present contracts is classified. While we cannot waive any statutory obligation when there is classified information, we would wish generally to have as few restrictions as possible, consistent with national security, which would be liberally interpreted if there were any wish to publish.

    Civil Projects (Military Personnel)
    Mr. Blenkinsopasked the Secretary of State for Defence whether he will now make a statement about the co-operation

    1423
    of military personnel in civil projects at home and abroad.
    Mr. Boyden: As I said in answer to a Question on 12th June, consultations outside the Ministry of Defence are proceeding satisfactorily. I would not wish to go further until these consultations have been completed.
    Mr. Blenkinsop: I welcome that Answer. However, what hopes has my hon. Friend of making an early statement on this subject, for there is a great deal of interest and a great deal of anxiety that there should be no unnecessary hold-up in this very exciting project?
    Mr. Boyden: There is no unnecessary hold up and nobody should be anxious. I cannot make a statement before the Recess, but I expect that statement and the resulting action to be non-controversial and well received.
    Mr. Ramsden: Is the hon. Gentleman aware that it was said, rather surprisingly, by the C.G.S. on television the other night that there were 300 contractors engaged in Scotland and a comparable number in England? Can he confirm that?
    Mr. Boyden: It is not as many as 300, but a considerable number of activities of all sorts have been and are being undertaken. The difficulty is that they vary from very small to very big things. If the House will give me a little longer, I hope to be able to make a satisfactory statement.

    Royal Air Force (Front-line Aircraft)
    Mr. Powellasked the Secretary of State for Defence on what number of front-line aircraft in 1973 he bases his estimate of Royal Air Force manpower in that year.
    Mr. Reynolds: It is not the practice to disclose such information.
    Mr. Powell: Have the Government formed any view of the approximate strength and composition of the Air Force in 1973? If so, why are they not prepared to give the House of Commons that general indication?
    Mr. Reynolds: Of course the Government are aware of these figures, but we see no reason whatever, on security
    1424
    grounds, for changing the policy, which has been adopted by all previous Governments, of not revealing the front line strength of the Royal Air Force.
    Mr. Hugh Jenkins: Will my right hon. Friend give an assurance that, following the policy of the present and previous Governments, no racial discrimination will be involved in recruiting manpower to the Armed Forces?
    Mr. Reynolds: I do not see the relevance of that question, even if my hon. Friend does, but I can definitely give that assurance.

    Regular Infantry Battalions
    Mr. Powellasked the Secretary of State for Defence for how many regular infantry battalions in 1973 he is now planning.
    Mr. Boyden: Forty-six.
    Mr. Powell: Will the Government, if not now at any rate in the course of the forthcoming debate, indicate the line of reasoning by which they have arrived at 46 battalions as being the correct size for the British Army in 1973?
    Mr. Boyden: I am sure that my right hon. Friend will, but I would have thought that it was very clear from the Defence Statement.
    Mr. Emrys Hughes: Is my hon. Friend aware that Field Marshal Lord Montgomery has assessed a reasonable number of infantry as 150,000? Are not the Government arranging for 40,000 more? Is it not time that the number was reduced to the level suggested by Lord Montgomery?
    Mr. Boyden: Lord Montgomery occasionally talks to me about these things; I must talk to him about this.
    Mr. Ramsden: Will the hon. Gentleman undertake that in the forthcoming debate a statement will be made by the Government relating decisions on the strength of the Army and the Air Force to defence considerations and not purely financial considerations?
    Mr. Boyden: Defence considerations and financial considerations are inextricably mixed. It is very difficult to get that lesson into hon. Members opposite.

    Armed Forces (Retired Pay)
    Mr. Worsleyasked the Secretary of State for Defence what proportion of serving pay is given as retired pay to members of the Armed Forces in the United Kingdom and other member countries of the Western European Union, respectively.
    Mr. Reynolds: With permission, I will circulate some United Kingdom examples in the OFFICIAL REPORT. I am making inquiries about the position in the other countries, and will write to the hon. Gentleman.
    Mr. Worsley: I thank the right hon. Gentleman for that reply. Will he confinn that these figures will show that we treat our retired Servicemen worse than our allies treat theirs?
    Mr. Reynolds: As I do not know the figures, I am writing to them to find out, and I cannot possibly confirm or deny it at this point.
    The following is the information:

    Pension as percentage of total emoluments Per cent.

    Corporal (Non-tradesman)

    …

    55

    Corporal (Technician)

    …

    51

    WOI (Non-tradesman)

    …

    61

    WOI (Technician)

    …

    56

    Major

    …

    57

    Colonel

    …

    60

    These percentages represent the proportion of total emoluments represented by a full career pension plus the terminal grant expressed as an annual pension. Total emoluments are maximum basic pay, marriage allowance (at the "in-quarters" rate) and ration allowance.
    Mr. Worsleyasked the Secretary of State for Defence in which member countries of the Western European Union is retired pay once awarded adjusted automatically for changes in serving pay.
    Mr. Reynolds: In the United Kingdom a separate decision is required to increase retired pay. I am making inquiries about the position in the other countries and will write to the hon. Gentleman.
    Mr. Worsley: As the right hon. Gentleman will find that in this respect, too, our Allies automatically adjust Service pensions., does he not think that the Government should do the same?
    Mr. Reynolds: For many years, I believe since the First World War, Service pensioners have been dealt with as part of the whole problem of public service pensions. I believe that to be right.

    Australia (Base Facilities)
    Sir Ian Orr-Ewingasked the Secretary of State for Defence what progress has been made in the negotiations with Australia for base facilities that he announced on 22nd February, 1966.
    Mr. Healey: I have nothing to add to the answer given by my hon. Friend the Minister of Defence for Administration to the right hon. Member for Wolverhampton, South-West (Mr. Powell) and the hon. Member for Beckenham (Mr. Goodhart) on 12th June.—[Vol. 766, c. 230–1.]
    Sir Ian Orr-Ewing: I wonder whether the right hon. Gentleman would not be wise not to continue making statements of this sort to the House when he has to disagree with or contradict them a few months or a few years later. We were given to understand that he was considering a base in Australia. Apparently, that has now been abandoned, like every other plan which he has ever produced for our defence forces.
    Mr. Healey: That is quite untrue. I have been considering this and I have been in consultation with the Australian Government about it. We know what the possibilities are and we know what possibilities do not exist. The Government took a historic decision in January to withdraw from bases in Singapore, Malaysia and the Persian Gulf at the end of 1971. I do not believe that it is consistent with that decision, or necessary to Britain's security and foreign policy, to build an alternative base in Australia.
    Mr. Maudling: The Government have repeatedly said that they intend to maintan a defence capacity, or capability, east of Suez. How can that be done in naval terms, for example, without some base facilities?
    Mr. Healey: The right hon. Gentleman should know that overseas the Navy is largely dependent on afloat support facilities. There are facilities in Australia which the Royal Navy could use if it

    1427
    wished to do so. I understood that the Question was concerned with the provision of permanent base facilities.

    Far East (Equipment Supplies)
    Sir Ian Orr-Ewingasked the Secretary of State for Defence what arrangements are being made to stockpile spare aircraft engines, missiles and armaments so that the United Kingdom can honour the assurances given at the Kuala Lumpur Defence Conference.
    Mr. Healey: I would refer the hon. Member to the Supplementary Statement on Defence Policy 1968 which makes it clear that in general we do not intend to maintain stocks of operational equipment and supplies in the Far East after our withdrawal, although we may wish to hold small amounts of equipment there for training and exercise purposes.
    Sir Ian Orr-Ewing: Since we are to remain a member of S.E.A.T.O. even though we may not have any forces committed there, would it not be wise to retain some of the very expensive air-conditioned workshop and storage facilities in Singapore? It may be very desirable to all three Services if we have expensive exercises and we need heavy support which cannot be carried by air in an emergency.
    Mr. Healey: To do such a thing would be totally inconsistent with the purposes of the change in our defence policy on which the Government have decided in the last 12 months. The maintenance of the sort of facilities to which the hon. Member refers has a multiplier effect in money spent and the number of men required. This is totally inconsistent with the Government's policies. If any of our allies wishes to maintain such facilities, to that extent our own capability to reinforce—if we judge it in our interests to do so—will be increased.
    Sir T. Beamish: Are the Australian, New Zealand, Malaysian and Singapore Governments now all satisfied that we have the general capability to intervene in the Far East in the way in which the right hon. Gentleman claims we have?
    Mr. Healey: Yes. This was one of the great successes of the Conference in Kuala Lumpur which I attended only the other day. I was disappointed to find
    1428
    that the success of that Conference was greeted with chagrin on the benches opposite.

NUCLEAR POWER INDUSTRY
The Minister of Technology (Mr. Anthony Wedgwood Benn): Mr. Speaker, with permission I should like to make a statement about the reorganisation of the nuclear industry.
In the debate on 23rd May, I summarised the Government's objectives in seeking a reorganisation of the nuclear industry following the report of the Select Committee on Science and Technology on this subject.
I have now had the opportunity of considering the matter further and have had the advantage of hearing the results of the informal consultations conducted by the Industrial Reorganisation Corporation.
I have today written to the I.R.C. to invite it to help in the reorganisation of the industry and I am circulating the text of my letter in the OFFICIAL REPORT. The I.R.C. will, of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.
I am asking the I.R.C. to assist in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. We have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of the nuclear "islands". The proposed two new companies would need to work in close conjunction with the highly successful fuel organisation set up by the A.E.A. which is already operating on a commercial basis.
The Government have decided that to make this co-operation more effective in the exploitation of reactor systems it would be advisable to establish the Authority's fuel business as a publicly-owned company under the Companies

1429
Acts with the initial share capital wholly subscribed by the Government. In order to emphasise the interdependence of fuel and reactor design and supply, the Government intend that the fuel company should take up and hold a minority shareholding in each of the two design and construction organisations. Since the establishment of the fuel company will require legislation, I am proposing that initially the Government shareholding should be taken by the A.E.A.
The exploitation both at home and overseas of new reactor systems, as well as the A.G.R., would then primarily be the responsibility of the new companies, whose activities we would seek to concentrate geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.
In addition, when the proposed new industrial structure takes shape, the Government have in mind the establishment of an Atomic Energy Board on which the A.E.A., the design and construction companies, the fuel company and the generating boards would be represented. This Board would concern itself with research and development programming, export co-ordination and major policy matters. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.
As part of these arrangements, the Government will have to consider the necessity for some modification in the organisation of the A.E.A. in the light of the proposed legislation for the fuel company and the rearrangement of responsibilities for the exploitation of reactor systems.
The necessity for these new arrangements arises from the great success that the A.E.A. has achieved in developing commercial reactors. The reorganisation will be designed to secure that the most effective possible use should be made of this great national asset not only in support of the new organisation of the nuclear industry, but also in conjunction with the Government's own research establishments in the development of industrial technology.
1430
These, then, are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent, since it is the new design and construction organisations upon which the task of selling our reactor systems abroad will fall. They will need certainty for the future and I hope that we shall soon be able to reach an agreement, at least in principle, which will allow us to exploit our national research and development in atomic energy to the full.
Mr. David Price: Is the right hon. Gentleman aware that his decision to have two design and construction companies rather than one is in line with the minority Report of the Select Committee and will, therefore, be welcomed on this side of the House? Is he also aware that this is a very full statement, that much of the detail has yet to be filled in, and that it is very difficult at this stage for us to examine it closely? Will he undertake—as his implementation of the strategy in this statement matures—to give the House more detail and that we will have an opportunity to discuss it in detail across the Floor of the House?
Mr. Benn: The rôle of the fuel company in relation to the design and construction organisations meets the need which was dominant in the minds of the Select Committee in its considerations and its Report.
On the question of further reports to the House, I shall be guided by the progress made by the I.R.C. in talking to the industry, but there will be opportunities for further discussions and, as the hon. Member knows, there will be legislation later.
Dr. Ernest A. Davies: I thank my right hon. Friend for making this statement and indicating that action is being taken to deal with the nuclear power industry. I welcome that part of his statement dealing with the treatment of nuclear fuel, but can he explain why he has prevented the I.R.C. from considering the need for a single design and construction unit and has specifically asked for it to deal with two, since this, in effect, according to the argument of the major part of the Select Committee on Science and Technology Report, means

1431
that we shall have three such organisations and not two?
Mr. Benn: My hon. Friend is wrong on his last point. We shall have two, because the A.E.A. will be working in the two design and construction organisations. As for his first comment, he will recognise that there was also an error in that, because we asked I.R.C. first to go out and seek negotiations on the basis of a single design organisation. This did not prove to be a practicable way of doing it, and the fuel company will meet the need that the Select Committee brought forward.
Mr. Lubbock: Will the Minister confirm that these arrangements will not jeopardise in any way the negotiations entered into by A.P.C. and T.N.P.G. and their European counterparts for the formation of international consortia? Can he say whether it will now become possible for licences to be granted for S.G.H.W. technology? Will it be possible, at a later stage, to consider private participation in the fuel company?
Mr. Benn: We have not yet established a fuel company, but the objective is a publicly-owned company in which the initial shareholding will be by A.E.A. and subsequently a Government holding. Existing commitments will continue on the basis on which they have been entered into. I stress this in relation to A.E.A., but it applies to everybody. It follows from the reorganisation that the two design construction teams will have access to the technology developed by A.E.A.
Mr. Brian Parkyn: Will the Minister give I.R.C. a time limit by which it will have to have its plan completed? Has he given instructions to I.R.C. to see what can be done concerning the tremendous future of the H.T.R., and capitalising on it?
Mr. Benn: I do not think that it would be wise to give the I.R.C. a time limit because we are asking it to negotiate with the firms concerned, but since a great deal of work has been done on this matter I should expect that the basis of an agreement probably could very rapidly be found. A certain amount of work is going on in connection with the
1432
H.T.R. We attach a lot of importance to the H.T.R., as is evidenced by our support for the Dragon project.
Mr. Michael Hamilton: In the time remaining to him, will the right hon. Gentleman seek to reduce rather than multiply the number of organisations which are known by their initials only?
Mr. Benn: That is a question for others than myself. But it is fairly well-established that the Atomic Energy Authority should be known as the A.E.A. If we have an Atomic Energy Board, it would be hard for me to lay down that it was not to be known as the A.E.B.
Mr. Maclennan: Is my right hon. Friend aware that the decision about the fuel company is unlikely to be welcomed by the Institution of Professional Civil Servants, which has resisted this suggestion all along? Is he further aware that, as a result of his remarks about the geographical grouping of the new work at Risley, there is likely to be considerable concern at the A.E.A's establishment at Dounreay, whose continued existence is of such great importance to the area?
Mr. Benn: I do not think that my hon. Friend should anticipate difficulties. If we are to make a change of this kind, there are bound to be many people who will find that the situation alters for them. The object of this reduction is to exploit the highly successful work being done by the A.E.A. in nuclear research and development. I should hope that these changes could be carried through with the good will of all concerned. Dounreay, which is a very advanced fast reactor development, is likely to be the beginning of the very successful exploitation of that system in this country.
Mr. Neave: Is the Minister aware that the reorganisation of the A.E.A. will create considerable staffing problems? Is he further aware of the need for maximum consultation with the staff side and, in particular, for an early decision on the question of transferring pensions?
Mr. Benn: I recognise that there is a great deal more work to be done in this field. There will be the fullest possible consultation with the staff.
Mr. Dalyell: Is my right hon. Friend aware that some of us who signed the

1433
majority Report, after seven months' work, will take a great deal of convincing about his rejection of the single nuclear boiler company? May I ask him two specific questions? First, precisely what are the minority shareholdings? Secondly, what does he mean by "close integration"?
Mr. Benn: I recognised what my hon. Friend says about the case for the single design organisation. It was for that reason that we asked the I.R.C. to go for that first. But, in practice, if we are to have international links between the D.C. organisations and other companies abroad as a result of which we hope to sell our reactor systems, there is a case for not trying to merge into a monolithic organisation in this country. This was one of the dominant considerations in our minds. This is the answer to my hon. Friend's second question about the rôle of the fuel company's holding in the D.C. organisations. We recognised, the longer we thought about this, that it was the fuel which, in the long run, played the dominant rôle in shaping the technical standardisation required.
Sir Knox Cunningham: Will this new structure, particularly the formation of the companies, in any way reduce the opportunities of hon. Members to obtain information about this subject in the House?
Mr. Benn: That is a technical question with which the House will be much concerned later, but it is a bit too early to say what the arrangements will be. They will be contained in legislation which will come forward later.
Mr. Atkinson: The answer which my right hon. Friend has just given would seem to mean that it is impossible for a Socialist structure in this country to cooperate with private interests in Europe. That is a view which would be rejected on this side of the House. Would my right hon. Friend accept that there will be great disappointment that, by choosing this course, he has accepted the Conservative proposals for the future of the industry and has rejected outright the advice given to him in a Motion, signed by 104 Members, to set up a single design authority?
Mr. Benn: I think that my hon. Friend is wrong in two respects. First, if we are
1434
to sell our reactor systems abroad, some industrial collaboration is absolutely essential, and that is why we have maintained this option. Secondly, I am somewhat surprised that now that a new publicly-owned, science-based industry is to be built up on the basis of public research and development, which is what the fuel company will be, he should find this so unwelcome.
Mr. Evelyn King: Is it possible to infer from the Minister's statement that the possibility of a rundown in the level of employment at Winfith is more or less likely?
Mr. Benn: I think that it would be foolish of me to try to answer a question of that kind without proper consideration. The A.E.A.'s success in developing a number of reactor systems has now opened up the possibility of a new organisation geared to the idea of exploitation. I think that everybody has always recognised that as the success of the A.E.A. became greater the emphasis would tend to be on the exploitation side. The object of the new organisation which we hope to set up is to give this new emphasis real form.
Mr. Hooley: Is my right hon. Friend aware that the creation of a publicly-owned fuel company is entirely acceptable to hon. Members on this side of the House, but that the idea that private enterprise should control the activity of the other two companies is not so acceptable? Is he arguing that in order to collaborate with other countries, complete public ownership is not possible?
Mr. Benn: It is not part of my object to argue that at all, nor is the proposal which I put to the I.R.C. confined solely to the creation of a new publicly-owned fuel company. The point is that we should try to build mixed enterprise arrangements inside the two D.C. organisations. If my hon. Friend reads the statement carefully, he will see that this is a balanced proposal designed to get the best out of the A.E.A. combined with the greatest possible prospects of selling reactors abroad, which is the only way in which we shall get a return on the many hundreds of millions of pounds which we have spent on atomic energy research in the last few years.
Sir Ian Orr-Ewing: Would the right hon. Gentleman remind his hon. Friends that this was not only the solution of the Conservative Party? The creation of two design companies was also the solution which was strongly recommended by the biggest customer—the Central Electricity Generating Board. Therefore, this will be very acceptable to the majority of people in this country.
Could the Minister be a little more forthcoming about the question put by the hon. Member for West Lothian (Mr. Dalyell)—why it is necessary to inject public money into the two design and construction companies? They have operated perfectly satisfactorily up to now. It was not clear from the right hon. Gentleman's earlier reply why the Atomic Energy Authority should lend money to the new public fuel company to take a minority shareholding in these two private enterprise companies.
Mr. Benn: I would dispute what the hon. Gentleman says about the arrangements having worked very well up to now. If they had worked very well up to now, we should not have devoted two years to considering how to improve them. [HON. MEMBERS: "Oh."] We have not sold a reactor abroad for some years, as the House knows very well.
On the second point, about why there should be a link between the fuel company and the two D.C. organisations, under the proposed reorganisation some of the A.E.A.'s staff and assets will be brought into the design and construction organisation in order to achieve the maximum concentration of effort and exploitation of the system.
That is one reason. The other reason is to meet the need which was very strongly pressed by the Select Committee that we want to get the maximum concentration of effort and the minimum of wasteful competition or design competition in a field in which this could be decisive in selling reactors abroad. This matter has been settled not on an ideological basis, but on the basis of finding a consensus of agreement between the public agencies involved and the companies which have to exploit them.
Mr. Rankin: Will the reorganisation of the industry and the creation of the new board be followed by a bigger intake of
1436
technologists, scientists and engineers on the administrative side?
Mr. Benn: The object of the exercise is to change the emphasis from nuclear research and development, in which we have done very well, to the exploitation of our reactor systems. I should very much hope that more scientists and technologists working in the field would find themselves on the exploitation end, because it is here that we have so much more to do.
Mr. Fortescue: In view of the Government's recent decision, taken against the advice of every nuclear physicist in the country, to withdraw from the proposed European 300 GeV nuclear accelerator programme, how can the Minister be so confident in our long-term export potential for nuclear reactors?
Mr. Benn: I do not think that the two issues are connected. At no stage whatever was the 300 GeV accelerator brought forward on the basis that it contributed to the exploitation of the atomic reactor systems developed by the A.E.A.
Mr. Dalyell: On a point of order. In view of the long-term importance of the Minister's statement, may I ask the Leader of the House whether, before the Summer Recess, he can provide time for a debate?
Mr. Speaker: There is a stage in the House on Thursday afternoon when business questions may be asked.
Following is the letter from the Minister of Technology to Sir Frank Kearton, Chairman of I.R.C.:
I am writing to you, as Chairman, to ask whether the I.R.C. would be ready to help to carry through a reorganisation of the nuclear industry, which has now been under discussion for well over eighteen months.
In our earlier talks about this, you were kind enough to advise me personally from your own long experience of atomic energy matters, as a part-time member of the A.E.A. Board. Later you and your I.R.C. staff also took informal soundings from all the parties involved both on the recommendations of the Select Committee and on the development of their thinking in the light of the Committee's report. All this has been most helpful.
We have, of course, discussed this very fully with the A.E.A. throughout and have now had an opportunity of considering your suggestions in the context of the Government's objectives which I summarised in the House of Commons on May 23rd as follows:
First, to make the best possible use of all the existing resources in this field, cutting out overlapping and duplication, of which there manifestly is some;
Second, to allow those who have worked in the Atomic Energy Authority full scope for carrying their work forward into the exploitation and sale of the systems which they have developed;
Third, to get the maximum possible advantage of the technical standardisation, coupled with the. most effective design competition in engineering detail and construction method;
Fourth, to try to link and co-ordinate the efforts in such a way as to relate reactor systems to the fuel elements and reprocessing business at which the A.E.A. has excelled, both technically and commercially, through its fuel production group;
Fifth, to create an organisation which permits the sort of international industrial links which will be of critical importance in all sectors of advanced industry and not just in atomic energy;
Sixth, to do this with a special eye upon the future of the European nuclear industry in co-operation with our partners in Europe;
Seventh, to change the emphasis of our national effort in such a way as to increase it on the exploitation side and see that future nuclear research is guided and shaped more directly by the needs of the market at home and abroad;
Eighth, to establish a creative partnership between the public and private sectors as far as possible by reaching a consensus of agreement so as to allow all the other objectives I have described to be achieved.
With these in mind, I am writing to invite the I.R.C. to assist the industry in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. I have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of nuclear "islands". The I.R.C. will, of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure of the industry. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.
The proposed two new companies would need to work in close conjunction with the highly successful fuel organisation built up by the Atomic Energy Authority, which is already operating on a commercial basis. The Government have decided that to make this co-operation more effective in the exploitation of reactor systems it would be advisable to establish the Authority's fuel business as a publicly owned Company under the Com-
1438
panies Acts, with the initial share capital wholly subscribed by the Government. In order to emphasise the inter-dependence of fuel and reactor design and supply, the Government intend that the fuel company should take up and hold a minority shareholding in each of the two new design and construction organisations.
The establishment of the fuel company will require legislation, and I would propose therefore that initially the Government shareholding should be taken by the A.E.A.
Exploitation both at home and overseas of the new reactor systems, as well as the A.G.R., would then primarily be the responsibility of the new companies. The design units of these two new firms, together with the fuel activities, should be, so far as is possible, concentrated geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.
When the proposed new industrial structure takes shape, the Government have it in mind to set up an Atomic Energy Board, including representatives of the A.E.A., the fuel company, the two new design and construction companies and the Generating Boards. This Board would concern itself with the composition and financing of R & D programmes (to which the two new design/construction companies, and the fuel company, would be expected to contribute), the co-ordination of activities in the export field and major matters of policy. These proposals have already been the subject of discussions between our respective officials. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.
The Government, as part of these arrangements, will have to consider the necessity for some modification in the organisation of the Atomic Energy Authority in the light of the proposed legislation for the fuel company and the re-arrangement of responsibilities for the exploitation of reactor systems. This reorganisation would be designed to secure that the most effective possible use should be made of this great national asset, not only in support of the new organisation of the nuclear industry, but also in conjunction with the Government's own research establishments in the development of industrial technology. The necessity for these new arrangements arises from the great success that A.E.A. has achieved in developing commercial reactor systems.
These then are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent since it is the new design and construction organisations upon which the task of selling our reactor systems abroad will fall. They need certainty for the future and I hope that the I.R.C. will be able to achieve an agreement, at least in principle, as soon as possible.

MESSRS. GALLAHER LTD. (TAKE-OVER BID)
Mr. McMaster: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the American Tobacco Company's bid to purchase a controlling interest in Gallaher Ltd., the manner in which this bid has been conducted, the possible effect, if it is successful, on employment in Gallaher's factories, and the economic implications of the bid for our economy".
I submit that the matter is specific in that it relates to a particular attempt to gain a majority interest in a major British tobacco manufacturing company. It is urgent in that it relates to events which took place yesterday in London. It is important in that if the bid succeeds control over an old-established British company supplying one-third of the United Kingdom market with tobacco and cigarettes will pass into foreign hands.
I should like to make it clear that I do not in any way wish to criticise either the American Tobacco Company or Philip Morris for the interest which they are taking in the British tobacco industry. Indeed, I welcome—
Mr. Speaker: Order. The hon. Member must not drift into the merits of what he wants to debate.
Mr. McMaster: I would simply argue that I welcome the fact that they deem it worth while to invest £65 million in Gallaher's. However, I suggest that the question which is of definite public concern is whether it is right that any overseas company should be allowed to purchase 50 per cent. of the equity of a leading British company and thus gain control over it and a commensurate share in its profits.
I also submit that it is a matter of concern because the offer is made with a paper currency—either dollars or Eurodollars—which is no longer backed by a guarantee of convertibility into gold at its ordinary market price and which may
1440
well depreciate in value if the inflationary trends which have existed since the war continue, whereas the value of the assets which would be purchased has risen steadily.
The second point of concern is the manner in which the bid has been pursued in the City. It is important that the House should consider whether there has been a breach of the City's code relating to the conduct of take-over bids. It will not have escaped your notice, Mr. Speaker, that this has attracted much comment, both attacking and defending, in today's Press. I submit that this is a matter of urgent concern which should be debated by the House.
Concern has been expressed in the Belfast Press about the possible effects of the take-over on employment in Gallaher's main factories in Northern Ireland, where we already suffer serious unemployment problems. I do not myself believe that there are any grounds for those fears, but I submit that it is a further important aspect of the bid which deserves the attention of the House.
Mr. Speaker: The hon. Member was kind enough to give me notice this morning that be might ask leave to move the Adjournment of the House, as he has done, for the purpose of discussing a specific and important matter that he thinks requires urgent consideration, namely,
"the American Tobacco Company's bid to purchase a controlling interest in Gallaher Ltd., the manner in which this bid has been conducted, the possible effect, if it is successful, that it may have on employment in Gallaher's factories, and the economic implications of the bid for our economy."
The House will remember that under the terms of the revised Standing Order No. 9, as agreed to on 14th November, 1967, Mr. Speaker is directed to take into account the several factors set out in the Order, but to give no reasons for his decision.
In the light of the new conditions, I have to rule that the hon. Member's submission does not fall within the provisions of the revised Standing Order and, therefore, I cannot submit his application to the House.

NUCLEAR POWER INDUSTRY
Mr. Dalyell: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the future of the British nuclear power industry."
The matter is urgent because these decisions will soon become irreversible, it is dsfinite because of the Minister's statement this afternoon and it is important because it is crucial to the long-term fuel policy of the nation.
Mr. Speaker: Might I point out to the House that it is customary, if possible, for an hon. Member to give notice that he seeks to raise a matter under Standing Order No. 9. I gather, however, from the hon. Member's statement that it was not possible to do so and that it was not until he had heard the statement of the Minister this afternoon that he took the course that he has taken.
The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the future of the British nuclear power programme".
The House will remember the conditions under which I apply the revised Standing Order No. 9 and that I am to give no reason for my decision.
I have to rule that the hon. Member's submission does not fall within the provisions of the revised Standing Order and, therefore, I cannot submit his application to the House.
Mr. Michael Foot: On a point of order. I understand what you have said to the House, Mr. Speaker, about the desirability of giving notice to Mr. Speaker if it is the intention of an hon. Member to try to invoke the provisions of the Standing Order. Will you, however, stress to the House that there is no prejudice against an hon. Member seeking to follow that procedure after a statement has been made from the Government Front Bench? It would deprive us considerably of the value of
1442
the Standing Order if it was not possible for hon. Members to raise the matter immediately following a statement which has been made from the Front Bench. Therefore, although I think that you said this, Mr. Speaker, it would be of great value to the House if you would stress it.
Mr. Speaker: I thought that the House would have heard that I said, in my own halting words, exactly what the hon. Member for Ebbw Vale (Mr. Michael Foot) has said so much more eloquently. There obviously may be occasions when what takes place in the House gives rise to a desire on the part of an hon. Member to seek to raise a matter under Standing Order No. 9. Obviously, that would not prejudice his chances.
Sir G. Nabarro: Further to the point of order. It will be within your recollection, Mr. Speaker, that at 8 o'clock this morning, being the earliest time possible, I came to your office to table a Private Notice Question—
Mr. Speaker: Order. The hon. Member may inform the House that he came to my office to raise a Private Notice Question. He is not allowed in any way to indicate the nature of the Private Notice Question.
Sir G. Nabarro: Of course not, Mr, Speaker. If you had allowed me to complete my sentence, I would have related it to the point of order raised by the hon. Member for Ebbw Vale (Mr. Michael Foot). Only two recourses are available to private Members to raise matters of urgent public importance. The first is by Private Notice Question, the second is under Standing Order No. 9. I chose the first recourse—
Mr. Speaker: It will not be beyond the intelligence of the House that the hon. Member is indicating now the nature of the Private Notice Question he was seeking to raise this morning. He cannot do that.
Sir G. Nabarro: I will endeavour to complete what I have to put to you, Mr. Speaker, without reference to it. I shall allude only to the matter raised by the hon. Member for Ebbw Vale (Mr. Michael Foot), as I am rising further to his point of order. The two matters are linked.

1443
You cannot give your Ruling in the matter of a Private Notice Question, Mr. Speaker, till after midday. Would it not be possible, for the convenience of hon. Members faced with the dilemma that we do not know your decision until so late in the day, for the decision to be taken earlier in the day and for it to be posted in a place where we can all see it? It is not always possible for hon. Members who come here early in the morning to take your counsel and seek your advice about submitting a matter of urgent public importance and bringing that before the House to be waiting in the Lobbies till about one, two or three o'clock, awaiting your decision.
Would it not be possible for the decision to be posted in the Lobby earlier in the day, so that hon. Members would know what recourse they may have when dealing with an urgent matter of this sort?
Mr. Speaker: I am completely sympathetic with the point of order that the hon. Member has raised. The simple fact is that an application to submit a Private Notice Question may be made until 12 o'clock. It is not until 12 o'clock that Mr. Speaker is in a position to decide all the many factors which govern his admission or rejection of all the Private Notice Questions that have by then been submitted. I understand that, once Mr. Speaker has made his decision on any hon. Member's Private Notice Question, then as soon as possible the information goes to that hon. Member.
1444
Following the line of the hon. Member's question, it would not be possible for Mr. Speaker, just after 8 o'clock, to reply to a submission of a Private Notice Question. The hon. Member must wait till 12 o'clock.
Sir G. Nabarro: Further to the point of order—[HON. MEMBERS: "Oh."] We are on a very important matter which affects every private Member. Is there any special sanctity about the hour of 12 midday? I am aware that it is unreasonable to ask Mr. Speaker to consider these matters at such an early hour as 8 o'clock in the morning. I am not asking for that. All I am asking is that the decision might be given at, perhaps, 10 o'clock. Could we not alter 12 midday to an earlier hour, which would help hon. Members faced with this dilemma?
Mr. Speaker: This would penalise hon. Members who have not the same early habits as the hon. Member for Worcestershire, South (Sir G. Nabarro) and Mr. Speaker, who, like the hon. Member, is also on duty at 8 o'clock in the morning.

BILL PRESENTED
  IMMIGRATION
  Bill to regulate migration into the United Kingdom: to define rights of entry into and departure from the United Kingdom; to confer on certain persons a right to a passport; and for purposes connected therewith, presented by Mr. Ronald Bell read the First time; to be read a Second time upon Friday and to be printed. [Bill 197.]

  DISMISSAL APPEALS BOARDS
  4.3 p.m.
  Mr. Roy Hughes: I beg to move,
  That leave be given to bring in a Bill to require that every worker shall be entitled to receive written notice of impending dismissal; to establish Dismissal Appeals Boards; and for connected purposes.
  By way of explanation I should point out that I first attempted to bring in a Bill of this character in March of last year, but on that occasion it fell by the wayside due to lack of Parliamentary time and, of course, as a result of lack of Government support. At the time I was informed by the then Minister of Labour that he was awaiting the Report of his National Joint Advisory Council on dismissals, that the dismissals procedure fell within the terms of reference of the Royal Commission on Trade Unions and Employers' Associations.
  Since then, as the House will be aware, both those Reports have been published. The Ministry's Report points out that while appreciating the need for a dismissals procedure, it prefers meanwhile to encourage voluntary agreements. I agree that it was issued over 12 months ago, but it is fair, nevertheless, to ask how much longer can we wait and can the country afford such inertia.
  After all, in Appendix 1, paragraph 6, it is stated:
  "It is estimated that between 333,000 and 500,000 dismissals per year result from misconduct."
  These are formidable figures indeed, but it is fair to point out that they hide a great deal of potential injustice. However fair minded management may be, are they always necessarily right, and are their subordinates necessarily right, too? People build their lives round their jobs, and for them dismissal can be disaster. It often means the uprooting of homes and families, and sometimes, particularly for elderly people, it is a question of getting a job at all.
  It is for this sort of reason that the Royal Commission, in paragraph 526, states:
  "We share in full the belief that the present situation is unsatisfactory."
  It goes on to say, in paragraph 529, that
  1446
  "we believe it urgently necessary for workers to be given better protection against unfair dismissal."
  The Bill I seek to bring in this afternoon is broadly in line with the majority conclusions of the Royal Commission. There are, nevertheless, one or two points on which I would take issue with the Royal Commission, first, when it says an employee who wishes to lodge a complaint against dismissal should do so within five days. I feel that this period should be longer. I would suggest 14 days. Often, a person who has been dismissed has a feeling of humiliation. The urge to fight back, so to speak, does not come till later. The Commission speaks of it being undesirable to deprive the employer of the right to dismiss without notice for misconduct. In serious cases, I would agree with this contention, but not normally, for this would reverse our normal concept of justice that a man is innocent till he is proved guilty.
  To illustrate my point, take, for instance, a badly organised workplace which is, nevertheless, moving towards trade union organisation. Suppose the employer were to sack an activist. The trade union organisation would be liable to crumble; there would be reluctance on the part of the other employees to take office in that trade union. Therefore, I believe that a written notice should be issued, and that, in normal circumstances, the worker should remain in work, and, in serious cases, be regarded as under suspension.
  The central theme of the Bill is, nevertheless, to establish dismissal appeals boards, or, as the Royal Commission referred to them, labour tribunals. Machinery of this character is already in existence as a result of the Redundancy Payments Act, 1965. They only need reconstituting, but the necessary priority would have to be given to the hearing of dismissal cases in view of their special urgency.
  Some people would point to the cost of establishing such a procedure, but I would say that this would be minimal compared with the savings from better industrial relations. I agree there is a need to discourage frivolous or vexatious cases, but this would not be an insuperable problem.

  1447
  There would be provision in the Bill for the exemption of suitable voluntary procedures, but I believe that legislation would be an incentive to employers and trade unions to set up suitable voluntary procedures. Voluntary agreements, for their effectiveness, largely rely on strong trade union organisation. In many establishments there is no trade union in existence, and in these the threat of the sack is often the main source of discipline. Even in companies with modern ideas this code of conduct still tends to apply to the non-manual white collar worker. The fact has also to be faced that there is no chance in the immediate future of voluntary methods succeeding in badly organised trades and industries involving millions of workers.
  Statutory machinery can be justified then, first, if only because of lack of machinery and the inadequacy of what is already in existence, and, secondly, to encourage trade union organisation and the growth of collective bargaining on sound lines. There is the problem of conciliation when wrongful dismissal has been proved. Ideally, reinstatement is the answer but often a permanent rift may have been opened between an employer and an employee. An employee may not wish for reinstatement even though he has been unfairly treated. Again, he may have obtained another job. In cases of this sort we feel that compensation would be the best answer. Reinstatement and compensation can both be envisaged as remedies, depending upon individual circumstances which would be taken into consideration by the tribunals or boards.
  Those, briefly, are the provisions provided for in the Bill, the implementation
  1448
  of which I believe to be urgently necessary.
  I speak not without personal experience of this matter. Before coming to the House I spent a quarter of a century in industry and, what is more, I participated in a number of strikes and even led a few. The Royal Commission, in paragraph 544, came to the conclusion:
  "… that the balance of advantage greatly favours the establishment of statutory machinery. Accordingly, we recommend early legislation to this end."
  I agree with this contention.
  The Labour Party, in its 1966 election manifesto, said this:
  "We shall recognise the right to trade union representation and ensure proper safeguards against arbitrary dismissal."
  To my mind, the time for decision has arrived and, therefore, in seeking leave to introduce the Bill, I trust that I shall have the full support of the House.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Roy Hughes, Mr. Arthur Probert, Mr. Clifford Williams, Mr. Maurice Edelman, Mr. William Wilson, Mr. Trevor Park, Mr. John Horner, Mr. Arthur Palmer, Mr. Leo Abse, Mr. Edwin Wainwright, Mr. John Ellis and Mr. Bert Hazell.

  DISMISSAL APPEALS BOARDS BILL
  Bill to require that every worker shall be entitled to receive written notice of impending dismissal; to establish Dismissal Appeals Boards; and for connected purposes; presented accordingly and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 189.]
ORDERS OF THE DAY

  SOCIAL WORK (SCOTLAND) BILL [Lords]
  As amended (in the Standing Committee), considered.
  4.15 p.m.
  Mr. Speaker: I have posted up, as is my custom, the Amendments which I have selected. It would help the Chair and the House if, at some time during the debate, the Chair could be told which of the many Government Amendments are to be grouped together.
  We come first to new Clause No. 2, with which we are taking Government Amendment No. 191.

New Clause 2

  AMENDMENT OF CHILDREN ACT 1958
  The Children Act 1958 shall have effect subject to the amendments set out in Schedule (Amendment of Children Act 1958) to this Act. —[Mr. Ross.]
  Brought up, and read the First time.
  The Secretary of State for Scotland (Mr. William Ross): I beg to move, That the Clause be read a Second time.
  I apologise to hon. Members for the belated appearance of the new Clause upon the Notice Paper It was a fairly natural human error, but the importance of the Clause and its length together with the Amendment must have caused considerable inconvenience and trouble to hon. Members.
  The purpose of the new Clause and the associated Schedule is to close a gap which exists under present legislation in the arrangements to control places in which children are looked after temporarily by persons other than their parents or guardians. Part I of the Children Act 1958 gives local authorities a duty to supervise children not in the care of local authorities who are living away from their parents or guardians under privately made arrangements.
  Briefly, notice must be given to the local authority by people who intend to take in for payment and for more than one month a child of school age or below. There is parallel provision in the Nurseries and Child-minders Regula-
  1450
  tion Act 1948 in respect of children who are taken in during the daytime only or for short periods not exceeding six days. So there is a gap between the 28 day minimum period of the one and the six day maximum of the other.
  Apart from this, there has been considerable public concern, I admit more so in England and Wales than in Scotland, about the evasion of the provisions of the two Acts, and the consequent danger to children placed with unregistered and unsupervised minders and foster parents where parents have found it impossible to make other arrangements for their children. The opportunity has been taken of the Health Services and Public Health Bill to strengthen the provisions of the Nurseries and Child-minders Regulation Act 1948. The changes apply to Scotland, and responsibility for the administration of the amended Act will be taken over from the Health Authorities where it lies now by our new social work departments.
  On the children protection side, the Minister of State, Home Office, Lord Stonham, announced in another place on 14th May that it is hoped to introduce legislation to strengthen the Children Act 1958. That legislation will introduce some important changes of policy, and may also carry out a great many detailed changes to improve the administration of the Act.
  We have considered what should be done in Scotland. I think that it is desirable to introduce the policy changes, but, as the difficulties with the present Acts are not so great as they are in England, there is not the same need to carry out the more detailed amendments. At the same time, the introduction of the social work departments will mean that the same local authority department will in Scotland be responsible for working both codes, and there may well be advantage in letting this happen for a year or two to see how best the two codes can be improved and assimilated in Scottish conditions. We have, therefore, decided that the best course is to take advantage of the opportunity given by the Social Work (Scotland) Bill to introduce the main changes and to allow our authorities to have experience of working both codes through one department before deciding what further detailed changes should be introduced.

  1451
  The changes are set out in the new Schedule. They are, first, the Amendment of Section 2(1), which closes the gap that I have already mentioned. It extends the scope of the Children Act 1958 to cover periods of care exceeding six days. It also extends it to cases where there is no question of reward. The interpretation of the words "for reward" has given rise to difficulty in proving whether it is "for reward" or not, thereby allowing people to opt out of the conditions and regulations for the safety and well being of children. Furthermore, fostering without reward has been exempt from supervision in cases where this was clearly desirable. The Amendment, therefore, will mean that foster parents will in future also be subject to supervision if they take care of children without payment, or contend that they do so.
  It is appreciated that these changes could add considerably to the work of local authorities, and the new Section 1A is intended to relieve this. At present, Section 1 of the 1958 Act puts upon local authorities a duty to arrange for all foster children within the meaning of the Act to be visited from time to time by their officers. This is unnecessarily and may even be undesirably inflexible, since a local authority may be well aware that individual foster parents provide good care and need no regular advice or guidance. The new Clause 1A substitutes, therefore, a general duty on the local authority to secure the welfare of children within its area who are foster children within the meaning of the Act and empowers the local authority to arrange for the children to be visited and advice to be given if the local authority considers this necessary or expedient.
  It is recognised that there may be a number of cases where parents make arrangements for their children and where there is no call for local authority supervision. A simple example is that of a child who may be looked after by lelatives or neighbours during school holidays. New paragraph (f) of Clause 2(3) is intended to exempt such cases from the need to notify the local authority. Its terms ensure that no one who takes in children regularly and continuously escapes notification, however. Clauses 2(6) and 2(7) are being omitted because there will be no requirement for
  1452
  a definition of "reward", although the term must be retained in Clause 9 for the purposes of the Life Assurance Act, 1774.
  Mr. Ian MacArthur: The Secretary of State was good enough to apologise because the new Clause and Amendment No. 191 are starred, which means that they appeared on the Notice Paper for the first time today. The right hon. Gentleman will appreciate that my hon. Friends and I have not had time to consider them adequately.
  In passing, I must say that I am surprised that it is only at this last moment that the Government should have found the need for the new Clause and Amendment No. 191. They are of substantial consequence, as the right hon. Gentleman has said. We have previously protested about last-minute Amendments being put down. In Committee, on 26th June, there were 17 starred Amendments on the Notice Paper; on the 23rd Tune, there were 23. This Bill received its Second Reading in another place in March and went through all its stages there before getting its Second Reading here and being in Committee for 13 sittings. It is, therefore, all the more surprising that we should still be confronted with starred Amendments to it.
  Having said that by way of protest, I appreciate that the right hon. Gentleman has apologised to the House for this oversight and I do not propose to make any more of it than that. I accept the explanation given by the right hon. Gentleman of the purpose of the new Clause and the Amendment. I believe that they are necessary even at this late stage and that, without them, there would almost certainly have been need for amending legislation later on. I hope that the House will accept the new Clause and Amendment.
  Question put and agreed to.
  Clause read a Second time, and added to the Bill.

New Clause 1

  FINGERPRINTING OF CHILDREN
  Children coming within the provisions of sections 31 and 32(2)(g) of this Act shall not be fingerprinted excepting in accordance with regulations made by the Secretary of State and approved by both Houses of Parliament. —[Mr. Willis.]
  Brought up, and read the First time.
  Mr. George Willis: I beg to move, That the Clause be read a Second time.
  I raised the question of the fingerprinting of children on Second Reading and in Committee and made clear my dissatisfaction with the present position. My dissatisfaction is now accentuated in view of the purpose of the Bill because, as I hope to show, the present position is in conflict with Part III unless we do something about it.
  The present position in Scotland is that the police have overall powers to take fingerprints without consent and without warrant from a person arrested and in custody following arrest. This applies to children, so that any child from the age of criminal consent—8—can be fingerprinted and photographed. That surely runs contrary to Part III.
  I do not like the present position in any case, but I know that there is strong feeling among the police about their possession of these powers. While I would not wish to weaken the powers of the police, we must consider this question in the light of the possible effect upon the children themselves. The effects on a child of 9, 10, or 11 years of age of being taken to a police station, fingerprinted with a couple of burly constables beside him, and then photographed, is not likely to be beneficial, particularly when some of the offences for which this might be done could probably be better rewarded by his father simply slapping the boy's bottom.
  My hon. Friend the Under-Secretary of State said in Committee that this was not the Bill to deal with that situation, but I submit that this is not so. Part III of the Bill sets out to make a fundamental change in our approach to offences by children and is endeavouring to remove them from the atmosphere of crime. In-deed, in Committee my hon. Friend went to great pains never to use the words "charge", "courts" or "sentence". The boy would be reported and asked to appear not before a court but a panel and he would not be sentenced or anything like that.
  All this was because, as my hon. Friend said, we wanted to create a different atmosphere for the child offender —an atmosphere in which he could be helped, assisted, corrected, although, if
  1454
  necessary, if the offence was very serious, he could be sent to the Sheriff court. I am dealing primarily at this point with offences going before the children's panel, however.
  That was the object of the Kilbrandon proposals. It is the whole object of Part III. The present position is that a child charged with an offence or about to be reported for an offence can be hauled off to the police station, fingerprinted and photographed. Are we to retain that system, but then tell the child, "You will go before the children's panel, where you must not be dealt with as a criminal or as an offender but as a child in need of assistance."? Part III is headed:
  "Children in Need of Compulsory Measures of Care".
  There is nothing there about children of a criminal character.
  The fingerprinting system makes nonsense of Part III of the Bill unless we do something about it. I appreciate that some people argue that everyone should be fingerprinted and that this would assist in the identification of people killed or severely injured in accidents—motor accidents, in particular. I realise that it would also be useful for a number of other reasons. But I do not necessarily hold the view that everyone should be fingerprinted. If we were all fingerprinted, there would be no difficulty in this case, of course.
  But at present fingerprinting is indelibly associated in everyone's mind with criminality. It is absolute nonsense to suggest that, after putting a child through the process of fingerprinting and photographing, we should say to him, "We shall not treat you further in this fashion. We do not want any stigma of being associated with crime to attach to you or to affect the way in which your case is dealt with."
  4.30 p.m.
  I proposed an Amendment in Committee, which was not accepted, which would have taken children under 12 out of this provision. The purpose of my Amendment was that children under 12 should not be fingerprinted and that children between the ages of 12 and 16 should only be fingerprinted with the permission of the court or the children's panel. Even so, I do not think that this would be quite so easy as the different situation in England where children

  1455
  under 14 are not fingerprinted, except in special circumstances. Children between the ages of 14 and 16 are fingerprinted only with the consent and sanction of the court. This seemed to be one way out.
  Another way out would have been that the child should not be fingerprinted unless his case went to the sheriff, which would be an indication that it was indeed serious and the kind of case for which fingerprints might provide a useful record.
  New Clause 1 leaves it to the Secretary of State to go into the matter and draw up regulations which should be approved by the House. It has a degree of flexibility about it which would enable regulations to be made in accordance with generally held views at particular times. We would also have some indication of what the practice would be when the Bill became law.
  This is a fairly modest, but necessary, request for something to be done. In my view, Part III in many cases is a nonsense unless we do something about it. I do not think that my right hon. Friend wants to pass legislation which is a nonsense. I believe that my right hon. Friend wants to make a good job of this and wants to take the steps necessary to satisfy the wishes of all who were in general favour of the underlying purpose of the recommendations of the Kilbrandon Committee.
  I do not wish to speak at any greater length on this matter—I said much more about it in Committee—but I believe that it is important and that something is necessary. It is not good enough to be given the reply that my hon. Friend gave me in Committee, that, of course, we will consult with the police and others concerned. Whatever the consultations might mean, there is no legal backing for what might be suggested. I understand that the legal position—and probably the hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie) could either confirm or deny this—would still be that a chief constable, if he thought it necessary, could carry on the existing practice. That is in spite of consultations and agreements.
  This is why I believe it is necessary that we should lay down something in the form of regulations. We cannot put it in the Bill at this late stage, but it
  1456
  can be done by regulations. This would give the necessary power to the Secretary of State to see that the wishes of people concerned with this practice were carried out.
  Mr. Edward M. Taylor: I did not have the pleasure and privilege of serving on the important Committee dealing with this Bill although, like many others who were not on the Commitee, I have read some of the Committee reports.
  I should like to mention two brief points on this new Clause, which has been so eloquently moved by the right hon. Member for Edinburgh, East (Mr. Willis).
  Having had a brief look at the Bill, the first point is that, in seeking to exclude children, this would, under Part III of the Bill, mean children up to the age of 16. This would be a considerable exemption from the powers we are talking about.
  Mr. Willis: No. All I am suggesting is that the Secretary of State should have power to make regulations about this matter. The Regulations need not necessarily exclude children, say, between 14 and 16, or between 12 and 16. It depends what the regulations are.
  Mr. Taylor: I read the right hon. Gentleman's remarks about children of the age of 12. The question of age is critical. We know that a young lady may not purchase cigarettes until she is 16 and cannot buy a bottle of stout until she is 18, although by that time she may be a wife and mother. Certainly, age limits are difficult to justify in present circumstances.
  We must bear in mind that the usual and normal purpose of fingerprinting is to detect and solve crime. The right hon. Gentlemen could have made a better case if there were any evidence of abuse of these powers or of their use on a widespread and general scale. However, no evidence has been put forward along these lines, so far as I am aware.
  We must bear in mind that, although many of the points are significant, expensive crimes are often committed by young children of 9, 10, 11 and so on. The fingerprinting of young people in such circumstances could lead to the solution of a crime at a much earlier stage, save a great deal of public expense, and also

  1457
  save unnecessary inquiries which might cause distress to other people.
  In these circumstances, unless there is any evidence of abuse of the existing powers or of their widespread use—and this is certainly not my information— the Government should look carefully at the whole matter before accepting the new Clause. The powers are simply used to solve crimes. This can often lead to a great saving of public expense and prevent distress being caused to a large number of people. I do not think that any evidence has been advanced on these angles.
  I hope that the Government will seriously consider the new Clause before accepting it.
  Mr. Donald Dewar: I do not wish to detain the House for more than a few minutes, but I would like to support my right hon. Friend the Member for Edinburgh, East (Mr. Willis).
  This subject was given an airing in Committee. The Under-Secretary relied on a variety of arguments which I found, and still find on further examination, highly unsatisfactory. First, my hon. Friend said that there was no demand and there had been no public outcry or pressure for a change in this sphere. It was then pointed out by myself and by various other hon. Members that there had been no outcry in the general public sense for Part III. If we were to wait until there was a general public demand for social reform we would be going without a large number of valuable changes for a long time.
  My hon. Friend then said—and here he had support from the Opposition Front Bench—that this was the wrong Bill; that we should wait for the Criminal Justice Bill. As a back bencher, I found this kind of argument particularly unpleasant. It is the kind of argument which Front Benchers fall back upon in the last extremity. It is an argument which can be, and is, freely used either way. It becomes a convention, a parliamentary smokescreen for refusing to take action.
  It is not so long ago that another Undersecretary of State for Scotland, when considering security of tenure in the Agriculture Bill, was arguing strongly in the face of attacks from the Opposition, that
  1458
  if an Amendment fell within the terms of the long title the Government were entitled to push it through and that, with the pressure upon legislative time, it would be wrong to turn up the chance.
  I think that if we have a Measure which, on merit, deserves action, we should not be put off by the kind of argument that in some way it is not suitable and that we should wait for a hypothetical bill which may or may not be coming up in the next year, the year after, or the year after that.
  I agree with my right hon. Friend the Member for Edinburgh, East that the present practice is against the spirit of Part III. I have in mind the arguments which were constantly used by the Undersecretary of State on Second Reading and in Committee. I realise that the original Amendment put down in Committee by my right hon. Friend was almost certainly too hard and too inflexible and no doubt was not suitable for a series of technical reasons.
  Some of the difficulties have been mentioned by the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor). But I refuse to accept that it is beyond the ingenuity of the Scottish Office, if it accepts the general case that the unregulated fingerprinting of juveniles is undesirable, to produce a reasonable and workable scheme which would in practice overcome difficulties of the sort which would in practice overcome difficulties of the sort which the hon. Member for Cathcart has in mind.
  The present practice is unsatisfactory. In Committee, my hon. Friend the Undersecretary of State said that one of the difficulties in the situation was that, since there was no statutory provision, he was unable to say
  "with absolute authority what is the practice in different parts of Scotland".
  He said that there were wide variations, his information being
  "that there are one or two police forces in Scotland which rarely take fingerprints of juveniles, while others make considerable use of this provision."
  But it was little consolation to hear from my hon. Friend, a moment or two later, that he was
  "simply stating the position as it is. I understand that it is very rare to take fingerprints of children below the age of 10… "—[OFFICIAL REPORT, Scottish Standing Committee, 2nd July, 1968; c. 587.]

  1459
  The Minister should be in a position to say authoritatively what the position is. If there are the wide variations of which he spoke, the matter is not, as the hon. Member for Cathcart suggested, such that in some areas, after serious crimes occur, fingerprints are taken while in other circumstances they are not. Obviously, the general practice varies from area to area, and this is not a situation which ought to be tolerated or allowed to continue.
  I believe that the Minister is sympathetic. He made clear in Committee that he sympathised with some of the points put forward by my right hon. Friend the Member for Edinburgh, East, and he said:
  "I undertake to look at this again before Report. However, I should be misleading the Committee if I gave the impression that I felt that it was possible on Report to provide Amendments which would place all these complicated matters on a statutory basis. I honestly do not believe that that could possibly be done in the time available."—[OFFICIAL REPORT, Scottish Standing Committee, 2nd July, 1968; c. 595.]
  I am the first to accept that it would be unreasonable to prepare hard and fast Amendments in the time available, but the new Clause merely gives power for the making of regulations for the approval of Parliament at a future date. This overcomes the difficulty to which my hon. Friend referred. If it be a real difficulty, and if the Minister is sympathetic towards the general intention, as he suggested, there need be no barrier against accepting the new Clause at this stage.
  Mr. John Robertson: I support the new Clause and the argument advanced by my right hon. Friend the Member for Edinburgh, East (Mr. Willis). So long as we are to have children's panels of the kind envisaged under the Bill, normal police procedures in this respect are inappropriate. We had a long argument about it in Committee, and I took the view that there should be some revision in the children's panel procedure.
  I should have preferred that a charge be made, but under the procedure envisaged no charge will be laid. Thus, there will be informal proceedings, with people able to give evidence against themselves without their realising that they are so doing. I did not like that procedure, but, so long as it is there, the
  1460
  normal police procedures in dealing with children must be changed in line with the ideas running behind Part III.
  As my right hon. Friend said, fingerprinting has always been associated with the concept of criminality. In this context, it is abhorrent and so contrary to the other ideas embodied in the Bill that the Government should have no difficulty in accepting the spirit of the new Clause. Even with the alteration proposed by my right hon. Friend in moving the Clause, there might still be some anomalies and it might not be possible to lay down a procedure which did precisely what we wanted, but it would be a good step in the right direction.
  It is a great pity that the Government did not themselves accept the principle and bring forward an appropriate Amendment in Committee to cover the whole situation. However, the new Clause would give the Secretary of State sufficient power to deal adequately with the situation.
  I am sure that it would be the wish of all right hon. and hon. Members— certainly all who were members of the Committee—that the Secretary of State should accept the Clause. It follows the spirit of the Bill precisely, and, if he is not prepared to accept it, he will, I suggest, make his Bill a nonsense.
  4.45 p.m.
  Mr. N. R. Wylie: I do not see how the Government could accept the new Clause as it stands. As is obvious from what has been said so far, this is a difficult problem which involves striking a balance between individual interests and the public interest, and I am by no means sure that it would be right to accept this proposal for a change at such a late stage in legislation. For one thing, the Clause refers only to fingerprinting, but a great deal of evidence in criminal cases relates not to fingerprinting, but to palmprinting and foot-printing. There was a recent decision in Scotland sustaining a conviction on the basis of identification of teeth marks.
  If we are to make a change in the law here—it would be a new provision because, as the right hon. Member for Edinburgh, East (Mr. Willis) pointed out, the matter is governed entirely by common law at present—it would have to be carefully thought out. I am not at all sure

  1461
  that this would not have been an appropriate Measure for a change to be made, if a change were deemed advisable. The Bill deals with children, and there is no doubt that the interviewing of children by the police could relevantly nave formed part of its subject matter.
  I hope that the Government will not accept the Clause as it stands, but, arising out of something said by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor), I put to the Government that one is sometimes not altogether happy about the police practice, if it be a practice, of taking fingerprints, footprints or other impressions from children when those children are not under suspicion but are invited to cooperate with the police in that way, perhaps not always being warned that they are under no obligation to do so. I had experience of that in a case only last week, and I think that there is here a question which should usefully be examined. However, I do not regard the Clause as the way to deal with it.
  Mr. Ross: I appreciate the concern expressed by my hon. Friends, and particularly by my right hon. Friend the Member for Edinburgh, East (Mr. Willis). When a Minister of State at the Scottish Office, my right hon. Friend was concerned with this matter, so it comes as no surprise to me that he has put his proposal forward now.
  It is all too easy to pass over to the Secretary of State the job of drawing up regulations. This matter is far too important to be slipped off in that way. People often talk about the Secretary of State's powers and what he has to do. I have even heard some of my hon. Friends who would wish this proposal to be adopted say that the Secretary of State already has too many powers.
  It is not right at all times to say that we can do things by regulation, which simply means that the Secretary of State goes away and does just as he likes. From the point of view of Parliament and of the people concerned, it is not right that a question like this should be dealt with in that way, the matter coming back later for debate in the House because Parliament has slid its obligations on to the Secretary of State.
  1462
  The hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie) was right to say that this is an important matter. If we could have seen a way through the problem, we might well have put an appropriate provision into the Bill. But it is not as easy as all that, and hon. Members are right to point to the difficulties, as the hon. Member for Cathcart (Mr. Edward M. Taylor) did. We could not proceed without full consultation with the police and the courts. Is it easy, for example, to isolate children's fingerprinting from other aspects of detection or from the fingerprinting of adults? The question sometimes arises whether children should be fingerprinted in any circumstances and, if they are, whether and in what circumstances their fingerprints should be put on the record.
  The second of these aspects will have to be considered in any event when implementing the Bill. As my right hon. Friend said, there is no statutory regulation or overall power to tell the police what to do. This is governed by a court decision of 1931, in respect of which no minimum age was laid down.
  But the present practice of fingerprints is for the police to retain the prints of people convicted or found guilty. Under the new arrangements, child offenders will not normally be brought before the courts, so there will be no finding of guilt. Therefore, this aspect must now necessarily be considered. As my hon. Friend said when this matter was discussed in Committee, there will now be consultations with the police to work out the practice which should be followed after the new arrangements for children's panels come into operation.
  The taking of fingerprints serves a number of important purposes. It is a useful aid to the detection of those who have committed offences—we must face the fact that some very young people commit very serious offences in Scotland —particularly housebreaking, theft and vandalism, where the use of fingerprints is sometimes essential to obtain sufficient evidence to justify proceedings against a suspected offender. Another important point is that the taking of fingerprints can exclude many other people from suspicion.
  I think that it would, therefore, be generally agreed that fingerprinting is

  1463
  an essential part of police investigation of offences, and there are strong arguments against dealing with children's fingerprinting in isolation. Having discussed this with my right hon. Friend before now, I know that we both feel much the same about this. I have noted the views expressed on both sides, today and in Committee, that the present position over fingerprinting of children in Scotland is not entirely satisfactory and that, in this matter, some form of statutory regulation is desirable. Bearing in mind our ultimate objective in the Bill for the treatment of children in trouble, I am not unsympathetic to this point of view, but I do not think that we should try, in this Bill and at this stage, to deal with children's fingerprinting.
  After all, this raises wider considerations and its implications need further thought and discussion. The Scottish Law Commission, in its Second Programme, which will be laid before the House and published this week, has already proposed to the Lord Advocate and myself the setting up of a departmental committee to examine criminal procedure in Scotland, and the Lord Advocate and I have approved the programme. We have now to consider, along with the Commission, the scope, composition and timing of the proposed Committee.
  It would be right to consider whether this difficult question of fingerprinting could appropriately be referred to that Committee for its views. When I remind the House that the Chairman of the Law Commission is Lord Kilbrandon, who was most responsible and in many ways could be proclaimed the genesis of this important part of the Bill dealing with the children's panels, hon. Members will appreciate that we are dealing with someone who is very conscious of most of the points of view expressed.
  I think that that might be the best way of dealing with it, but I appreciate and share the concerns of hon. Members, and I understand the importance of this from the point of view of the police and detection. It is a matter of balance, but we must face the fact that, when we have a Bill about criminal procedures, we should deal with this matter. Before we do, we shall be able to have our minds very much clearer
  1464
  about what we are doing and what we are asking the Secretary of State to make Regulations about.
  Mr. Willis: The purpose of the Clause would, as my right hon. Friend said, be to slip this matter off to the Secretary of State, but this should have been considered when the Bill was considered. This Bill has been under consideration for about two years now, and I suspect that this aspect was never considered at all. It was certainly never considered by Lord Kilbrandon when he framed his Report and I fancy that it was never considered when the Bill was being framed, until I whipped down a new Clause in Committee. That was evident, from what was said at the time.
  I am not against fingerprinting. I know the need for it and the uses to which it can be put, but I also recognise that the fingerprinting of children has certain possible effects on a child's mind. But I thought that Part III of the Bill was concerned specifically with creating an atmosphere in which children would not be given the immediate impression that they were criminals and would be labelled as such for the rest of their lives. I said in Committee that I knew that the police were very concerned about this power, which some of them use considerably. I recognise that there are cases in which it should be used.
  My right hon. Friend mentioned separating adults from children. Somehow, they manage to do this in England when fingerprinting, but we are now told that it is impossible. I think that it can be done. There is no indication that these much severer and overriding powers of the police have led to any better rate of apprehension than in England, and this should be considered. I do not know that the rate of apprehension in Glasgow, where, I understand, this is generally or at least greatly used, is any better than in any of the large communities in England. So we should not be persuaded by all these arguments—
  Mr. Edward M. Taylor: Would the right hon. Gentleman say whether comparable cities in England have a shortage of 400 policemen?
  Mr. Willis: I understand that all the centres of population in England have a large shortage of police, and that, in the

  1465
  largest of all, London, the shortage is far greater than that in Glasgow—
  Mr. George Lawson: This matter of a shortage of police keeps coming up. But we know that, over the last 10 years, the police force in Glasgow has increased by nearly 25 per cent. I do not know how this shortage is determined, and what target people have in mind, but surely we should remember that there has been a considerable increase in the number of policemen.
  Mr. Willis: My hon. Friend is right, of course, and I have argued with the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), in an earlier debate, that the numbers in the police force have increased. However, I take the point, but there is a bigger shortage in London than in Glasgow.
  I make that point only in passing. I know that the police like to build up records of fingerprints, and I do not blame them. They have a very difficult job to do. But we also have a job to do—a job with a wider interest to take into consideration. We must take account of what the police say, but we also have to take account of wider, personal considerations.
  5.0 p.m.
  Mr. Archie Manuel: I did not have the benefit of being on the Committee dealing with the Bill, but I am attuned to my hon. Friend's feelings as expressed in the Clause. If the police obtain fingerprints in connection with some form of delinquency and discover that the possible offender went to a certain school, can they take fingerprints of the whole class in which they think the boy or girl may be, or the whole school?
  Mr. Willis: Not unless they obtain the permission of the children, or the parents. A person is fingerprinted and photo-graphed in Scotland when he is charged with an offence. Prior to that the police can fingerprint only with consent.
  One difficulty is that many people do not know that their consent is required, and if somebody says to them, "Come on —give us your fingerprints," they do so. At Wallyford, in Midlothian, the whole village was fingerprinted. I have no reason to doubt that it was a voluntary
  1466
  action on the part of the villagers. It must be a very amenable sort of village, without a rebel.
  We are considering children, and the effects of fingerprinting upon them. We have accepted the vital principle that we should not deal with children of the age of 8, and so on, as criminals. If they commit serious offences they should be fingerprinted; I have not said otherwise. But it is not the appropriate treatment for the majority of children, and I very much doubt whether it is the appropriate treatment for any child going before a children's panel. It may be correct in the case of children going to sheriff courts.
  My right hon. Friend has said that further consideration is needed. The matter should be considered now, when we are dealing with the Bill. It has taken a long time to prepare. I am not clear whether my right hon. Friend made a commitment about the committee which is to be set up to carry out an inquiry into our criminal procedures.
  Mr. Ross: I could not do so at this stage.
  Mr. Willis: That means that we have no promise that anything will be done about it. I am not altogether happy, and in the circumstances I shall not ask leave to withdraw the Clause.
  Question put and negatived.

Clause 1

  LOCAL AUTHORITIES FOR THE ADMINISTRATION OF THE ACT
  The Under-Secretary of State for Scotland (Mr. Bruce Millan): I beg to move Amendment 1, in page 2, line 10, leave out '7(1)(e) thereof' and insert:
  '7(1) thereof so far as relating to the'.
  This is a drafting Amendment. Section 7 of the Mental Health (Scotland) Act, 1960, is amended by Schedule 7, and we need a corresponding Amendment here.
  Mr. Edward M. Taylor: I hope that this is the last occasion on which I shall say anything on Report. There are two points that I should like to be clear about. First, the Amendment would seem to extend to Section 7 only in so

  1467
  far as it relates to assessment and exclusion as formulated in Section 7(l)(e) of the 1960 Act. This would seem to be more than drafting.
  As far as I can see, under Section 65 of the Education (Scotland) Act, 1962, there is a procedure whereby certain children who are ineducable can be transferred to the responsibility of the local health authority. I am wondering whether, if they are referred to under Section 65, they come in under Section 7 of the Mental Health (Scotland) Act, 1960. Will this mean a change, or will they remain under the responsibility of the local health authority?
  I want to refer to an article from the Medical Officer, published on 14th June of this year, which refers to a small group of children who are unable to fit into the educational system. These children are referred by the education authority to the health department under Section 65, in order that they can be cared for under the provisions of Section 7 of the Mental Health (Scotland) Act, 1960. Bearing in mind that this article refers to 22 children who were excluded as ineducable, more than half of whom were suffering from physical disabilities, concern was expressed that this should be under the responsibility of the social work department and not the local health authority. Does the Amendment, in referring to the totality of Section 7(1) and not just to paragraph (e) bring in the question of medical referral of Section 65 cases under the 1962 Act?
  One question raised by the Association of Medical Officers of Health concerns the boarding out of mental defectives. We would accept that there is a real need for medical supervision of these cases. Under the Clause as drafted it would appear that responsibility rests with the social work department. Will the Medical Welfare Commission have power to supervise the work of the social departments in this field? Can I also be told whether, by the Amendment, any changes made in the responsibility for supervising mental defectives who are boarded out? It would seem that the spirit of the Mental Health (Scotland) Act in this respect has been weakened by the Clause as drafted.
  Mr. Millan: This is a drafting Amendment. It should be read in conjunction
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  with Amendment 151, in page 76, line 17, leave out '(e)' and Amendment 152, in page 76, line 19, leave out from '7(1)' to end of line 24 and insert:
  'after the words "shall include", there shall be inserted the words "the ascertainment of mental deficiency in any person not of school age within the meaning of the Education (Scotland) Act, 1962".
  (1A) In relation to the aforesaid persons the purpose for which arrangements are authorised or required to be made by a local authority under the said section 27(1) as read with section 1(4) of the Social Work (Scotland) Act, 1968 shall include the following, that is to say—"; and paragraph (e) shall be omitted".
  (2) In subsection (2) for "(1)" where secondly occurring there shall be substituted the word "(1A)"'.
  Perhaps the hon. Member will study those Amendments. If he does this Amendment may be a little clearer to him. I do not want to stimulate him to make another speech when we reach Amendments 151 and 152, but he will get a better idea if he looks at them.
  The powers of the Medical Welfare Commission are not affected by the Bill. We are simply referring to the local health authority the function of ascertaining mental health deficiency. It is a medical matter and is not for the social work department. A slight adjustment is required because the references in Schedule 7 to the 1960 Act and the 1962 Education (Scotland) Act are being changed. This is purely a drafting Amendment. There is no change in the function of local health authorities in relating to the ascertainment of mental deficiency.
  Mr. MacArthur: I rise almost on a point of order to call attention to the fact that Amendments 151 and 152 are associated with this Amendment. Before you took the Chair. Mr. Deputy Speaker, Mr. Speaker was good enough to suggest that an indication of groupings of Amendments from the Government would be welcomed. We should also welcome it. There are 189 Amendments, of which 187 remain to be dealt with. At our present rate of progress it is conceivable that it will take us nearly 60 hours to debate these Amendments.
  It would be for the general convenience of the House to have some indication of groupings, and it would be to the convenience of my hon. Friends if purely

  1469
  drafting Amendments could be grouped together and taken with some rapidity.
  Mr. MillanThat is a perfectly fair point. I have quite a number of later Amendments grouped together. There was some misunderstanding between Mr. Speaker and I on the question of grouping. We have now sorted this out and I shall as soon as possible have the information on grouping passed to hon. Members. I apologise for the fact that it has not already been done.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 2, in page 2, line 17, at end insert:
  (5) On the date of the commencement of Part III of this Act the functions of education authorities in relation to the establishments which immediately before that date were approved schools and the children resident therein shall be transferred to the local authorities in whose areas the said children are ordinarily resident or, in the case of children who have no ordinary residence in Scotland, such local authorities as the Secretary of State may determine.
  The purpose of the Amendment is to make it clear that on the date when Part III comes into operation and approved schools as such cease to exist the function of education authorities in relation to approved schools will be transferred to the appropriate local authority; that will be the local authority normally in whose area the child is ordinarily resident. This is a consequential Amendment made necessary by the fact that when Part III comes into operation we shall no longer have approved schools as such.
  Mr. William Hannan: I. too, want to follow the point made on the previous Amendment. Are we considering with this Amendment the new Schedule on approved schools which covers 2½ pages? If we are, are we now entitled to debate the whole issue? It seems a pity, as there are so many Amendments, that this issue will be inadequately discussed on Report.
  Do I understand the position correctly? If children who are resident in approved schools outwith their areas are coming back to their own areas on the due date, is my hon. Friend satisfied that there is sufficient accommodation within the areas to which the children will return? Is not this one of the problems which will arise consequent upon changes made
  1470
  earlier in the Bill? How many local authorities have approved schools under their own management? How many are privately run? How many are run by county councils and large burghs? I should be surprised if any large burgh has an approved school, although some may be run by counties and by cities.
  Mr. Deputy Speaker (Mr. Sydney Irving): There has been no request to the Chair so far to discuss the new Schedule with this Amendment.
  Mr. Millan: If it had been the intention that the Schedule should be discussed with this Amendment, obviously I would have said so and said something about the Schedule. The Schedule will be dealt with separately.
  My hon. Friend has misunderstood the position. There is no question of transferring people from one approved school to another to get them within the areas of any particular local authority. The responsibility for, for example, making the financial contributions for children who are at approved schools falls at present on the local education authority. It is the appropriate local authority for making those contributions. After the passage of the Bill the appropriate authority will no longer be the education authority. It will be the local authority which has the social work department for the purposes of the Bill. It is therefore necessary to provide that, in future, the contributions will be paid by the social work department, or at any rate by the local authority which is the social work authority, and not by the education authority. That is entirely different from transferring people from one school to another, and there is no question of that arising. General questions about residential establishments do not arise on the Amendment.
  Amendment agreed to.

Clause 10

  FINANCIAL AND OTHER ASSISTANCE TO VOLUNTARY ORGANISATIONS ETC., FOR SOCIAL WORK
  5.15 p.m.
  Mr. MacArthur: I beg to move Amendment No. 3, in page 7, line 37. leave out 'sums' and insert 'grants'.
  Mr. Deputy Speaker: With this Amendment it will be convenient to discuss Amendment No. 4, in line 39, leave out 'those sums' and insert 'such grants'.
  Mr. MacArthur: We shall be very happy to take the two Amendments together. Amendment No. 4 is purely consequential.
  In Committee I moved an Amendment to omit subsection (2). The Minister said that he would consider the matter. I am obliged to him for writing to me a few days ago in some detail explaining that the advice given to him, which we accept, was that subsection (2) should remain.
  There is a further point which is rather more than a drafting matter. Subsection (2) says:
  "The conditions on which any sums are paid"—
  that is, grants and loans—
  "… may include conditions for securing the repayment in whole or in part of those sums."
  If "sums" refers to a payment which is a loan, the conditions required under subsection (2) are unnecessary, because a loan, by its very nature, implies some condition of repayment. The Minister said this in his letter to me:
  "I agree that a loan clearly contains its own conditions of repayment."
  Apart from that, we believe that the word is superfluous, if it embraces both loans and grants, because subsection (1) says this:
  "The Secretary of State may make grants and loans of such amounts, and subject to such conditions, as he may with the consent of the Treasury determine …"
  Therefore, "sums" is unnecessary for two reasons. The first is that, on the loan aspect, there is no need for this condition, because the fact that it is a loan suggests that there would be a condition of repayment. The second is that in any event the Secretary of State has power to impose conditions under subsection (1).
  Mr. Millan: The wording is all right as it is, but it would be more logical to accept the hon. Gentleman's wording. Therefore, I am perfectly happy to accept the Amendments.
  Amendment agreed to.
  Further Amendment made: No. 4, in page 7, line 39, leave out 'those sums' and insert 'such grants'.—[Mr. MacArthur.]
  Mr. Millan: I beg to move Amendment No. 5, in page 8, line 8, at end insert:
  () On the commencement of this Act, the power of the Secretary of State to give financial assistance and of local authorities to give financial and other assistance under sections (Financial assistance by the Ministry of Health and the Secretary of State to certain voluntary organisations) and (Financial and other assistance by local authorities to certain voluntary organisations) of the Health Services and Public Health Act 1968 shall cease in so far as any such assistance may be given under this section.
  Mr. Deputy Speaker: I suggest that it would be convenient for the Committee to discuss with this Amendment Amendment No. 13, Amendment No. 176, and Amendment No. 188.
  Mr. Millan: These four Amendments are necessary to make the necessary repeals of the Health Services and Public Health Bill when it is enacted in so far as these provisions of that Bill overlap the provisions of this Bill. The difficulty has been that the Health Services and Public Health Bill has been going through the Parliamentary process at the same time as this Bill. There are some of these provisions which are virtually the same, but it is necessary to have the provisions in both Bills because there may be a difference in the operative date. If there were not the provisions in both Bills, there would be an unfortunate gap.
  That is why we have this overlap of provisions. What we provide for in these Amendments is that when the Bill comes into operation the provisions of the Health Services and Public Health Bill which overlap with this Bill will be repealed.
  Amendment agreed to.

Clause 12

  GENERAL SOCIAL WELFARE SERVICES OF LOCAL AUTHORITIES
  Mr. Hugh D. Brown: I beg to move Amendment No. 6, in page 8, line 23, after 'welfare', insert:
  'including the specified functions of school welfare officers and specialist social workers'.
  Mr. Deputy Speaker: I suggest that it would be convenient to discuss at the same time Amendment No. 31, in Clause 59, page 35, line 13, after 'establishments', insert:
  'including assessment and specialist centres'.
  Mr. Hannan: On a point of order. Are you aware, Mr. Deputy Speaker, that Amendment No. 31 does not deal with exactly the same point as Amendment No. 6 and that it would be more convenient, certainly for me, if the two were discussed separately.
  Mr. Deputy Speaker: I am afraid that I cannot accept the hon. Gentleman's request. This is Mr. Speaker's selection. He selected Amendment No. 31 for debate only with Amendment No. 6, and not for a separate Division.
  Mr. Brown: I make no apology for tabling the Amendment because it raises a matter which was not adequately discussed either in Committee or in another place. It is significant in the sense that, as with so many other things, Scotland is a little ahead of the rest of the country.
  The main arguments for the Amendment were not adduced in Committee, mainly because on the morning when Clause 12 should have been discussed tempers were somewhat frayed, doors were being banged and various points of orders were being raised. [HON. MEMBERS: "Oh."] I do not wish to encourage hon. Gentlemen opposite to introduce the same atmosphere today. Suffice to say that the Clause sneaked through with the first part of it being relatively ignored. Very little was said in the Lords about it, although it raises, because it deals with the generality of the provisions in the Bill, the whole question of the sort of social work department that we wish to see.
  Reference has been made to Lord Kilbrandon. It is interesting to note that it was stated in paragraph 1 of the White Paper "Social Work and the Community":
  "The other"—
  recommendation from the Kilbrandon Committee
  "was a 'social education department' of the education authority, formed by the merger of existing organisations concerned with children's special needs which would provide all the facilities necessary for the care, treatment and training of these children."
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  It is in this context that it is relevant to argue for the inclusion of school welfare officers and, as the Amendment proposes, specialist social workers.
  I have suggested that, from the point of school welfare work, we in Scotland are a little ahead of the rest of the country. I am delighted to say that in Glasgow we are somewhat ahead of the rest of Scotland in that Glasgow has the only local education authority with school welfare officers. Glasgow employs 20 at present, and while that number is not enough, it provides a challenge to other authorities.
  The functions of a school welfare officer are, to some extent relatively new. He has a range of activities and functions which include more than the problems arising from the non-attendance of children at school. As the White Paper suggests in paragraph 20:
  "The Government"—
  and we should remember that this is a Government White Paper
  "think, however, that responsibility for providing school welfare services should be assigned to the new department"—
  that is, the social work department
  "and that existing education authority staff employed specifically on welfare duties should be brought into it. By continuing to work in the closest association with teachers, they could form an effective link between the schools and the social services generally."
  Obviously the Government have changed their mind. Critics of the Government often suggest that they should change their mind more often. Certainly on this issue they have changed it between the time when the White Paper was discussed and the production of the Bill. Both the White Paper and the Kilbrandon Report proved the need to include social welfare officers.
  We then come to the question of specialist social workers. I concede that there is more room for disagreement about this aspect. However, referring in paragraph 11 to those with special skills, the White Paper commented:
  "Their employment in one department would, however, permit much greater flexibility of deployment than is now practicable …"
  The case has been well made out, although the matter was not examined in detail in the White Paper, for all social workers—irrespective of any added training and qualifications to their basic

  1475
  skills—to be employed in one department, so that their specialist knowledge and techniques may be diverted to the various areas which need them.
  It does not seem unreasonable that hospital almoners—they now go under the new title of medical social workers— should also come within the social work department. That does not mean that hospitals and other places where these people are employed would be denuded of their specialist staff. The same argument could be applied to probation officers. In view of their approach to training and so on, it would be advisable for them to start off in one department, and then be hived off to other areas, rather than being merely offshoots of a service which is fundamentally similar but which is completely separate.
  I raise this matter because it is the key to the whole philosophy of this part of the Bill. I have a great admiration for my right hon. Friend the Secretary of State. If he wishes to say this in his election address, he can announce that I consider him to be a man of great charm, ability and compassion. However, he has a weakness.
  Mr. Ross: Only one?
  Mr. Brown: It is a weakness shared by many of us. My right hon. Friend is not noted for changing his mind. On this occasion I am not asking him to change his mind but to return to the original thoughts of the White Paper. I am not at all optimistic about his accepting the Amendment. I hope, however, that he will make encouraging noises and say that the Scottish office will look with keen interest at the way in which local authorities act when they set up the new social work department. In other words, I hope that my right hon. Friend will say that every encouragement will be given, as the Amendment suggests, to authorities to bring all social workers with common skills and knowledge into one department. It is not just a question of centralisation for the sake of efficiency in terms of the more efficient use of labour. I think that it makes sense.
  Having said a few kind words about the Secretary of State, I am sure that he will respond, if not by suggesting that we do something now, at least in the
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  sense of looking to the future and saying that my ideas are consistent with the philosophy of the White Paper and what we are all trying to do. I hope that he will give my ideas every blessing.
  5.30 p.m.
  Mr. Hannan: I want to support these two Amendments. My hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) has spent some time on the first of them, and I shall dwell mainly on the second one.
  The whole purpose of the Bill is to try and meet the need for an effective integrated service. There is a variety of agencies, and it is hoped that where different members of the same family have individual problems, the one service can deal with them all. However, although it was originally intended to bring all the services together, that will not now happen because of an Amendment which was made at an earlier stage.
  The first Amendment deals with welfare officers of local authorities. As I understand it, they are to be appointed in addition to the attendance officers who are employed by education authorities in the counties and cities. They will continue their job, of course, and they are very valuable people in the sense that at an early stage they will be able to report weaknesses in a family structure which could give rise to trouble in the future. As I understand it, one of the purposes of the Bill is to deal with these at an early stage and so prevent some of our young people going awry later.
  However, as far as I know, welfare officers are employed in only one local authority, and that is Glasgow. Counties which are education authorities will be able to employ such people if they wish, but in component parts of counties which are not education authorities, it will not be possible to engage them. Is this the reason for the Government's reluctance to include this class of social workers?
  The White Paper indicates clearly that the Government think that the responsibility for providing school welfare services should be assigned to the new Department. At an earlier stage, they indicated that attendance officers proved an invaluable source of early warning of children's and family problems because bad attendance at school often indicated such problems. If there is a link-up

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  between attendance officers and school welfare officers, who will be skilled social workers, part of the problem can be dealt with at an early stage.
  The other Amendment deals with assessment centres and the provision of what used to be called remand homes; in other words, accommodation for young people who are in trouble. However, we are concerned not only with accommodation for children, because the responsibility is put on local authorities to pro-side various categories of accommodation for disability, old age and other groups of various types. These in turn call for staff of varying skills to deal with the different problems. A wide range of specialised facilities is needed, for example, for the mentally handicapped. All these requirements will call for remand homes, detention centres, borstals, diagnostic clinics, old people's homes, and the rest of it.
  However, under Clause 37(2) for example, a child shall not be detained if the reporter considers that compulsory treatment is not required. The time for which a child can be detained will be cut down. But the immediate point to which I want to come is how children are treated if, for instance, they are detained in a police office.
  It will come as no surprise to some hon. Members, although some of us were horrified when we learned of it, that children held in a police office and taken to a former remand home for four days before their cases are heard may be relieved of their clothes and given khaki shirts and shorts and different shoes to wear. One can imagine the indignity of that, especially if, subsequently, they are found innocent of the charges against them. I had such a case in my constituency not very long ago.
  The intention behind these Amendments is to ask my right hon. Friend whether consideration has been given to these- two points. If it has, why are school welfare officers not included in this part of the Bill? If the short answer is that they are, one will feel almost constrained to apologise to the House for taking up its time, but great value is placed on such officers locally. As for the point about accommodation, probably my right hon. Friend will say that the Bill provides for short detention, that
  1478
  it will not be protracted, that the panel will meet on the day after a child has been apprehended so that the period of detention is cut down. But may I remind him that under other Clauses a child may be detained for three or four days and, in some instances, up to 21 days? I would like an assurance that proper accommodation will be provided. At present, it is quite inadequate. In cases of certain unruly children, the treatment given is not determined by the needs of the child but by the accommodation available. That is quite wrong. I would like an assurance that the accommodation will be adequate for the treatment of children and that, pending the time that the panel meets, no child will feel that he has already been adjudged guilty and is being treated as such. That has happened in some instances.
  Mr. Ross: My hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) had a few soft and flattering words to say about me. However, I do not know what he expects from me. He knows quite well that I am not given to changing my mind. He read a passage from the White Paper which suggested that in the opinion of the Government school welfare officers should be included. I have not changed my mind. School welfare officers are included. So, if my hon. Friend likes to apologise—
  Mr. Hannan: Certainly I will do that.
  Mr. Ross: Any other apologies will be gratefully received for this misunderstanding of what is intended. There is no doubt about it.
  There is no statutory obligation on any local authority to employ a school welfare officer. As my hon. Friend the Member for Provan suggested, this is one of the positions in which Glasgow leads.
  I could not accept the Amendment because it is misconceived and would be restrictive. One of the things we want to do is to get away from narrow specialisms. I do not want this new Department to have the same sort of divisions which now exist. We have to develop much wider specialisms which will enable us to get a measure of inter-changeability. There is no doubt that much of the work to be done will bring social workers into contact with the

  1479
  schools, and it would be wrong to ignore that aspect. Equally, it is undesirable to define in a Statute how this will work. There is no doubt that the Social Work Department will be able to undertake social work in co-operation with the schools and to place some of its staff in schools in places like Glasgow.
  My hon. Friend the Member for Mary-hill spotted a defect in the Amendment when he discussed local authorities, which would include large burghs, which, apart from the cities, are not education authorities. That is another technical fault in his Amendment. I understand his concern and I appreciate that he was merely probing to see whether we had forgotten or overlooked anything.
  Although he did not say so, I gathered that he was dealing with Amendment No. 31. A statutory duty to provide specialist centres would not be effective unless the kinds of specialist centres were to be defined, and the definition would have to be in the Bill. Before we knew where we were, we might find that that definition had become out of date and even that it was retarding development. Assessment is an integral part of social work and adequate assessment centres will be necessary, but it would be misleading to imply that assessments can be made properly only in an assessment centre, or that the name "assessment centre" has a generally recognised meaning. Nevertheless, my hon. Friend was right in what he had to say about the kind of place and the kind of treatment required for young people.
  We are sympathetic towards this idea, but we are limited. In the past we have had Bills involving remand homes or other kinds of centres, and yet we have never provided adequate establishments. That has been one of the troubles in the remand of prisoners, old and young, for a long time.
  I hope that my hon. Friend will recognise that we share his concern and I hope that my hon. Friend the Member for Provan will appreciate that we understand the point he has raised.
  Mr. Hugh D. Brown: On that generous assurance, which emphasises my point that we had not discussed this
  1480
  matter adequately, I am delighted to beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  5.45 p.m.
  Mr. Millan: I beg to move Amendment No. 7, in page 8, line 23, leave out 'in their area'.
  Mr. Deputy Speaker: It may be convenient with this to discuss Amendment No. 8, Amendment No. 9, in page 8, line 28, leave out from 'adequate' to end of line 31, and Amendment No. 10. I ought to point out that Amendment No. 9 has not been selected by Mr. Speaker for a Division.
  Mr. Millan: When the Clause was discussed in Committee, there was a good deal of criticism about the drafting, and a number of hon. Members felt that there was some repetition which meant that, taken as a whole, the Clause was very difficult to follow, particularly those provisions about giving assistance in the form of cash or in the form of kind to persons in need. I promised that I would consider the drafting to see whether we could tighten and improve it, and the three Government Amendments are almost exclusively directed towards that end, although there are one or two minor matters of which we have taken care at the same time.
  Basically, what we have done is to make the subsections more intelligible and made it easier to see what it is we are trying to achieve. In doing so, we have removed three lines about authorities proceeding in accordance with guidance which the Secretary of State may give, because, as was pointed out, that provision is inherent in the Bill as a whole in view of the general powers of the Secretary of State in Clause 5.
  I hope that with that explanation the House will feel that the Clause is much clearer and that the Amendments are therefore acceptable.
  Mr. MacArthur: These Amendments follow the hon. Gentleman's undertaking in Committee carefully to consider the drafting which my hon. and learned Friend the Member for Edinburgh, Pent-lands (Mr. Wylie) and I severely criticised. In its original form, the Clause was a memorable example of bureaucratic verbosity and I am glad that its

  1481
  length has now been cut considerably. In its amended version, the Clause will lose nothing, but it will gain substantially and the gain is that of comprehension. The Clause is now much clearer. Amendment Mo. 10 alone has the effect of cutting out 41 lines and introducing 22 in their place, almost halving the length of that major part of the Clause. The Clause is considerably improved by the Amendments, and I am much obliged to the Under-Secretary for fulfilling his word so thoroughly.
  Amendment agreed to.
  Further Amendments made: No. 8, in page 8, line 25 leave out first 'in' and insert 'for'.
  No. 10, in page 8, line 29 leave out from beginning to end of line 23 on page 9 and insert:
  'such assistance may be given to, or in respect of, the persons specified in the next following subsection, in kind or in cash subject to subsections (3) and (4) of this section.
  (2) The persons specified for the purposes of the foregoing subsection are—

  (a) a person, being a child under the age of eighteen, requiring assistance in kind, or in exceptional circumstances in cash, where such assistance appears to the local authority likely to diminish the need—

  (i) to receive him into, or to keep him in, care under this Part of this Act, or

  (ii) of his being referred to a children's hearing under Part III of this Act;

  (b) a person in need requiring assistance in kind or, in exceptional circumstances constituting an emergency, in cash, where the giving of assistance in either form would avoid the local authority being caused greater expense in the giving of assistance in another form, or where probable aggravation of the person's need would cause greater expense to the local authority on a later occasion.

  (3) Before giving assistance to, or in respect of. a person in cash under subsection (1) of this section a local authority shall have regard to his eligibility for receiving assistance from any other statutory body and, if he is so eligible, to the availability to him of that assistance in his time of need.
  (4) Assistance given in kind or in cash to, or in respect of, persons under this section may be given unconditionally or subject to such conditions as to the repayment of the assistance, or of its value, whether in whole or in part, as the local authority may consider reasonable having regard to the means of the person receiving the assistance and to the eligibility of the person for assistance from any other statutory body.'.—[Mr. Millan.]

Clause 14

  HOME HELP AND LAUNDRY FACILITIES
  Mr. Wylie: I beg to move Amendment No. 11, in page 9, line 37, leave out 'for households'.
  This is a very small drafting Amendment which was mentioned in Committee. It seems offensive to the use of language to add the words "for households" to the words "home help". The intention would be perfectly clear without them.
  Mr. Millan: I cannot advise the House to accept this drafting Amendment. It might be possible to consider a home help in the context of people living in a boarding house, or in a lodging house, which is not a household. Having the words "for households" therefore adds something to the Clause. In any case, the phrase is required in line 41 to deal with laundry facilities and it is also used in the National Health (Scotland) Act, 1947, and in the Health Services and Public Health Bill which has just gone through the House. For the sake of consistency and because the phrase adds a little to the meaning of the Clause, we should retain it. I have been fairly ready to accept drafting Amendments where I thought they were worthwhile, but in this case it would be a mistake to agree to this Amendment and I hope that it will be withdrawn.
  Mr. MacArthur: The Minister disappoints me now. We were getting on so well I thought that he would be bound to accept a most sensible Amendment. The phrase "for households" is linguistically offensive. Despite the Minister's observations, I cannot believe that it is necessary. It is inconceivable that a local authority would interpret the Clause without those two words as meaning that it should provide home help for boarding houses. The situation is too far-fetched for words. I do not believe that because the words have been used in the National Health Service (Scotland) Act, 1947, they have any particular sanctity. They were probably unnecessary and ugly words in that Act, just as they are now. I am sorry that the Minister is being obstinate about what I believe to be a helpful drafting Amendment
  Mr. John Brewis: When the Minister is talking about a household, does that have to be a house? What would happen to a family in a caravan? Would they be able to get home help?
  Mr. Millan: "Household" covers that, but not boarding houses or hotels. The House should remember that it is not a question of the local authority interpreting this Clause. We are actually placing a specific duty upon it to provide certain services, and in doing that we must make absolutely sure that we have defined that duty as precisely as possible.
  Amendment negatived.
  Amendment made: No. 13, in page 10, line 6, at end insert:
  () On the coming into operation of the provisions of this and the last two foregoing sections, the provisions of sections (Home help and laundry facilities), (Extension of power, under the National Assistance Act, 1948, of local authority to provide accommodation elsewhere than in premises managed by them or another such authority) and (Promotion, by local authorities, of the welfare of old people) of the Health Services and Public Health Act. 1968 shall cease to have effect.—[Mr. Millan.]

Clause 15

  DUTY OF LOCAL AUTHORITY TO PROVIDE FOR ORPHANS, DESERTED CHILDREN, ETC.
  Mr. Millan: I beg to move Amendment 14, page 11, line 11, at end insert:
  (5) Where under the last foregoing subsection a local authority take over the care of a child from another local authority, that other authority shall where possible inform the parent of the child that the care of the child has been so taken over.
  Mr. Deputy Speaker: It would be convenient if we discussed Amendment No. 15 with this.
  Mr. Millan: The House will see that what we are doing is transferring Clause 19 to the end of Clause 15. This was suggested in Committee by an hon. Gentleman opposite. He pointed out that the functions of Clause 19 had so reduced in size that they hardly warranted a separate Clause and should be transferred elsewhere.
  Amendment agreed to.
  Further Amendment made: No. 15, in page 15, line 1, leave out Clause 19. —[Mr. Millan.]

Clause 21

  MODE OF PROVISION OF ACCOMMODATION AND MAINTENANCE
  Mr. Ross: I beg to move Amendment 16, page 15, line 31, at end insert:
  (3) Arrangements may be made by a local authority under this section for boarding out a child in England or Wales or for maintaining him in any accommodation in England or Wales which a local authority in those countries is authorised to use for that purpose by virtue of section 13 of the Children Act 1948.
  Mr. Deputy Speaker: It will be for the convenience of the House if we also discuss Amendments 27 and 132.
  Mr. Ross: Under Section 13 of the Children Act, 1948, which is a Great Britain enactment, a local authority may discharge its duties to provide accommodation and maintenance for a child in its care by boarding it out or maintaining it in a local authority home or placing it in a family home willing to receive the child.
  There are other instances of an English local authority arranging for a child to be looked after in Scotland and vice versa. The 1948 Act is to be repealed for Scotland, but it is desirable to keep in force the arrangement whereby children in care in Scotland can be boarded out or placed in a proper establishment in England and Wales, and similarly whereby children in England and Wales can be boarded out or placed in an appropriate establishment in Wales.
  This is the purpose of the Amendment, which makes clear that a supervision requirement may provide for a child to be sent by the children's hearing to a place in England and Wales where suitable arrangements can be made to deal with it. This may be desirable if there is, in England or Wales, a particularly appropriate establishment for treating a certain kind of child. The Scottish local authority would remain formally responsible for the child's supervision and would have to make proper financial and other arrangements for the child while he or she was south of the Border.
  Amendment agreed to.

Clause 27

  SUPERVISION AND CARE OF PERSONS PUT ON PROBATION OR RELEASED FROM PRISONS, ETC.
  Amendment made: No. 17, in page 18, line 1, leave out 'the'.—[Mr. Ross.]
  Mr. Thomas Steele: I beg to move, Amendment No. 18, page 18, line 26, leave out 'and' and insert:
  (e) arrangements for the co-operation of the local authorities with each other regarding the performance of functions under this section; and.
  This Amendment adds a new paragraph to subsection (3) of Clause 27. Under that subsection it is necessary for local authorities to have a probation scheme to make provision for certain matters. These are then listed in subsection (3). My new paragraph includes another provision, indicating to local authorities that they must make:
  "arrangements for the co-operation of the local authorities with each other regarding the performance of functions under this section …"
  The first thing I imagine my hon. Friend will say is that this is unnecessary, that there is sufficient provision in present Statutes for the co-operation of local authorities with one another. I feel that it is insufficient in this case, and would like this mandatory provision included. The other reason why I put down this Amendment is because of an undertaking which my hon. Friend gave in Committee when he said:
  "I said that I would make arrangements between Committee and Report to discuss combinations between one local authority and another, with the local authority Associations. …I shall be able to tell hon. Members at Report stage the outcome of that meeting."—[OFFICIAL REPORT, Scottish Standing Committee, 18th June, 1968; c. 359–60.]
  I have therefore put this Amendment down to give my hon. Friend an opportunity to tell us what has been the result of these conversations. There is a wider wider purpose to the Amendment. We all want to make a success of the provisions of Part III of the Bill. We have to consider what conditions will be operating when the Bill becomes an Act. What will be the time-table for its provisions? Before it becomes an Act the Royal Commission will have reported
  1486
  and made new suggestions about the boundaries of local authorities. Therefore, it is clear that many local authorities which will be under an obligation to carry out the Bill's provisions will view them with some reluctance because they will have to engage new staff and to expand the work which they are doing. They will not be very enthusiastic about entering into such commitments in order to carry out the Bill's provisions.
  6.0 p.m.
  As a result of Clause 27, the probation service is to be disbanded. On Monday, we had a long argument in the House about the disbandment of a regiment for which the Government had no operational requirement. But it cannot be said that the functions of the probation service will disappear. A service provided by probation officers will continue, and if we want the things done which we feel should be done the functions carried out by them will increase. If the probation service is disbanded, as the Bill suggests, and the probation officers are frittered away among the local authorities, I cannot visualise the Bill being the success which the Minister expects it to be.
  We shall have two things. The local authorities will be reluctant to enter into commitments, and the probation officers transferred to local authorities will have a grievance. Therefore, from an administrative point of view, I cannot feel that the Bill will be the success which we all desire it to be.
  Is it necessary to disband the probation services as it exists? Would it not be possible to implement the Bill's provisions about the creation of children's panels and the abolition of the probation committee by the new social committees taking over the responsibility? Under this arrangement the provisions of the Bill would be carried out, but the probation service would remain as a unit, and then, through the work of the social committees, there could be co-operation between the probation officers and the social welfare officers. This would enable the probation officers, working as a body, to help the social welfare workers.
  I am sure that hon. Members will agree that it is essential that the experience of the skilled probation officers should be available to help with the work to be done by the social welfare

  1487
  officers under the new panels. There is no reason why the Secretary of State cannot so arrange matters that the social workers and probation officers come under the social work committee, and there could be agreement between the large burghs and the counties on the utilisation of the probation service in giving assistance to the social welfare workers.
  Whatever arrangements are made, they will be only interim arrangements until we carry into effect the reforms suggested by the Royal Commission on Local Government which we shall be receiving by the end of the year.
  What I suggest would have the added advantage that it would satisfy the courts. My hon. Friend the Under-Secretary of State gave an undertaking to the sheriffs that adequate provision would be made to ensure that the courts were served in the way that they are served now. I find it difficult to see how that would be done administratively if the probation service were disbanded and the probation officers were distributed among the local authorities. The implementation of this undertaking would be very much easier if there were acceptance of my suggestion to leave the probation service as it is and to make arrangements for co-operation between the probation officers and the social welfare workers.
  There is no reason why something like this cannot be done under Clause 27. I know that it would not be all that satisfactory. However, it would be much more satisfactory than what is likely to happen when the Bill comes into operation and the probation officers are distributed among the local authorities, which will be reluctant to carry out the Bill's provisions because they do not know the future of each local authority. I believe that my solution would help the courts, the probation service and local authorities in the interim period before we receive the Royal Commission's Report.
  Mr. John Robertson: The effect of the argument of my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) is that the Bill should not be passed. The concept is that we should have a single group of social workers to carry out all the specialist services presently being done by a whole range of officers, in-
  1488
  cluding probation officers. It is wrong to see probation officers as welfare officers. I see them as servants of the court who are attached to the court rather than to a local authority. I have never thought that the local authority provided this service. I was a member of a local authority in which there was a joint probation committee—the Lanarkshire Joint Probation Committee. My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) will bear me out that while it carried out a function, it was not very effective. Our duty was to supply the money and the facilities for experts to carry out the function. The connection between the probation officers and the local authorities was pretty tenuous. With a joint committee, it was more tenuous than with a single authority.
  If my hon. Friend is arguing for the retention of probation officers, in which I could go some way with him, the same argument would apply to a whole range of other services under the Bill. What I think is wrong with the Bill is that there is room also for a general welfare department of the local authority for specialist services. One cannot take a social worker at any time and make him an adequate probation officer.
  The other possibility which could have been acted upon in the Bill was, as I said in Committee, to allow local authorities to amalgamate for certain of their functions. The probation service might be a good example. Why should not a number of local authorities, if they feel that they can provide a better service for a limited number of functions, or even only one service, get together and evolve a scheme for making that provision?
  Mr. Steele: We must face the fact that we now have the Bill in its present form. I could have argued about what I would like the Bill to do, but it is too late for that now. I have made a plea for a scheme which would, I trust, make the provisions of the Bill more successful.
  Mr. Robertson: I accept that that is what my hon. Friend means by his Amendment, but it was hardly what he meant by his contribution to the discussion. He went a great deal further than that. I accept his arguments. I feel the same way as he does. If he feels that way, however, he cannot accept the Bill at all.

  1489
  I would have been more inclined to support my hon. Friend's Amendment had he been more precise and named the probation service as a service for which local authorities could have combined. That could have taken the probation service out of the context of the ordinary social work of a local authority and provided a separate and comprehensive service.
  Mr. J. Bruce-Gardyne: The point made by the hon. Member is met because his hon. Friend's Amendment relates to a Clause which is concerned precisely with the probation service. Therefore, I cannot see how the hon. Member's argument arises.
  Mr. Robertson: I do not think that the hon. Member has related the Amendment to the Bill. My hon. Friend is saying that the existing probation service should be allowed to continue, but it could not continue with the Amendment. As I see it—we discussed this in Committee—the existing co-operation between local authorities could not continue with the Amendment.
  I support the idea of my hon. Friend the Member for Dunbartonshire, West but I must point out to him again that he is seeking to destroy the whole concept of the Bill so that we do not nave specialists but would have one social service department and any person employed within that department could carry out any of the functions which fell to that department.
  6.15 p.m.
  If my hon. Friend were to take probation services away from the local authority, there would be a lesser work load on the full complement within the social service department. The more jobs that we give them, the more likely they are to be fully engaged. This is important, too. I do not want to see people hanging about with nothing to do, as may well happen in many areas. However, I do not think that we can achieve what my hon. Friend desires, and what I desire, with the Amendment at this late stage.
  It is a pity that my hon. Friend the Under-Secretary had not thought in some way of keeping the probation service out-with the social service department of local authorities although under the control of the social work committee of a local authority. This could have been done
  1490
  without destroying the existing probation service, which has done, and is doing, a very good job.
  Mr. Lawson: I do not quite see where my two hon. Friends get to such cross-purposes. It seemed to me that my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) went much further than his Amendment. He argued for complete retention of the probation service. My hon. Friend the Member for Paisley (Mr. John Robertson) has gone still further.
  The Amendment relates to subsection (3) of Clause 27, by which the duty of preparing a probation scheme is imposed upon the local authorities. Paragraphs (a) to (e) of subsection (3) are merely descriptions of what is to be done in the scheme. By his Amendment, my hon. Friend the Member for Dunbartonshire, West seeks to lay upon the local authorities the duty that in carrying out the probation scheme they shall seek to work with each other. Part of the arrangement would be that wherever possible they would function in relation to each other.
  That would not be impossible. I had it in mind at an earlier stage that wherever possible, where services could be rendered on a co-operative basis, they should by all means be rendered co-operatively. I would like my hon. Friend the Undersecretary to say that that is what he has in mind and that there will be nothing to hinder the local authorities from acting in exactly the way that my hon. Friend the Member for Dunbartonshire, West wishes them to act, the difference being that he wishes to impose an obligation on the local authorities to function in that way.
  I do not know whether it is advisable that they should be compelled by means of a change in the law to function in that way. What my hon. Friend was saying—
  Mr. Hannan: At an earlier stage, in Committee, was there not the opportunity to make provision for that?
  Mr. Lawson: No. As I understood, it was a question whether the probation service should become part of the joint, combined or comprehensive work service to be rendered by the local authorities.
  Mr. Hannan: My hon. Friend has spoken of co-operation. At an earlier stage of the Bill, was there not power

  1491
  to do that, not only in respect of the probation service, but in respect of other services?
  Mr. Lawson: We were arguing, surely, at an earlier stage, whether probation be kept out of the provisions made for social service in a comprehensive way, and what the probation service wanted was that the probation service should be outside the Bill altogether. This was not accepted by the Committee. It was not accepted by myself. I argue differently. However, I see that Mr. Speaker is becoming impatient, so I will get back to the point.
  It seems to me that my hon. Friend is saying, in his Amendment, as distinct from what he said in his speech, if he will excuse my saying so, that this probation scheme part of the comprehensive social work service which the local authority has to render should be worked in conjunction with other local authorities. I myself hope that it will be worked in this way, but I am very doubtful of the wisdom of imposing upon local authorities the duty of doing it in conjunction with other local authorities. Where it can be so done, I hope that it will be so done. I expect the Under-Secretary to tell us that that is his intention. If he can say that, I think he will meet the point which is being genuinely made by my hon. Friend the Member for Dunbartonshire, West.
  Mr. Dewar: I have some sympathy with my hon. Friend the Member for Dunbartonshire, West (Mr. Thomas Steele). His Amendment is ingenious. I know why he moved it, but it is not one which I can support. The whole trouble, in my view, stems from the Government's unfortunate decision to retain large burghs within the social work structure. My hon. Friend the Under-Secretary knows my views on this matter and that they are the views of several of my hon. Friends. However, though we are now in the position that we must accept that what has been done has been done, and that large burghs now retain their identity in these functions. I cannot accept my hon. Friend's argument that local authorities will be reluctant to cooperate and unwilling to use the expertise of those probation officers who are allocated to them.
  Mr. Thomas Steele: I must confess that I made my point very badly if I gave my hon. Friend that impression. I said that it would be necessary and essential to use that expertise and that local authorities would welcome it. I said they would be reluctant to implement the provisions of this Bill.
  Mr. Dewar: This is a much wider-ranging point, and, as my hon. Friend the Member for Paisley (Mr. John Robertson) said, almost an argument for saying that the Bill should not have been presented at this time at all, not till we have the reorganisation of local government, though that is an argument I am not prepared to support.
  However, it seems to me that if, in advance of the Royal Commission's report, we push through these complicated, comprehensive arrangements, we have to accept that there is an unfortunate fragmentation which stems from the Government's decision to change their original decision on large burghs. It seems to me that if the scheme as a whole is to be workable the probation service must be in it, and I cannot disagree more strongly than I do with my hon. Friend the Member for Paisley, who seemed to hint that the probation officers are a race apart from the general social workers. This point was made in Committee and I do not want to labour it. The whole philosophical basis of the Bill is that the probation workers have knowledge, expertise and ideology in common with social workers, and that, basically, their work is of the same nature.
  Mr. John Robertson: There is a very vital difference, I am sure my hon. Friend will agree, in that the probation officer, whatever his future title may be, has responsibility and function in a court of law, whereas the other employees of the social work department have no such function, and that function puts him apart.
  Mr. Dewar: This distinction has been drawn before, that the probation officer is a servant of the court and almost a law enforcement officer, and so on, but I think that the distinction is a false distinction. If a person appears before a court and is referred to the care of a probation officer that person must be seen, not in a vacuum, as it were, but

  1493
  against the background of his home environment, his family troubles, his employment, and so on, and the facts of all those circumstances must be known to assess which of the multiplicity of factors are at the root of his being in trouble, and they have to be dealt with in exactly the same way as they would have been if the person had not appeared before a court but had been within the ken of the social worker in some other way. The whole point is to have an efficient organisation with a whole range of facilities and workers to deal with these problems whenever they may occur. I am not prepared to accept this as the hard and fast distinction which my hon. Friend has tried to draw.
  It is suggested to me from my own conversations with probation officers that a very large number of them are quite prepared to accept that they have duties very similar to those of other members of the social work department, and that, indeed, they look forward to a challenge, the challenge of widening their experience and moving into other fields. In exactly the same way I think that it would be useful if people not at present involved in probation work but dealing with similar problems can make their services available to the probation service. It would be a great mistake, and would set the whole scheme off on a very bad footing, if we kept the probation officers out of the social work department. The juvenile probation services would have to be included, even if these should be transitional arrangements.
  I can sympathise with my hon. Friend, but it would be a mistake to accept his Amendment, and I hope that my hon. Friend the Under-Secretary will resist it.
  Mr. MacArthur: From this Amendment a number of hon. Gentlemen opposite have developed an argument about the future structure of the probation service. Of course, it is perfectly natural that that should be so, because the Amendment relates to the making of a probation scheme.
  It may be for the convenience of the House if I intervene at this stage to say that it is not our intention to pursue on this Amendment the question of the future structure of the probation service.
  1494
  With great respect to hon. Gentlemen who have spoken on the Amendment, we feel that it would be more appropriate to explain our view on Amendment No. 20, which, I believe, will be the next you will call, Mr. Speaker.
  May I, however, make one comment on the Amendment, a comment which, I think, is of some importance. As I understand the Amendment, it would have the effect of providing that, in the making of a probation scheme, local authorities would make arrangements for cooperation with one another, and the Amendment certainly touches on one of the great points of concern we have about the structure of the probation service, and that is the fragmentation of the service which would follow the Bill if passed in its present form.
  The argument for co-operation, and, indeed, for amalgamations, between local authorities is a very strong one we advanced vigorously in Committee, and I will not go over the familiar ground again. Hon. Gentlemen will, however, recall that we take the view that the working of this desirable Bill has been endangered by the introduction of a multiplicity of operating authorities.
  There are to be in Scotland now, following an Amendment made to Clause 1 in Committee, 56 social work departments, 56 local authorities charged with the exercise of functions under the Bill. We do not consider that the Bill can operate successfully when the work of operating authorities is fragmented in this way. This argument has been deployed over and over again, and it recurs on Clause after Clause of the Bill, in terms of the career structure of welfare workers, the attracting of suitably qualified social work directors, and so on.
  In terms of the Amendment, however, the argument must relate to the making of a probation scheme, and here the argument is highly appropriate. If there is doubt about the operation of other parts of the Bill because of the multiplication of local authorities involved, there must be at least as much doubt about the wise operation of probation schemes by as many as 56 local authorities. Cooperation between local authorities is, therefore, necessary. More than that, we would hope that there could be amalgamation between local authorities.

  1495
  6.30 p.m.
  The House may be interested to know that, in Committee, we proposed from this side an ingenious method whereby, in certain circumstances, amalgamation between local authorities could be insisted upon, subject to the protection of inquiry. We left that point when the Minister told ss that he would hold consultations with the local authority organisations in Scotland to determine the extent to which voluntary amalgamations would take place. This would be an appropriate opportunity for the Minister to tell us about the progress of those consultations. I am disappointed that we have not had from him before now an account of the consultations. I said expressly to him in Committee that my hon. Friends and I would hope and expect to have a progress report from the Minister before we entered the Report stage, and that account has not been forthcoming.
  If the Minister can report to us that voluntary amalgamations will be substantial in scope, it is possible that some of our doubts about the operation of the probation scheme would be reduced. In the absence of such an assurance, those doubts will remain. The co-operation which the hon. Gentleman seeks would help to some extent, but the large question would remain unanswered, and the argument on that larger question is one which we would prefer to deploy when we debate Amendment No. 20. Perhaps there will be an opportunity for the Minister to give the House an account of the progress of these important consultations.
  Mr. Willis: I have taken the attitude during the passage of the Bill that in view of the forthcoming reorganisation of local government we should meanwhile interfere as little as possible with local services. My attitude towards the probation service is much the same, although I recognise that finally the probation service must go into the social work department. It is unfortunate that after we have spent 20 years building up the probation service, laying down qualifications and setting up special schemes of training we should throw it all overboard.
  Mr. Speaker: The debate is becoming a little wide. We are at the moment discussing a specific Amendment.
  Mr. Willis: Mr. Speaker, I am saying what I wish to preserve and what the Amendment seeks to preserve. To throw overboard all that has gone before and to say that the probation officer is nothing more than a social worker is not true. If it were true, we would have been wrong for 20 years. By placing upon local authorities responsibility to co-operate, the Amendment enables the position to be preserved. The Amendment does not go against the main provisions of the Bill, it merely questions the advisability of reorganising the service when within another four years it will again have to be reorganised. Such a reorganisation must have an undesirable effect upon the morale of the people in the service.
  If the probation officer is absorbed into the social work department he will still be doing the work which he does as a probation officer. A probation officer will be doing the same work as he was doing prior to the passage of the Bill. The courts will require to be served; people released from prison will require to be attended; records will have to be kept. All these things will have to be done, and the man who was trained to carry out this work and who has been doing it will continue to do it.
  In Lanark, there are 33 probation officers, who are now to be split up into six services. They have to serve the sheriff court in Lanark, and it might be necessary to send a man from each of those six authorities to the sheriff court if the court is dealing with cases from different burghs in the county. If the Amendment were accepted, this could be done by one probation officer and such a waste of manpower would be avoided.
  Mr. John Robertson: Although, in essence, what my hon. Friend says is true, in practice there would never be five or six probation officers in any one of the sheriff courts in Lanarkshire.
  Mr. Willis: I am suggesting that this is what could arise.
  Mr. John Robertson: No, it could not.
  Mr. Willis: I think that it could. Probation officers from different burghs could

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  be attending the sheriff court. This is a duplication and a waste of effort when under a combined scheme, it could be done by one officer in the same way as it is done at the present time. I have nothing against proceeding with the Bill, but at least as little dislocation as possible ought to be caused to existing services.
  It is true of the other services—which is why I supported the inclusion of the large burghs—and it is true of the probation service. If we are to do this, the local authorities within a county area must come together to draw up a scheme. In this way, one of the most difficult problems in the Bill would be overcome, and to that extent the Amendment is a useful one. I tried to achieve something similar with children's panels, because to split them up and then two or three years later to reorganise them again would be to get the worst of all possible worlds.
  For these reasons, I support the Amendment.
  Mr. Millan: I appreciate the reasons why my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) has put down the Amendment in this way, although some of the points he made really went beyond what its effect would be. I am not suggesting that he was out of order, but that his interpretation of what the effect would be is well beyond what would be the case in practice. I think that a number of my right hon. and hon. Friends made the same mistake.
  The basis for the concern of some of my right hon. and hon. Friends on this matter is the Government's decision to include the large burghs as well as the county councils as social work departments. This was discussed at great length in Committee. It does not arise directly from the Amendment, however, and I shall, therefore, not rehearse all the arguments again. The decision has been taken and the Government: want the large burghs as social work departments for the purposes of the Bill.
  Similarly, I do not think that the Amendment raises the fundamental issue, at least not directly, of whether or not the probation service should be part of the social work department. I think that my hon. Friend really was raising that issue, but it is not specifically dealt with in this Amendment. Again, we dis-
  1498
  cussed it at great length in Committee, and it is not for me now to rehearse the arguments once more.
  But some of the expressions we have had in this debate as to the effect of incorporation of the probation service in the social work department have been quite exaggerated. For example, as has been pointed out, the probation service for children will have to go in whatever the arguments might be about the probation service for adults. That is accepted and is, indeed, inherent in Part III of the Bill.
  For many local authorities in Scotland, the probation service will not be affected at all in so far as we are bringing it into the social work department. That applies in the four large cities and in the counties where there are not also large burghs. It is an exaggeration for my right hon. Friend the Member for Edinburgh, East (Mr. Willis) to talk about everything that has happened with the probation service in the last 20 years as being thrown overboard by what we are doing in this Clause.
  Mr. Willis: My point was that the argument that the probation officer is just another social welfare officer who can be shifted about destroys all that we have been doing.
  Mr. Millan: I have never suggested that the probation officer is just another social worker—a phrase which has a slightly pejorative ring about it—and that he should just be shifted about as though all his training and experience were irrelevant. But these matters were considered at considerable length in Committee and I am sure that you, Mr. Speaker, would not allow me to go over all the arguments again now. Nevertheless, I repeat that the phraseology used by my right hon. Friend is not an accurate way of reflecting my views of the probation service or its future in the social work department.
  The Amendment would make it mandatory for the probation scheme to include arrangements for co-operation. The particular phrase used by my hon. Friend the Member for Dunbartonshire, West is open to very wide interpretation. It could be interpreted narrowly or in a variety of ways. Obviously, what he has

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  in mind is that we should make it mandatory in effect for combinations of probation work to take place, and I understand from what he and others have said that this means in this context that there should be mandatory arrangements for the probation services to be combined in counties like Lanarkshire, where the effect of the Bill will be that the probation service will be distributed over a number of social work authorities.
  I want to say what happened at the meeting I had with the local authority associations on 21st June, but I first make it clear that it is not right in principle to separate the probation service in this way. What we are doing in the Bill is bringing the service within the social work department. We are bringing a number of other services within it as well. It would be wrong to encourage social work authorities to combine for particular specific purposes as distinct from combining for all the purposes they take over in the new social work department.
  All the value of having an integrated social service department, with a range of duties and responsibilities all placed within the one department, would go if the local authorities were to split it up and decide that the probation service might be combined with something else and the child welfare service with something else. If we are looking at varieties of combination between one authority and another, we should do so in the context of all the services that are taken into the social work department and not in the context of paying particular regard to having special arrangements for one of the services, whether it be the probation service or anything else. It was my strong impression at my meeting with the local authority associations that they would also take this approach to the question of combinations and amalgamations.
  6.45 p.m.
  Mr. Bruce-Gardyne: Before the hon. Gentleman comes to his discussions with the local authority associations, could he deal, for the benefit of those who did not serve on the Standing Committee, with the point raised by the hon. Member for Dunbartonshire, West (Mr. Steele) concerning the date as specified in subsection (2)?
  Mr. Millan: As I recall, the date of commencement comes in Clause 90.
  Mr. Speaker: Order. We must resist temptations to discuss the whole Bill. We are on Amendment No. 18.
  Mr. Millan: Perhaps I may quickly point out that the date of commencement comes towards the end of the Bill. I covered the point in Committee and perhaps the hon. Member for South Angus (Mr. Bruce-Gardyne) would care to look at what I said. It appears in c. 572 in the report of the 12th sitting of the Committee.
  The meeting I had with the local authority associations arose out of discussions on Clause 1, when there was fairly general feeling in the Committee that the number of local authorities providing social work services should, in practice, be less than 56, which would be the number if every city, county and large burgh provided a separate service. I gave an assurance, which is relevant to the probation aspect, that I would discuss this with the local authority associations with a view to seeing what the possibility would be of achieving voluntary combinations of local authorities.
  I met the representatives of the local authority associations on 21st June and had a frank and helpful discussion with them. Not surprisingly, the representatives of the associations felt quite strongly, as did most hon. Members on the Standing Committee, that it would be undesirable for the Secretary of State to take powers in the Bill to require local authorities to combine for these purposes. Therefore, I can say that the local authority associations would be much against the Amendment.
  Naturally, the representatives I met could not commit any individual local authority as to what would happen once the Bill was implemented, but they were in agreement that, following its passage, the local authorities would be willing to enter discussions with their neighbours to explore the possibilities of voluntary combinations. Some of the representatives felt that the likelihood of voluntary combinations would be improved if the Government took the initiative and made positive suggestions to local authorities in certain areas where the Government felt that combinations would be most desirable. But they also felt that it would be preferable for any such

  1501
  initiative to be delayed until after the recommendations of the Royal Commission on Local Government were known.
  I am glad that the attitudes of the local authority associations towards the matter of combinations are close to the attitudes expressed today. My right hon. Friend feels quite satisfied, therefore, in the light of the discussions with the local authority associations, that there is no need to amend this provision in the way suggested by the Amendment. Both before the publication of the Royal Commission's Report but in particular after-wards, quite apart from any general exhortations the Government might make to local authorities to look at the question of voluntary combinations, we shall take the opportunity of bringing together particular local authorities for the purpose of discussing the possibility of their combination for the purposes of the Bill. We shall certainly take an initiative with the particular authorities where we think that would be most profitable.
  I have dealt with this matter at some length and perhaps tested your patience more than a little Mr. Speaker, but this is an important Amendment. I promised that, on Report, I would give this report which is relevant to the probation service. I hope, with that explanation, my hon. Friend the Member for Dunbartonshire, West will be willing to withdraw his Amendment.
  Mr. Thomas Steele: Many of my hon. Friends have taken the discussion much wider than I did initially. That may have been my own fault. I was trying to say that I accepted the Bill as it is now and that the probation service would be incorporated in the new social work department. We had the key to this matter in my hon. Friend's reply when he said that the local authorities were not prepared to consider any combination until they had the report of the Royal Commission.
  Mr. Millan: With respect, I did not say that. I said that once the report of the Royal Commission has been received it will be easier for all concerned, the Government as well as local authorities, to see what the ultimate pattern will be. I did not say that local authorities were not willing to consider this matter until the Royal Commission had reported.
  Mr. Steele: That was my understanding. I apologise to my hon. Friend.
  1502
  I understand that my hon. Friend the Member for Central Ayrshire (Mr. Manuel) got the same impression. In any event, it seems that this is the key. Just as the local authorities will consider the question of combinations after they receive the report of the Royal Commission, I say to my hon. Friend—and this is the warning that I gave him—that they will be reluctant to carry out the provisions of the Bill, because they will be anxious and concerned about the report of the Royal Commission.
  This proposal would enable local authorities to put up schemes and, in the putting up of these schemes, the Secretary of State would be able to preserve the probation service as it is to co-operate with the new social work department. I think that this is possible.
  In effect, we shall destroy the probation service, as we know it, and have the people in it incorporated into the new service with a grievance and a grudge. This is my feeling. Therefore, I am thinking about the administration of the new social service. I appreciate, as the Minister said, what we are doing in this Bill, but in this House we are dealing with theory. This is the idea; this is what we want to see done. But I visualise administrative problems arising from what is to happen. I genuinely felt that the Amendment would help and assist the introduction of the new proposals. I hope and trust that my hon. Friend will take the matter seriously.
  Amendment negatived.
  Mr. Wylie: I beg to move Amendment No. 20, in page 18, line 39, at end insert:
  'holding such qualifications as the Secretary of State may prescribe, and every such officer may perform such other functions of the local authority under this Act as the Social Work Committee may direct'.
  This is an Amendment to which my right hon. and hon. Friends attach considerable significance and take very seriously.
  The House will be aware, from some of the speeches to which we have listened, that one of the major criticisms of this Bill in the eyes of many of us is the effect of Clause 27 abolishing the identity of the probation service as we know it today, a service which has worked very satisfactorily and with increasing efficiency over the years.

  1503
  I accept, as we all have to accept, that the identity of that service has been abolished. It is being integrated, by the provisions of Clause 27, into the general social work department the new organisation for local authority social work. The purpose of the Amendment is to try to save something and to try to avoid some of the consequences which flow from that decision. Reference has already been made to some of these consequences, particularly by the hon. Member for Dunbartonshire, West (Mr. Steele).
  In our view, it is not correct to say that the probation officer is essentially the same as any other social worker. Many of the features of his training and experience are shared in common with many other social workers, but the statement contained in paragraph 28 of the White Paper, that
  "the main duty of the probation officer … is basically similar to that of other social workers ",
  is a proposition which I do not accept, and it is obvious, from what has been said by the hon. Member for Paisley (Mr. John Robertson), and others, that they do not accept it.
  I think that the essential feature of the probation officer is his close, intimate relationship with the court. He is primarily an officer of the court. Indeed, the whole development of probation as a method of treating delinquents and the development of the allied functions, such as the provision of social inquiry reports for the court, has largely depended on that close, intimate relationship, and, above all, on the trust and respect which the court has always had for the probation officer.
  That arises because the court knows the man who is the probation officer, knows his training and experience, and has learned, through experience, to accept his judgment. I think it was with this consideration in mind that the Morison Committee, when reporting on this matter a few years ago, repeatedly referred to the probation service as essentially a social service of the courts and, on other occasions, as a court service. If the identity of this service is to be lost altogether, that confidence and trust and that close, intimate working relationship will be prejudiced, and, as a result, probation as a method of treating delinquents is liable to suffer.
  1504
  Accepting, as we must, that the probation service, as we know it today, goes out of eistence and is merged into the social welfare organisation of a local authority, this Amendment seeks to preserve within that organisation the probation service as an identifiable group. In other words, we are seeking to say that they are all social workers and all members of the one administrative organisation—if administrative tidiness requires it, there it is —but that the people who will do the probation work will be those with the necessary training and qualifications—the group of people whom the courts will continue to know and trust. That is not to say—and I hope that the Amendment makes this clear—that the probation officer will be precluded from doing other useful social work within the department. Indeed, the Amendment specifies that.
  I can understand the new organisation wanting the services of those officers in a wider sphere, but our primary concern is that they should remain as an identifiable group within the new social work organisation and that the confidence and mutual trust which has all along existed between probation officers and the courts should remain. If that link of confidence and trust is broken, the whole system as a method of treating delinquency is liable to be prejudiced, and I cannot imagine that any right hon. or hon. Member would desire that result.
  7.0 p.m.
  Mr. George Younger: I support what has been said by my hon. and learned Friend the Member for Pent-lands (Mr. Wylie), and I hope that the Minister will accept the Amendment as a genuine attempt at a compromise between two opposing views. He will recall that there were a good many of us on both sides of the Committee who were unhappy at the thought that the probation service as we have known it would become completely merged in the new social work department.
  The Amendment is, as I say, a genuine attempt to introduce a compromise solution, for it would make it possible for the probation service still to keep its identity as a body of professional and technically qualified people doing a specialised job, a job which is very much orientated to the link of confidence

  1505
  existing between the courts and our probation officers.
  The Amendment would allow probation officers to retain that professional status and their link of confidence with the courts while at the same time bringing them under the general umbrella of the social work department and the director of social work. It offers a good compromise by which we could avoid disturbing the feelings of probation officers generally at the prospect of losing their separate professional status while at the same time still making it possible to bring in the benefits of the Bill.
  The Amendment has been on the Notice Paper for some time now. I hope that the Minister has had time to consider it carefully and to realise that there is merit in the compromise solution which it offers. If, on the other hand, he has not had time to consider it fully, as, perhaps, he may not, I hope that he will at least say that he is prepared to look at it and consider whether such a compromise could be brought in at some stage.
  Mr. Gordon Campbell: I support the Amendment. As my hon. and learned Friend the Member for Pentlands (Mr. Wylie) said, it would enable the Secretary of State to appoint those who had the qualifications to continue in probation work, and it would thus give the advantage of the connection with the courts which these officials already have. It would be a considerable loss to disperse completely the present body of probation officers. The Amendment, 01 the other hand, would enable them to be identifiable so that they could be kept doing the job which they now know so well and in which they have great experience. There are not too many probation officers with experience in Scotland anyway, and they ought to be kept on the job in which they can be most useful.
  The Amendment would enable probation officers to take on other work as well, as appropriate. It would thus give the kind of rationalisation which the Secretary of State seeks by the Bill. I hope that he will accept an arrangement of this kind.
  Mr. Alasdair Mackenzie: I support the Amendment. There is great concern throughout the country about the probation service. In
  1506
  the past, the probation officer has been a trusted individual in our social services, trusted not only by the courts themselves and recognised by them for the inestimable benefit of the work which they do, but trusted, also, by the parents of those who, unfortunately, have to attend court and who have had tremendous help from probation officers.
  There is a fear that it will be difficult to replace such officers. People have become accustomed to the services of the probation officer and of the probation service in general. There is a feeling that it will be difficult to fit the service into the new and larger organisation. Because of the very personal nature of the probation officer's work, the service as we now know it should be allowed to carry on as far as possible as it has in the past.
  It seems that the main reason for the change is that it was thought necessary to bring all the services together under the new Bill. But there need be no difficulty in allowing the probation service to carry on and to co-operate as it has in the past with the other social services. There is not a great deal which is new in the Bill from this point of view. Most of the other work done in the past by various other bodies will continue, though more effectively, perhaps, in the future. My concern is that, in going about the country, I find great anxiety in people's minds about what will happen if the probation officer is no longer known in the community.
  Mr. Dewar: I listened with interest to the hon. and learned Member for Pentlands (Mr. Wylie), and I accept at once that there is one sizeable difficulty raised by the Government's proposal, namely, that, rightly or wrongly, the sheriffs—this is certainly true of the Sheriff Substitutes Association—have considerable reservations about the loss of an identifiable probation service. Even though I regard their objections as mistaken, possibly too sweeping and in some cases rather alarmist, one must bear in mind that they are the views of people who will sit on the bench and have to decide whether to use the service.
  The very fact that they have such doubts, which may well inhibit their free use of the service, is a matter to be taken

  1507
  into consideration. For that reason alone, I have some sympathy with an attempt to produce a formula which will reassure the sheriffs and, no doubt, reassure a good number of other people who have the worries which the hon. Member for Ross and Cromarty (Mr. Alasdair Mackenzie) expressed.
  For all that, however, I do not like the Amendment. As I said in another context a few minutes ago, I think that it is based upon a fundamental fallacy. I do not agree, for example, when my right hon. Friend the Member for Edinburgh, East (Mr. Willis) says that, given the concept of flexibility, if there is not a defined and separate training for the probation officer as distinct from the general run of social workers, we shall throw out everything we have worked for over the past 20 years.
  A little while ago, the Minister said that to talk in terms of "just another social worker" was in some way derogatory. I do not accept that, and I certainly meant what I said in no derogatory sense. I tried to show that there was a good deal of common method, common philosophy and common type of work as between social workers and probation officers. I am open to correction, but I understand that there is now largely a common course followed by a child care officer and a probation officer. The refresher courses which the administration has been running for probation officers who came into the service before the training régime was instituted are shared courses as between probation officers and other groups of social workers. There are differences of emphasis in terms of attention to criminal regulations and the like, but in the basic course followed, the methods adopted and the type of problems dealt with I do not see a sharp differentiation.
  I should be sorry if something were written into the Bill which militated against ultimate flexibility in the use of the social workers whom we have available. I accept that one will not suddenly switch all people doing probation work at the moment into a completely different sphere. That would be mad and quite inexcusable irresponsibility for the directors of the new
  1508
  social work department. They must remain basically within their own sphere, and there must be a long period when they will be the backbone of the social workers attached to the court. It is possible for there to be some changeover, for example, with a responsible person who has been dealing with child care for a number of years. I see no reason why such a person should not be attached to perhaps a children's hearing, in conjunction with someone established in the probation service for some time.
  It would be useful and part of the intentions of the Bill. Of course, we must have continuity, but it would be very sad if we wrote in statutory barriers to stop this kind of experimentation, this mobility within the social work department. It would be throwing the baby out with the bath water. We talked a good deal in Committee about the structural difficulties of the new organisation. This is only worth while if we can create the kind of social work structure which allows this interchange of duties where possible, where people are properly qualified. It would be a retrograde step to accept this Amendment although I accept the existence of the initial fears, expressed by hon. Members opposite.
  Mr. Bruce-Gardyne: I join with the hon. Member for Aberdeen, South (Mr. Dewar) at least in that I am very concerned about the attitude of the Sheriff Substitutes Association. I do not think, from what I have heard, that it is sufficient to say that it has strong reservations about this. I would say that its attitude is a good deal stronger than is implied by the word "reservation". This is a very important Amendment—I would argue that it is the most important Amendment. One of the most vital properties of a probation scheme is that it should enjoy the confidence of the courts—in the words of my hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Wylie), that there should be a close and intimate relationship.
  There is real anxiety that such a relationship will be vitiated as a result of this Clause. The hon. Member for Aberdeen, South said that the acceptance of the Amendment would lead to the erection of statutory barriers within the social work department. As my hon.

  1509
  and learned Friend pointed out, this is precisely what it will not do. As my hon. Friend the Member for Ayr (Mr. Younger) said it does not erect firm statutory barriers.
  On the whole, I would prefer to see probation officers excluded altogether from the social work department, but that is not what we are discussing. This Amendment would incorporate certain people within the social work department and require them to have special qualifications, recognised by the Secretary of State.
  Mr. Dewar: I quite see that there is provision in the Amendment to allow the trained probation officer to do other work. It seems that there is a barrier the other way, in that a trained social worker engaged in child care cannot move in to help the court. This seems wrong.
  7.15 p.m.
  Mr. Bruce-Gardyne: I take the hon. Member's point, but do not think that the barrier would be as rigid in terms of the Amendment as he imagines, because the Amendment would leave it to the Secretary of State to define the qualifications which the person serving the court would need. We have to satisfy the very legitimate anxieties of the Sheriff Substitutes Association and the probation officers.
  I have received a copy of the memorandum prepared by the National Association of Probation Officers in which it points out that:
  "The probation service in Scotland now only accepts for appointment persons who have been centrally selected and have completed a course of training approved by the Secretary of State. So far as possible the Association wishes to ensure that the standards of service to the courts and to persons supervised on behalf of the courts, are maintained within the new structure. In addition, it is essential, if the courts are to be encouraged to use probation, that the sheriffs and other sentencers should have confidence in the service provided by the local authority."
  It is this last sentence which seems fundamental. I was very concerned to be told by a distinguished and experienced sheriff substitute that he would think twice before sentencing people to probation if this Clause went through un-amended. We have to take this seriously. If the sheriff substitutes do not have confidence in the probation system, the likelihood is that instead of sentencing people
  1510
  to probation, they will sentence them to imprisonment—which is not what the Government seek to achieve through the Bill.
  We have to bear in mind that in the past conditions of service in the probation department have been, broadly speaking, the same in Scotland and England, if the Clause is passed without this Amendment, conditions of service will be very different. It has been suggested that we might see—because there was a feeling that those who had previously been in the service were losing status as a result of the Clause—a movement of such people, South of the Border.
  I do not suggest that these considerations would be eliminated if the Amendment is accepted, but it would certainly be a substantial improvement and I very much hope that the Amendment is accepted.
  Mr. Lawson: This has been described as an attempt to help. I have been interested in this argument for a considerable time, although I apologise to the hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie), because I had to leave the Chamber for a few minutes. This has been described as an attempt to help, in that it refers to special qualifications that the Secretary of State may lay down for a probation officer. It is true that the Amendment says that he will be to perform other services. On the other hand, other people without this special qualification will not be permitted to fulfil the rôle of the probation officer.
  The Amendment draws a clear distinction, and the probation officer is established as a category with certain characteristics, clearly marked off from other forms of social workers. The issue is whether we are to have a certain set of officers, based primarily on the courts, as servants of the courts, in distinction to other officers primarily serving local authorities.
  If we were to decide that there should be this clear distinction, then the probation officer ought to be taken out of the Bill altogether. I would go further and venture to say that he ought not to be paid for by the local authorities, because as a servant of the court he would be outwith the functions of a local authority. My hon. Friend the Member for Glasgow,

  1511
  Maryhill (Mr. Hannan) was concerned about a comprehensive service. If we are to have a comprehensive service the probation officer must form part of it.
  If I were satisfied that the probation officers as a whole were determined to remain based upon the courts, I would agree with the argument advanced, and even to taking probation officers out of the Bill altogether. But I am not satisfied. I have seen plenty of evidence in the probation service itself for a substantial body of opinion that they should be involved in the multiplicity of services under the heading of social work. There should be a bias towards the courts, certainly, but I do not agree that there is evidence that the probation worker thinks this. His organisation says this officially, but my findings show that many individual officers want to fulfil the diverse functions of social service workers. They will, naturally, also render these functions in relation to the courts, where necessary, but they should have this wider function.
  Since the Bill is designed to bring about a comprehensive social work service, it should include the services to the courts, which are not designed primarily to punish. There is a bias in the probation service towards reclaiming, redeeming and re-educating people rather than punishing them, which is still the function of the court. Therefore, I decided to support those lines of development which brought the service within the comprehensive social work service which the Bill would bring about. Thus, it would be a mistake to inject a provision to make the probation officer distinctly different from other social workers, and to say that he alone can fulfil that service because he alone has those qualifications.
  Mr. James Davidson: I have been following the hon. Member's argument with great interest, since this is the key Amendment to the whole Bill. I apologise for not having been present earlier, because of other reasons. Is it not possible to have a comprehensive service, which the hon. Gentleman is arguing for, and yet provide that probation officers must have some additional qualification? A parallel is that officers in the Royal Navy may be perfectly competent executive officers—
  Mr. Speaker: Order. Interventions should not be speeches.
  Mr. Davidson: —but must have a watchkeeping certificate before he can take charge of a ship at sea. Surely a probation officer can have extra qualifications?
  Mr. Lawson: I should have thought that the local authority, whose duty it is to provide officers to render this service to the courts, would see that the people involved were suitably qualified. The Amendment would write in the express condition that the Secretary of State should draw up qualifications and, presumably, that only the people with those qualifications would be able to render this service. It is admitted that they might render other services, but it is suggested that no one else would be able to render this service because only these people would have the qualifications.
  This is an attempt to make a clear distinction in law between that type of officer, called the probation officer, and others—
  Sir Myer Galpern: But surely the same distinctions. apply in the teaching profession? If a teacher wants an additional qualification to teach the deaf or the blind, those qualifications are available, and only those with the required qualifications are empowered by the Secretary of State to carry out that kind of educational work.
  Mr. Lawson: I do not think, Mr. Speaker, that you will allow me to discuss the teaching profession and its different qualifications and payments. We are discussing the setting up of a comprehensive service. The Amendment would make it less comprehensive than it is intended to be—
  Sir M. Galpern: Teaching is a comprehensive service.
  Mr. Lawson: It is for this reason that the Amendment should be rejected.
  Mr. Ross: We should not apologise for having taken some time over this Amendment, because, right from the publication of the White Paper and all the discussions of this, attention has been paid—probably to the sacrifice of attention to other branches of the social work service—to the probation service. It is a

  1513
  tribute to that service, its work and its contact not only with the courts but with local authorities that it has had this ready response to its pleas for special consideration in the discussions.
  I would say to the hon. Member for South Angus (Mr. Bruce-Gardyne) that the probation service in Scotland is different from that in England, which is a centralised Home Office service. In Scotland, it is a local authority service. Therefore, we should be worried about the changes which we make. If we are to assert the rights which we already have to legislate, let us take some pride in the fact that we can be different.
  Hon. Members opposite, as they did earlier, have tried to take the probation service out of the Bill. They are not doing exactly that this time, because earlier discussions in Committee cannot now be repeated. The hon. and learned Member for Edinburgh, Pentlands (Mr Wylie) admitted honestly, as he must, that the probation service will be part of the new social work service, but what they want is that I shall so lay down their qualifications that these officers shall be seen to be within but apart, and that they and they alone shall continue to do one kind of work, although hon. Members say that the social work committees, notwithstanding the Secretary of State, should be able to allow them to do other work as well.
  I do not doubt that, if we accepted this, we should destroy the new conception of the social work service. This is what would happen. There would be divisions within the service. If this is true of the probation officer, is it not equally true of the children's officer and the welfare officer?
  Mr. Wylie: No.
  Mr. Ross: But their work will, possibly, be encroached upon by the probation officer in his new light. This is a misunderstanding of our whole purpose, which is to get away from this narrow specialisation by different people who deal, mainly, with the same kind of situation—and, very often, with the same people. It is people we are concerned about, not the courts but the people in the courts; it is those people's background, in their families.
  Mr. Wylie: Does not the right hon. Gentleman agree, however, that the probation officer is part of the penal system? It is because of his connection with the courts that he is in a different position from anyone else. It is not suggested that he is better or worse than anyone else, but he is in a different position.
  7.30 p.m.
  Mr. Ross: He is not part of the penal system. He is certainly involved in it, but so are many children's officers and welfare officers, who often provide the probation officer with some of the background which goes into his report. We have arrived at the appreciation that, instead of three or four different people in different guises visiting the same family, we should give this job to one department. Instead of three or four specialisms, we shall get one much more rounded specialism in the end.
  Probation officers will play a very important part in this, because of their experience. Far from their status being lowered, as has been suggested, I think their status and their career opportunities will be considerably enhanced.
  The hon. Member for Ross and Cromarty (Mr. Alasdair Mackenzie) said that the work would be the same as that which was done in the past. If I were satisfied that the right kind of work and the right amount of work was being done in the social field in Scotland, we would not have needed the Bill at all. But there are great gaps in Scotland, not only in rural areas, where the social work that needs to be done is not being done. Anyone who looks at the statistics for juvenile delinquency and of prisoners who, after their discharge, return to the courts and thence to prison has no reason for complacency or for thinking that we have reached the end of the road. We have only just started to pay the kind of attention which we should be paying, and we are starting at the right point.
  I was shocked to hear the hon. Member for South Angus suggest that some sheriff substitute—he did not name him; he said that he was an important one, an experienced one, and all the rest of it— would hesitate to use probation if this was passed. I hope that sheriff substitutes will hesitate to apply any sentence, but only in relation to the adequacy or appropriateness of that sentence to the

  1515
  case in question. To make such a statement and not to say who made it is not fair on all the other sheriff substitutes who will apply the law and who will use the facilities which will be there.
  In the beginning, undoubtedly, as we take over here, it will be the same probation officers who will be used. Subsection (2) says:
  "For the purposes of the foregoing subsection every local authority shall, after consultation with the sheriffs having jurisdiction in their area, prepare a scheme and submit it by such date, as he may require, to the Secretary of State for his approval."
  In the light of that, in the light of the kind of experience already in being, and in the light of what has already been said as to how this will develop, it was wrong of the hon. Gentleman to suggest that the sheriff substitutes will hesitate to consider probation as an appropriate condition to make in relation to the treatment of any case.
  Mr. Bruce-Gardyne: This comment was made to me by a sheriff substitute. I have not obtained his permission to mention his name, and, therefore, I do not think I should do so. He said to me, however, that if the probation officer did not have the confidence of the court he would think twice about sentencing somebody who came before him to probation.
  Mr. Ross: That is not what the hon. Gentleman said earlier. He said that the sheriff substitute would hesitate to use probation if this was passed as it is. He said nothing about confidence.
  Mr. Bruce-Gardyne: The same thing.
  Mr. Ross: It is not the same thing. Does the hon. Gentleman suggest that, before a scheme has ever been discussed with that sheriff substitute, determined, modified, seen by me and by him, and approved by me, it will be unsatisfactory? The chances are, with the facilities which will be made available, that the decisions of the court will be even better than they are at present. The hon. Gentleman should not use phrases like that, bring in unnamed people to support such a contention, and then change his mind about what he said when he is challenged.
  This is a fundamental Amendment, because it cuts right across what we hope
  1516
  to achieve by this completely new and pioneering scheme that we are introducing for Scotland. The Bill, including this part, has been lauded, not just in Scotland, but in other parts of Britain and elsewhere. Interest has been shown in it as something that others would like to strive towards. I know that we are taking a pioneering step, but it is not one which has been taken lightly. We went into this very fully before we issued the White Paper. Since then, we have had full discussions with everyone concerned and have modified our views in the light of those full discussions. We have had full discussions in Committee.
  I assure the House that I, too, give my praise to the probation officers. I can remember pressing the Conservative Government to do something about the Morrison Report. If I had thought that we would destroy the service and not replace it with something which contained what was of value within their work and build upon that, with a greater breadth of social science and experience, I would not have introduced the Bill.
  Taking the whole Clause, in view of what we are doing in relation to the schemes, and in view of the kind of people who will undertake this work, I think that it would be wrong to do as the hon. Gentleman suggested and condemn the thing in advance. We must assume that the directors of social work will not send people into the courts who have no knowledge of what they are doing. In the beginning, it will be the probation officers that will play a very important part in this, because they have a width of experience which is of value outside the narrow field of probation. As time passes the same may well be true of others. It would be undesirable to create within the department of the director of social work officers who might appear to have some special statutory status which, indeed, the director himself does not have.
  Lastly, when the new departments have taken over probation responsibilities, the best arrangement is that the work should continue to be carried out mainly by the officers who are now qualified and have experience in this work, but it is not desirable at the very beginning here, and in something which will last as long as the Bill lasts, to preclude the possibility that officers with other skills might, under

  1517
  supervision, acquire probation experi-and share in the work. What we are creating, and in which probation officers will play a leading part, is virtually a new profession and one which probation officers, with their experience, will be glad to be members of. I am sorry about some of the things which have been said, mainly by the hon. Member for South Angus. On the whole, the attitude to this subsection has been fairly objective. I cannot do other than ask the House to reject the Amendment.
  Mr. MacArthur: When debating an earlier Amendment the hon. Member for Glasgow, Provan (Mr. Hugh D. Brown) complimented the Secretary of State by saying that he was obstinate. I do not think that we have ever seen the right hon. Gentleman more obstinate than he has been tonight.
  Mr. Ross: Stick around.
  Mr. MacArthur: The right hon. Gentleman said, in effect, that the Kilbrandon Report, the Morrison Report, the probation officers, the sheriffs and, I suspect, most hon. Members are wrong. The person who is right is the right hon. Gentleman. As I listened to him I was reminded of the old story, the last line of which goes, "Everybody's out of step except 'oor Wullie". On the Front Bench opposite, in the guise of the Secre-tary of State, sits 'oor Wullie, as obstinate as ever.
  It might be as well to remind the House of three background facts which we must consider when deciding our view towards the Amendment. The first is that the Kilbrandon Report, which the right hon. Gentleman described as the Genesis of the Bill—
  Mr. Ross Mr. Ross indicated dissent.
  Mr. MacArthur: One hon. Member did; Kilbrandon's effect on the Bill is enormous—made it clear that Kilbrandon envisaged an independent adult probation service.
  Mr. Ross Mr. Ross indicated dissent.
  Mr. MacArthur: The right hon. Gentleman may disagree. That was the interpretation which I and a great many others put on the Report. The right hon. Gentleman is, therefore, wrong.
  Mr. Millan Mr. Millan rose—
  Mr. Speaker: Order. If the hon. Gentleman goes out of order, he will be wrong The hon. Member for Perth and East Perthshire (Mr. MacArthur) must address his remarks to the Amendment.
  Mr. MacArthur: The second point to remember is that the Government's decision to bring the probation service within the social work department was a narrow decision. Indeed, the White Paper said:
  "The Government's conclusion is that, on balance, it would be better if all the functions of the probation service in Scotland were undertaken by the local authority social work department."
  The two key words were "on balance".
  The third point to remember is that that narrow decision was taken when the Government believed that the large burghs should not be in the Bill as administrative authorities. In other words, there would have been, at the time of the White Paper, many fewer social work departments than envisaged in the Bill. I believe that if the Government had decided to introduce large burghs, thus creating 56 possible local authorities, they might have taken a very different view about the probation service because the balance would have been the other way round.
  There has been some discussion of the rôle of the probation officer. Is he or is he not an officer of the court? What matters is the fact that probation officers see themselves as officers of the court. I believe that the courts see probation officers as officers of the court, too. That is critical to the Amendment.
  Everything in the end comes back to the trust and confidence which the courts have in the person appearing before them as the probation officer. We say that it is necessary, if that trust and confidence is to be retained, for the probation officer to be identified within the social work department and to continue that rôle, within the terms of the Amendment, into the future. We advanced this argument on Second Reading and we continue to advance it. We believe that this is the only way that we can be absolutely certain that this essential confidence will be held. If it is not held we will reach the stage when probation might not be invoked so readily by the courts, and that would be a serious loss to our penal system.
  Question put, That the Amendment be made:
  The House divided: Ayes, 107, Noes, 138.

  Division No. 282.]

  AYES

  [7.45 p.m.

  Astor, John

  Harris, Frederic (Croydon, N.W.)

  Noble, Rt. Hn. Michael

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

  Harrison, Col. Sir Harwood (Eye)

  Osborne, Sir Cyril (Louth)

  Awdry, Daniel

  Hawkins, Paul

  Pearson, Sir Frank (Clitheroe)

  Baker, Kenneth (Acton)

  Heald, Rt. Hn. Sir Lionel

  Peel, John

  Balniel, Lord

  Hiley, Joseph

  Percival, lan

  Biffen, John

  Hill, J. E. B.

  Powell, Rt. Hn. J. Enoch

  Blaker, Peter

  Hirst, Geoffrey

  Prior, J. M, L.

  Body, Richard

  Holland, Philip

  Pym, Francis

  Brewis, John

  Hunt, John

  Ramsden, Rt. Hn. James

  Brinton, Sir Tatton

  Hutchison, Michael Clerk

  Rossi, Hugh (Hornsey)

  Brown, Sir Edward (Bath)

  lremonger, T. L.

  Russell, Sir Ronald

  Bruce-Gardyne, J.

  Irvine, Bryant Godman (Rye)

  Scott-Hopkins, James

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

  Jenkin, Patrick (Woodford)

  Silvester, Frederick

  Bullus, Sir Eric

  Kaberry, Sir Donald

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

  Burden, F. A.

  King, Evelyn (Dorset, S.)

  Smith, John (London & W'minster)

  Campbell, B. (Oldham, West)

  Knight, Mrs. Jill

  Stainton, Keith

  Campbell, Gordon (Moray & Nairn)

  Lancaster, Col. C. G.

  Stodart, Anthony

  Clegg, Walter

  Langford-Holt, Sir John

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

  Craddock, Sir Beresford (Spelthorne)

  Longden, Gilbert

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

  Currie, G. B. H.

  McAdden, Sir Stephen

  Taylor, Frank (Moss Side)

  Dalkeith, Earl of

  MacArthur, lan

  Teeling, Sir William

  Dance, James

  Mackenzie,Alasdair(Ross&Crom'ty)

  Temple, John M.

  Davidson,James(Aberdeenshire,W.)

  Maclean, Sir Fitzroy

  Tilney, John

  Dean, Paul (Somerset, N.)

  McMaster, Stanley

  Turton, Rt. Hn. R. H.

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

  Maude, Angus

  van Straubenzee, W. R.

  Dodds-Parker, Douglas

  Mawby, Ray

  Waddington, David

  Elliot, Capt. Walter (Carshalton)

  Maxwell-Hyslop, R. J.

  Williams, Donald (Dudley)

  Errington, Sir Eric

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

  Wills, Sir Gerald (Bridgwater)

  Fortescue, Tim

  Mills, Peter (Torrington)

  Wilson, Geoffrey (Truro)

  Glover, Sir Douglas

  Miscampbell, Norman

  Wolrige-Gordon, Patrick

  Godber, Rt. Hn. J. B.

  Monro, Hector

  Wright, Esmond

  Gower, Raymond

  Montgomery, Fergus

  Wylie, N. R.

  Grant-Ferris, R.

  More, Jasper

  Younger, Hn. George

  Gresham Cooke, R.

  Morgan, Geraint (Denbigh)

  Griffiths, Eldon (Bury St. Edmunds)

  Munro-Lucas-Tooth, Sir Hugh

  TELLERS FOR THE AYES:

  Grimond, Rt. Hn. J.

  Murton, Oscar

  Mr. R. W. Elliott and

  Gurden, Harold

  Neave, Airey

  Mr. Anthony Grant.

  NOES

  Allen, Scholefield

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

  Loughlin, Charles

  Archer, Peter

  Fernyhough, E.

  Lyons, Edward (Bradford, E.)

  Armstrong, Ernest

  Fletcher, Raymond (Ilkeston)

  Mabon, Dr. J. Dickson

  Atkins, Ronald (Preston, N.)

  Fletcher, Ted (Darlington)

  McBride, Neil

  Atkinson, Norman (Tottenham)

  Foot, Michael (Ebbw Vale)

  McCann, John

  Bacon, Rt. Hn. Alice

  Ford, Ben

  MacColl, James

  Beaney, Alan

  Forrester, John

  MacDermot, Niall

  Binns, John

  Fowler, Gerry

  Macdonald, A. H.

  Bishop, E. S.

  Galpern, Sir Myer

  McGuire, Michael

  Blackburn, F.

  Gardner, Tony

  Mackie, John

  Boardman, H. (Leigh)

  Gourlay, Harry

  Mackintosh, John P.

  Booth, Albert

  Gray, Dr. Hugh (Yarmouth)

  McMillan, Tom (Glasgow, C.)

  Boston, Terence

  Gregory, Arnold

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

  Braddock, Mrs. E. M.

  Grey, Charles (Durham)

  Manuel, Archie

  Brooks, Edwin

  Griffiths, David (Rother Valley)

  Marks, Kenneth

  Broughton, Dr. A. D. D.

  Griffiths, Rt. Hn. James (Llanelly)

  Mason, Rt. Hn. Roy

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

  Griffiths, Will (Exchange)

  Mendelson, J. J.

  Buchan, Norman

  Hamilton, James (Bothwell)

  Millan, Bruce

  Carmichael, Neil

  Hannan, William

  Miller, Dr. M. S.

  Chapman, Donald

  Harper, Joseph

  Milne, Edward (Blyth)

  Coe, Denis

  Harrison, Walter (Wakefield)

  Morgan, Elystan (Cardiganshire)

  Cullen, Mrs. Alice

  Heffer, Eric S.

  Morris, Charles R. (Openshaw)

  Dalyell, Tam

  Herbison, Rt. Hn. Margaret

  Newens, Stan

  Davies, S. O. (Merthyr)

  Hooley, Frank

  Oakes, Gordon

  de Freitas, Rt. Hn. Sir Geoffrey

  Houghton, Rt. Hn. Douglas

  O'Malley, Brian

  Delargy, Hugh

  Howarth, Harry (Wellingborough)

  Orbach, Maurice

  Dempsey, James

  Howie, W.

  Orme, Stanley

  Dewar, Donald

  Hoy, James

  Oswald, Thomas

  Dickens, James

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Owen, Will (Morpeth)

  Doig, Peter

  Hughes, Emrys (Ayrshire, S.)

  Page, Derek (King's Lynn)

  Dunn, James A.

  Hunter, Adam

  Palmer, Arthur

  Dunnett, Jack

  Hynd, John

  Pannell, Rt. Hn. Charles

  Dunwoody, Mrs. Gwyneth (Exeter)

  Jones, J. ldwal (Wrexham)

  Park, Trevor

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

  Kerr, Russell (Feltham)

  Parkyn, Brian (Bedford)

  Eadie, Alex

  Lawson, George

  Peart, Rt. Hn. Fred

  Ellis, John

  Lewis, Arthur (W. Ham, N.)

  Pentland, Norman

  Ennals, David

  Lewis, Ron (Carlisle)

  Price, Thomas (Westhoughton)

  Ensor, David

  Lomas, Kenneth

  Rankin, John

  Reynolds, Rt. Hn. G. W.

  Silverman, Julius

  Wainwright, Edwin (Dearne Valley)

  Robertson, John (Paisley)

  Slater, Joseph

  Watkins, David (Consett)

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

  Small, William

  Watkins, Tudor (Brecon & Radnor)

  Rogers, George (Kensington, N.)

  Spriggs, Leslie

  Woodburn, Rt. Hn. A.

  Ross, Rt. Hn. William

  Swingler, Stephen

  Woof, Robert

  Ryan, John

  Taverne, Dick

  Yates, Victor

  Sheldon, Robert

  Thornton, Ernest

  Shore, Rt. Hn. Peter (Stepney)

  Urwin, T. W.

  TELLERS FOR THE NOES:

  Silkin, Rt. Hn. John (Deptford)

  Varley, Eric G.

  Mr. Alan Fitch and

  Mr. J. D. Concannon

Clause 31

  RESTRICTION ON PROSECUTION OF CHILDREN FOR OFFENCES
  Mr. Millan: I beg to move Amendment No. 21, in page 20, line 1, leave out subsection (2) and insert:
  (2) The case of any child liable to prosecution in respect of any act committed or omission made, but against whom proceedings have not been instituted before the commencement of this Act, shall be dealt with in accordance with the law as in force after the said commencement.
  This is largely a drafting Amendment. It clarifies the position of children who have committed offences but against whom proceedings have not been instituted at the date when Clause 31 comes into operation. It provides that they must then be dealt with in accordance with the law as it will be after Clause 31 comes into operation.
  Amendment agreed to.

Clause 35

  PROVISIONS AS TO TIME, PLACE, PRIVACY AND NOTIFICATION OF CHILDREN'S HEARINGS
  Mr. Millan: I beg to move Amendment No. 22, in page 21, line 33, after 'hearing', insert:
  ',or shall authorise the exclusion of bona fide representatives of a newspaper or news agency.'.
  This is in discharge of an undertaking given in Committee that I would move an Amendment on Report to say that bona fide representatives of the Press would be able to attend children's hearings.
  I do not want to go over the arguments on either side as to whether the Press should be able to be present at these hearings. I made a statement about that in Committee, and my impression was that it had the general agreement of the Committee. It is in discharge of what I said there that I move this Amendment.
  1522
  It does not in any way affect the prohibition on the publication of proceedings or the identification of children, which are fully provided for in Clause 58. But it gives the Press the opportunity of being present at children's hearings and, on the balance of public advantage, I am sure that this is the right decision.
  The only other comment that I would make about it is that admitting the Press does not in any way militate against the general principle that the number of people to be present at hearings should be kept to a minimum. Certainly it is not our intention that children's hearings should be turned into some kind of public session with large numbers of people ranged in front of the child appearing before the hearing. That can all be dealt with in the arrangements which we shall make for the hearings, the way in which they are organised, the premises in which they meet, the seating arrangements, and the rest of it.
  The balance of public advantage is in favour of the Press being in attendance at hearings, provided always that we keep the prohibition on publication which we have in a later Clause. I hope, therefore, that the Amendment will be acceptable to the House, because it does very little different from what the Children and Young Persons (Scotland) Act, 1937, does.
  Mr. Dewar: This is a difficult question, and, although my hon. Friend says that he thinks that the Amendment interprets the feeling in Committee, that is a slight essay into the optimistic. The Committee rather stumbled on the fact, to its surprise, and had a clear and fair statement from my hon. Friend in which he said that he would invite the comments of the committee. But, owing to procedural niceties as interpreted by the Chairman, there was no opportunity to take the Committee's views.
  Having spoken to one or two of my colleagues about it today, it is clear that there is some anxiety about the decision which has been taken. We recognise that

  1523
  it is one of the great principles, to which we pay lip service at least, that justice must be seen to be done, and it is right as a general rule that the Press should have access to judicial proceedings at every level unless there is good reason for its exclusion.
  However, I wonder if children's hearings are suitable for Press entry. After all, if it is a matter of safeguarding the rights of the child appearing before a hearing, it seems to me that they are adequately safeguarded already by the child's right to have present his parents or anyone else whom he wishes to speak for him. In addition, there is provision in the Bill for a member of the Council on Tribunals or of the Scottish Committee of that Council to attend. If there is an abuse or miscarriage of justice or a case where the people intimately concerned feel that they are getting a raw deal, they can go to the Press and turn the spotlight of publicity on events.
  It is important that we should keep the informal atmosphere at the hearings. I accept that there will not necessarily be hordes of Press representatives present, but the very fact that the Press has the right of entry and that the local Press may carry, even without names, details of what happened, or at least a general picture of what happened, at any given hearing could militate against the kind of informal inquiry in depth which the Bill attempts to achieve.
  There is no stated charge at a children's hearing, no facts, in the commonly accepted sense of the word, to be reported, and I am not sure that from the point of view of the Press there is the normal case for a right of entry. I do not want to press my argument and I would not like to give the impression that I should like these hearings to be some sort of Star Chamber at a much lower level, some sort of judicial hearing at which the public eye was not allowed entry so that there was room for bureaucratic abuse, but I still think that on balance the admission of the Press is not a meaningful safeguard, and I am not sure that it is desirable.
  8.0 p.m.
  Mr. MacArthur: I listened with interest to the hon. Member for Aberdeen, South (Mr. Dewar) and I have much
  1524
  sympathy with what he says. My own feeling is that on balance the Press should be admitted, with the normal restrictions of which the Under-Secretary has reminded us. I am not comfortable about the prospect of enlarging the number of people present at a children's hearing, for the very reason which the hon. Member for Aberdeen, South has advanced. At the same time, in view of the restrictions on publication, it is unlikely that hordes of Press men will invade a children's hearing, and I doubt whether more than one or two representatives of the Press would normally be present.
  But if the Press is excluded, there will inevitably be a risk that the hearings will be thought to be meeting in secret. Embarking as we are on a challenging experiment, we ought not to give any impression that these hearings are to be held in secret. There will be wide interest about the way in which they are conducted, and public interest in them should be encouraged and protected by the right of the Press to be present.
  There is a further reason. During our debates in Committee, the Opposition, and many hon. Members opposite shared some of our fears, expressed our anxiety that the rights of the child should be protected as much at a children's hearing as they are in the present juvenile courts. While we all welcome the informality of the children's hearings, there still lurks a doubt in our minds that that informality could lead, quite unconsciously, to some abuse of the child's judicial rights. The Press is a great champion of the individual and the rights and liberties of the individual.
  Mr. James Dempsey: Will the hon. Gentleman give some evidence to substantiate his claim that the absence of the Press would lead to such unfortunate deductions by the general public?
  Mr. MacArthur: I hope that the hon. Gentleman is right and I think that he probably is, but there will be great interest in these children's hearings and it is reasonable that the general public should have some knowledge of the way in which they are conducted, a knowledge which the Press would provide. I see nothing wrong with that; indeed, I see everything right with it.

  1525
  It would be as well for the independent eye of the Press to be on children's hearings in order to ensure that the liberty of the child and the rights of the child are properly protected within the atmosphere of informality which is such an important aspect of this part of the Bill. Therefore, I hope that the House will accept the Amendment.
  Mr. Millan: The hon. Member for Perth and East Perthshire (Mr. MacArthur) made a valid point when he spoke of the genuine public interest in these hearings. The public as a whole should have the opportunity of knowing how these hearings are conducted. It is extremely difficult to devise any means of allowing them to know if the Press is excluded. I accept that the Press would not normally be interested in children's hearings, but it will be very interested in the initial stages when the panels come into operation. However, I imagine that it will not often be interested afterwards, although it is important to establish the principle that it has the right to be present if it wants.
  Mr. Dempsey: It would be unwise to take such a step. How many hon. Members who have spoken on this subject have ever sat in a juvenile court and tried young people? There is nothing secretive about these proceedings. I am one of those who for their sins are magistrates, and I take my share of court work during the Recesses. I have often had to try young people, but the parents, the probation officer and the representatives of the authorities are present. There is no question of a secret trial, as was suggested by the hon. Member for Perth and East Perthshire.
  Mr. MacArthur: I do not want the hon. Gentleman to misunderstand. It is the impression of what happens that matters, and I fear that if the Press is excluded, the impression of what happens in an entirely new structure, which is what we are talking about, may be that something secret is going on. That would be avoided by the presence of the Press, but that is the smallest of my list of arguments.
  Mr. Dempsey: I cannot think of anything more terrifying for a young first offender than to be in the presence of a
  1526
  large number of people. It is frightening. One has to appreciate the excitement and almost the terror of the young first offender with all these individuals looking on and listening to an account of some mistake or idiosyncrasy which he has committed as a juvenile in his local town or village. Having the general public present would not contribute to the success of these courts. The Press is not needed. Many of these young persons will have committed an offence for the first time. They do not want to be headlined in the Press and to have their names absorbed by the many curiously minded people in our communities. If the Press is present, it naturally has a job to do.
  Mr. MacArthur: Reporting of that type would be expressly prohibited.
  Mr. Dempsey: That is just the difficulty. It is difficult to draw a demarcation line between what journalists shall report and what they shall omit. That is why it is important for those in charge of such a court to issue a statement to make sure that the right type of report, a report which is objective and sensible and in the interests of the young offender, appears in the local Press. That is why I am apprehensive.
  It may be thought that I am a little prejudiced because I have operated under this system for many years, but it has been tried and found to be successful, and that is why I am scared of the possibility of the Press being present at these juvenile panels and reporting ad lib and indiscreetly about the decisions. The journalist has a job to do. He is inclined to pander to sensationalism. This is the great danger. It is his bread and butter, he must justify his existence. Once we admit the Press we shall have difficulty in laying down conditions as to how its members shall operate—what they shall report and what they shall not, and how they shall conduct themselves.
  My right hon. Friend should have second thoughts about admitting the Press, especially to panels of this nature. These panels are trying young children who have committed offences for the first time. If these children are given adverse publicity in the Press it will have a very bad effect on them. My right hon. Friend should have another look at this question.
  Mr. Ross: I had hoped that it would not be necessary for me to intervene. My hon. Friend has it all wrong. He says that he is a magistrate and is talking from experience. At the moment, the Press are allowed into any court of which he is a magistrate.
  Mr. Dempsey: I have never seen a member of the Press in my court in my life.
  Mr. Ross: That may be so. The Press may not be interested. But they have the right to be there, just as they have in juvenile courts.
  I was because we were departing from the juvenile court practice that we were concerned, for the reasons expressed by everyone who has spoken, whether or not we should say "No" to this one. If we said "No" there would be a danger that something was being concealed from the public. It is because we are confident that the Press will work within the limits laid down in Clause 58, and because we have the experience of Sections 45 and 52 of the Children and Young Persons (Scoltand) Act, 1957, which limits reporting, that we decided, on balance, that it was right to allow access to the Press.
  I am sure that members of the Press will behave properly. They know that they can do great danger by bad reporting. We have no reason to fear anything like that happening. I hope that I have allayed the fears of my hon. Friend. We are giving no more rights than the Press has at present. Its members have exercised their duties properly and carefully, and I am sure that they will continue to do so.
  Amendment agreed to.

Clause 37

  REPORTS OF CASES OF CHILDREN WHO MAY REQUIRE COMPULSORY MEASURES OF CARE AND THE INTERIM DETENTION OF SUCH CHILDREN IN PLACES OF SAFETY.
  Mr. Ross: I beg to move Amendment No. 23, in page 23, line 20, after '1937', insert:
  'or any offence under section 21(1) of that Act'.
  Mr. Deputy Speaker (Mr. Sydney Irving): It might be convenient to take
  1528
  also Amendment 169, in page 79, line 21, column 3, at beginning insert:

  In section 21(2), the words from 'may take' to the end of the subsection.

  8.15 p.m.
  Mr. Ross: Yes, Mr. Deputy Speaker. The Clause provides that,
  "A constable or any person authorised by any court or by any justice of the peace may take to a place of safety any child in respect of whom any of the offences mentioned in Schedule 1 to the Children and Young Persons (Scotland) Act 1937 has been or is believed to have been committed …"
  The Amendment adds a reference to Section 21 of the 1937 Act, which makes it an offence for vagrants to prevent children from receiving education. The Amendment confers the power of arrest and the taking of a child to a place of safety. It is desirable to transfer this power to the machinery laid down in Part III so that steps can be taken to bring it before the children's hearing, as appropriate. This addition is accordingly made to the Clause and the reference to taking a child to a place of safety is delegated by an Amendment to Schedule 8.
  Amendment agreed to.

Clause 44

  DISPOSAL OF CASE BY CHILDREN'S HEARING OTHER THAN BY DISCHARGE OF REFUSAL
  Amendment made: No. 27, in page 28, line 37, at end insert:
  ',and the place may be a place in England or Wales where arrangements have been made in that behalf.—[Mr. Ross.]
  Mr. Dewar: I beg to move Amendment No, 26, in page 28, line 37, at end insert:
  () Subject to the provisions of this part of this Act a children's hearing where, after consideration of his case they decide that such action is appropriate, may impose on a child or his parents—

  (a) a fine which shall not exceed £50 sterling,

  (b) any order for repayment by way of restitution for damage done to any other person,

  (c) an obligation to find caution as to his future good behaviour.

  The Amendment refers to the sanctions which will be available to the newly constituted children's panels. This is a matter

  1529
  of substance because it is necessary to ensure that we have the right selection methods for the panels and that the members are properly trained. Their discretion is fundamental to the sanctions imposed in Part III.
  If we are to give them a wide discretion it should be matched with wide powers. In Committee I said that the powers were at present limited, but the Minister said that they were not. In that they are extremely serious for the individual in terms of committal to residential accommodation or supervision there if. a wide discretion open to the children's panels, but they are limited in the sense that they are narrow. The Amendment gives them powers to impose fines and various other penalties where appropriate.
  The matter of fines was argued at length on pages 16 and 17 of the Kilbrandon Report. The Under-Secretary agrees that it would be wrong to impose upon a parent a fine because of the misdemeanour of a child, but as the Minister will accept, for some period—at least until 1972, people between the ages of 15 and 16 will be appearing before children's panels, and will be working and perhaps earning substantial pay packets.
  The present plan envisages the school leaving age being raised in 1972, and this will largely eliminate this circumstance arising, but it is possible that Government priorities will change, as they have in the past. Even Governments can change. It may be considerably later than 1972 before substantial wage earners cease to appear at children's hearings. In paragraph 27 the Kilbrandon Report said:
  "While such research studies as have been made of the effectiveness of different methods of treatment are necessarily subject to qualification, there is reason to think … that lining is on the whole not an effective method of treatment in relation to wage-earners."
  On the time scale that we are working on, this alone justifies having second thoughts about methods of fining.
  There are many occasions when it is appropriate to impose a fine upon a parent. In Committee the Minister said that
  "a fine on a parent had really very little to do with the function of the children's hearing which is concerned with the treatment
  1530
  of the child."—[OFFICIAL REPORT, Scottish Standing Committee, 26th June, 1968, c. 500.]
  It may be that in general there is validity in this argument, but I am sure that the Minister will accept that it would be wrong to look upon a child as a unit outwith its family background and context.
  In Committee, when talking about the contributions made by a parent towards the cost of maintaining a child in an approved school the Under Secretary said
  "We want always to maintain the parental responsibility and the parental interest in the child, and it is undeniable to allow a parent to get the idea that when a child is taken into care he is no longer responsible in any way. This is not the only way of bringing his responsibilities home to him but it could be a part of that and it is important that we maintain it in the Bill."—[OFFICIAL REPORT, Scottish Standing Committee, 27th June, 1968, c. 564.]
  I accept that the context is very different, but the point is well made. There may be circumstances when the children's panel thinks that parental responsibility would be brought home if a fine were imposed.
  There is the question of a gap which appears to have emerged in the range of penalties which can be imposed and the circumstances in which a juvenile can be arrainned before a panel or court— what the hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie) called in Committee an apparent lacuna.
  It is quite true and fair to say that under Clause 31 the Lord Advocate may recommend that prosecutions should be instituted for specific offences, but that can be done only in the High Court or the sheriffs court, which would be inappropriate for comparatively minor offences.
  There might well be occasions when offences are committed when there is no question of the proper answer being a continuing period either of residential accommodation or of supervision but in which the procurator fiscal or the authorities, for their own reasons, having tried rebukes, police conciliation methods, and so on, feel that a sharp reminder of the law should be administered. If that is so, they cannot go to the juvenile court because they will no longer exist. It would be ridiculous to go the Sheriffs' court, because that would be making a mountain out of a molehill. They could not go to the children's hearings because

  1531
  they could not recommend a suitable penalty.
  The National Association of Probation Officers has drawn my attention to a fact which I did not know, namely, that in the recent White Paper for England and Wales entitled "Children in Trouble", Cmnd. 3601, the Government proposed the retention of court procedures for certain offenders over the age of 14. It was suggested that criminal proceedings would be possible when:
  "the young person appears not to be in need of sustained support or treatment, for the nature of the offence and his home circumstances suggest that a court appearance and a simple deterrent, e.g., a fine, would be appropriate".
  If the White Paper finds that case to be proven, it is worth considering it when we are dealing with the Scottish situation.
  The proposal to find caution for future good behaviour is recommended in paragraph 159 of the Kilbrandon Report. In Committee, my hon. Friend the Member for Glasgow, Scotstoun (Mr. Small) said that in his experience it was often useful for the parent to have his or her hand strengthened in the domestic scene by some such device of this nature. It would rarely be used, but it might be useful to have this power in reserve. If we trust the discretion of the children's panels, we should put the widest possible variety of weapons at their disposal.
  Finally I have suggested restitution. There is a tremendous case for saying that mehtods of dealing with people who appear before the children's panel should allow for a great deal of imagination and flexibility. Some cases in which damage may have been done may fall into the general category of vandalism and it may be right that the panel should be in a position to say that it would take a very different view of the circumstances if it were able to ensure that some sort of restitution, some effort to undo the damage done, would be made by those who appeared before it.
  In short, I am anxious that the public should see the new children's hearings machinery which is being erected as being flexible and able to deal with the cases which come before the hearings. We have all been worried by the attitude which has often manifested itself in general debates about juvenile delinquency
  1532
  in Scotland in the last month or two. Prominent spokesmen, particularly those representing local authorities, sadly, seem to think that we can deal with violence by violence—almost an Old Testament attitude towards the juvenile delinquent and his treatment. The Government are trying, rightly, to shift the emphasis to proper treatment, but if they are to win, and if they are to convince the public that the machinery will be effective, they must allow imagination and flexibility in the approach of the juvenile panels. I hope that the Government will be prepared to think about this matter.
  Mr. Millan: The Amendment raises a number of very important and interesting points. It is technically faulty. I should not normally make very much of that, but it is difficult to see, even if we accepted its principle, how we could insert it in the Bill at this late stage. As I said in Committee, it is a pity that we did not have a debate there on this specific Amendment, because it would have been useful to go over and elaborate the various considerations involved and the ideas which my hon. Friend the Member for Aberdeen, South (Mr. Dewar) has put forward.
  The question of fines was dealt with at some length by the Kilbrandon Committee, which came to the conclusion that it would not be appropriate to give the children's hearings the power of imposing a fine. It did that for a number of reasons, but particularly because it felt that a fine was specifically a punishment whereas the children's hearings were not concerned with sanctions which can be looked upon as punishments.
  My hon. Friend mentioned the question of a short, sharp sanction. But the purpose of the hearings is not, at least in the normal circumstance, concerned with short, sharp sanctions. They will be concerned with cases in which there is a continuing need for supervision and treatment of the children who come before them. That is absolutely basic to the principle on which the hearings operate.
  One of the dangers of giving the hearings the opportunity to impose a fine is that this could be looked upon by the hearings as a convenient way of imposing a sanction without considering basically the problems of the child appearing before them. That would be a very great

  1533
  pity. I do not think that a parallel with what my right hon. Friend the Home Secretary may be proposing for England and Wales stands up, because that is in the context of an entirely different concept, involving different age groups and procedures. It is unlikely that we shall get from the English White Paper any guide to what we should do in Scotland.
  It is true that in the case of wage earners there is an effectiveness about lining in many cases which is indisputable. But the quotation which my hon. Friend made, which came from a Report of the Scottish Advisory Council on the Treatment of Offenders, was not specifically directed to young people; it was directed to offenders as a whole. I doubt very much whether even with young wage earners that proposition is as true and widespread as it might be among older offenders. The wage earner whom my hon. Friend has in mind—the 15 to 16 year old—is a temporary phenomenon, because after the school-leaving age has been raised that category of young person coming before the children's hearings will no longer exist.
  My hon. Friend proposes that we should put into the Bill something which would go well beyond 1972 and also well beyond the child who happened to be a wage-earner, which would impinge on the child who is not a wage-earner and would, therefore, take the form of imposing a fine not on the child but, in the vast majority of cases, a fine on his parents.
  We have been careful in the Bill not to give the children's hearings any kind of power over parents in the sense of punishment. The treatment procedures available to the children's hearings are exclusively for children and young persons. They have nothing to do with imposing sanctions on the parent. It would be wrong to impose sanctions on parents in this rather indirect way by allowing a panel to impose a fine on the child.
  Restitution was also considered by the Kilbrandon Committee, which came to the conclusion that it should not have statutory sanction. It will, of course, be open to the children's hearings—and I hope that in appropriate cases they will use this facility—in their treatment
  1534
  of the case before them to make arrangements for voluntary restitution. There may be many cases in which that is a sensible and adequate method of dealing with the case.
  8.30 p.m.
  Caution was recommended by the Kilbrandon Committee, but, as I said in Committee, I regarded that as an illogical recommendation. I did not necessarily agree with the Kilbrandon Committee about every detail, but in each case, except that of caution, I considered that the arguments were well rehearsed and the conclusions extremely well argued.
  I find great difficulty in understanding why the Kilbrandon Committee came to this conclusion in view of what it said earlier about fines on children and on their parents. Caution is the threat of compulsory financial sanction and it seemed to me to be completely incompatible with the view of the Kilbrandon Committee, which I share, with regard to fines.
  My hon. Friend the Member for Aberdeen, South makes the point that if a particular sanction is left out of consideration, the feeling could arise that the children's hearing does not have available to it what it might regard as the most effective sanction in a case. For the reasons I gave in Committee, I do not believe that this will happen in many instances, although I could not completely exclude that a children's hearing would never feel that it would be an appropriate sanction.
  I said in Committee that if the children's hearing considered that what was required in a certain case was a sharp reminder to a child who appeared before the hearing about the course that his behaviour was taking and the possible consequences of persisting in that behaviour, an admonition, a rebuke or the very appearance before the children's hearing would probably be as effective in that case as a fine, which for most children is a fairly artificial concept when they are not wage-earners.
  If, on the other hand, an appearance before the children's hearing and the fact that the child is given a rebuke have little effect on the child, or if there has been more than one appearance and there

  1535
  has still been no real improvement in the child's behaviour, I doubt very much whether, in those circumstances, a short sharp sanction is appropriate. There would probably be underlying causes of difficulty which would make a supervision requirement—not necessarily by any means a residential supervision requirement—the appropriate sanction for the children's hearing to impose. In all the circumstances, therefore, the cases in which a hearing might find it a pity that it did not have the sanction of the fine would be very few.
  As I made clear in Committee, however, there is not a cast-iron argument one way or the other. It is very much a balance of argument although, in my view, the balance comes down quite heavily on the view taken by the Kilbrandon Committee. At this late stage, however, we are not able to consider all the interesting implications of my hon. Friend's proposal and, therefore, while I appreciate very much the way he moved his Amendment and the thought he has given to it, I must ask the House not to accept it.
  Mr. Dewar: I mentioned, in passing, the argument, with which my hon. Friend is familiar, that a large number of offences which at present are commonly prosecuted—which people feel to be of value—will disappear. My hon. Friend said in Committee:
  "In practical terms, in most cases such offences will disappear because they will not be among the kind of offences which the procurator fiscal, under instructions from the Lord Advocate, will be prosecuting."— [OFFICIAL REPORT, Scottish Standing Committee, 20th June, 1968; c. 385.]
  Will my hon. Friend say a word or two about this?
  Mr. Millan: My hon. Friend raised the question of Clause 31. I do not think that he interpreted the Clause completely accurately, because he was looking at it in the sense of what happens in a particular case with the procurator scratching his head and wondering whether he should not recommend to the Lord Advocate that there should be a prosecution and the reporter wondering
  1536
  whether he should take the child before a hearing because an appropriate penalty would not be available. I think that this is not an accurate way of describing what will happen.
  In the vast majority of the cases my hon. Friend has in mind there will be, of course, no question of prosecution. It will not be a question of the procurator feeling that there is no appropriate penalty available to the court if he prosecutes, because the whole question of prosecution will simply not arise. Of course, in many of these cases which are trivial, the question whether the child should be brought before a children's hearing will in the first instance be a matter for the reporter himself.
  There will be many of these cases in which the reporter, for good reason, will feel that it is not necessary to have a children's hearing, that the matter can be dealt with by taking no action at all, or, in certain circumstances, that it can be dealt with by the reporter passing the case over to the local authority for informal supervision, but there will be cases where, either because of the number of the offences committed, or the kind of offences committed, or because, in the particular circumstances of the background of the child, it seems appropriate, the offences will be brought before the children's hearing. When they are brought before the children's hearings for reasons I have already given there will be a very few cases indeed, I think, in which the hearing would feel their sanctions to be inappropriate and would feel it appropriate that there should be a fine.
  I am sure that the other sanctions, which are very important and far-reaching sanctions, which they have under Clause 44, will cover the vast majority of cases which go before a children's hearing. It is for these reasons that I think it would be a pity to introduce these other sanctions, which are rather against the principle of what we are trying to do with the children's hearings, and which I think can have dangerous implications for the way in which the children's hearings operate.
  Amendment negatived.

Clause 45

  RULES AS RESPECTS TRANSMISSION OF INFORMATION AND CONVEYANCE OF CHILDREN TO RESIDENTIAL ESTABLISHMENTS ETC.
  Mr. Wylie: I beg to move Amendment No. 190, in page 29, line 30, leave out 'shall' and insert 'may'.
  This is purely a drafting Amendment. Clause 45 uses the mandatory word 'shall' where as Clause 35(4) uses the permissive word 'may'. This matter was raised in Committee, the Minister, with disarming frankness, told us he did not know what the difference was then. Perhaps he can tell us what the difference is now.
  Mr. Ross: This is a matter of very considerable importance, so it was referred to me. I invite the hon. and learned Gentleman to brace himself for a shock, for I entirely agree with him, and would ask the House to accept the Amendment.
  Amendment agreed to.

Clause 47

  DURATION OF SUPERVISION REQUIREMENTS AND THEIR VARIATION
  Mr. Ross: I beg to move Amendment No. 192, in page 30, line 22, at the beginning to insert 'Unless the context otherwise requires.'.
  Mr. Deputy Speaker (Sir Eric Fletcher): With this Amendment we can also take Government Amendment No. 195.
  Mr. Ross: Yes.
  The first of the two, which is an Amendment to Clause 47, is a paving Amendment. Clause 47(3) at present provides that any reference to a supervision requirement is to be construed as a reference to a supervision requirement which is for the time being in force.
  It is the purpose of the other Amendment, which is to Clause 74, is to make it clear that when a child is transferred from Scotland under Clause 74 to an approved school in England or Wales or a training school in Northern Ireland the order for transfer is to be regarded as if it were an approved school order or
  1538
  a training school order made on the date on which the supervision requirement was originally made under Clause 44. If the Amendment were not made, a child whose case had been recently reviewed might have to serve close on three years in the approved school or training school from the date of that review.
  The Amendment provides that the period shall start from the date on which the supervision requirement was first made by the hearing in respect of the ground of referral. In other words, a child is to be regarded as originally sent to an approved school or training school by the court on the date when the children's hearing made the supervision requirement under Clause 44.
  Amendment agreed to.

Clause 49

  APPEAL AGAINST DECISION OF A CHILDREN'S HEARING
  Mr. Millan: I beg to move Amendment No. 193, in page 31, line 35, leave out 'further appeal against that decision' and insert:
  'appeal against a decision to continue the supervision requirement, which was the subject of that appeal, made on a subsequent review'.
  The Amendment deals with the provision that the sheriff may order that no further appeal shall be made for a year. The Clause as it stands is ineffective. It refers to a decision which is appealable only on one occasion, and it is not therefore an effective sanction in the case of a frivolous appeal to say that it cannot be appealed again, because there is no possibility of appealing it again. We had in mind that where there was a subsequent review which continued the supervision it should not be appealed against for a year, and the new wording makes this clearer.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 194, in page 32, line 1, after 'reporter', insert 'forthwith'.
  We are dealing here with an application for the suspension of a supervision requirement against which an appeal is pending, and the purpose of the Amendment is to say that when a hearing is to be arranged in this interim period it should be arranged forthwith. Otherwise, the hearing might not be arranged until

  1539
  after the appeal had been heard, which would make the procedure completely nugatory from the point of view of protecting the interests of the child who is subject to the supervision requirement.
  Amendment agreed to.

Clause 51
  REHEARING AFTER APPEAL, AND SUBSEQUENT APPEAL
  Amendment made: No. 28, in page 32, line 29, leave out '(7)' and insert '(8)'. —[Mr. Millan.]
Clause 52

  POWER OF SECRETARY OF STATE TO TERMINATE A SUPERVISION REQUIREMENT
  Mr. Millan: I beg to move Amendment No. 29, in page 32, line 33, leave out 'best'.
  Mr. Deputy Speaker: I suggest that with this Amendment the House can also consider Amendment No. 116.
  Mr. Millan: Clause 52 deals with the circumstances in which the Secretary of State might terminate a supervision requirement. Reference is made to having regard to the best interests of a child. The word "best" does not add anything. The important words are
  "having regard to … the interests of a child"
  Therefore, the word "best" comes out.
  Similarly, Schedule 3 deals with whether or not legal aid should be granted by the sheriff granting a legal aid certificate. The Schedule as it stands provides that the sheriff has to be satisfied that the giving of legal aid is necessary in the best interests of the child. This suggests, on the one hand, that there may be some interests which say that the child ought to have legal aid and, on the other hand, others which say that he ought not to. I am sure the hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie) will not accept that there is a balance of interest, and therefore the word "best" does not give the meaning we want and is better eliminated.
  Amendment agreed to.

Clause 54
  TRANSFER OF CASE TO ANOTHER CHILDREN'S HEARING
  Amendment made: No. 30, in page 33, line 2, leave out 'held' and insert 'heard'.—[Mr. Millan.]
Clause 68

  VISITING OF PERSONS IN ESTABLISHMENTS ON BEHALF OF LOCAL AUTHORITIES
  Mr. Millan: I beg to move Amendment No. 32, in page 42, line 20, after 'care', insert 'or under the supervision,'.
  Mr. Deputy Speaker: With this Amendment we shall be taking Amendment No. 61.
  Mr. Millan: These are both drafting Amendments.
  Amendment agreed to.

Clause 69

  ABSCONDMENT FROM A PLACE OF SAFETY, OR FROM THE CONTROL OF A PERSON IMPOSED BY A SUPERVISION REQUIREMENT
  Mr. Millan: I beg to move Amendment No. 33, in page 42, line 32, leave out 'placed' and insert 'detained'.
  Mr. Deputy Speaker: With this Amendment we shall be taking Amendment No. 38.
  Mr. Millan: This is basically a drafting Amendment. The proper word is "detained" and not "placed".
  Amendment agreed to.
  8.45 p.m.
  Mr. Millan: I beg to move Amendment No. 34, in page 42, line 34, after 'requirement', insert:
  'or by virtue of rules made by the Secretary of State under section 45 of this Act'.
  The purpose of this Amendment is to cover a gap in the Bill. The Amendment extends the circumstances in which a child may be arrested without warrant to cover cases where a child absconds while being conveyed to a residential establishment. As the Bill stands, this circumstance is not covered but obviously must be.
  Amendment agreed to.
  Mr. Ross: I beg to move Amendment No. 35, in page 42, line 36, after 'Kingdom', insert 'or'.
  Mr. Deputy Speaker: With this Amendment it would be convenient to discuss Government Amendments No. 36, No. 43 and No. 44.
  Mr. Ross: It has been advised that it is not appropriate for Parliament to legislate on powers of arrest within the Isle of Man. The Isle of Man authorities have indicated their willingness to legislate for necessary powers of arrest in the Island. The effect of the Amendments is to delete the reference to the Isle of Man from Clauses 69 and 70.
  Amendment agreed to.
  Further Amendment made: No. 36, in page 42, line 36, leave out 'or the Isle of Man'.—[Mr. Ross.]
  Mr. Millan: I beg to move Amendment No. 37, in page 43, line 5, after 'unwilling', insert 'or unable'.
  This is an improvement in drafting. There may be circumstances in which a person from whom a child has absconded would be willing to have him back but would be unable to do so for a variety of reasons. We therefore need to insert the words "or unable".
  Amendment agreed to.
  Further Amendment made: No. 38, in page 43, line 5, leave out 'placed' and insert 'detained'.—[Mr. Millan.]
  Mr. Ross: I beg to move Amendment No. 39, in page 43, line 6, leave out 'disposal of his case' and insert:
  'reporter has considered, in pursuance of section 37 of this Act, whether the child may be in need of compulsory measures of care'.
  Mr. Deputy Speaker: With this we can discuss Government Amendment No. 40.
  Mr. Ross: These Amendments are necessary to improve and clarify the provisions of Clause 69(3).
  Amendment agreed to.
  Further Amendments made: No. 40, in page 43, line 7, after 'hearing', insert:
  'for the consideration of his case or'.
  No. 41, in page 43, line 13, leave out 'has' and insert 'have'.—[Mr. Ross.]
  Mr. Millan: I beg to move Amendment No. 42, in page 43, line 13, at end insert:
  1542
  (5) In this and the next following section any reference to a child absconding includes a reference to his being unlawfully taken away.
  This is to cover the circumstances where the child does not abscond but is unlawfully taken away. The object is to allow sanctions which are applied by the Bill to apply in these cases as well.
  Mr. Hannan: I would like some assurance on this point. I was not a member of the Standing Committee and regret having to wait until the last moment to raise this point, and if my hon. Friend cannot answer me now perhaps he will let me know later.
  In 1956, I had the honour of introducing a Private Member's Act to amend the Children and Young Persons Act, 1937. My Act, in dealing with the question of absconding children, had for its purpose the rectifying of what had been discovered to be a loophole. Three children who were in the care of the Glasgow local authority were, by trickery, on three separate occasions brought to London. When Glasgow local authority discovered where they were and attempted to get them back, it had great difficulty in doing so because the local authority concerned in London refused to send them back. The courts here would not act unless thaty had evidence that the mother, who was here, had regained the children. It took this Amendment in the Act to empower one local authority in Scotland to regain children from across the Border who, by that time, were in the area of another local authority and had been restored to the mother.
  If the point is covered by this Amendment, I am glad to welcome it, because it seems the most appropriate point to raise it. If the Amendment,
  "In this and the next following section any reference to a child absconding includes a reference to his being unlawfully taken away",
  covers the circumstances which I have briefly tried to recite, I shall be quite relieved.
  Mr. Millan: I think my hon. Friend will see that the point he has in mind is completely covered both from the point of view of absconding and being unlawfully taken away. My hon. Friend will also see that Clause 69 deals with any part of the United Kingdom, including Scotland. Therefore, the point is covered.
  Amendment agreed to.

Clause 70

  ABSCONDMENTS FROM RESIDENTIAL ESTABLISHMENTS
  Amendments made: No. 43, in page 43, line 24, after 'Kingdom', insert 'or the'.
  No. 44, in page 43, line 24, leave out:
  'or the Isle of Man'.
  No. 45, in page 43, line 26, leave out 'of this subsection'.—[Mr. Ross.]
  Mr. Millan: I beg to move Amendment No. 46, in page 43, line 27, leave out 'escaped' and insert 'absconded'.
  "Absconded" is the correct word. The hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie) raised this in Committee. I had an Amendment down, which was not called, but this now puts the matter right.
  Amendment agreed to.
  Further Amendment made: No. 47, in page 43, line 29, leave out 'of this subsection'.—[Mr. Ross.]
  Mr. Millan: I beg to move Amendment No. 48, in page 43, line 30, leave out 'other'.
  This Amendment is necessary to make a slight improvement in the provisions of Clause 70. The Clause provides that a child who
  "absconds from any hospital or other institution in which he is temporarily residing".
  must be brought back to the place from which he has absconded. There may be circumstances in which this would be impracticable. Therefore, it is necessary to amend the Clause. For example, it may be necessary to bring him back to the residential establishment where he is normally required to reside. This Amendment, by eliminating the word "other", makes that possible.
  Amendment agreed to.

Clause 71
  HARBOURING
  Amendment made: No. 49, in page 43, line 37, leave out' subsection (1) of'.—[Mr. Ross.]
Clause 72

  SUPERVISION OF CHILDREN MOVING TO ENGLAND OR WALES OR NORTHERN IRELAND
  Mr. Millan: I beg to move Amendment No. 51, in page 44, line 13, leave out second 'of' and insert 'not exceeding'.
  Mr. Deputy Speaker: I think it will be convenient to take with this Amendment, Amendment No. 50, in page 44, line 13, leave out:
  'for a period of one year'.
  and Amendment No. 52, in page 44, line 22, leave out:
  'a supervision order is made'
  and insert:
  'a case is disposed of'.
  Mr. Millan: Amendments Nos. 51 and 52 make improvements in Clause 72 and meet points which were raised in Committee.
  As Clause 72 is drafted, it would require the court which made a supervision order on a child who moved from Scotland to England, Wales or Northern Ireland, to make it for exactly one year. In other words, there would be no flexibility at all. We are here providing that the court will have power to make an order for a period not exceeding one year, which introduces the necessary element of flexibility.
  The reason for making the maximum period one year is that the child who is moving would, if he remained in Scotland, be subject to the normal review requirements of the children's hearings, which provide for a regular review in a period not exceeding one year. It would, therefore, be putting him at a disadvantage in England unless we put some term in the order. We think that we have now got this right.
  If the circumstances change in England so that the court there feels that a further period of supervision of some kind is necessary, because of the circumstances in which the child is living, because it needs care and protection, or whatever the need be, the court would be able to do that.
  Amendment 52 changes the wording of subsection (3) to make clear that, as soon

  1545
  as a juvenile court in England has cognisance of a case, any supervision requirement in Scotland falls, whatever the decision of the juvenile court in England on the case may be.
  I hope that what I have said answers the point raised by the Opposition Amendment 50, which is directed to precisely the same purpose of removing the inflexibility of the one-year order and nothing else being available. I think that we have the matter right in our Amendments.
  Amendment agreed to.
  Further Amendment made: No. 52, in page 44, line 22, leave out 'a supervision order is made' and insert:
  'a case is disposed of '.—[Mr. Millan.]

Clause 74

  PARENTS OF A CHILD IN A RESIDENTIAL ESTABLISHMENT UNDER A SUPERVISION REQUIREMENT MOVING TO ENGLAND OR WALES OR NORTHERN IRELAND
  Mr. Ross: I beg to move Amendment 53, in page 45, line 17, after '44', insert:
  'and send notification of that requirement in accordance with section 72(1)(b) of this Act'.
  Clause 74 (1) deals with the transfer to England, Wales or Northern Ireland of a child subject to a supervision requirement whose parent proposes to reside or is residing in one of those countries. It requires a children's hearing to hold a review of the child's case and empowers it to do any of the things specified at paragraphs (a), (b), (c) and (d) of subsection (1). In the event of its deciding as in paragraphs (a), (b) or (d), the consequential events are clear. If the hearing decides under(c)to vary the requirement by making a requirement under Clause 44(1)(a)—that is, one which places the child under supervision but does not require him to live in a residential establishment—the Clause does not make clear that the hearing may then arrange under Clause 72 to transfer the child to the country in which his parent proposes to reside or is residing.
  The purpose of the Amendment is to make good that deficiency.
  Amendment agreed to.
  Further Amendment made: No. 195, in page 45, line 44, leave out 'made' and insert:
  'originally made under section 44 of this Act'. —[Mr. Ross.]
  Mr. Millan: I beg to move Amendment 54, in page 45, line 44, leave out 'except that' and insert:
  Provided that—
  (a).
  Mr. Deputy Speaker: With this Amendment we shall take Amendments 55 and 56. They all deal with the same point.
  Mr. Millan: Yes, Mr. Deputy Speaker.
  The effect of these Amendments is to make clear that when an order for transfer is made under Clause 74 transferring a child to an approved school in England and Wales or to a training school in Northern Ireland, the council responsible for making contributions in respect of the child shall be that in whose area the parent proposes to reside or is residing.
  Amendment agreed to.
  Further Amendments made: No. 55, in page 46, line 1, leave out 'it' and insert:
  'the order under this section'.
  No. 56, in page 46, line 3, at end insert:
  (b) the contributions to be made in respect of him under section 90 of the said Act of 1933 or under section 126 of the said Act of 1950 shall be made by such council as may be named in the order under this section, being the council within whose district his parent proposes to reside or is residing at the time of the order.—[Mr. Millan.]

Clause 75

  PARENTS OF A CHILD SUBJECT TO AN APPROVED SCHOOL ORDER OR A COMMITTAL ORDER MOVING TO SCOTLAND
  Amendment made: No. 57, in page 46, line 22, after 'Northern Ireland' insert:
  'under Part III of the Children and Young Persons Act (Northern Ireland) 1950 or Part I of the Education Act (Northern Ireland) 1948,'.—[Mr. Millan.]

Clause 76

  PROCEDURE
  Mr. Millan: I beg to move Amendment 58, in page 46, line 40, at end insert, 'or both'.
  This Amendment makes clear—it answers a point raised in Committee by

  1547
  the hon. and learned Member for Pentlands (Mr. Wylie)—that the reference in Clause 76 to the
  "absence of the child or his parent"
  includes the absence of the child and his parent. It makes the Clause clearer.
  Perhaps I should explain that we are dealing here with children who are going to England and Wales, that is, moving out of Scotland, not with hearings dealing with children moving into Scotland, in which circumstances the children's hearing would exercise its jurisdiction not under this Part of the Bill but under the normal provisions of Part III. In those circumstances, the child would be present at the hearing. In the case of a child moving out of Scotland, on the other hand, it may well be that the children's hearing has reviewed his case only weeks before the question of his moving to England becomes an issue. In such circumstances, it seems unnecessary to have a full-scale review with the child present and his parent present. It might, indeed, be extremely oppressive if that were the requirement.
  Amendment agreed to.
  Further Amendments made: No. 196 in page 46, line 42, leave out 'this Part' and insert 'section 72'.
  No. 197, in line 44, leave out 'under the said Part' and insert 'for the purposes of section 73 of this Act'.—[Mr. Ross.]
  9.0 p.m.
  Mr. Ross: I beg to move Amendment 59, in page 47, line 15, leave out 'attendance of the child at the hearing' and insert:
  'transfer of the child to the place notified to them by the reporter'.
  Clause 76 deals with the procedure for transferring children from one country to another under the provisions of Clauses 72 to 75. Subsection (4) requires the responsible authority furth of Scotland to ensure the attendance of a child for whom they are responsible, and who is being transferred to Scotland, at a children's hearing. This might be onerous, and not always appropriate. The Amendment provides that the authority shall ensure the transfer of the
  1548
  child to a place which it will arrange with the reporter.
  Amendment agreed to.

Clause 78

  DUTY TO MAKE CONTRIBUTIONS IN RESPECT OF CHILDREN IN CARE ETC.
  Mr. Millan: I beg to move Amendment 198, in page 47, line 31, after 'sixteen', insert 'years of age'.
  It will be convenient to discuss Amendment No. 199.
  These Amendments are intended to remove a defect in the drafting. As drafted the Clause has a deficiency because the subsection (l)(a) refers to a child under 16 while subsection (l)(b) refers to a child over 15. There was a gap between 15 and 16. The new wording which follows the 1948 Children Act makes the position absolutely clear.
  Amendment agreed to.
  Further Amendment made: Amendment 199, in line 33, leave out 'while he is over fifteen' and insert:
  'if he is over sixteen years of age '.—[Mr. Millan.]

Clause 79

  RECIPIENTS OF CONTRIBUTIONS
  Mr. Ross: I beg to move Amendment No. 60, in page 48, line 1, after '79', insert:
  (1) Subject to the provisions of the following subsection.
  Mr. Deputy Speaker: With this Amendment the House could conveniently take Amendments Nos. 62, 72, 75, 76, 78, 80 and 83.
  Mr. Ross: This group of Amendments, together with the Amendments proposed in Schedule 7 to the Maintenance Orders Act, 1950, are designed to provide the appropriate machinery for ensuring that contributions are paid by and orders and decrees may be enforced against the contributors—the mothers and fathers, living in England and Wales and Northern Ireland. This machinery was laid down in the 1950 Act and the machinery and wording here follows closely that of Schedule 1 to the Act, which is repealed for Scotland insofar as it relates to The Children

  1549
  and Young Persons (Scotland) Act 1937, which, as applied by the Children Act 1948 and the 1950 Act, contains the present provisions relating to contributions by mothers and fathers.
  Amendment agreed to.
  Further Amendments made: No. 67, in line 4, after 'care', insert ', or under the supervision'.
  Amendment No. 62, in line 11, at end insert:
  (2) Where a contributor is for the time being residing in England or Wales or Northern Ireland contributions payable by him under the last foregoing section shall be payable to the local authority having the care or supervision of the child.—[Mr. Ross.]

Clause 80

  ENFORCEMENT OF DUTY TO MAKE CONTRIBUTIONS
  Mr. Millan: I beg to move Amendment 63 in page 48, line 14, leave out 'the sheriff' and insert—
  'any court of summary jurisdiction'.
  Mr. Deputy Speaker: With this Amendment I suggest that the House should discuss Amendments Nos. 65, 67, 70, 73 and 82.
  Mr. Millan: This group of Amendments change various references to "the sheriff" into references to "any court of summary jurisdiction ". This is the appropriate reference so far as maintenance orders are concerned. The new wording follows the Maintenance Orders Act, 1950.
  Amendment agreed to.
  Further Amendments made: No. 64 in line 17, after 'an order', insert 'on any contributor'.
  No. 65, in line 24, leave out 'the sheriff' and insert:
  'any court of summary jurisdiction'.
  No. 66, in line 25, leave out 'resident' and insert 'residing'.
  No. 67, in line 27, leave out 'sheriff' and insert 'court'.
  No. 68, in line 43, leave out 'it is made' and insert:
  ''the child is a maintainable child'.
  No. 69, in line 44, leave out 'it' and insert 'that requirement'.
  No. 70, in page 49, line 5, leave out 'the sheriff' and insert 'any court of summary jurisdiction'.
  No. 71, in line 6, leave out 'person liable' and insert 'contributor'.
  No. 72, in line 8, at end insert:
  (7) Where a contributor resides in England or Wales or Northern Ireland this section shall have effect as if for any reference to a court of summary jurisdiction having jurisdiction in the place where the contributor is for the time being residing there were substituted a reference to a court of summary jurisdiction having jurisdiction in any place within the area of the local authority having the care or supervision of the child.—[Mr. Millan.]

Clause 81

  PROVISIONS AS TO DECREES FOR ALIMENT
  Further Amendments made: No. 73, in page 49, line 16, leave out 'the sheriff' and insert:
  ''any court of summary jurisdiction'.
  No. 74, in line 23, leave out 'such a decree' and insert 'a decree for aliment'.
  No. 75, in line 27, leave out subsection (4) and insert:
  (4)(a) In this section the local authority concerned means the local authority which may make application for a contribution order in respect of a child under the last foregoing section;
  (b) where the father of a child is resident in England or Wales or Northern Ireland, subsection (2) of this section shall have effect as if for the reference to a court of summary jurisdiction having jurisdiction in the place where the father is for the time being residing, there were substituted a reference to a court of summary jurisdiction having jurisdiction in any place within the area of the local authority concerned—[Mr. Millan.]

Clause 82

  RECOVERY OF ARREARS OF CONTRIBUTIONS
  Amendments made: No. 76, in page 49, line 39, after 'residing', insert:
  ', or, as the case may be, the local authority having the care or supervision of the child to whom the order or decree relates'.
  No. 77, in page 49, line 41, after 'order', insert 'or decree'.
  No. 78, in page 49, line 42, after 'area', insert:
  ',or, as the case may be, when the authority were not entitled to sums payable under the order or decree ".
  No. 79, in page 50, line 4, after 'order', insert 'or decree'.—[Mr. Millan.]

Clause 83

  VARIATION OF TRUSTS
  Amendments made: No. 80, in page 50, line 6, after '83', insert '(1)'.
  No. 81, line 6, leave out from 'is' to 'is' in line 7 and insert:
  'by virtue of a supervision requirement removed from the care of any person and that person'.
  No. 82, line 10, leave out 'the sheriff' and insert 'any court of summary jurisdiction'.
  No. 83, line 15, at end insert:
  (2) Where the person in whose care a child has been residing is for the time being residing in England or Wales or Northern Ireland the foregoing subsection shall have effect as if for the reference to a court having jurisdiction in the place where that person is residing there were substituted a reference to a court of summary jurisdiction having jurisdiction in any place within the area of the local authority having the care of supervision of the child.—[Mr. Millan.]

Clause 84

  TRANSFER OF ASSETS AND LIABILITIES
  Mr. Millan: I beg to move Amendment No. 84, in page 50, line 22, leave out 'the coming into operation of this Act' and insert 'transfer'.
  Clause 84 at present provides that, where any functions are transferred from one local authority to another by the Bill, all property, etc., relating to the performance of those functions which, immediately before the date of the "coming into operation of this Act" were the property of the first authority, shall be transferred to the second. But different parts of the Bill will come into operation at different times, so it is necessary to make the reference rather more specific. We are, therefore, substituting a reference to the date of transfer of the functions, which is the more accurate expression.
  Amendment agreed to.

Clause 85
  TRANSFER AND COMPENSATION OF OFFICERS
  Amendment made: No. 85, in page 51, line 2, leave out second 'officers'.—[Mr. Ross.]
Clause 86

  ADJUSTMENTS BETWEEN AUTHORITY PROVIDING ACCOMMODATION ETC., AND AUTHORITY OF AREA OF RESIDENCE
  Amendment made: No. 86, in page 52, line 8, after 'person', insert 'ordinarily'.—[Mr. Ross.]
  Mr. Ross: I beg to move Amendment No. 87, in page 52, line 9, after 'authority', insert:
  ', and in this subsection any reference to another local authority includes a reference to a local authority in England or Wales'.
  Mr. Deputy Speaker: I suggest that it would be convenient to discuss at the same time Government Amendments Nos. 128 and 131.
  Mr. Ross: I am obliged, Mr. Speaker.
  The purpose of these Amendments is to ensure that a local authority can recover from a local authority across the border any expenditure which it incurs in providing accommodation, services and so on for persons ordinarily resident in the area of that local authority. The Children Act, 1948, and the National Assistance Act, 1948 are both Great Britain enactments but, as the relevant provisions relating to recovery from another authority are being repealed for Scotland, it is necessary to spell out in Section 32(1) of the National Assistance Act and in Section 1(4) of the Children Act that recovery can be made from a local authority in Scotland, in order to preserve the status quo. Clause 86 is being similarly extended to ensure that Scottish local authorities can make recovery from a local authority south of the border.
  Paragraph 16(2) of Schedule 7 in effect repeats the existing paragraph 16 except that, in the proviso to Section 1(5), which relates to the determination of ordinary residence, the reference to boarding-out under this Bill is to be additional to,

  1553
  rather than in substitution for, the reference to boarding-out under the Children and Young Persons (Scotland) Act, 1937.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 88, in page 52, line 13, at end insert:
  (3) In determining for the purposes of subsection (1) of this section the ordinary residence of any person or child, any period during which he was a patient in a hospital forming part of the hospital and specialist services provided under Part II of the National Health Service Act, 1946 or Part II of the National Health Service (Scotland) Act, 1947 or, in the case of a child, any period during which he resided in any place as an inmate of a school or other institution, or in accordance with the requirements of a supervision requirement, supervision order or probation order or the conditions of a recognizance, or while boarded cut under this Act or under the Children Act, 1948, the Children and Young Persons Act, 1933 or the Children and Young Persons (Scotland) Act, 1937 by a local authority or education authority shall be disregarded.
  This new subsection provides that certain periods of residence are not to be taken into account in the determination of ordinary residence. We are, here cealing with the Clause for the determination of residence and it is right that we should make this Amendment to exclude these special periods of residence.
  Amendment agreed to.

Clause 87

  CHARGES THAT MAY BE MADE FOR SERVICES AND ACCOMMODATION
  Mr. Millan: I beg to move Amendment No. 89, in page 52, line 27, leave out: 'of the said Act of 1948'.
  Mr. Deputy Speaker: With this Amendment the House can discuss Amendment No. 90.
  Mr. Millan: The purpose of these Amendments is to apply the provisions of Sections 42 to 44 of the National Assistance Act, 1948, in relation to charges for accommodation made under the Clause. Subsection (3) provides that as a general rule accommodation provided under the Bill is to be regarded as accommodation under Part III of the National Assistance Act, 1948, and lists certain provisions of the 1943 Act which are to apply accordingly. As accommodation provided under the Bill is to be regarded as Part
  1554
  III accommodation, it is necessary to add Sections 42 to 44 to the other 1948 Act provisions which are already listed in subsection (3).
  Amendment agreed to.
  Further Amendment made: No. 90, in page 52, line 30, after 'organisations)', insert:
  'and sections 42 to 44 of the said Act of 1948 (which make provision for the mutual maintenance of wives and husbands and the maintenance of their children by recovery of assistance from persons liable for maintenance and for affiliation orders, etc.)'.—[Mr. Millan.]

Clause 88

  DUTY OF PARENTS TO NOTIFY CHANGE OF ADDRESS
  Amendment made: No. 91, in page 53, line 10, leave out 'person' and insert 'local authority'.—[Mr. Ross.]
  Mr. Ross: I beg to move Amendment No. 92, in page 53, line 17, leave out 'is' and insert:
  ''was at the material time'.
  The Amendment adds a necessary qualification to the defence which may be adopted by a parent in proceedings for failure to notify the local authority responsible for a child's care or supervision of the parents' address. The critical factor is not whether the accused is, at the time of proceedings under the Clause, living at the same address as the other parent, but whether he or she was living at the same address at the time when notification of a change of address should have been made and had reasonable cause at that time to believe that the other parent had fulfilled the requirement.
  Amendment agreed to
  Further Amendment made: No. 93, in page 53, line 19, leave out 'person' and insert 'local authority'.—[Mr. Ross.]
  Mr. Millan: I beg to move Amendment No. 94, in page 53, line 20 at end insert:
  (3) A father who is making any payment to a local authority by virtue of any order or decree under Part VI of this Act shall be regarded as a parent for the purposes of this section.
  The purpose of the Amendment is to add a father who is making contributions

  1555
  under an order or decree to those responsible for informing the local authority responsible for the supervision or care of his child of change of address. The definition of "parent" in Clause 94 in the case of an illegitimate child excludes the father. It is therefore necessary to have this Amendment to the Clause to make it clear that a father who is making a contribution and who would otherwise be excluded by that definition is nevertheless under an obligation to keep the local authority informed of his change of address.
  Amendment agreed to.

Clause 89

  APPLICATION OF TRIBUNALS AND INQUIRIES ACT 1958
  Amendment made: No. 95, in page 53, line 25, leave out 'the appeal tribunals established by' and insert:
  'any appeal tribunal established under'.—[Mr. Ross.]

Clause 94

  INTERPRETATION
  Amendment made: No. 96, in page 56, line 43, after 'order", 'insert:
  'in relation to an order'.—[Mr. Ross.]
  Mr. Ross: I beg to move Amendment No. 97, in page 57, line 31, at end insert:
  'and to any enactment of that Parliament passed after this Act and re-enacting the said enactment with or without modifications.'.
  Clause 95(3) at present provides that any reference in that Bill to an enactment of the Northern Ireland Parliament and to an enactment which that Parliament has power to amend is to be construed in relation to Northern Ireland as a reference to that enactment as amended by any Act of the Northern Ireland Parliament.
  Clause 96 provides that the Northern Ireland Parliament may by appropriate legislation make such amendments of those provisions of the Bill which extend to Northern Ireland as are necessary to bring them into conformity with the Northern Ireland legislation. As we explained in Committee, it is inappropriate for the Westminster Parliament to legislate for Northern Ireland on the pro-
  1556
  hibition of publication of proceedings, and accordingly Clause 58, which relates to prohibition of publication of proceedings in any children's hearing, was dis-applied from Northern Ireland.
  However, the Northern Ireland Parliament may wish to legislate to cover this point, but Clause 96 does not bite on Clause 58, as it does not now apply to Northern Ireland. Accordingly, it is necessary to make an appropriate adjustment in the Bill to ensure that this can be done.
  Amendment agreed to.

Clause 95
  MINOR AND CONSEQUENTIAL AMENDMENTS, REPEALS AND SAVINGS
  Amendment made: No. 98, in page 58, line 4, at beginning insert 'but'.— [Mr. Ross.]
Clause 97

  EXTENSION OF CERTAIN PROVISIONS OF ACT TO ENGLAND AND WALES, NORTHERN IRELAND, THE CHANNEL ISLANDS AND THE ISLE OF MAN
  9.15 p.m.
  Mr. Millan: I beg to move Amendment No. 99, in page 58, to leave out line 20.
  Mr. Deputy Speaker: I suggest that it would be convenient for the House to discuss, at the same time, the following five Government Amendments, Nos. 100, 101, 102, 103 and 104.
  Mr. Millan: That would be convenient, Mr. Deputy Speaker, since these are all basically drafting Amendments. They relate to the application of the Bill's provision outside Scotland. They are technical and some of them pick up changes which we have made in earlier parts of the Bill.
  Mr. W. H. K. Baker: I understood that the House of Commons was not entitled to legislate for the Channel Islands, among other places, outside the United Kingdom. Subsection (3) states:
  "The following provisions of this Act shall extend to the Channel Islands and the Isle of Man…"

  1557
  Have any consultations taken place, for example with Guernsey, in connection with the Bill?
  Mr. Millan: I assure the hon. Gentleman that all appropriate consultations have been carried out. These provisions deal with absconding children and their recovery from the Channel Islands. I would have thought that the House would not want children who abscond to feel that if they get to the Channel Islands they are beyond the reach of the British House of Commons.
  Amendment agreed to.
  Further Amendments made: No. 100, in line 21, after '58', insert 'sections 86 and 87'.
  No. 101, in page 58, leave out lines 25 to 27.
  No. 102, in page 58, leave out lines 30 and 31.
  No. 103, in page 58, line 32, after 'V', insert 'section 96'.
  No. 104, in line 35, leave out from 'Islands' to 'sections' in line 36 and insert 'that is to say '.—[Mr. Millan.]

New Schedule

  TRANSITIONAL PROVISIONS
  Registration of existing establishments
  1.—(1) Until the expiration of a period of two years beginning with the commencement of Part IV of this Act, or until registration is. effected or refused under the said Part IV, whichever of those three events first occurs—

  (a) a registration in respect of any establishment under any enactment repealed by this Act shall for the purposes of this Act be deemed to be a registration kept by a local authority under section 63 thereof, and

  (b) a registration in respect of any establishment (other than an approved school) not required under any enactment immediately before the said commencement but required thereafter shall for the purposes of this Act be deemed to be kept as aforesaid by a local authority so long as there is no change of user.

  (2) Notwithstanding the coming into operation of the said Part IV, the provisions of the said Part shall not apply in relation to approved schools until the commencement of Part III of this Act and thereafter, until the expiration of a period of two years beginning with the said commencement or until registration is effected or refused under the said Part IV whichever of these three events first occurs, a. registration in respect of an approved school required under the said Part IV shall, subject to the provisions of the next following para-
  1558
  graph, be deemed to be kept by the Secretary of State under that Part.
  (3) Before the expiration of the period of two years mentioned in either of the two foregoing sub-paragraphs, the persons responsible for the management of any establishment deemed to be registered as aforesaid shall, if they intend the establishment to continue for the purposes in respect of which it is so deemed, make application for registration in accordance with the provisions of the said Part IV.
  Approved schools
  2.—(1) The following enactments shall, notwithstanding the repeal or exclusion by this Act of any such enactment, continue to have effect, with any necessary modifications, in relation to establishments which were approved schools immediately before the commencement of Part III of this Act until such time as the Secretary of State otherwise directs, either generally or in regard to any particular establishment—

  (a) The Children and Young Persons (Scotland) Act. 1937: sections 83(2) and (3) and 85(1), 2(a) and (c) (surrender of certificate of approval of approved school and classification and administration etc. of approved schools); section 107(l)(a) (i) and (b) and (2) (exchequer grants and expenses of the Secretary of State);

  (b) The Criminal Justice (Scotland) Act, 1963: sections 21 and 22 (directions as to management of approved schools and constitution of managers).

  (2) Until such time as the Secretary of State makes a direction under sub-paragraph (1) of this paragraph in respect of an establishment the payments made by a local authority under this Act in respect of the expenses of carrying on the establishment shall be at such rate as the Secretary of State shall from time to time prescribe.
  (3) Until such time as aforesaid any contributions or sums received by a local authority by virtue of any order or decree made under Part VI of this Act, or deemed to be so made, in respect of a child in an establishment shall be paid to the Secretary of State, but subject to such deductions in respect of the services rendered by the authority as may be prescribed.
  Contributions in respect of children taken into care
  3. After the commencement of Part II of this Act and until the commencement of Part VI thereof, Part III of the Children Act 1948 shall have the like effect in relation to children taken into care under section 15 of this Act as it had in relation to children taken into care under section 1 of that Act.
  Approved school orders, fit person orders, and supervision orders
  4.—(1) This paragraph applies to children who immediately before the commencement of Part III of this Act were in any of the following classes, that is to say children who are—

  (a) subject to an approved school order.

  1559

  (b) committed to the care of a fit person under an order of a court,

  (c) under a supervision order,

  (d) subject to an order of committal to custody in a remand home.

  (2) Subject to the next following sub-paragraph, a child to whom this paragraph applies shall, on the coming into operation of the said Part III, continue to be subject to any such order as aforesaid, and any provision of any enactment applying to the operation of the order and the treatment of the child shall, notwithstanding the repeal or exclusion by this Act of any such provision, continue so to apply.
  (3) It shall be the duty of such local authorities as may be prescribed by the Secretary of State, by such date, and in such circumstances and in such cases as may be so prescribed to arrange for children to whom this paragraph applies to be brought before a children's hearing for the consideration and disposal of their cases under Part III of this Act, and on the disposal of a case the order relating to the child shall cease to have effect.
  (4) The provisions of the last foregoing sub-paragraph shall apply in the case of a child over the age of sixteen years who has not attained the age of eighteen years, but where a child has attained the age of eighteen years, on such date as the Secretary of State may prescribe, the order relating to the child shall cease to have effect.
  Jurisdiction of courts
  5.—(1) Subject to the next following sub-paragraph, on the commencement of Part III of this Act, for the purpose of continuing the jurisdiction of courts in respect of children and young persons who before the said commencement have been charged with an offence, and in respect of children whose cases have been disposed of but where the courts have continuing functions at the time of that commencement arising from the form of disposal, the provisions of any enactment relating to those courts and cases in them shall, notwithstanding the repeal or exclusion by this Act of any such provisions, continue to have effect in relation to those courts and to those cases.
  (2) In the case of a juvenile court constituted under section 51 of the Children and Young Persons (Scotland) Act 1937, the provisions of the foregoing sub-paragraph shall apply until such time as the Secretary of State otherwise directs, and on any such direction being made any question arising from the imposition of an order of such a court shall be dealt with by the sheriff having jurisdiction in the former area of that court as if the order had been made by him.
  6. On the coming into operation of the said Part III the jurisdiction of a juvenile court in relation to the care and protection of children shall cease, and any case of a child under the age of sixteen years which was before the court under that jurisdiction immediately before the said commencement shall stand referred to the reporter of the local authority in whose area the child is ordinarily resident, or, where his ordinary residence is not known or is furth of Scotland,
  1560
  to the reporter of the local authority in whose area the circumstances arose which brought his case before the court.
  Remand Home Grant
  7. Until such time as the Secretary of State may direct, section 107(a)(iii) of the Children and Young Persons (Scotland) Act, 1937 shall continue to have effect.
  Probation Grant
  8. Until such time as the Secretary of State may by order direct, section 75(3(a) and (b), (4) and (5) of the Criminal Justice (Scotland) Act, 1949 shall continue to have effect.
  Interpretation
  9. In this Schedule the following expressions have the meanings assigned to them—
  'approved school' means a school approved under section 83 of the Children and Young Persons (Scotland) Act, 1937.
  ' approved school order' has the meaning assigned to it by section 110(1) of the said Act of 1937.
  'remand home' has the meaning assigned to it by section 78(1) of the Criminal Justice (Scotland) Act, 1949.
  'supervision order' has the meaning assigned to it by section 72 of the said Act of 1949.—[Mr. Millan.]
  Brought up, and read the First time.
  Mr. Millan: I beg to move, That the Schedule be read a Second time.
  Mr. Speaker: Order. I have been informed that there is a manuscript Amendment to the Schedule..
  Mr. Millan: Yes, Sir. I apologise for this. The manuscript Amendment is in paragraph 5(1) after the second "children" insert "and young persons".
  This is a purely drafting point. I apologise for the manuscript Amendment, but this is a complicated Schedule and these words were omitted. I am sure that it would be right to insert them.
  This Schedule should be taken with Amendment No. 118, which deletes the existing Schedule 6, as this is a new transitional Schedule which replaces Schedule 6. We found on further consideration of the transitional Schedule that it would be necessary to make a number of Amendments to it to ensure that it was absolutely right. It seemed to us that it would be more convenient for hon. Members if, instead of tabling complicated Amendments, we simply eliminated Schedule 6 and tabled a completely new Schedule of transitional provisions, and I

  1561
  think that this course is more intelligible to hon. Members. I discussed the matter with the hon. Member for Perth and East Perthshire (Mr. MacArthur) and I know that he agrees that this is an appropriate caurse to take.
  Paragraph I relates to the registration of existing establishment. It is envisaged that Part IV of the Bill, which deals with registration, will come into operation before Part III, which provides the new system for dealing with children in rouble. It is only when Part III comes into operation that approved schools as such will be abolished and it is at this stage that approved schools should be brought within the registration system provided for in Part IV. Other existing establishments should, as at present provided, be brought within the Part IV registration system at the commencement of Part IV. The revised paragraph I provides accordingly.
  The revised paragraph 2, which replaces the existing paragraphs 2 and 3, contains the provisions which will continue to apply to existing approved schools for a transitional period after Part III of the Bill comes into operation. The preamble is in more general form and makes it clear that the approved schools can eventually be brought entirely within the Bill system either individually or all together. As compared with the existing version of the Schedule, Section 94 of the 1937 Act, which deals with contributions, is no longer applied. We have incorporated the substance of that prevision in sub-paragraph (2). We have also removed the application of certain provisions of the Education (Scotland) Act, 1962, as that is no longer necesary when the appropriate provisions are being provided for in other parts of the Bill.
  The new paragraph (3) deals with contributions in respect of children in care. It is intended that Part VI of the Bill should come into operation at the same time as Part III, and accordingly it is necessary to keep in operation Part III of the Children Act, 1948, which contains the present provisions about such contributions for the period between the coming into operation of Part II of the Bill and the coming into operation of Parts III and VI. Otherwise there would
  1562
  be a gap, and this transitional provision provides for that gap period.
  Paragraph 4 of the present Schedule deals with bringing before hearings children subject to certain court orders. We have made this provision a good deal clearer. It deals with the continuance in force of such orders and for bringing before the children's hearing as appropriate children subject to such orders. In the period after the Bil comes into operation, it can be provided that children then under supervision should be brought before children's hearings and, therefore, into the general arrangements of Part III.
  New paragraphs 5 and 6 are introduced to cover children whose cases are in progress either in relation to criminal proceedings or to care and protection proceedings. Briefly, the courts' jurisdiction to deal with criminal cases before them at the time of the coming into operation of Part III will continue, though paragraph 5(2) provides a safeguard against the indefinite continuance of the special juvenile courts. Care and protection cases will stand referred to the appropriate reporter.
  Paragraphs 7 and 8 provide for the continuation of remand home grant as well as probation grant.
  I hope that that brief explanation will make reasonably clear what the transitional provisions in Schedule 6 are all about.
  Question put and agreed to.
  Schedule read a Second time.
  Mr. Millan: I beg to move as an Amendment to the proposed Schedule, in paragraph 5(1) after second "children" insert "and young persons".
  Amendment agreed to.
  Schedule, as amended, added to the Bill.

New Schedule

  AMENDMENT OF CHILDREN ACT 1958
  1. After section 1 there shall be inserted the following section—
  '1A. In Scotland, without prejudice to the provisions of the Social Work (Scotland) Act 1958, it shall be the duty of every local authority to secure the welfare of children within their area who are foster children within the meaning of this Part of this Act

  1563
  and, where the local authority consider such a course to be necessary or expedient for the purposes of this section, they shall cause the children to be visited from time to time by the officers, who shall give such advice as to the care and maintenance of the children as may appear to be necessary '.
  2.—(1) In section 2(1), for the words 'and maintenance' to the word 'month' there shall be substituted the words 'is undertaken for a period of more than six days beginning with the day on which the child is received into that care'.
  (2) In section 2(3), after paragraph (e) there shall be added the following paragraph—
  (f) who undertakes his care for a period not exceeding one month beginning with the day the child is received into that care, unless—

  (i) the person during the year immediately preceding the date of receiving into care has had the care or one or more foster children for periods which in the aggregate exceed three months, or

  (ii) the number of continuous periods, which exceed six days beginning on the day of receiving into care, throughout which a particular child or any child was in the care of that person in that period of one year exceeds three.

  (3) Section 2(6) and (7) shall be omitted.
  3. In section 9, after the word 'foster-child' there shall be inserted the words 'for reward'.—[Mr. Millan.]
  Brought up, read the First and Second time, and added to the Bill.

Schedule 1

  AMENDMENT OF PART IV OF THE CHILDREN AND YOUNG PERSONS (SCOTLAND) ACT 1937
  Mr. Ross: I beg to move Amendment No. 106, in page 60, line 16, at beginning insert:
  (1) In section 40(1) for the words 'apparently under the age of seventeen years' there shall be substituted the words 'who is apparently a child'.
  Perhaps it would be convenient to discuss with it Amendment No. 107.
  Mr. Speaker: So be it.
  Mr. Ross: Section 40 of the 1937 Act relates to liberation or detention of children and young persons who are arrested. Paragraph 1 of Schedule 1 provides that any reference to a child or young person is to be construed as a reference to a child within the meaning of Part III of the Bill, but that is not wide enough to cover references to persons under the age of 17 years.
  1564
  The provisions in Part IV of the 1937 Act, as it is to be amended, will deal generally with procedure in relation to children within the meaning of Part III of the Bill who may be or are prosecuted, and accordingly it is desirable to change the references in subsections (1) and (2) of Section 40 to references to
  "a person who is apparently a child".
  That is the phrase already used in the subsection (3) to be inserted in Section 40 by paragraph 3 of Schedule 1.
  Amendment agreed to.
  Further Amendments made: No. 107, in page 60, line 16, after '40(2)', insert:
  'for the words" apparently under the age of seventeen years" there shall be substituted the words "who is apparently a child", and'.—[Mr. Ross.]
  No. 108, in page 60, line 34, leave out '(3)' and insert '(4)'.—[Mr. Millan.]
  Mr. Millan: I beg to move Amendment No. 109, in page 61, to leave out lines 26 to 28.
  This Amendment deletes the reference to the local authority furnishing the court with information as to the availability of residential establishments. It is not necessary to provide this now because in the case of remands and committal to places of safety the local authority will select the place where the child is to be detained, and in the case of detention imposed by the court the Secretary of State shall choose the place at which the child should be detained. Therefore, it is not necessary to provide the court with this information.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 110, in page 61, line 31, to leave out from 'section' to the end of line 37 and insert:
  '46(1) for the words "child or young person", in both places where these words occur, there shall be substituted the words "a person under the age of seventeen years"'.
  Mr. Speaker: We may take, at the same time, Government Amendments Nos. 113, 112, 166 and 186.
  Mr. Millan: All these Amendments relate to the enactments dealing with the prohibition of publicity about young people brought before a court. The

  1565
  Scottish provisions relating to this are Sections 46 and 54 of the Children and Young Persons (Scotland) Act, 1937, and Section 57 of the Children and Young Persons Act, 1963. The original intention was to repeal Section 57 of the 1963 Act and to amend the 1937 Act appropriately, but we have found that this is rather less satisfactory than what we are now providing for in this series of Amendments, which keeps Section 57 in force for Scotland. The subsections which we propose to add to Section 46 of the 1937 Act are not now necessary as the appropriate modifications are made by Section 57 of the 1963 Act, which we are retaining.
  In the case of children who come before a court we are retaining the status quo in the sense that the age limit for questions about publicity will remain 17, although we have made certain other changes in age limits from the point of view of children who should be brought before the children's hearings or the courts. It is right, in all the circumstances, and particularly as 17 will continue to apply south of the Border, that on questions of publicity we should retain the age of 17.
  Amendment agreed to.
  Further A mendments made: No. 1ll, page 61, line 47, leave out' (3)' and insert '(4)'.
  No. 112, page 62, line 8, after 'Act', insert:
  'and section 49 of the Children and Young Persons Act 1933'.
  No. 113, page 62, line 35, leave out from 'and' to end of line 42 and insert:
  'for the words "child or young person" in both places where these words occur there shall be substituted the words "a person under the age of seventeen years" '.
  No. 114, page 63, line 34, leave out from beginning to end of line 35 and insert:
  'For section 67, there shall be substituted tha following section'.—[Mr. Millan.]

Schedule 2

  CHILDREN'S PANELS
  Mr. Millan: I beg to move Amend-men No. 115, in page 64, line 33, to leave out 'of the panel' and insert:
  1566
  'or possible members of the children's panel and members of the Children's Panel Advisory Committee'.
  This meets a point raised by my hon. Friend the Member for Glasgow, Provan (Mr. Hugh D. Brown) in Committee about the payment of expenses to prospective members of the children's panel and also members of the Children's Panel Advisory Committee. He drew attention to the fact that they did not seem to be provided for in the Schedule. I agree, and the Amendment inserts the appropriate provision. It was always intended that provision should be made for this.
  Amendment agreed to.

Schedule 3
  AMENDMENT OF LEGAL AID (SCOTLAND) ACT, 1967
  Amendment made: No. 116, in page 65, line 8, leave out 'best'.—[Mr. Millan.]
Schedule 4
  APPEAL TRIBUNALS
  Amendment made: No. 117, in page 67, line 2, leave out 'tribunals' and insert 'the panel'.—[Mr. Millan.]
Schedule 6
  TRANSITIONAL PROVISIONS
  Amendment made: No. 118, in page 68, line 1, leave out Schedule 6.—[Mr. Millan.]
Schedule 7

  MINOR AND CONSEQUENTIAL AMENDMENTS
  Amendments made: No. 119, in page 70, line 2, leave out from 'proviso' to 'Part II' in line 4 and insert:
  'after the words "1948" there shall be inserted the words "or"'.
  No. 120, in page 70, line 8, leave out from 'and' to 'art II' in line 10 and insert:
  'after the words "1948" there shall be inserted the words "or"'.

  1567
  No. 121, in page 70, line 12, leave out from '90(6)'to' Part II' in line 14 and insert:
  'after the words "1948" there shall be inserted the words "or"'.—[Mr. Millan.]
  9.30 p.m.
  Mr. Millan: I beg to move Amendment No. 122, in page 70, line 24, at end insert:
  7.—(1) In section 87(1), for the words from to an approved school' to the end of the subsection there shall be substituted the words 'to such place in Scotland as the Secretary of State may direct for the purposes of undergoing residential training, and after his transfer to that place may be dealt with and shall be subject to the provisions of this Act and of the Criminal Justice (Scotland) Act 1963 as if the order sending him to the school in England or Northern Ireland were an order for committal for residential training made under section 58A of this Act made upon the same date, and as if the order were authority for his detention for a period not exceeding the period for which he might be detained under the approved school order or, as the case may be, the training school order made in respect of him'.
  (2) In section 87(2) to (4), any reference to an approved school in Scotland shall be construed as a reference to a place in respect of which the Secretary of State has made, or may make, a direction under subsection (1).
  (3) In section 87(3), the words from 'approved school as' to the end of the subsection shall be omitted, and there shall be substituted the words 'to such place in Scotland as the Secretary of State may direct for the purposes of undergoing residential training, and after his transfer to that place may be dealt with and shall be subject to the provisions of this Act and of the Criminal Justice (Scotland) Act 1963 as if the order were an order for committal for residential training made under section 58A of this Act made upon the same date'.
  I suggest that it will be convenient to take at the same time Amendment No. 173, in Schedule 8, in page 79, line 42, leave out '98' and insert:
  '86
  Sections 88 to 98'.
  Mr. Deputy Speaker: So be it.
  Mr. Millan: Section 87 of the Children and Young Persons (Scotland) Act, 1937, sets out arrangements for children and young persons to be sent from England, Northern Ireland, the Isle of Man and the Channel Islands to approved schools in Scotland. Although approved schools as such are to be abolished in Scotland there may still be occasions when the most suitable treatment for a child from another part of the United Kingdom can
  1568
  be provided in a residential establishment in Scotland. For example, children from Northern Ireland are sometimes sent to the Macdonald Wing of Rossie Farm School. It is desirable to make provision for such cases. Accordingly, Section 87 of the 1937 Act is amended to make this possible.
  Amendment agreed to.
  Further Amendments made: No. 123, in page 70, line 25, leave out' For section 101(2) there shall be substituted' and insert:
  'After section 101(2) there shall be inserted'.
  No. 124, in page 70, line 27, leave out '(2)' and insert '(2A)'.—[Mr. Millan.]
  Mr. Millan: I beg to move Amendment No. 125, in page 70, line 29, at end insert:
  (1) In section 103(1), for the words 'whether charged with an offence or not' there shall be substituted the words 'charged with an offence'.
  (2) After subsection (1), there shall be added the following subsection—
  '(1A) The court in making any inquiry in pursuance of the last foregoing subsection shall have regard to the application of the provisions of section 30(1) of the Social Work (Scotland) Act 1968 but an order or judgment of the court shall not be invalidated by any subsequent proof that the court was not informed that at the material time the person was subject to a supervision requirement or that his case had been referred to a children's hearing under Part V of that Act'.
  (3) After subsection (4), there shall be added the following subsection—
  '(5) In subsections (1) and (2) of this section, references to a child or young person charged with an offence shall be construed as references to a child within the meaning of section 30(1) of the Social Work (Scotland) Act 1968'.
  I suggest that with this it will be convenient to take Amendment No. 174, in Schedule 8, in page 79, leave out lines 44 to 48.
  Mr. Deputy Speaker: Very well.
  Mr. Millan: The Amendment in subsection (1) takes account of the fact that a child will no longer be brought before a court in care and protection cases, so that it is necessary to remove that reference. The subsection (1A), which we add to Section 103 provides that an order or judgment of a court shall not be invalidated by a subsequent discovery

  1569
  that a child is subject to a supervision requirement in broadly the same way as it provided in Section 103 at present that an order or judgment shall not be invalidated by a subsequent discovery that the age of a person has not been correctly stated to the court.
  As the House will know, in the case of a child under a supervision requirement, he should appear before a children's hearing. If he does not, the Amendment provides that nevertheless the decision of the court is not invalidated.
  The subsection (5) which we are adding to section 103 of the 1937 Act—again by subsection (3) of the Amendment—takes account of the fact that in the case of an accused person the relevant factor is whether or not he is a child within the meaning of Part III of the Bill. Where a victim or a witness is concerned, the relevant factor remains whether he is a child or young person, that is, whether he is under 17 years of age. The deletions from Section 103 at present provided for in Schedule 8 are accordingly unnecessary and the references to section 103 are omitted from the Schedule by leaving out lines 44 to 48 on page 79.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 126, in page 71, line 7 [Schedule 7].. leave out 'Part I' and insert 'section 1(4)'
  I suggest that with this we take Amendment No. 127.
  Mr. Speaker: If that is convenient to the House.
  Mr. Millan: The purpose of these two Amendments is to express in more specific form the Amendment to Section 27 of the National Health Service (Scotland) Act, 1947, set out in paragraph 10 of Schedule 1 of the Bill. The existing reference to Part I of the Social Work Act is too general. It is possible under the Bill for different dates to be appointed for the coming into operation of individual Clauses and, therefore, there might not be any operative date for Part I as a whole.
  It is therefore necessary to make this reference rather more precise. It is from the date of the coming into operation of Clause 1(4) of the Bill that a local health authority is no longer to perform any function which that Section transfers to
  1570
  a local authority, and the two Amendments make the appropriate change.
  Amendment agreed to.
  Further Amendments made: No. 127, in page 71, line 10, leave out 'section 1(4) that Act' and insert 'that section'.
  No. 128, in line 14, at end insert:
  11. In section 32(1), at the end there shall be inserted the words ', and in this subsection any reference to another local authority includes a reference to a local authority in Scotland'.
  No. 129, in line 15, leave out paragraph 12.
  No. 130, in line 27, leave our paragraph 14.
  No. 131, in line 36, leave out paragraph 16 and insert:
  16.—(1) In section 1(4), after the words 'Secretary of State', there shall be inserted the words 'and in this subsection any reference to another local authority includes a reference to a local authority in Scotland'.
  (2) In subsection (5), after the words 'probation order', there shall be inserted the words 'or supervision requirement', and after the words '1937', there shall be inserted the words 'or Part II of the Social Work (Scotland) Act, 1968'.
  No. 132, in line 40, at end insert:
  17. In section 13(1), at the end, there shall be inserted the words' and arrangements may be made under this subsection for boarding out a child in Scotland, or for maintaining him in a residential establishment provided, or the provision of which is secured, or which is registered, under Part IV of the Social Work (Scotland) Act, 1968'.—[Mr. Millan.]
  Mr. Milian: I beg to move Amendment No. 133, in page 72, line 13, leave out 'in rules made by the Secretary of State' and insert 'by Act of Adjournal'.
  As the Schedule stands, it provides for a probation order to be in the form pre-prescribed in rules made by the Secretary of State. It is in fact inappropriate that a form relating to criminal procedure should be prescribed by the Secretary of State. It ought to be done by an Act of Adjournal made by the High Court of Judiciary, and the Amendment corrects that error.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 134, in page 73, line 4, after 'authority', insert:
  'for the words "other than a juvenile court" there shall be substituted the words "other than a court whose procedure is regulated by rules made under section 52(2) of the Children and Young Persons (Scotland) Act, 1937"'.

  1571
  With this we can also take Amendment No. 177.
  Mr. Speaker: If that is convenient to the House.
  Mr. Millan: The purpose of these two Amendments is to except from the provisions of Section 10 of the Criminal Justice (Scotland) Act, 1949, in the same way as a juvenile court is excepted at present, a court whose procedure is to be regulated by rules made by the High Court under Section 52(2) of the Children and Young Persons (Scotland) Act, 1937, as amended by Schedule 1 to the Bill, that is to say, a court dealing with summary proceedings against a child.
  What we are doing is continuing the special safeguards, the special considerations, which apply in a juvenile court to the communication to the child and his parent or guardian of the content of any report made to a court about him. This is already recognised in the special procedure of the Juvenile Courts Procedure (Scotland) Rules, 1951, and we are providing for a continuation of these safeguards by these Amendments.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 135, in page 73, line 19, leave out paragraph (2) and insert:
  (2) For subsections (3) and (4), there shall be substituted the following subsections—
  '(3) Where any person is committed to a local authority or to a remand centre under any provision of this Act that authority or centre shall be specified in the warrant, and he shall be detained by the authority or in the centre for the period for which he is committed or until he is liberated in due course of law.
  (4) Where any person has been committed to a local authority under any provision of this Act, the court by which he was committed, if the person so committed is not less than fourteen years of age and it appears to the court that he is unruly or depraved, may revoke the commitment and commit the said person—

  (a) if the court has been notified that a remand centre is available for the reception from that court of persons of his class or description, to a remand centre; and

  (b) if the court has not been so notified, to a prison'.

  This Amendment goes with the following two Amendments: No. 136, in page 73, line 23, leave out from 'person' to second 'the' in line 24 and insert:
  1572
  'under sixteen years of age who has been committed to prison or to a remand centre under this section'.
  No. 137, in line 25, after 'prison' insert 'or a remand centre'.
  These Amendments are consequential on the new provisions substituted by paragraph 26(1) of Schedule 7 for the existing provisions of Section 28(1) of the Criminal Justice (Scotland) Act, 1949, which relates to the detention of persons under 21 remanded or committed for trial by a court. In future, if the person is under 16 he is to be committed to the local authority, which must place him in a suitable place of safety, rather than committed to a remand home because under the Bill remand homes as such will disappear. If he is over 16, or under 16 but over 14 and certified by the court to be unruly or depraved, he is to be committed to a remand centre if one is available or to prison if one is not.
  The Amendments which replace the existing Sections 28(3) and (4) of the 1949 Act provide (a) that the local authority or remand centre to which a person is committed is to be specified in the warrant and that he is to be detained for the period of committal or until liberated in the due course of law; and (b) that the court, in the case of a person committed to a local authority who is over 14 and appears to be unruly or deprived, may revoke its commitment and commit that person instead to a remand centre or, if one is not available, a prison.
  The Amendments to lines 23 and 25 alter the wording of the new subsection (5) which is added to Section 28 of the 1949 Act by paragraph 26(3) of Schedule 7 to make it clear that the sheriff may revoke the commitment of a person under 16 committed to a remand centre as well as to prison under Section 28 and commit him instead to the local authority.
  In other words, these provisions introduce various elements of flexibility which would be missing without the Amendments.
  Amendment agreed to.
  Further Amendments made: No. 136, page 73, line 23, leave out from 'person' to second 'the' in line 24 and insert:
  'under sixteen years of age who has been committed to prison or to a remand centre under this section'.
  No. 137, in line 25, after 'prison' insert 'or a remand centre'.—[Mr. Millan.]
  Mr. Ross: I beg to move Amendment No. 138, in page 73, line 34, leave out 'definition—' and insert:
  'definitions—
  "local authority" has the same meaning as in the Social Work (Scotland) Act, 1968,'.
  The Amendments made in Schedule 7 of the Bill to the Criminal Justice (Scotland) Act, 1949, refer in several places to local authorities. It is accordingly desirable to define "local authority", which is not defined in the 1949 Act.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 139, in page 74, line 7, at end insert:
  In section 8(1), after the words 'the Children Act 1948' there shall be inserted the words 'or section 81 of the Social Work (Scotland) Act 1968'.
  Mr. Speaker: With this Amendment, we take also the following group of Amendments: No. 140, in page 74, line 8 after '30', insert '(1)'.
  No. 141: in page 74, line 8, leave out from '(1),' to 'for' in line 10 and insert;
  ' after paragraph (a) there shall be inserted the following paragraph—(aa)'.
  No. 142: in line 14, at end insert:
  (2) In subsection (2) after the words 'forty-three', there shall be inserted the words 'or the said section 80'.
  In section 16(2)(b), after sub-paragraph (v) there shall be inserted the following sub-paragraph—
  '(vi) a contribution order under section 80 of, or a decree or an order made under section 81 of, the Social Work (Scotland) Act 1968'.
  No. 178: in Schedule 8, page 81, line 41, column 3, at end insert:
  ',so far as relating to the modification of the Children and Young Persons (Scotland) Act 1937'.
  Mr. Millan: These Amendments, to the Maintenance Orders Act, 1950, and complementary to Amendments which we have made earlier today to Part IV of the Bill, are designed to ensure that the machinery exists for the making and enforcement of contribution orders, decrees for aliment and orders in respect of such decrees against fathers and mothers who are for the time being resid-
  1574
  ing in England and Wales and Northern Ireland, where a child is in the care or under the supervision of a local authority in Scotland.
  In other words, it is not possible for a father or mother to absolve himself from his obligation by moving out of Scotland. We are now making the provisions of the Act bite in England and Wales and in Northern Ireland.
  Amendment agreed to.
  Further Amendments made: No. 140, in page 74, line 8, after '30' insert '(1)'.
  No. 141: in page 74, line 8, leave out from '(1),' to 'for' in line 10 and insert—
  'after paragraph (a) there shall be inserted the following paragraph—(aa)'.
  No. 142: in line 14, at end insert:
  (2) In subsection (2) after the words 'forty-three', there shall be inserted the words 'or the said section 80'.
  In section 16(2)(b), after sub-paragraph (v) there shall be inserted the following sub-paragraph—
  '(vi) a contribution order under section 80 of, or a decree or an order made under section 81 of, the Social Work (Scotland) Act 1968'.—[Mr. Millan.]
  9.45 p.m.
  Mr. Ross: I beg to move Amendment No. L43, in page 74, leave out lines 16 and 17 and insert:
  'Any reference to the Children and Young Persons (Scotland) Act 1937, however expressed, or to any provision of that Act shall be omitted.
  Valuation and Rating (Scotland) Act 1956
  32.—(1) In section 8(1) in paragraph (b), after the word "authority", there shall be inserted the words "or to a local authority".
  (2) For paragraph (c), there shall be substituted the following paragraph:—
  "(c) of any structure belonging to a local authority or voluntary organisation being a local authority or a voluntary organisation within the meaning of the Social Work (Scotland) Act, 1968 and supplied in pursuance of arrangements made under the Social Work (Scotland) Act, 1968 for the use of any persons who are blind, deaf and dumb or who suffer from mental disorder of any description and other persons who are substantially and permanently handicapped by illness, injury or congenital deformity or such other disabilities as may be prescribed by the Secretary of State under that Act"'.
  This Amendment relates to two separate Acts. The Children and Young Persons Act, 1956, is a Great Britain enactment which amended both the

  1575
  Children and Young Persons Act, 1933, which is the principal English Act, and the Children and Young Persons (Scotland) Act, 1937, the principal Scottish Act. The amendments related to such matters as escapes from care of fit persons, escapes from approved schools, and escapes from remand homes, and the amended provisions of the 1937 Act are being superseded by the provisions of the Bill. The 1956 Act is repealed for Scotland, and this makes clear that the references in the Act to the 1937 Act are no longer applicable to England and Wales or Scotland.
  The new paragraph amending Section 8(1) of the Valuation and Rating (Scotland) Act, 1956, is designed to maintain the status quo. Section 8 provides that for the purpose of ascertaining the gross annual value of any lands and heritages no account shall be taken of certain structures. Subsection (1)(b) refers to structures supplied for use in pursuance of arrangements under Section 27(1) of the National Health Service (Scotland) Act, 1947, while subsection (l)(c) refers to structures supplied for use in pursuance of arrangements made under Section 29 of the National Assistance Act, 1948.
  The changes are necessary because certain responsibilities under Section 27(1) of the 1947 Act are transferred from local health authorities to social work authorities, while responsibilities corresponding to those under Section 29 of the 1948 Act, which is repealed for Scotland by the Bill, are placed on social work authorities by the Bill.
  Amendment agreed to.
  Further Amendments made: No. 144, in page 74, line 31, after '1968', insert
  'and for the words "that section" there shall be substituted the words "the said section 1 or, as the case may be, the said section 15"'.
  No. 145, in line 2, leave out 'sections 5(3)' and insert 'or by virtue of sections 5,'.
  No. 146, in line 2, leave out 'and 59' and insert '59 and 60'.
  No. 147, in line 11, leave out 'section' and insert 'subsection'.
  No. 148, in line 24, leave out from '6(b)' to 'the' in line 25 and insert:
  'after the words "1937" there shall be inserted'.
  No. 149, in page 75, line 30, leave out '15' and insert '16'.
  No. 150, in line 37, leave out 'for' and insert 'in'.—[Mr. Ross.]
  Mr. Speaker: We come now to Amendment No. 151, with which it is suggested we should take Amendments No. 152, No. 154 and No. 183.
  Mr. Millan: I beg to move Amendment No. 151, in page 76, line 17, to leave out '(e)'.
  This Amendment, and No. 152, which were referred to earlier today, are necessary because under Clause 1(4) the functions of local authorities under the Mental Health (Scotland) Act, 1960, are transferred to the local authorities, other than the functions relating to the ascertainment of mental deficiency of young persons under school age. In essence, what the Amendments do is to place under Section 7(1) of the Mental Health (Scotland) Act, 1960 functions which are appropriate to the local health authority and to transfer to subsection (1A) those appropriate to the social work authority. You said, Mr. Speaker, that with Amendment 154, we could take Amendment No. 183, but Amendment No. 157 could also be taken, I suggest, in this group.
  The purpose of the Amendments is to make clear the meaning of a child for the purposes of Part V of the Mental Health (Scotland) Act, 1960. We are dealing here with a court case where the accused young person is not represented and it is necessary to make provision that a medical report shall be made available to the parent if the accused young person is a child under the age of 16 rather than if he is a child or young person. The words "child" and "young person" have certain meanings under the Children and Young Persons Act 1937 where a child is taken up to the age of 17. We are now dealing with a child up to the age of 16 and the three Amendments make the appropriate adjustment.
  Amendment agreed to.
  Further Amendments made: No. 152, in page 76, line 19, leave out from '7(1)' to end of line 24 and insert:
  'after the words "shall include", there shall be inserted the words "the ascertainment of mental deficiency in any person not of school

  1577
  age within the meaning of the Education (Scotland) Act, 1962".
  (1A) In relation to the aforesaid persons the purpose for which arrangements are authorised or required to be made by a local authority under the said section 27(1) as read with section 1(4) of the Social Work (Scotland) Act, 1968 shall include the following, that is to say—"; and paragraph (e) shall be omitted ".
  (2) In subsection (2) for "(1)" where secondly occurring there shall be substituted the word "(1A)"'.
  No. 153, in page 76, line 26, at end insert 'or'.
  No. 154, in page 76, line 39, at end insert:
  In section 57(3)(b), after the word 'child', there shall be inserted the words 'under sixteen years of age'.
  No. 155, in page 76, line 40, after '59(1)' insert:
  'for the word "home" there shall be substituted the words "residential establishment", and '.—[Mr. Millan.]
  No. 156, in page 77, line 5, leave out first '(1)'.
  No. 157, in page 77, leave out lines 6 to 9.
  No. 158, in page 77, line 20, leave out '(2)'.
  No. 159, in page 77, line 21, leave out 'definitions' and insert 'definition'.
  No. 160, in page 77, leave out lines 24 and 25.
  No. 161, in page 77, line 26, leave out from '111', to 'the' in line 27 and insert:
  'after the definition of "hospital order" there shall be inserted'.—[Mr. Millan.]
  Mr. Ross: I beg to move Amendment No. 162, in page 77, line 29, at end insert:
  Health Visiting and Social Work (Training) Act 1962
  54. In section 3(5), after '1948', insert 'or under any re-enactment of any of the provisions of the said Parts of the said Acts of 1947 and 1948 contained in Part II of the Social Work (Scotland) Act 1968.
  The Amendment provides that the re-enactments of the 1947 and 1948 Acts contained in Part II of the Bill shall be added to the list of enactments in Section 3(5). The effect is to preserve the status quo.
  Amendment agreed to.
  Mr. Millan: I beg to move Amendment No. 163, in page 78, line 3, leave out from first 'of to end of line 4 and insert:
  'an establishment or residential establishment within the meaning of the Social Work (Scotland) Act 1968 and the certificated teachers employed therein in the provision of primary, secondary or further education'.
  The purpose is to maintain the protection which certificated teachers at present employed in approved schools enjoy in the same way as teachers employed by the education authority. The provision in the Bill was not quite right and the Amendment maintains the protection.
  Amendment agreed to.
  Further Amendments made: No. 164, page 78, line 14, at end insert:
  (b) in definition 42, for the words from 'not include' to the end of the definition there shall be substituted the words 'an establishment or residential establishment within the meaning of the Social Work (Scotland) Act 1968'.
  No. 165, in line 19, leave out paragraph 61 and insert:
  61. In section 55, the words from 'section 88(5)' to 'Scottish Act' shall be omitted and after '1948' there shall be inserted the words 'or section 23 of the Social Work (Scotland) Act 1968'.
  No. 166, in line 22, at beginning insert:

  (1) In section 57(2), any reference to a juvenile court shall, in relation to Scotland, be construed as a reference to the sheriff sitting summarily in respect of an offence by a child.

  (2).—[Mr. Millan.]

  Mr. Millan: I beg to move Amendment 167, in page 78, line 30, at end insert:
  65. In section 29, for the words 'approved school' there shall be substituted the words 'detained in any place under an order made by virtue of section 57 or 58A of the Children and Young Persons (Scotland) Act, 1937'.
  We are dealing here with a provision in the Criminal Justice (Scotland) Act, 1963, which provides for the remission of fines where a young offender is detained. The references are no longer appropriate and we are substituting for a reference to an approved school a reference to detention
  "… in any place under an order made by virtue of section 57 or 58A of the Children and Young Persons (Scotland) Act, 1937'.
  These provisions are provided for in Schedule 1.
  Amendment agreed to.
  Mr. Ross: I beg to move Amendment No. 168, in page 78, line 40, leave out sub-paragraphs (1) and (2) and insert:
  66.—(1) In section 11(1), in paragraph (a), after the word 'authorised' there shall be inserted the words 'or, as the case may be, his or her residence in a residential establishment is required', after paragraph (a)(ii) there shall be inserted the following head—
  'or
  (iii) by a supervision requirement made under section 44 of the Social Work (Scotland) Act 1968,',
  and after the words 'the school', there shall be inserted the words 'or, as the case may be, the residential establishment', and in paragraph (b), for the words 'the said Act of 1937' there shall be substituted the words 'the Children and Young Persons (Scotland) Act 1937' and after paragraph (b) there shall be inserted the following paragraph—
  '(bb) during which the child is liable to undergo residential training under committal by virtue of section 58A of the said Act of 1937 and is not released under that section;',
  and after paragraph (c) there shall be added the following paragraph—
  '(cc) during which the child is accommodated by virtue of rules made by the Secretary of State under section 45 of the Social Work (Scotland) Act, 1968'.
  Mr. Deputy Speaker: With this we can discuss Government Amendments Nos. 187 and 189.
  Mr. Ross: Amendment No. 168 provides for the omission of paragraph 66(1) and (2) of the Schedule and substitutes a provision the effect of which is to add Section 11(1) of the Family Allowances Act, 1965, which lists circumstances in which a child has been treated as excluded from a family for the purposes of the Act. A series of new circumstances arise from the Bill. These are any periods during which a child is, first, required to reside in a residential establishment by a supervision requirement made under Clause 44; or, secondly, liable to undergo residential training on committal under Section 58A of the Children and Young Persons (Scotland) Act, 1937; or, thirdly, accommodated by virtue of rules made by the Secretary of State under Clause 45, which may provide for the temporary accommodation of children subject to supervision requirements.
  The Amendments to Schedule 8 which we are also discussing omit references in Section 11(2) of the Family Allowances
  1580
  Act, 1965, to provisions which are repealed by this Bill.
  Amendment agreed to.

Schedule 8

  ENACTMENTS REPEALED
  Amendments made: No. 169, in page 79, line 21, column 3, at beginning insert:

  In section 21(2), the words from 'may take' to the end of the subsection.

  No. 170, in line 23, column 3, at end insert:
  'and in subsection (2), the words "or taken to a place of safety" and the words "or the person by whom he is taken to the place of safety, as the case may be".
  In section 47(1) the words "until he can be brought before a juvenile court", wherever occurring'.
  No. 171, in line 35, at end insert:
  'and in subsection (4), the words "under this section, or"'.
  No. 172, in page 79, leave out line 41.
  No. 173, in page 79, line 42, leave out '98' and insert:
  '86
  Sections 88 to 98'.
  No. 174, in page 79, leave out lines 44 to 48.—[Mr. Millan.]
  It being Ten o'clock, further consideration of the Bill, as amended, stood adjourned.

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings on the Social Work (Scotland) Bill [Lords], on consideration of the Lords Amendments to the Sewerage (Scotland) Bill and on the Civil Evidence Bill [Lords] may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Ross.]

  SOCIAL WORK (SCOTLAND) BILL [Lords]
  As amended (in the Standing Committee), further considered.
  Amendments made: No. 175, in page 80, leave out lines 21 to 23.
  No. 176, in page 80, line 28, at end insert 'Section 26(1) and (5)'.
  No. 177, in page 80, leave out lines 44 and 45.
  No. 178, in page 81, line 41, column 3, at end insert:
  ',so far as relating to the modification of the Children and Young Persons (Scotland) Act, 1937'.—[Mr. Ross.]
  Mr. Millan: I beg to move Amendment No. 179, in page 81, line 42, at end insert:

  15 & 16 Geo. 6. & 1 Eliz. 2. c. 61.

  The Prisons (Scotland) Act 1952.

  Section 18(l)to(3A)-In section 32, in sub-section (3), the words 'who is net less than seventeen years of age', and subsection (4).

  This is basically a drafting Amendment. The hon. Member for Perth and East Perthshire (Mr. MacArthur) early on in our proceedings in Committee asked why this particular repeal of Section 18(1) to (3A) of The Prisons (Scotland) Act, 1952, was not in Schedule 8. I did not have a very good answer for him then. I hope that the hon. Gentleman will accept that we have now put this right. I know it is late on in the Bill, but it is necessary.
  Mr. Ian MacArthur: I am obliged to the hon. Gentleman for reminding the House that it was I who called his attention to the need for this Amendment in Committee. We called the hon. Gentleman's attention to the need for this Amendment early on in Committee and it is a great pity— I say no more than that at this stage— that the Government did not see fit to table this Amendment, along with many others, in Committee. It is a pity that so much time has been taken today debating Amendments which could have been dealt with in Committee.
  Amendment agreed to.
  Further Amendments made: No. 180, in page 81, line 53, column 3, at end insert 'and section 12(3)'.
  No. 181, in page 81, line 53, at end insert:

  6 & 7 Eliz. 2. c. 65.

  The Children Act 1958.

  Section 1.

  Section 2(6) and (7).—[Mr. Millan.]

  No. 182, in page 82, line 3, column 3, at beginning insert 'Section 4(3)(b)'.
  No. 183, in page 82, line 29, at end insert:
  'and in the definition of "place of safety" the words "or young person" first occurring'.
  No. 184, in page 82, line 31, at end insert:
  'for persons suffering from mental disorder'.
  No. 185, in page 82, leave out lines 37 to 39.
  No. 186, in page 82, leave out line 42 and insert 'Section 58'.
  No. 187, in page 82, leave out lines 51 and 52.—[Mr. Ross.]
  No. 188, in page 82, line 52, at end insert:

  1968 c.

  The Health Services and Public Health Act 1968.

  Section (Home help and laundry facilities).

  Section (Extension of power, under the National Assistance Act 1948, of local authority to provide accommodation elsewhere than in premises managed by them or another authority).

  Section (Promotion, by local authorities, of the welfare of old people).

  No. 189, in page 83, column 3, leave out lines 49 and 50 and insert:
  In section 11, subsection (1)(a)(ii), in subsection (l)(c), the words 'or an order under section 73(2) of the said Act of 1937', and in subsection (2), the words 'or the said Act of 1937'.—[Mr. Millan.]

  SOCIAL WORK (SCOTLAND) BILL [Lords]
  10.5 p.m.
  Mr. Ross: I beg to move, That the Bill be now read the Third time.
  When the Bill first came before the House, right hon. and hon. Members gave it a warm and rather enthusiastic welcome. I recall one right hon. Gentleman saying that we were going in for a major pioneering scheme. The importance of the scheme and the strength of interest taken in it have been evidenced by the heavy work which has been done on the Bill and the number of Amendments which have been made during its passage thus far. I do not doubt that the Bill has been considerably improved, and the record of Government Amendments shows that the Government have been responsive to what was said in Committee.
  It is not surprising that attention has tended to concentrate on Part III, since its provisions setting up a new system of children's panels and children's hearings are novel. They are, indeed, pioneering. The new arrangements embodied in Part III do not provide the answer to every problem of juvenile behaviour and delinquency and disturbance among young people. So long as boys are boys and girls are girls, they will continue to get into mischief, severally and jointly, and cause perplexity, if not anxiety, to their parents and to adults generally. No new arrangements, however well designed, will change that state of affairs.
  However, we are concerned in the Bill with something different and probably more serious. We are concerned with the troubles and disturbances among young people which are socially destructive and destructive to themselves and to their own personalities. I am sure that the arrangements under Part III will open the way to major improvements in our ways of dealing with the young people with whom we are concerned and, when firmly established, will give a new impetus to experiment and to the development of improved methods.
  We shall be heavily dependent on finding enough suitable people to be members of children's hearings and to be reporters. Here again, we must explore new ways
  1584
  of identifying those who can help, of attracting them to the work, and of preparing and training them for it. There has been scepticism in some quarters about our ability to find such people, or, at least, enough of them. I am absolutely certain that this scepticism is misplaced. There are people in Scotland today to do these jobs. They can be found. It is our responsibility to make every effort to find them by making as widely known as possible the challenge and the opportunities offered by the work, the satisfaction which it is likely to bring to those who undertake it, as well as the benefits which it can give to the young people and to society itself.
  We are creating for the first time in the history of the United Kingdom, and, so far as I know, that of any other country, a single public agency whose sole concern is the entire range of social welfare, from the care of very young children at one end of the spectrum, through the care and welfare of the sick, the handicapped and the elderly, to the social support and rehabilitation of offenders who have been placed on probation or released from detention.
  The range and scope of this work is great. It presents an immense challenge to all in the social work and related professions and a continuing challenge to the voluntary organisations which have taken part in it. The professions concerned are willing and eager to respond to the challenge. I do not deny that some have had their anxieties either about the ability of their own professional resources to meet it or about the willingness of the public to make available to them the financial and physical resources which are equally essential if the challenge is to be met.
  It is right that the House should be made fully aware of the size and nature of the challenge which we are presenting to these professional people. But the challenge is not only to them. The problems are there and have been there. We have dealt with them inadequately in the past. The real challenge is to society. The Bill provides additional facilities and additional opportunities for all to rise to that challenge.
  10.10 p.m.
  Mr. W. H. Baker: The Secretary of State rightly referred to this Measure as a challenge to us all, in that it is a pioneering effort. The Secretary of State also said that we are dealing with the troubles and disturbances among young people. We have to bear in mind too, that to a large extent we are responsible for protecting society at large. I am not at all sure that the provisions of the Bill will take account of this.
  In Part III, as the Under-Secretary was careful to point out in Committee, with the establishment of the children's hearing and panels, there will be no provision for the punishment of children coming before the panel. On the other hand, if a child commits an offence providing the offence is approved of, that is provided that the Lord Advocate considers that the offence has been committed, the child will go before the sheriff. It is foreseeable that in a number of cases, children should not go before the sheriff because they are in trouble either as a result of their background, or their home background.
  Those are the very children who should be receiving corrective treatment other than punishment. It is equally true that young offenders who have got into mischief would be far better dealt with somewhat more severely than as we are told will be the case with the children's panel. One of the chief sanctions that the panels will have is to take children compulsorily into care. Again, I am not sure that this is the answer. This is a pioneering effort, but I hope that this and succeeding Governments will not close their minds and allow the Bill to go on for ever without further scrutiny, but will be prepared, if the experiment does not work, although we all hope that it will, to look at it again.
  10.15 p.m.
  Sir M. Galpern: My right hon. Friend has rightly referred to this as the creation of a single public agency. The use of this phrase aptly describes this forward-looking reform. Unfortunately, I was not able to serve on the Committee, so this is the first opportunity that I have had of making any comments.
  I want to deal with Clause 12, which is an important aspect of the Bill, apart from the revolutionary changes which have
  1586
  taken place in treatment of individuals. Clause 12 lays a duty on the local authority as follows:
  "It shall be the duty of every local authority to promote social welfare in their area by making available advice, guidance and assistance on such a scale as may be appropriate in their area … "
  How does the average citizen, who has never had contact with social benefits, but is suddenly in a sad plight through illness or unemployment, get to know about the many changes which this Bill will bring about?
  There is a gross inadequacy of information. Someone who is in and out of employment and has contacts at the local Ministry of Social Security Office knows how to act in difficult circumstances and where to enquire about help, but the decent, ordinary citizen with a problem which he cannot resolve is often so grateful when told where help is available that one might think that one was making a personal sacrifice in telling him.
  I would urge action comparable with that proposed by the Minister of Social Security, which is to post 14 million copies of a leaflet headed "Entitlement Campaign", to acquaint families with the benefits available should they require them. Would it not be possible to include in these leaflets in Scotland a description of the services which local authorities will now provide—for example, home helps? Many people, particularly unmarried daughters looking after aged mothers, do not know where to get a home help or that the local authority would pay all or some of the cost. This sort of thing could be explained in the way I mentioned.
  But, if that is too early, could not these details be included in rate demands which, in Glasgow at least, include a statement of how the money is spent? There should be officers, and not just voluntary ones. Citizens' advice bureaux are often in back streets or are known by few people. Surely it would not be too much for authorities to establish offices telling people where to seek help for their problems, instead of them being directed to different departments.
  Then there is the question of the variation in citizens' contributions for the services under this Bill. In the United Kingdom, there are 3,000 local authorities with 3,000 different means tests, which means

  1587
  that people are getting the aid they require not according to their degree of poverty, but according to the area in which they live. Some work has been done on the question of a national scheme of means tests so that there should be no variation between one area and another.
  In the meantime, there are wide variations in the scales laid down by various authorities, and even between various departments in one authority, as to at what level an individual is entitled to help, either in cash or in kind. I hope that every effort will be made to centralise and unify the large number of means tests that operate in Scotland.
  I speak now about Glasgow, but many other places could operate the same system. We have an information office. There should be a central office. One of the problems which was thrown up as a result of the storm damage in Scotland was that there was not one central office to which an individual could make application. There should be a central office to which an individual could apply for advice and guidance on any problem.
  With these remarks, I wish the Bill every success. I believe that if a right is to be claimed by the citizen he should know that the right exists and there should be some place where he can go and get all possible advice and guidance to enable him to avail himself of the right.
  10.21 p.m.
  Mr. Alasdair Mackenzie: This is a very good Bill and one of the least controversial of the Scottish Bills which have passed through the House for some time. In view of the Bill's laudable objectives, this is very satisfactory. It is also very satisfactory to record that there was excellent co-operation in Committee. The Government will admit that they received very good help and co-operation from the Opposition. This has enabled the Bill to be greatly improved from the original draft. This augurs well for the future of the Bill when enacted.
  Clause 27, which deals with probation officers, and Part III are very important. My part of Scotland does not have the problem of children who get into trouble in various ways—juvenile delinquency, and so forth. This is because we have a
  1588
  small population and chiefly because parents accept their responsibility and, if a child gets into trouble, think that it is a reflection on them, because everybody around knows his neighbour. This attitude should be encouraged.
  The Bill is designed to deal with areas where there is a real problem. Special measures are required to deal with a special problem. I think that the Bill will be adequate. I hope that the Secretary of State realises that I am not under-rating the Bill in any way. I realise that it is necessary, although the situation in my area is different from that further south.
  My party welcomes the Bill and is very pleased that it has reached this stage. We hope that it will have a useful part to play in dealing with what is a very urgent problem in Scotland.
  10.25 p.m.
  Mr. Dewar: This has been a long haul, and rightly so because this is an important Measure. I, too, give the Bill an extremely warm welcome as it reaches the end of its journey through Parliament. It is pleasant to be considering a piece of legislation which puts Scotland, in an important and complicated sphere, years ahead of the rest of the United Kingdom and many other countries.
  Many hon. Members have pointed out on various occasions that the advantage of having a separate legal system in Scotland and of having an almost separate legislative passage for Measures affecting Scotland is that we are able to push through Bills of a legal nature—and, in this case, of a social nature—quickly. The Scottish Office deserves the greatest credit for having got the Bill through at a time when the Seebohm Committee has either just reported or certainly its Report is still only being discussed. I congratulate my hon. Friend the Undersecretary for steering the Bill through Committee with admirable clarity and patience, particularly in view of the loquacity of his own back benchers.
  There are still ends to be tidied up and I cannot help mentioning, even at this stage, the fact that—there may be a simple explanation for this—when looking through the Legal Aid (Scotland) Act, 1967, in a vain attempt to understand some of the Amendments contained in the Schedules to this Measure,

  1589
  I found that there were still references to prosecutions before juvenile courts of young persons under the 1957 Act. While I have no doubt that the civil servants have a fiendishly ingenious reason why that provision should still stand, I feel that within a year or two it will look pretty redundant.
  Mr. Speaker: Order. On Third Reading, the hon. Gentleman cannot amend the Bill.
  Mr. Dewar: I apologise, Mr. Speaker, I am getting authoritative advice from my own Front Bench that I am thoroughly cut of order.
  Another end which needs tidying up is the position of the juvenile over 16 whose supervision order has been extended. I mentioned this to my hon. Friend the Under-Secretary in Committee and he agreed that it might be worth considering. The difficulty is that if a young person between 16 and 18 who is still under supervision commits another offence, will he be dealt with at a children's hearing or be brought up for prosecution? It would be unfair if a first offender over 16 was dealt with in the normal way, before the courts, while someone committing the same offence, but who had been in trouble before, was brought before a children's hearing. The latter would, in effect, be protected. This would be an anomalous and unfortunate situation.
  I do not support everything that the Government have done in the Bill. As the Under-Secretary knows, I and a large number of my hon. Friends have reservations about the retention of the large burghs in the new structure which is being created. However, as I have said before, what is done is done, and we must make the best of it. I cannot help thinking that the position has been complicated for the Government, particularly in the light of the hot debates which took place on the question of the probation service.
  We now have a good Bill. It is the right vehicle for reform in this important sphere. However, it is one thing to have the right vehicle, but another to change the attitudes of those who must operate the system. I am sure that the Secretary of State will agree that complacency in this matter would be a mistake.
  1590
  When I read the White Paper for the first time I noticed that paragraph 75 consisted of only one sentence. It said:
  "The detention of children as a punishment will be abolished."
  This is an admirable sentiment, but I believe that it will be a long time before residential accommodation, once called approved schools, will lose the stigma of punishment. We have an enormous amount of education to do, not only among the general public but among those who will serve on the children's panels. According to the White Paper, in Glasgow we will need about 300 of these people.
  I hope that every effort will be made to ensure that, in the training scheme, those who are picked to serve on these children's panels will be sympathetic to the outline which the Government have laid down; that they will accept that the juvenile who strays needs remedial treatment as much as punishment, retribution and punitive policies meted out to him.
  I was told the other day about a recent television programme in which a prominent elected local authority person in the West of Scotland spoke about meeting violence with violence. I find this extremely alarming. It underlines that, however wise the Government may be in their legislation, they will also have to ensure that the people who are to carry out what is laid down in the Bill have a similar attitude.
  Obviously, we will also need money and more personnel to back up the work to be done by the children's panels. An enormous amount will devolve upon the new departments, and the availability of staff will be important. It is because of that that I have laid great stress on flexibility, to ensure the maximum use of the expertise available.
  Overall, this is a good Bill. I think that we have got it about right. If, in Part III, it shifts the enormous emphasis given in the past to the criminal aspect of the juvenile courts over to a greater stress on suitable treatment, that will be an achievement which may do a great deal to solve many of the problems rightly troubling people today in the field of juvenile crime.
  10.31 p.m.
  Mr. Bruce-Gardyne: I want to make one general point and three specific ones about the Bill.
  I make, first, the general point. We began discussing the Report stage over 6½ hours ago, and something like four hours of the intervening time has been spent on Government Amendments. The Secretary of State claimed that this was an indication of all the hard work which had been done in Committee and the responsiveness of the Government to suggestions made in Committee. But I find it hard to believe, with 185 Government Amendments down on the Report stage of a Bill which had already passed through the other place before coming here—and even at this late stage a manuscript Amendment—that it can be explained away entirely by the comprehensiveness of the discussions in Committee or the willingness of the Government to listen to representations.
  I feel that the Government have treated the House with a lack of consideration and have taken up a great deal of time unnecessarily. Furthermore, the House has been expected to pass rapidly through a vast number of detailed Amendments which we have had no serious opportunity to consider properly.
  Having drawn attention to the fact that we have spent so long on Report, it is incumbent upon me to keep my comments as brief as possible. For that reason, I do not intend to speak about the Bill as a whole, except to say that I accept that it is a major piece of legislation and incorporates many proposals which will be welcomed as extremely valuable.
  I want to concentrate my remarks on three aspects about which I am still far from happy as one who was not a member of the Committee. They concern Clauses 1, 27 and 36.
  On Clauses 1 and 27, my points are related. When the Bill left this House after Second Reading, the Secretary of State had given notice that he intended to introduce an Amendment which would have the effect of creating social work departments in the large burghs as well as in the counties. That happened upstairs. But it changed fundamentally the view which one could take about the allocation of adult probationer services
  1592
  to the social welfare departments. Will we get the right organisation for the adult probationer departments?
  In paragraphs 28 and 29 of the White Paper, the Government clearly admitted that they had gone straight in the face of the recommendations of the Morison Committee. The only justifications which the Government gave in the White Paper, although I admit that we have heard rather different and wider justifications today, for overturning the recommendations of the Morison Committee were—
  Mr. Lawson: On a point of order. Is it not the case that on Third Reading one must take the Bill as it is and not start to reargue on a Second Reading basis?
  Mr. Deputy Speaker (Sir Eric Fletcher): The hon. Gentleman is right. The debate on Third Reading is far more circumscribed than that on Second Reading. On Third Reading, it is wrong to refer to anything which is not in the Bill.
  Mr. Bruce-Gardyne: I am well aware that the debate on Third Reading is circumscribed. I thought that I was referring to matters which were in the Bill, because I am concerned about precisely Clause 27 as its effect has been amended since the Bill went to Standing Committee.
  The point which I am trying to make is that the argument for allocating the adult probationer services to the social work departments, as is done in Clause 27, has been essentially that they could not be left out on their own, but that the probation service flatly disagrees with this and has always taken the line that the service is perfectly viable on its own, even when the junior department, which is to be removed by the Bill, is taken away from the service.
  The main point of this is connected with the forthcoming Report of the Royal Commission on Local Government. Under Clause 27, there are to be discussions with the local authorities about the form in which they are to incorporate the probationer services and I hope that when we have the Report of the Royal Commission the Government will take this very much into account. I understand that in its submission to the

  1593
  Morison Committee the Sheriff Substitutes Association suggested that if the probation services were to be incorporated as a whole into the social work departments, it would be essential for the areas which were created to be on the scale of regional hospital board areas. This is the sort of thing which ought to happen and which might become possible under the new structure of local government which may emerge from the Report of the Royal Commission.
  I hope that the Government will be thinking along these lines, because I am sure that it is only in the context of large units that we can have sufficient specialisation in the probationary work within the social work departments to enable the courts to treat those representatives of the social work departments who carry on the work of the probationer services with sufficient: confidence and, as has been said, the confidence of the courts is vital.
  I am still worried about the qualifications to be required of the reporters by Clause 36. Not having served on the Standing Committee, I am still concerned about the Government's view of the qualifications of these officers. In Committee, the Under-Secretary reminded hon. Members that the Kilbrandon Report favoured a combination of legal qualifications and administrative experience in child welfare and educational ser-vices and very fairly added:
  "… one has only to say that to see that the number of people who have in fact that kind of background must be very small indeed."—[OFFICIAL REPORT, Scottish Standing Committee, 20th June, 1968; c. 412–3.]
  The hon. Gentleman went on to say that in the Government's view the reporter would not need legal qualifications. This is not the view of a number of authorities and sheriff substitutes. They feel that in cases where a finding of guilt is disputed, and an offender has to return to the sheriff court, and the reporter presumably has to present the case against him, then the reporter would need legal qualifications. I cannot judge whether this is a valid point but it causes me some concern. I am sure that the Under-Secretary was right to say that it will not be easy to find people with these important qualifications.
  Mr. Lawson: On a point of order. Is is not the case that whether or not the
  1594
  hon. Gentleman is concerned, nothing can be done about it now? We are on Third Reading? Is it not out of order for the hon. Gentleman to go on talking about what he might have raised earlier, had he been here to do so?
  Mr. Deputy Speaker: This is a very difficult question. The general theory is that on Third Reading hon. Members talk about the Bill as a whole, and what is in the Bill. I cannot rule the hon. Member out of order for commenting on Clause 36, and saying that he feels concern about it. It would not be right for him to dwell on it at any great length.
  Mr. Bruce-Gardyne: I am concerned to emphasise that as we leave the Bill there are many aspects which the Government will have to consider carefully.
  I wonder whether a major piece of social legislation such as this is wisely introduced a few months before we receive the report of the Royal Commission on Local Government. Many of the functions of this Measure could be seriously affected by its findings, and I cannot see that we would lose much by waiting a few more months to see what the Commission reports, so that we could fit major changes in the structure of social welfare and social work organisations in Scotland into the Bill.
  10.45 p.m.
  Mr. Patrick Wolrige-Gordon: We who were on the Committee will recognise the validity of the points of my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne). They are issues which have concerned us all. I wish the Bill well, and I wish even more good will to those whom it will affect, and those who will have to operate it. I voiced certain fears, on Second Reading about Part III. Although one or two matters have been clarified, many fundamentals still remain as woolly as the woolliest among us could wish.
  One proof is the acreage of Government Amendments today. I hate to think of how many more they would have produced had this Third Reading debate been held tomorrow. There is no guarantee that the Government's capacity and desire to increase their productivity ratio of Amendments would have halted with another day's grace.

  1595
  Some issues have not yet been clarified. It is the issue of dealing with young offenders which disturbs me. It has a flabby feel to it. Guilt is out, punishment is out and offences are nearly out. There is a kind of forbidden phraseology which reminds me of the old story of the lady who was discussing with a friend the delicate and troublesome question of sin. "Oh", the lady cried, "let us not use that word. I hate the word 'sin'." "Very well", replied the friend, "let us call it rheumatism". "Do not call it rheumatism", shouted the lady, "I am full of that." The only moral from that story I want to draw at this stage in our discussion is that whatever word we use, the people involved know full well what it is meant to mean.
  It is no help to a young offender who has done something wrong to try to pretend that it is not in some sense wrong and that he should not be punished for it. I believe that young offenders would far prefer us to hold the line so that they know immediately they kick over the traces instead of our trying to pretend that there are no traces. That latter course is dishonest. Any young person worth his salt will know it and will resent it.
  Nor does that mistake stop there. It is compounded by the legal concealment behind the children's panels. I fear that every endeavour will be made, and has been made in the Bill, to foster the illusion that these panels do not represent the arm of the law and that they do not have legal sanctions and powers of enforcement behind them. But they have. We would do far better to admit it openly. Offending children will know quickly enough and they will not think much of anybody who tries to pretend that it is not so. They would be far more impressed if we said frankly that we felt that the standards of behaviour in our countries had sunk to an unacceptable level, that we are all to blame for that in some sense and that for our part we are prepared to pull up our socks and, that we think perhaps, the most effective way of getting young offenders to pull up theirs is the children's panels. I do not think that there is any hope of persuading children to pull up their socks if we pretend that they are not down at heel in the first place.
  1596
  That is what I have against the Bill. It is not so much the system, which will depend to an alarming extent on the reporters particularly and on the personnel of the children's panels. It is the philosophy behind it, which seems to find it more acceptable to set up a vague new structure of social ambivalence instead of inviting the young to participate in a wholehearted move by all of us to repair the social quality of the nation.
  10.48 p.m.
  Mr. Alex Eadie: I am to some extent breaking my self-denying ordinance—because I was a member of the Standing Committee—in rising to speak on Third Reading. I do not have to apologise too much for giving a welcome to the Bill, because as we come to the fag end of a long debate it is necessary that somebody should give it a welcome.
  I believe that the Bill is a good one. When we start to talk about the philosophy, I prefer to think of the philosophy of Martin Luther King, who was assassinated in America, and who said that if we pursue that philosophy of an eye for an eye and a tooth for a tooth, there will soon be no eyes left in the world. Therefore, the new approach that we are making towards the problem of juvenile delinquency and all the problems dealt with in the Bill is a courageous one by the Government.
  I concede that there might have been difficulties in the fact that the Royal Commission on Local Government was meeting in Scotland and might alter geographical areas, which might create administrative difficulties, but I believe that the Government were right in bringing forward the Bill, because we could not wait that length of time to deal with the problem of social work.
  In briefly welcoming the Bill, I wish to deal with a point which is very important within the Bill. On Amendments and on Third Reading to some extent we have discussed the problems which will attend the professional staff in working the Bill, but there will also be great difficulties for the people who serve on the children's panels.
  My hon. Friend the Member for Glasgow, Shettleston (Sir M. Galpern) talked about trying to publicise the Bill, its implications and effects. I hope that

  1597
  my right hon. Friend will try to publicise the fact that the panels will be comprised of people from all walks of life. I want to see on the children's panels a variety of people. I want to see miners on the panels; I want to see electricians on them; I want to see dockers on them. I do not want to see only one aspect of life represented on the panels.
  The point I made in Committee is, therefore, very important, that it should be publicised that the people who are prepared to go for training and are prepared to be nominated for the panels will receive reimbursement of loss of earnings. I mentioned my experience of 20 years as a lay magistrate. I was a miner working on night shift all night and went to the juvenile court by day. I do not want people to go through what I considered to be a harrying experience as a magistrate. Therefore, I hope that my right hon. Friend, in any publicity he gives to the Bill, will make it perfectly clear that this new experiment we are about to try will involve people from all walks of life and not just those who are said to be "do gooders".
  With that, I welcome the Bill, and I hope that it works well.
  10.52 p.m.
  Earl of Dalkeith: I shall be incredibly brief. This is one of the rare occasions on which I find myself unable to agree with the hon. Gentleman the Member for Ross and Cromarty (Mr. Alasdair Mackenzie), who welcomed the Bill in as much as he thought it had been greatly improved in Committee. I am sorry to say that I believe that in one major and fundamental respect it was greatly disimproved.
  Like many, I welcomed the Bill on Second Reading as being a glorious concept which had the power to do so much good, but I think that much of that power to do good has been negatived by the change which was made by the Government in Clause 1 in relation to the large burghs. This has gone a long way to undo the major power of the Bill to help Scotland and to unify the social services, as we would all like to see them unified.
  It absolutely beats me why the Government, with the Royal Commission about to report so soon, could not have used a
  1598
  little intelligent anticipation of what the Commission's recommendations are likely to be and could not have conformed to what those recommendations are almost certain to be. Therefore, I believe, with real sorrow and disappointment, that the Government have spoiled what could have been such a good Bill.
  10.53 p.m.
  Mr. Mac Arthur: Now that we are at the very last stage of this long Bill I should like to express my personal thanks to the Under-Secretary of State for the courtesy and clarity with which he handled the Bill, particularly at its earlier stage. I appreciate that very much, and I appreciate the trouble he took in writing to me before Report to deal with some of the points we raised in Committee.
  The right hon. Gentleman the Secretary of State, in moving the Third Reading, claimed that the Government had been very responsive. To some extent the Government have been responsive, but where they have responded—goodness me—they have responded very late in the day.
  I want to refer to the point made by my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) about the conduct of the Report stage today. I do not believe that it was necessary for the House to be confronted with 199 Amendments on the Notice Paper. Only 16 of these were non-Government Amendments, so that 183 Government Amendments confronted the House at 4 o'clock today. Of these, 10 were starred, last-minute Amendments, and even that was not good enough for the Government in their scramble to force through Amendments at the last moment. We were then inflicted with a manuscript Amendment, too.
  The scramble has been such that I am left with an uneasy feeling that these last-minute Amendments may not be the end of the story. I feel that the way in which the Bill has been handled today is an abuse of the co-operative spirit in which we have approached it, and, more importantly, I suggest that this is an improper treatment of the House of Commons. We have spent six hours on the Report stage, placing an unnecessary burden on hon. Members and, with great respect, on Mr. Speaker and Mr. Deputy Speaker.

  1599
  I think that all of us can share the credit for a Bill which is a good Bill, and which, I believe, could be a better Bill. The Kilbrandon Committee, which was the start of this long journey, was set up by the Conservative Government, and the Bill which largely resulted from it was introduced by this Government, so I think that we can both share the credit.
  I said that the Bill could have been improved further because I am still very doubtful about three matters in the Bill. I trust that the Government will give the greatest possible care to the need to protect the rights of the child before the children's hearings. I am not satisfied that the Bill has yet gone far enough in that regard, and a lot will depend upon the rules laid down by the Secretary of State for the conduct of children's hearings.
  Secondly, I am dismayed about the lack of advance regarding the structure of the probation service, which we debated at length today. Above all, I share the view expressed by my hon. Friend the Member for Edinburgh, North (Earl of Dalkeith) about the damage done to the Bill by the Government in Clause 1. We talked about the reintroduction of the large burghs. I think I must make clear that it is not the large burghs as large burghs we are worried about; what concerns us on this side of the House is that the number of administering authorities has been so enormously increased.
  I cannot believe it was sensible—indeed, it flies in the face of the Government's own intentions in the White Paper —to expand the number of local authorities to 56 at a time when we know that the number of local authorities in Scotland is shortly to be reduced as a result of the work of the Royal Commission.
  The hon. Gentleman was good enough to give us an assurance in Committee that he would consult the local authorities about the possibility of voluntary amalgamations, which would at least have gone some way towards meeting our objections. I was not very encouraged by what he had to say to us today about the progress of the consultations, although I do take some hope from the fact, if I understood him aright, that local authorities have suggested that the Govern-
  1600
  ment should take an initiative as soon as the Report of the Royal Commission is in their hands.
  If that is so, I hope that it means that the local authorities will themselves agree to adopt a course of voluntary amalgamation which will substantially reduce the number of administering authorities below the figure of 56, and begin to conform, so far as common sense and intelligent anticipation make it possible, to the shape of the local authority structure which will in time follow the Royal Commission's Report.
  I would say, in passing, that, if that can be done, that in itself might well overcome many of the objections which have been raised about the proposed introduction of the probation service into the social welfare departments, and, in particular, the fragmentation of the probation service which would follow the Bill as it stands.
  We have conducted our long debates on the Bill against a background of rising crime and frightening violence in Scotland. I listened with great interest to what my hon. Friend the Member for Aberdeenshire, East (Mr. WolrigeGordon) had to say about the treatment of young offenders. I have great respect for his views, but this is primarily a matter of emphasis, if he will allow me to say so. I am not convinced that the Bill represents a soft, easy treatment of juvenile delinquents. I do not believe that it is an extension of the permissive society. On the contrary, I believe that it is not. If we can, through the Bill, identify and treat circumstances which, if properly handled, may save the child in trouble or the troublesome child from turning into a teenage thug, we shall have made a major advance towards beating this enormous problem in Scotland.
  The Bill does not deal only with problem children: it covers all ages. It covers the whole range of deprivation and difficulty caused by sickness and old age. The Secretary of State described the Bill as a major pioneering scheme. I believe that it is. The quality of the pioneering has been endangered by the changes made to Clause 1, and I hope that the voluntary amalgamations which will come will remove that danger completely, but I have doubts about that.

  1601
  If the Bill works, as I trust it will, then it could build in Scotland a social work system which may become a model for other countries to admire and adopt.
  11.2 p.m.
  Mr. Millan: I am glad that the Bill, at all its stages, has had a general welcome from the House. I was very appreciative of the approach taken in Committee by all the members of the Committee, including the hon. Gentleman the Member for Perth and East Perthshire (Mr. MacArthur), who led for the Opposition. The Committee stage was constructive, and the Bill was considered with an absence of rancour which is perhaps not so common in the Scottish Standing Committees as some of us would like it to be.
  We now have a major Measure of social reform. In reply to points that have been raised, I will say a word about the two particular aspects of the Bill. The first is the establishment of the social work department. At the end of the day this will perhaps prove to have been the most fruitful part of the Bill. In the wide range of activities covered by the social work department, whether dealing with delinquent children, with children generally in need of help or with adults right up to the elderly, there are tremendous problems still to be solved and tremendous jobs to be done. There is also the need for society as a whole to recognise that in the future it will have to devote more resources to the kind of work done by the social work department.
  By bringing within one department a whole range of social welfare services, including the probation service, we have laid the framework which will allow that job to be done more effectively than it can be done with the present dissipated services.
  The question of the probation service has been raised in this context and has been a feature of our discussions throughout. I do not now want to go over the arguments again, but I say to the probation service and hon. Members who may still feel concerned that it should be brought into the social work departments that I hope they will not allow short-term difficulties—and there will be some —to obscure the long-term advantages which I am confident will come from in-
  1602
  corporation of the service in these departments. From the long-term point of view I think that this is the right solution and the fact that it is will be increasingly recognised, I am sure, by the probation officers themselves as the new departments come into operation and begin to make an impact on the problems with which they will have to deal.
  My hon. Friend the Member for Glasgow, Shettleston (Sir M. Galpern) raised the question of getting over to those who may need the services of the new departments the fact that they are available. I would not pretend that the establishment of the departments will solve all the problems of communication, because there are profound problems here, particularly in dealing with certain sections of society who obviously need help, but are not amenable to the normal processes of mass communication or public relations, as it were.
  But the establishment of a single department is obviously in this respect as well a considerable step forward because it reduces the bewildering complexity of services separately organised which the person in need of help faces at present. Now we are bringing these services together and are putting them on to a more coherent and comprehensive basis and this can only be a help from the point of view of communicating to those who need help the kind of services available.
  In the establishment of the social work departments, one of the points of controversy has been the Government's decision to allow the large burghs to continue to provide the services most of which they are already providing under existing legislation and to make large burghs social works departments as well as counties of cities and county councils. Again, it is rather late to argue this matter in detail once more, but I think that what is provided in the Bill will be compatible with a movement towards larger units if that is what the Royal Commission recommends and what the Government, on the receipt of the recommendations, decide.
  There is nothing in the Bill which is incompatible from the long-term point of view with having the social work departments organised on a wider basis and with larger populations than we shall have under the Bill as expressed at present. I have already given information to the

  1603
  House about the reactions of the local authority associations towards combinations and I do not take the pessimistic view about it which some hon. Members have shown today.
  Then there is the question of whether we should have waited for the Report of the Royal Commission. The Kilbrandon Committee was set up in May, 1961, by Jack Maclay, as he was then. It reported in April, 1964. In view of the urgency of the problems, which the hon. Member for Perth and East Perthshire has mentioned—particularly problems of juvenile delinquency—it would have been irresponsible of the Government to defer this major element of reform any longer. It was right to bring it forward now. This has disadvantages in relation to the Royal Commission but I do not believe that what we have done will prove in the event from the long-term point of view to be incompatible with what the Royal Commission is likely to recommend.
  The other major matter dealt with is the establishment of children's panels and hearings to replace juvenile courts. I have been gratified to see that, at all stages of the Bill, this major change in our method of dealing with young people has had a general welcome. I do not think that it has had a unanimous welcome. For example, I do not think that the hon. Member for Banff (Mr. W. H. K. Baker) or the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon) is happy about the procedure which is laid out in Part III of the Bill. But I think that what we are doing is on the right lines. I am sure that as the panels come into operation they will provide potentially a much more fruitful and effective way of dealing with young people who, for one reason or another, come before them than we have at the present time in our juvenile court system.
  The hearings will not only deal with offenders; they will deal with children who may be before them for a wide range of other circumstances. In many of these cases my view would be that the children concerned are much more offended against by society, because of their home background, than offenders against society. We should keep in mind that we are dealing with a whole variety of circumstances and children, and it would be wrong to look upon all of
  1604
  them as having offended against society. Certainly, it would be terribly and tragically wrong to look upon them as children who require to be severely punished if they are to be turned into responsible citizens.
  The children's hearings will have substantial sanctions. I do not like to look on this in terms of whether the sanctions are tough or soft, because that is the wrong way to look at what we are doing in Part III. We require sanctions in Part III which will allow the children's hearings to deal with the individual children that come before them in the most effective way possible for the good of the children, and also, in certain cases, for the protection of society. I think that we have here a range of sanctions which will provide the children's hearings with the means of doing the job that we are placing on them.
  The personality of the individuals who make up the panels will be extremely important. I have already said in Committee that we do not intend to have the members of the panels drawn from any narrow section of society. We shall look to people in all walks of life whom we think have the right kind of background and human approach to do the job effectively. I take the point which has been made by my hon. Friend the Member for Midlothian (Mr. Eadie). If we get the right people and establish these new panel procedures in the right kind of atmosphere, I repeat that I think that potentially this can be a very fruitful way of dealing with these young people in trouble.
  I have been pleased at the general welcome that has been given to the Bill. I think that sometimes in Scotland we pride ourselves on being in advance of the rest of the United Kingdom when in fact, unfortunately, we are not. But this is one major piece of social legislation which puts us very far ahead. It is taking imaginative and bold measures of reform. We have every reason as a House, and particularly as Scottish Members, to be very proud of this Bill and I hope that in that spirit we shall see it implemented in the future.
  Question put and agreed to.
  Bill accordingly read the Third time and passed, with Amendments.

  SEWERAGE (SCOTLAND) BILL
  Lords Amendments Considered.
Clause 3

  CONSTRUCTION ETC. OF PUBLIC SEWERS AND PUBLIC SEWAGE TREATMENT WORKS
  Lords Amendment No. 1: In page 2, line 18, leave out from "street" to end of line 21.
  11.14p.m.
  The Under-Secretary of State for Scotland (Mr. Norman Buchan): I beg to move, That this House doth agree with the Lords in the said Amendment.
  Mr. Deputy Speaker (Sir Eric Fletcher): It might be convenient to the House to consider, at the same time, Amendments Nos. 2 and 12, the new Clause "A", and Amendment No. 13.
  Mr. Buchan: The combined effect of the Amendments is to ensure that any work carried out under the Bill by any person will comply with the requirements of the Coast Protection Act, 1949. The words which we propose to delete would require the consent of the Board of Trade, and these references are to be superseded by this new Clause, which is of course the common form for this kind of provision. The new Clause will also repair an omission by applying the relevant provisions of the Coast Protection Act to any works done under the Bill which might interfere with navigation.
  Question put and agreed to.
  Subsequent Lords Amendment agreed to.

Clause 12

  RIGHTS OF OWNERS AND OCCUPIERS TO CONNECT WITH AND DRAIN INTO PUBLIC SEWERS, ETC.
  Lords Amendment No. 3: In page 6, line 31, leave out from "it" to end of line 33.
  Mr. Buchan: I beg to move, That this House doth agree with the Lords in the said Amendment.
  Again, there may be points here which particularly affect hon. Members, so that it might be convenient to discuss, at the
  1606
  same lime, Lords Amendments No. 4, in Clause 14, page 8, line 7, leave out from beginning to "who" in line 8 and insert "appeal to the Secretary of State"; No. 5, in Clause 14, page 8, leave out line 10; No. 6, in Clause 14, page 8, line 34, leave out "£50" and insert "£25"; and No. 7 in Clause 17, page 10, line 32, leave out from "them" to end of line 33.
  Amendments Nos. 3 and 7 are basically drafting Amendments which delete unnecessary words in Clauses 12 and 17, each of which provides for an appeal to the Secretary of State, and the words which we propose to delete in both cases say that his decision is final. But of course the procedure for appeals to the Secretary of State is laid down in Clause 51 of the print which we are considering, subsection (5) of which says that the decision of the Secretary of State on appeal is final. It is, therefore, unnecessary to say so in Clauses 12 and 17.
  The remaining Amendments are minor ones to bring to the provisions of Clauses 12 and 14 more closely into line. Each of the Clauses confers on the local authority powers of control to be exercised when someone proposes to connect a private sewer or drain to the public system. The two Clauses were not originally linked, but a fairly close connection was established as a result of Amendments made to Clause 14 on Report in this House. This was mainly on the initiative of the hon. Member for Edinburgh, West (Mr. Stodart). Discrepancies between similar provisions of the two Clauses are therefore undesirable and in that sense the Amendments are consequential.
  Clause 12(5) provides for an appeal to the Secretary of State where an owner of premises who has applied for permission to connect his private drain or sewer to the public system is aggrieved by the local authority's decision or by any condition attached to it. Under Clause 14, if he is ordered to construct a drain, private sewer or private sewage works in a particular fashion, his appeal is to the sheriff. There should not be appeal to different authorities on different aspects of what might essentially be similar things which we have now linked in this way. We therefore propose that both appeals should lie to the Secretary of State and the first two Amendments provide for this.

  1607
  Clause 12(8) provides for a penalty not exceeding £25 for making an unauthorised connection of a drain or private sewer to a public sewer, and under Clause 14 the penalty for constructing such work is £50. Because we have linked the two Clauses, we think that the penalty in both cases should be £25, which would bring together the two views expressed in Committee.
  Question put and agreed to.
  Subsequent Lords Amendments agreed to.

Clause 18

  EXPENSES OF LOCAL AUTHORITIES AND DISSOLUTION OF DRAINAGE DISTRICTS
  Lords Amendment No. 8: In page 11, line 12, after "to" insert "or in respect of".
  Mr. Buchan: I beg to move, That this House doth agree with the Lords in the said Amendment.
  This is a minor drafting Amendment. We have enlarged the payment of compensation to officers or servants who, as a result of the change, may have suffered loss but this is too restrictive, because it may not cover a payment to the dependants of such an officer who had died before the payment was made. These words will remove that doubt.
  Question put and agreed to.—[Special Entry.]

Clause 29

  DECISION ON APPLICATION
  Lords Amendment No. 9: In page 17, line 30, leave out from "such" to "as" in line 31 and insert "inspection chambers or manholes".
  Mr. Buchan: I beg to move, That this House doth agree with the Lords in the said Amendment.
  This is purely a drafting Amendment which puts the reference from the singular into the plural, because we might require a plural purpose in the way of two inspection chambers or manholes.
  Mr. Wylie: I do not wish to detain the House, but I was always under the impression that the Interpretation Act states that the singular includes the plural
  1608
  and the plural includes the singular. Is this Amendment necessary?
  Mr. Buchan: I take the point, but in the following condition—subsection (3)(1)(l)—there is a plural reference which it would be difficult to put into the singular, and in the circumstances it might be better to put the singular into the plural in this case.
  Question put and agreed to.

Clause 41

  BREAKING OPEN OF STREETS, ETC.
  Lords Amendment No. 10: In page 23, line 8, after "authority" insert "or other person".
  Mr. Buchan: I beg to move, That this House doth agree with the Lords in the said Amendment.
  This Amendment is consequential on one made on Report. It was involved with the breaking open of a street, which originally required the local authority to do the work. We extended the discretionary power so that a private person could undertake it, and it is clearly right that the same provision should apply to a private person as to a local authority. The Amendment achieves this object.
  Question put and agreed to.

Clause 45

  PRODUCTION OF PLANS AND FURNISHING OF INFORMATION TO AUTHORITIES
  Lords Amendment No. 11: In page 24, line 8, after "without" insert "unreasonable".
  Mr. Buchan: I beg to move, That this House does agree with the Lords in the said Amendment.
  Under this Clause a local authority can require an owner or occupier of land to produce to it plans of a sewer or drain, and so on. We have put in the word "unreasonable" because as it stands I understand that no expenditure could be made at all—not even in respect of a postage stamp or a telephone call. We have therefore put in this word. I understand the local authorities are pleased that this Amendment should be made.
  Question put and agreed to.
  Subsequent Lords Amendments agreed to.

Clause 58

  INTERPRETATION
  Lords Amendment No. 14: In page 32, line 26, leave out "pumps" and insert:
  "pumping stations, storm water overflow pipes, outfall pipes".
  Mr. Buchan: I beg to move, That this House doth agree with the Lords in the said Amendment.
  It might be convenient to take, at the same time, Lords Amendment No. 15, in page 32, line 30, leave out "and outfall pipes".
  Mr. Deputy Speaker: So be it.
  Mr. Buchan: The second Amendment is consequential. Subsection (2) lists certain installations which may be necessary to the operation of a drain, sewer or sewage treatment works. The two Amendments are necessary for clarification purposes. The first substitutes the words "pumping stations", and so on, because the word "pumps" may not adequately describe the whole pumping installation. The same consideration applies to the other Amendment.
  Question put and agreed to.
  Remaining Lords Amendment agreed to.

  CIVIL DEFENCE BILL [Lords]
  Consideration deferred till tomorrow.

  MEAT AND LIVESTOCK COMMISSION (LEVY)
  11.24 p.m.
  The Minister of Agriculture, Fisheries and Food (Mr. Cledwyn Hughes): I beg to move,
  That the Meat and Livestock Commission Levy Scheme (Confirmation) Order 1968, a draft of which was laid before this House on 2nd July, be approved.
  I begin by reminding the House how the Commission came into being. It followed the inquiry which the previous Government had made into this industry. The Report was published in February, 1964, as Cmnd. 2282. In the 1965 White Paper on the marketing of meat and livestock we took up the task and made clear what we intended to do. We said:
  1610
  "The Government are resolved that the weaknesses should be remedied and intend to take very early action."
  At that time, and in the subsequent proceedings on the Agriculture Bill, there was much common ground on both sides of the House. Some thought that the powers proposed for the Commission were too great; others thought that they were not great enough, and a few even thought that it had been given the wrong name. But there was no division on the broad policy of tackling in a comprehensive way the problems of the meat and livestock industry.
  I am recalling this deliberately, because now that the Commission is in being and its work has to be paid for, we are hearing all about the opposition expressed to it. The need for the work which it will undertake is in danger of being forgotten. From the first, however, it was the Government's intention that the work of the Commission should be financed mainly by a levy on the industry. This was stated clearly in the 1965 White Paper on the marketing of meat and livestock, and embodied by Parliament in the Agriculture Act, 1967. There was no misunderstanding about this at the time.
  I cannot accept that the Commission's work should be paid for out of public funds. The Government have been contributing for a long while to some of the main work which the Commission takes over. We have, for example, rightly used public money to get beef recording started, but I need scarcely remind the House of the words in the 1963 Annual Review White Paper, when the right hon. Gentleman opposite, the Member for Grantham (Mr. Godber), sat on this side, that Government contributions were, and I quote:
  "to the costs of establishing the necessary organisations until they can be taken over by the industry."
  Government support will have been given to the Beef Recording Association for some five years, which is a good deal longer than might reasonably have been expected at the time, and a good deal longer than most hon. Members expected. It is, therefore, time for the industry to finance, through the Commission, what amounts to an investment in its own future.
  Now I come to the Commission's proposals and the Order before the House.

  1611
  The Commission submitted to the Secretary of State for Scotland and me a levy scheme which included the following maximum rates of levy: cattle, 8s. a head; calves, 2s. a head; sheep, l0d. a head; pigs, 2s. a head. It was estimated that this would yield an annual income of just under £3 million. The Commission also indicated that at first it intended that the actual rates of levy would be: cattle, 4s. a head; calves, 1s. a head; sheep, 4d. a head; and pigs, 1s 9d. a head.
  This would yield about £1,850,000. The Commission believed that this lower level would be sufficient for about two years, but it none the less attached considerable importance to the inclusion in the Order of the higher levels, so that there could be reasonable forward planning of its future work.
  The Secretary of State for Scotland and I received representations from a
  number of different interests about the Commission's proposals. We received several deputations and gave careful thought to these matters and I would draw the attention of the House to two important points. First, we have received an assurance from the Chairman of the Commission that the initial rates of levy will not be increased during the first two years, and the Commission has made this assurance public. In other words, the Commission will not levy in excess of the estimated sum of £1,850,000 a year during its first two years.
  Secondly, we have reduced the maximum rates of levy so that in the draft Order now before the House, these rates are: cattle, 6s. a head; calves 1s. a head; sheep 6d. a head and pigs 2s. a head. This would raise an estimated £2,450,000. The question is: why did we do this? Why have we exceeded the minimum amount which the Commission stated would be necessary for the first two years? We thought it right that the Commission should have some room for manoeuvre to plan for its future development.
  The Commission has an important job to do in the longer term in the interests of the whole industry and it clearly needs confidence to plan ahead. None the less, the Secretary of State for Scotland and I, taking note of the representations made to us, decided that we should reduce the
  1612
  maximum rates of levy, so that the Commission will have to come back to Ministers and to Parliament, if it should wish to make any substantial increase in its expenditure and its charge on the industry.
  The position, therefore, is that the levy will not be raised for two years above the initial rates which are estimated to yield £1·85 million and that after that time there will be a small margin which might allow the Commission to charge an estimated further £0·6 million.
  The House is entitled to know how the £1·85 million will be spent. About three-quarters of this money will be spent on existing work—the work which is now being done by the Pig Industry Development Authority, on meat research and on beef recording. The largest part of this— about £1 million—is the continuing programme of the Authority. I think that this has been very valuable and I am glad that the Chairman of the Authority, Sir Richard Verdin, is now the Deputy Chairman of the Commission.
  The remaining quarter of the Commissions' expenditure—about £0·45 million—will be on the first stages of work in a number of fields. This includes sheep recording; carcase classification and evaluation in the interests of producing meat most suited to the requirements of the housewife; and market information. That will amount to about 25 per cent. of the Commission's work during the first two years of its operations.
  I turn now to the method of collecting the levy, because there has been a good deal of publicity given to this point. The scheme will enable the Commission to impose a levy on the various categories of livestock at the point of slaughter. This proposal to collect a single payment in respect of each animal, instead of splitting the levy between the various parties to any market transaction, obviously makes for simple and economical administration. But as it has been criticised, I should like to deal with it more fully.
  It has been said that the person on whom the levy first falls will pay the whole of it, and that the burden of the levy will not, therefore, be spread across the whole industry, amongst all the people who will benefit from the Commission's work. Before confirming the scheme in this respect, my right hon. Friend the

  1613
  Secretary of State for Scotland and I gave this question careful thought. We went into it with very great care. We believe, with the Commission, that the burden of the levies will be diffused, which is how the market works with any other cost of distribution. Why should it prove otherwise with these levies?
  I am satisfied that although a levy scheme could have been put forward under the Act specifying any number of classes of people on whom charges might have been separately imposed, the Commission was right to consider the equity of the scheme in practice rather than in appearance. A composite charge would still be spread by market forces and the complication of additional payments would merely add to the cost of collection.
  I should like to emphasise here that the Commission is concerned with the whole of the meat and livestock industry. One cannot allocate the programme of work on the basis of its supposed immediate value to particular sectors of the industry. All parts of this diverse industry are linked and inter-dependent. It is in the interests of the retail trade as well as the farmer's that the right type of livestock should be produced and marketed at the right time.
  It is in the farmer's interests as well as the meat retailer's that consumers should be well informed and that their demands should be reflected back quickly and accurately through the marketing complex. When different sectors argue narrowly their own particular case, they show the very fragmentation due to immediate interest which the Commission has been set up to overcome in the longer-term interest of the industry as a whole.
  We have confidence in the Commission. I am sure that its work will develop progressively as all sectors of the industry appreciate the value of the tasks with which it has been charged and the need to press ahead with them. The consultative machinery included in the formal structure of the Commission is there for all sectors of the industry to use. Through it they can make known their views and be closely connected with the Commission in carrying out the work which is most to their own benefit. Their co-operation is vital. I believe
  1614
  that it will be forthcoming in full measure as the Commission tackles the work ahead.
  To make the start which is so important, my right hon. Friend and I have no hesitation in commending this Order for the approval of the House.
  11.35 p.m.
  Mr. J. B. Godber: An important Order of this kind should not have been brought forward so late at night. My hon. Friends and I feel that we should have been given more time in which to debate the matter. It is regrettable that the Order should have been imposed on us at this hour.
  We have noted what the Minister said about the Order and I would not dissent from what he said about the background to the setting up of the Commission. It arose, as he said, from the Verdon-Smith Report and it was included in the Agriculture Act, 1967. When we debated this matter on Report and in Committee we made our attitude towards the Commission perfectly clear; that we were not opposed to it being set up, but that we felt that it was being given unnecessary extra powers. We discussed this issue at great length, and I do not propose to repeat that discussion now.
  We had no desire to prevent the Commission from being set up. Indeed, we could not, and we expressed our belief that there was useful work for it to do in terms of the scope about which the Minister spoke. In other words, I wish to make it perfectly clear at the outset that I do not dissent from the Minister's general approach to the setting up of the Commission.
  Once set up, the Commission must have the funds to do its work. I would not recommend my hon. Friends to oppose the Order if we felt that the proposed levy was correct and that one could have complete confidence in the method of collection. I will, therefore, concentrate my remarks on these aspects.
  The Minister gave an assurance that the proposed levy would not be raised for at least two years. That is a useful assurance. He also said that the levy would not be the maximum provided under the Order. We note, too, that the Minister has reduced the maximum for which the Commission had asked. In terms of cattle units, it has been reduced from 8s. to

  1615
  6s., and the Commission says that it will raise only 4s. in the first two years.
  The Minister will be aware of the concern that has been expressed by the meat trade, and by the butchers in particular, about the method of collection. I would not disagree with the view that the most economical method of collection is at the point of slaughter. Hon. Members connected with the agriculture industry will have in mind the problem of collecting the levy for the Agricultural Training Board. That is extremely diffuse and the cost of collection is enormous in relation to the funds raised. Nevertheless, the meat interests feel strongly that there is a degree of injustice here, and we should take careful note of that view.
  How is it that this matter has not been cleared up in discussions by the various committees of the Commission? When the committees were set up, some of us voiced doubts about whether they had been made large enough or fully enough representative. I referred specifically to this in Committee, and pointed to the danger of antagonisms arising in the working of the authority and the feeling that one section was being unduly squeezed.
  That is precisely what one section now feels. I am not clear why discussions in the Distributive Committee did not lead to a fuller understanding about the matter, and whether it means that some sections of the distribution side feel that they are not adequately represented. If that is so, I can only say that we warned the Government about that when the matter was in Committee. The feeling is there, and it is one of which the Government should take note.
  It is in this connection that I feel that the Minister's approach is wrong. While I do not accept what the meat trade is saying about it, because I feel that the effect of the levy will be spread out by the operation of the market, I have to acknowledge that the trade feels that it is being put upon in an unfair way.
  Had the Minister put before us an Order of 12 months' duration for the amount asked for by the Commission, or, assuming that it is impossible to limit the period, if he had undertaken to bring forward a variation order next year, we should have had 12 months in which to
  1616
  see whether the fears expressed by the meat trade were real. If they had proved to be real, at the expiration of 12 months, the Government could have brought forward an amending order.
  My grievance is that, in the form in which the Government have put this Order forward, it is possible not only to go on for two years at the level that the Minister has indicated, but, under the existing Order, at a later stage it is possible to raise the levy to a higher level without the necessity of coming back to the House for verification and approval. By reason of the way in which this is being done, the House will not be given the automatic opportunity of considering the matter again. It worries us when power is given in a way which is claimed by one section of an industry to be unfair and we have no means of knowing whether we shall have an opportunity to put it right in another year.
  If the Minister would give an undertaking to come back this time next year with an amending Order, that might change our attitude. But, as it is put forward, one section of the trade feels that it is being unfairly treated, and we cannot know whether or not those fears are justified. I do not feel that they will be in the event, but I know the fears are there, I know that the operation of the scheme will be affected, and I know that many people in the meat trade have uttered all sorts of threats about non-co-operation. In those circumstances, the Meat Commission will not have the opportunities that we all wanted it to have to get off to a good start.
  We are not only concerned about the size of the levy, but about the power to raise it. When we part with the Order tonight, we have no power to bring it back to the House afresh.
  It must not be forgotten that the attitude of traders is conditioned so much at present by the actions of the Government in other directions. When the Government impose levies on a section of the community, it has to be borne in mind that they have singled out the distributive trades for very harsh treatment.
  For instance, Selective Employment Tax operates fully and completely on the distributive trades which

  1617
  have no rebate of any kind. When investment allowances were withdrawn and investment grants were substituted for them, the distributive trades were far from getting any advantage from the change. If they are now to have this additional impost, they will regard an Order of this kind with greater criticism. We have to consider the totality of the effect of these things upon the trade. I do not think that the Minister has taken sufficient note of the genuine concern which has been expressed in this regard.
  If there is to be a levy on home-produced meat, why is there not to be a levy on imported meat as well? This was an argument which I pressed in Committee. The right hon. Gentleman's predecessor then told us that the Bill gave power for a levy to be imposed on imported meat, although he said that it was not his view that the Commission ought to place a levy on imported meat. However, if there were such a levy, the levy on home-killed meat would not have to be so high. It seems unfair to, our home meat producers to put a levy on them at a time when we are not imposing a levy on imported meat as well. There could be different rates of levy for imported and home-produced meat and the levy for imported meat might arguably be lower, but to eliminate the possibility of a levy on imported meat means that the impact of a levy on home producers is that much greater.
  The Opposition are very unhappy about the way in which the Order is being brought forward. That does not mean that my colleagues and I are opposed to the Commission as such—we have always made it clear that we are not. Nor does it mean that we are opposed to the levy, or its level, particularly if account is taken of the fact that there is no levy on imported meat. We quarrel with the way in which the Order is brought forward and the fact that we shall not have an automatic opportunity in 12 months 10 discuss whether the fears of the meat trade have been justified and whether action has been taken to deal with them.
  I ask the Minister for an assurance that, if the fears of the meat trade are shown to be well founded, he will introduce an amending Order. If he cannot give that assurance, the position will remain unsatisfactory. In that case, in
  1618
  spite of what I have said about the Commission as a whole, I shall have to ask my right hon. and hon. Friends to express their views in the Division Lobby.
  11.48 p.m.
  Mr. Michael Foot: Like several other hon. Members, on both sides of the House, at the weekend I was approached by butchers in my constituency who put their case to me on this subject. Hearing it for the first time, I thought that they put it extremely persuasively. It was a case which has to be answered in the House, and I came to listen to the debate to hear what was said by the Minister and others with much more knowledge of this matter than I have.
  My fears have not been allayed by what my right hon. Friend has said this evening. Nor were they allayed by what was said by the right hon. Member for Grantham (Mr. Godber), who agreed with the Commission and with the levy and with the postponing of the raising of the levy, and who did not feel that the fears expressed by the butchers would materialise.
  Mr. Godber Mr. Godber indicated assent.
  Mr. Foot: I see the right hon. Gentleman nodding, I do not think that I have misrepresented what he says.
  When I hear a speaker from this Front Bench praising the operation of market forces, and when I hear the right hon. Member for Grantham saying that we can leave everything to market forces, I become extremely suspicious. It is much better to try to leave it to some form of planning especially when we are operating a Commission which is intended to introduce a form of planning into this operation of the free market.
  Speaking personally, I need a firmer explanation than has so far been given to persuade me that market forces will really settle this question, in a manner which is just to the butchers. My right hon. Friend says, and the right hon. Gentleman agrees, that no one can dispute that this is the most convenient way of raising the money. I would not attempt to dispute that at all. It is obvious that if one raises a levy of this kind from one place, it will be easy to raise it in that way than from two places. It will be easier to raise it from the trade than

  1619
  through a division between the producer and the trade.
  But because it is more convenient, it is not necessarily the right way of doing it. It may be an unjust way of doing it, and it certainly could leave the feeling of injustice, even if the actual injustice is not imposed. Therefore, I would ask my right hon. Friend to explain, if he wishes to have my vote at the end of the debate, whether there would be any substantial difficulty in dividing the levy between producer and butcher. I understand that when the Bill went through, and I am not an expert in these matters, the Minister of State said that this question would be considered. I would like to know why this has been rejected. If I am told that it has been rejected solely because it is inconvenient, I am not convinced. If I was told that it was impossible, then we have to examine that. That is not the Government's case. The Government do not say that it is impossible, but that it is more convenient. Supposing that it is slightly more expensive to raise it from the farmer as well as the butcher, there is still a good case for doing it.
  I do not see why it should not be made certain that different sections of the industry which will benefit from this Commission should have their contributions to the Commission apportioned, by the decision of this House, rather than leave the matter to the haphazard course of what the market forces may eventually determine. The Government should not place such confidence in the market forces, particularly when the whole purpose of this operation is to introduce more order, more planning, in to the sale of meat. There may be a few hon. Members who are against this scheme, but the right hon. Gentleman has indicated that, officially, the Opposition are in favour of the Commission.
  When we are trying to introduce a fresh form of planning into the system we have to make the plan fair. If it is unfair we will create opposition to the whole scheme. It would be most unfortunate if, when we set up a Commission which it is agreed on both sides of the House is for the benefit of the industry as a whole, we should arouse the hostility of one part to the Commission and its operations because of the way in which the levy works. If there is a convenient
  1620
  way of getting out of that difficulty, the Government ought to reach it. I ask my right hon. Friend to look at this afresh and consider whether it is possible to have a different system of applying the levy.
  As I understand, the levy will not be further increased, for the next two years at any rate, so there is some time. It is not as if we have to settle this matter forever tonight. It may be settled a bit later. It would be much wiser, in view of the feeling that has been aroused, if my right hon. Friend were to say that he will give fresh consideration to the view put by the butchers. It is one of the purposes of the House of Commons, that these matters should be represented. I know that my right hon. Friend can say that he has already had conversations with the butchers about this, but this is the place where these discussions are supposed to be heard.
  I hope, therefore, that my right hon. Friend will make an accommodating reply to the representations which have been fairly made to him on behalf of the butchers. I believe that if he does he will do it in the interests of the Commission and of ensuring that the Commission will be able to do the job which hon. Members, on both sides of the House, wish it to do.
  11.55 p.m.
  Lieut.-Colonel Sir Walter Bromley-Davenport: It appears that the Minister has acted in this matter without any proper consultation with the trade, and it seems that the inevitable result will be more bureaucracy, which will serve no useful purpose. In view of the already efficient system of meat distribution in the trade, it can mean, in the end, only higher prices of meat to consumers.
  The cost of collection of the levy will be outrageous. It has been the object of those in the trade to keep prices down, but they are being heavily penalised through Government action. Their overheads have been considerably increased over the past four years, due to the imposition of the Selective Employment Tax—increased taxation; heavier charges for National Insurance and graduated pensions—increased taxes; heavily increased transport changes—the nationalised industries; higher rates—increased

  1621
  taxation; increased gas and electricity charges—the nationalised industries; and higher wages for employees as a result of inflation.
  They are all feeling the pinch, and so are the customers, to such an extent that they are already encountering sales resistance and their sales of meat are decreasing, simply because the customer cannot afford to buy as much meat nowadays as he could in the old days of so-called Tory misrule.
  The levy on carcase weight may seem small at 0·1d. per lb., but the result can mean only a substantial increase in charges which, in fairness to all sections of the trade, will have to be passed on 1o the customer. This will stem from the additional time spent in the grading and ticketing of meat at wholesale and retail levels.
  The trade is being asked by the Government to keep prices down, and yet Government action is forcing prices up. The trade is anxious to keep its prices as low as possible and this additional burden, due to the proposed levy system, cannot be absorbed. That is why the trade ask for a square deal and, in the process, an endeavour to prevent further waste of public money on such senseless bureaucratic schemes.
  12 m.
  Mr. Derek Page: I was very pleased to hear the right hon. Gentleman the Member for Grantham (Mr. Godber) welcome the scheme, as I do. Indeed, I think that many hon. Members of this side will regret that the Commission will not have more powers than these. Certainly, the scheme has to be paid for, but the point I want to protest about—it has already been mentioned, but it needs covering a little more fully—is the fact that imported meat should bear its proper due.
  Many of the functions of the Commission will be of help to the importers and to the producers, of course. Carcase classification will help marketing of imported meat, market information is bound to help importers just as it will our own producers, market development is bound to help them as well, and so will research, and it will help our competitors in increasing their efficiency abroad. In these circumstances, it is quite indefensible that the whole charge should fall on our home producers. Of
  1622
  beef, 73 per cent. is produced at home, but of mutton only 438 per cent., and yet the whole of the charge is falling on those producers. This is plainly inequitable.
  I would point out also that the effect of putting the charges purely on home carcases will be a reduction of the levies charged on imports. Imported carcases are charged at about 30s. per carcase, apart from those from Commonwealth countries. By putting the levy on our own carcases we reduce the import levy, which is bound to encourage imports, at a time when we should be doing exactly the opposite.
  I would, therefore, ask my right hon. Friend to consider very carefully whether imported meat should not pay its proper due. If he wants my vote tonight I would certainly like to hear an undertaking from him that he will think this point over carefully.
  12.2 a.m.
  Mr. James Dance: I think that most of us, on both sides of the House, have butchers and their slaughterhouses in our constituencies. They feel, I believe rightly, that they are being discriminated against. They feel very strongly that while it is a good idea to have the Commission set up, the levy should be more widely spread, and not imposed on only one section of the industry.
  The Farmer and Stockbreeder recently said:
  "The Government has thought it necessary for the livestock industry to have a co-ordinating and development body imposed upon it And Government could well be right."
  I think we all agree about this.
  "But as the Commission is evolving, it seems only fair for the Government to pay direct for this work and not make it a charge on either side of the industry"—
  I think that that is true—
  "to neither of which it seems likely on its present showing to be of much help."
  Would it not be possible?
  I agree with my right hon. Friend the Member for Grantham (Mr. Godber) when he says this is the most economical and possibly the easiest way of collecting this levy, but is there not an easier one still? That is for the Government to put it in the February Price Review and let them pay for it. Would not that

  1623
  make more sense? That would make it easier to collect. I do not think that it would be detrimental but much fairer to all of the agricultural industry.
  I also believe that the cost of this exercise is far too high. For example, why have we got £50,000 for rent and equipment of the out of London offices in the first year, and why have we got £30,000 for general headquarters' expenses?
  This is surely one further example of excessive Government expenditure on commissions and other forms of bureaucracy. I am in entire agreement—and I know my right hon. Friend also agrees —on the setting up of this particular Commission, but surely we must look at the expense of these various bodies set up by the present Government at a time when we are doing so much to take money out of people's pockets and increasing bureaucracy.
  The burden of this levy, which I think is much' too high, should be more equally spread over the whole of the agricultural industry, and possibly the best way to do it is through the February Price Review. I would also like to see the cost of this Commission reduced quite considerably, because it is too high.
  Finally, I would like to see this reviewed in the near future and not just allowed to go on expanding and expanding, thus making the levy more onerous for the whole of the agricultural industry.
  12.7 a.m.
  Mr. James Davidson: I should like, first, to get an assurance from the Minister that he has seen this report produced by the Meat Distributors' Action Committee, because I feel that if he has read it and seen the arguments in it it will save a great deal of time in this debate and save us from going over the same arguments.
  May I have a nod from the Minister that he has read it? I see indications from the Front Bench opposite that this obviously has been seen, and so I can at least throw away one page of the short speech I had intended to make. The arguments are there in the report, and there is no point in repeating them over and over again.
  Having studied with care the representations of the National Federation of
  1624
  Meat Traders' Associations, I think many of their arguments are totally invalid. Some I agree with, and some I do not. There seem to be two completely separate points at issue. The first is whether a Meat and Livestock Commission is necessary at all, and the House has made its decision on this point in passing the relevant Section of the Agriculture Act.
  I personally do not agree that a Meat and Livestock Commission in its present form is entirely desirable or necessary. I believe it has excessive powers, and yet the most essential power of all—some power to regulate imports—is missing. In this respect it seems to me like a horse with three legs. The other question—
  Mr. R. J. Maxwell-Hyslop: Before the hon. Gentleman leaves his point about getting an assurance from the Government, would he bear in mind that at this late hour of the night a nodding head on the Government Front Bench can have two possible interpretations?
  Mr. Davidson: Well, I am sure the whole House is very grateful for that most useful contribution to the debate.
  The other major question is the way this levy is actually to be financed, and this is what has raised all the dust and caused all the complaints that have come to us through the post, and more directly through representations, in the last few weeks.
  On the reluctant presumption that the Commission is necessary and that therefore a levy has to be raised somehow, is it unfair that it should be taken at the point of slaughter? In my view it is not unfair, since it will filter through the ramifications of the industry from the producer to the consumer. I cannot agree with the arguments which have been put forward by the meat trade that this is an unfair imposition and an unfair concentration on one section of the trade. As with every extra cost on an industry, it is bound to find its way through the industry to every section, to the farmer and to the housewife who buys her meat in a chain store, or wherever she goes for it.
  If at the end of the debate the Order is voted on, my colleagues and I will go to the Lobby against the Government, and I will make clear the reasons why we shall be doing so. We are not convinced that the Meat and Livestock

  1625
  Commission in its present form is desirable, particularly because it lacks powers of control or regulation over imports, and in this respect is an incomplete meat marketing commission. We are dissatisfied with its published programme of work. We are not persuaded that it will give value for money. If the Government persist with their intention to finance it in this way they should adopt the suggestion that has already been made in the course of the debate, that, rather than the money being taken at the point of sale, for the first year or two, in the nature of an experiment, it should be financed directly from the money provided by the farm price review in February, at least until every section of the industry from the farmer to the consumer is convinced that the Commission is giving value for money. When we are convinced that it is giving value for money, then we will be prepared to pay for it.
  12.12 a.m.
  Sir Arthur Vere Harvey: I have had many protests from my constituents in Macclesfield and Congleton, and I am glad to follow the theme of the forceful speech of my hon. Friend the Member for Knutsford (Sir W. Bromley-Davenport), who is a constituent of mine. It is a monstrous situation that we should be asked to debate this subject after midnight. I have heard a rumour that there may be some other arrangement, but why did not the Leader of the House think of this earlier? He makes a face, but it is very bad administration and is not the way in which to run the House of Commons.
  I am concerned about the amount of paperwork the slaughterer has to deal with day by day. The Government revels in handing on paperwork to all sections of the community. It is not surprising that we have had nearly 60,000 additional civil servants in the last 3½ years. The powers to raise the levy could have been taken in a different way, but the Government always say that this is a convenient way. S.E.T. is a convenient way, and that is being doubled in September. The butchers, amongst other members of the community, will have to bear that as well. Why is imported meat not included? Why should it be only home produced meat that is involved? The agricultural industry as a whole, and the
  1626
  butchers, have a great deal to contend with. The debate last week did not take us very far. We were told by the Prime Minister in his famous broadcast after devaluation that there would be long-term planning in the agricultural industry, but we have had nothing but increased prices. No industry has been treated more shabbily than the agricultural industry in Great Britain.
  Mr. Orme: Feather-bedding.
  Sir A. V. Harvey: The only time the Labour Party makes a noise about agriculture is at General Elections. The Minister has had precious little support for the Order, even from his own side of the House, and he should look at this scheme again, for it is untidy and unworkable.
  12.15 a.m.
  Mr. Angus Maude: I want to take up the question of the exception of imported meat from the levy. I have some sympathy with the Government in the problems they are facing on this issue. The main question facing the Government is how they are going to get the confidence of the agricultural industry for what they claim is a great appeal to it for import saving on a large scale in the present balance of payments difficulties. Over and over again, when speeches have been made by the Prime Minister and other Ministers, the appeals have been nullified by by what the industry regards as sabotaging moves in the opposite direction.
  There have been complaints about imports of dairy produce, of new potatoes and so on, at exactly the time when we are trying to substitute home produce for imports. Now, at a time when there is a genuine disquiet about the size of the levy and the way it is levied, all imported meats are to be exempted.
  The hon. Member for Aberdeenshire, West (Mr. James Davidson) said that of course the method of collection proposed is the most convenient because it filters through to the consumer. It does on home produced meat but not on imported meat. The British meat industry is entitled to say that it is being put at a serious disadvantage.
  I understand the difficulties with which the Government are faced, with

  1627
  which any Labour Government are faced —and I am not trying to make a party political point—because it is difficult for a Labour Government, whose supporters represent largely urban areas and constituencies, to put any kind of taxes or levies on cheap imported food. We have always known this. But they cannot try to maintain this attitude convincingly while at the same time trying to get the agricultural industry to make a major effort for import substitution.
  Either the Government really want to encourage the British agricultural industry to replace imported agricultural produce with home produced food or they do not. At the moment, the industry simply does not believe that the Government mean it. It is no good Ministers making speeches with high-falutin' appeals to the industry while this sort of thing happens, and this is a striking example of it.
  The right hon. Gentleman must realise that not a single hon. Member from either side has expressed himself as satisfied with this Order and with the system he is bringing forward. He would be wise, if he wants to encourage and satisfy the food and agricultural industries, to make some conciliatory noises, take the Order away and look at it again.
  12.20 a.m.
  Mr. W. F. Deedes: The Minister is not having a warm reception for his Order. I hope he realises that one of the reasons behind the very strong opposition to the Order is the feeling that he is approaching saturation point with schemes of this kind. This is very keenly felt by the primary producers and their agents. To be honest, we have all contributed to this. In the sense that the right hon. Gentleman has only entered his Ministry recently, he is perhaps among the more blameless for the present state of affairs. But there is a general feeling that schemes of this kind are amounting to far too heavy an impost. In this case the right hon. Gentleman is vulnerable, because the impost will fall on one section, namely, the slaughterers and the butchers. As we have heard, the importers and the primary producers will be left out.
  I know what lies behind the problem. Any levy applied to import prices
  1628
  has an effect on the price to the consumer, it is always considered a very dangerous thing to impose a levy on imports which will affect the level of prices here. I hope that the right hon. Gentleman understands that the levy here will be passed on to the consumer. This is the inevitable consequence of a scheme of this kind. For the moment the slaughterers are appealing to their Members of Parliament to support them against an unfair levy. But they know, and I know, who will eventually pay. It will be the customer. We should be clear about that in discussing this Order tonight.
  The arguments being levelled against the scheme are not—here I give the right hon. Gentleman a point—altogether rational. My right hon. Friend the Member for Grantham (Mr. Godber) accepted this. In terms of the 1967 Act, which is what we all agreed we wanted, there is in this Order a good deal of substance to which we have all subscribed. It is not altogether rational to oppose the particular proposal that the Minister brings tonight, but he is now facing the central core of resistance, which I must warn him will steadily increase, from the primary producers and others who reckon that they have had very nearly enough. One of the lessons we should learn from this Order is that the Minister has not yet had a single voice raised in warm support. The primary producers are not involved at the moment, but their agents, the slaughtermen, are, and they are up in arms.
  I beg the Minister to realise that this will have to be the last scheme of its kind. I hope that hon. Members on this side, who have their own ideas about schemes of this kind, will accept it as well. There will have to be a limit on future imposts of this kind, both on the primary producers and their agents, or we shall have more trouble than we are having tonight.
  12.23 a.m.
  Mr. James Scott-Hopkins: I hope that we shall not pass this Order tonight. I hope that the right hon. Gentleman will have second thoughts about it.
  I agree with the idea of having a Meat Commission. I have always said that this is right. As my right hon. Friend the Member for Grantham (Mr. Godber)

  1629
  said, it is obviously necessary to have a charge for it. But I part from the Minister on the level of charges that he is making. Although the Minister has reduced what was originally asked for by the Commission, I do not believe that he is right to levy an extra leeway over and above what the Commission says that it will need for two years. I think that £1·85 million is more than is needed, including what will be needed for P.I.D.A. I believe that what will be needed for the extra amount of work that the Commission will be doing comes to less than £1·85 million. Therefore, I submit that it is asking for too much. I think that to give leeway over this is asking too much. That is my first point of disagreement.
  The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): I think that the hon. Gentleman said in addition to P.I.D.A., but P.I.D.A. is included in this sum and represents more than £1 million of it.
  Mr. Scott-Hopkins: If the hon. Gentleman was listening to what I was saying he would realise that what I said was that £1·85 million is more than is needed, including what will be needed for P.I.D.A. This is my first point. That is why I think that too much is being asked for. He is wrong also not to come back in a year or so and ask the House for more money or to reduce the levy, depending on how the Commission has got on. I have just as much confidence as the hon. Gentleman in the people who will run the Commission: that is not the point.
  The next point which is wrong is to give the extra £600,000 after two years. The third point at which I part company with the right hon. Gentleman is that I think that this is the wrong way to collect the levy. I do not agree with my right hon. Friend that because the point of slaughter is the most convenient way, it will filter down. The Order says that the
  1630
  slaughterer is entitled to recharge the amount of levy which he has to pay. How is he to apportion it? It will be done down the line. The local authority as well as the butcher is often the slaughterer, and this will certainly go down the line away from the producer to the customer at the far end: he will have to pay at the end of the day. It is not only the primary producer but the consumer who has had enough of these extra imposts on agriculture. As a result, the price of food is continually rising and the time has come to call a halt.
  The Order should not be approved. As I said in Committee on the Bill there should be a charge on imports. We must remember that the Commission's activities in improving the tenderness, cutting up, presentation and marketing of meat can affect imports as much as the home producer, and it is wrong that the Order does not include a charge on imported meat. This is the gravest mistake of all. It need not be at the same level as that paid by the home producer, but it should be there. I repeat what my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) said: since the Minister is asking the farming community for increased production, particularly of livestock, and for import replacement, this is he wrong way to get their confidence. He will regret that he has brought the Order forward like this, unfairly framed and phrased as it is, and I beg him to take it away.
  Mr. Cledwyn Hughes: We have made good progress in this debate and many other hon. Members still wish to speak. Although we have heard many interesting speeches, I would not agree with their argument, and in due course I think that I will satisfy hon. Members that their arguments have no validity. Nevertheless, I am anxious to hear a full debate. Therefore, I beg to move,
  That the debate be now adjourned.
  Question put and agreed to.
  Debate to be resumed Tomorrow.

  S.A.C. JOHN McKILLEN (DEATH)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. loan L. Evans.]
  12.30 a.m.
  Mr. Richard Buchanan (: I am very grateful for the opportunity afforded to me to raise the question of a pension for the father and mother of one of my constituents who was killed while on service with the R.A.F. overseas. The case concerns Senior Aircraftman John McKillen, who was the only son of a family of four, who joined the R.A.F. at the age of 24 in 1962, who in 1965 was posted to Germany and on 16th January, 1966, was killed while on service in Germany.
  I notice that my hon. Friend the Joint Parliamentary Secretary is here, and I know his attitude in regard to such cases. He always views them with a most benevolent eye and helps where it is possible. I realise the straitjacket in which he finds himself about the decisions made in other places, but I would point out that at the time of his death S.A.C. McKillen was a Serviceman serving his country in a foreign land—I repeat; he was serving his country in a foreign land.
  My appeal is based on this fact and the precedent which was created in the granting of a pension to the dependants of another unfortunate Senior Aircraftman whose name I have given to my hon. Friend and which I need not mention now.
  On 16th January, 1966, Senior Aircraftman McKillen and a fellow Serviceman were making their way from the R.A.F. camp at Gutersloh, in West Germany, to a cafe, where the were intending to have a meal, when they were hit by an automobile driven by a German civilian. This German civilian has since been convicted and sentenced to a term of imprisonment for driving whilst under the influence of alcohol.
  I submit that the two Servicemen were injured—and S.A.C. McKillen subsequently died—as a direct result of being on service in Germany and of the illegal action of the German civilian. In this regard the case must be considered
  1632
  in parallel with the case which I have already mentioned and others concerning Service men serving their country in other parts of the world—Service men at Cyprus and Aden—who may have been entering their personal sphere, off duty at the time and who, through the action of other civilians, or nationalists, or whatever one may call them, were injured, wounded or killed. The action of these foreign nationals has a direct bearing on whether or not the person concerned is entitled to a pension.
  There is also the question of precedent. It is said that because S.A.C. McKillen was leaving the camp to go to a cafe he was entering his personal sphere and severing for the time being his Service connection. This is a line of officialese reasoning that I find very difficult to understand, especially when a precedent was created in the case of the other unfortunate S.A.C, who was killed a few hundred yards from camp in almost exactly the same circumstances but whose dependants were granted a pension because in going back to camp he was resuming his service—entering the official sphere.
  I find it terribly difficult to understand why the dependants of one S.A.C. who was leaving his camp in a foreign country are denied a pension on the assumption that he was entering his personal sphere and severing his Service connection, whereas the parents of the other unfortunate S.A.C. received a pension because he was coming back to camp and therefore resuming his Service connection.
  In the consideration of the appeal by Mr. McKillen senior, the Ministry quote the judgment of Mr. Justice Tucker in the case of Horsfall v the Ministry of Pensions, Volume I of the Selected War Pensions Appeals, page 7, but I cannot see the connection between this and the case now under consideration, because in the case of Horsfall v the Ministry the man died of a coronary thrombosis at the age of 53 after playing squash, and that happened in Britain.
  In the second case, of Standen v the Ministry of Pensions, in Volume I, page 905, Mr. Justice Denning, as he then was, was against the applicant. This person was injured while cycling with his wife and had a three monthly sleeping-out pass. This does not compare with

  1633
  the case which I am trying to put on behalf of S.A.C. McKillen's dependants. In the case of Standen v the Ministry, he was living almost permanently outside the camp with his wife, in private digs.
  The case of Richards v the Ministry of Pensions, on page 631, before Mr. Justice Ormerod, was one in which a soldier was injured and was claiming a pension, but his injury was received in a brawl with a fellow soldier. I ask my hon. Friend to recognise that no matter how charitably I can view the cases under review, they bear no relation at all to the case of S.A.C. McKillen who was killed on service overseas by a native civilian who was subsequently convicted.
  I would implore my hon. Friend, knowing the strait-jacket in which he is enclosed, to see that this case is reopened, if at all possible.
  The only other step open to my constituent is to raise this case in the Court of Session, but the cost is completely beyond him. It runs to something like £200. I appeal to my hon. Friend to have some regard to the cases I have quoted. I do not think the Appeals Tribunal reviewed comparable cases, and I ask for this case to be reopened.
  12.38 a.m.
  The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Charles Loughlin): I want to thank my hon. Friend for the temperate way in which he has presented this case, because I know how strongly he feels about it, and perhaps it is a pity that I could not have afforded him satisfaction in this case after the way in which he has pursued it to the fullest extent possible to him as a Member of Parliament.
  Before I discuss the claim to pension by S.A.C. McKillen's father, may I express my personal sympathy and that of the Minister with Mr. and Mrs. McKillen in the loss they suffered by the death of their only son at 24. Out of personal experience, I am fully aware of the sad blow this must have been, and if the Minister and I could have granted a pension we would have been only to happy to do so. Unfortunately, much as we sympathise, it is not within our power to do anything for Mr. and Mrs. McKillen by way of pension.
  1634
  The pension claim had to be rejected because Senior Aircraftsman McKillen's death could not be accepted as due to service. The statement made by my hon. Friend shows that he is aware of this fact. The claim falls to be considered under the war pensions scheme. The primary condition under the scheme for any award of pension in respect of the death of a member of the Forces is that death was due to service. This fundamental principle of a casual connection with service is that basis of the difference between the war pensions scheme and other schemes and as such it is the justification for the various preferences enjoyed by war pensioners as compared with others.
  There can accordingly be no question of a pension where death was not due to service. But it cannot be emphasised too strongly that my Ministry takes the most sympathetic view it can of any claims, and that the benefit of any reasonable doubt is given to the claimant. Nor does the Ministry have the last word. My hon. Friend referred to the Pensions Appeal Tribunal. When we are unable to concede a claim, there is a right of appeal to the Tribunal. These Tribunals are completely independent of the Ministry, which has no hand in the nomination or appointment of members, nor in the running of the Tribunals. The Tribunals come within the jurisdiction of the Lord Chancellor.
  When the Ministry did not find it possible to admit Mr. McKillen's claim in respect of the death of his son, he took his case to the Pensions Appeal Tribunal. The Tribunal gave the case a very full hearing, adjourning it at one point for further inquiry on a point raised by Mr. McKillen's representative. Mr. McKillen was there in person. After hearing all the evidence and arguments, the Tribunal also reached the conclusion that S.A.C. McKillen's death was not due to service.
  My hon. Friend spoke about the restrictions placed upon my right hon. Friend and myself. A Tribunal's decision is legally binding both on the appellant and the Ministry. It is only on a point of law that application can be made for leave to appeal against a Tribunal's decision—to the Court of Session in Scotland or the High Court in England.
  My hon. Friend has given the bare bones of the facts, I will augment them

  1635
  a little. S.A.C. McKillen met his death in a road accident while he was stationed with the R.A.F. in Germany. He was off duty at the time. His last spell of duty had ended at 0.800 hours on the Saturday, and he was not required to be on duty again until just after midday on the Monday. During this off-duty weekend, his time was his own to do what he liked in—naturally within the same bounds as apply to other citizens.
  Some time late on the Sunday evening he and a friend decided to go out for a meal at a local cafe. They were walking along the road at about 11.00 p.m. when they were knocked down by a car. It was dark and they were wearing dark overcoats. They were not in uniform. Once the accident occurred, help was on the spot almost immediately, and there was no delay in getting them to hospital. S.A.C. McKillen was admitted within thirty minutes, but he died from his injuries two days later, despite all that the doctors could do. I can well understand what a shock the news of this must have been to his parents and their subsequent anxieties and grief.
  But the circumstances of the accident clearly had nothing to do with any compulsion of service. S.A.C. McKillen was making his way from the camp to the cafe at that time, entirely because it suited his own purposes so to do. In walking along the road, any risks to which he was exposed were those to which any one else, civilian or Serviceman, doing the same thing was exposed. They were not Service risks. It was a public road and the car involved in the accident was driven by a civilian. The plain fact is that this was a road accident of the sort that could unfortunately happen to any of us at any time when we are innocently going about our own affairs.
  I appreciate that my hon. Friend has sought to draw a parallel between this case and one in which a widow's pension was granted following the death of the husband in an off-duty road accident while serving in Germany. A case of this sort was quoted at the Tribunal hearing in support of Mr. McKillen's appeal. In our view, the circumstances of the other case quoted at the Tribunal and referred to by my hon. Friend, although superficially similar, differed in
  1636
  significant respects from those of S.A.C. McKillen's case. As I have said, the Pensions Appeal Tribunal disallowed Mr. McKillen's appeal.
  The implication of the Tribunal's decision cannot be other than that we were on firm ground in reaching the decision which we reached. In any event, as I said earlier, the Tribunal's decision means that there is no further action that the Ministry can take on Mr. McKillen's behalf. Perhaps I should explain that even had his son's death been due to service, it would not have been possible to pay him a pension. Under the War Pensions Scheme the condition that death was due to service is not the only one to be met before a parent's pension can be granted. A pension can be paid to a parent only if the parent is in financial need due to old age, infirmity or some other adverse circumstances. According to my information, this would not apply to Mr. McKillen.
  We understand that he and his wife did receive some compensation for the death of their son as a result of legal action taken on their behalf by the Ministry of Defence against the driver of the car involved in the accident. I should, perhaps, make it clear that the compensation they received was very restricted, largely because of the German laws that applied when the case was heard in Germany. The compensation might have been more, but the court held that S.A.C. McKillen had to some degree been negligent, and his negligence was taken as a contributory cause of the accident.
  But I can well believe that it is not the financial aspect that the parents are primarily interested in. I know they feel there would be some comfort, slight as it would be, if their son had died as a result of service.
  I do not know what more I can say to S.A.C. McKillen's parents. We were proud of the lad's service record and we were proud of him. Unfortunately we cannot, under the regulations governing the War Pensions Scheme, concede the payment of a pension in this case.
  Question put and agreed to.
  Adjourned accordingly at eleven minutes to One o'clock.

DEFENCE
  N.A.T.O. (Non-Proliferation Treaty)
  N.A.T.O. (Non-Proliferation Treaty)
  Royal Navy Ships (New Classes)
  Royal Navy Ships (New Classes)
  Army Administrative Vehicles
  Army Administrative Vehicles
  Rhine Army Brigade
  Rhine Army Brigade
  Imprisonment and Detention Rules
  Imprisonment and Detention Rules
  Defence Budget
  Defence Budget
  Naval Vessels (Building and Repair)
  Naval Vessels (Building and Repair)
  United Kingdom Defence Forces (Overseas Countries)
  United Kingdom Defence Forces (Overseas Countries)
  Royal Defence College
  Royal Defence College
  Royal Navy (Air Support)
  Royal Navy (Air Support)
  Hospital Staff, Malta
  Hospital Staff, Malta
  Force Reductions (N.A.T.O. Discussions)
  Force Reductions (N.A.T.O. Discussions)
  Nigeria (British Army Vehicles)
  Nigeria (British Army Vehicles)
  B.A.O.R. (Training Areas)
  B.A.O.R. (Training Areas)
  Royal Naval Hospital, Malta (Fees)
  Royal Naval Hospital, Malta (Fees)
  H.M.S. "Broadsword" and H.M.S. "Roebuck"
  H.M.S. "Broadsword" and H.M.S. "Roebuck"
  Far East Defence (Five-Power Conference)
  Far East Defence (Five-Power Conference)
  Crown Proceedings Act, 1947
  Crown Proceedings Act, 1947
  Seawolf (Development)
  Seawolf (Development)
  Royal Malta Artillery
  Royal Malta Artillery
  H.M.S. "Blake" (Helicopters)
  H.M.S. "Blake" (Helicopters)
  Major Pike (Posting)
  Major Pike (Posting)
  Service Pensioners
  Service Pensioners
PORTS
  Bristol West Dock Scheme
  Bristol West Dock Scheme
RAILWAYS
  Central Wales Line (Passenger Services)
  Central Wales Line (Passenger Services)
  Passenger Fares
  Passenger Fares
  Deficit
  Deficit
ROADS
  Hedgerow and Farm Timber (Merthyr Committee Report)
  Hedgerow and Farm Timber (Merthyr Committee Report)
  Tree Planting (Trunk Road Schemes)
  Tree Planting (Trunk Road Schemes)
  Traffic Signs (Maintenance)
  Traffic Signs (Maintenance)
  Tinsley Roundabout, Sheffield (Route Signs)
  Tinsley Roundabout, Sheffield (Route Signs)
  Roadworks (Public Utilities)
  Roadworks (Public Utilities)
  Speed Limit Policy
  Speed Limit Policy
AGRICULTURE, FISHERIES AND FOOD
  New Potatoes (Price)
  New Potatoes (Price)
  Industrial Development (Drainage)
  Industrial Development (Drainage)
  Brucellosis
  Brucellosis
  Oysters (French Imports)
  Oysters (French Imports)
  Wheat and Barley (Prices)
  Wheat and Barley (Prices)
SCOTLAND
  Fishing Ports and Port Markets (Bremen Conference)
  Fishing Ports and Port Markets (Bremen Conference)
  Geriatric Beds (Lanarkshire)
  Geriatric Beds (Lanarkshire)
  Shipping Charges (Islands)
  Shipping Charges (Islands)
  Kincardine and Hunterston A Power Station (Unit Costs)
  Kincardine and Hunterston A Power Station (Unit Costs)
  Prescription Charges
  Prescription Charges
  Weir Housing Corporation
  Weir Housing Corporation
  Burrell Collection
  Burrell Collection
  Electricity (Generating Costs)
  Electricity (Generating Costs)
  Ninewells Hospital, Dundee
  Ninewells Hospital, Dundee
  Tayside Development Area
  Tayside Development Area
BOARD OF TRADE
  Greece (Trade Relations)
  Greece (Trade Relations)
  Nelson and Colne Area (Employment)
  Nelson and Colne Area (Employment)
  Local Employment Acts (Service Industries)
  Local Employment Acts (Service Industries)
  Local Employment Acts (Hotel Projects)
  Local Employment Acts (Hotel Projects)
  Crowther Committee on Consumer Credit
  Crowther Committee on Consumer Credit
  Sheffield Area (Industrial Development Certificates)
  Sheffield Area (Industrial Development Certificates)
  Industrial Development Certificates (Refusals)
  Industrial Development Certificates (Refusals)
  Visitors to Britain
  Visitors to Britain
  British Holidaymakers (Expenditure)
  British Holidaymakers (Expenditure)
AVIATION
  B.O.A.C. (Boeing Aircraft)
  B.O.A.C. (Boeing Aircraft)
MINISTRY OF HEALTH
  State-Registered Nurses (Salary Incentives)
  State-Registered Nurses (Salary Incentives)
  Prescription Charges
  Prescription Charges
  Aspirin (Side-Effects)
  Aspirin (Side-Effects)
  Invalid Vehicles
  Invalid Vehicles
HOME DEPARTMENT
  Experiments on Animals
  Experiments on Animals
  Taxi Fares (London-Heathrow)
  Taxi Fares (London-Heathrow)
  Citadel Restaurant, Carlisle (Prices)
  Citadel Restaurant, Carlisle (Prices)
  BERLIN (ACCESS)
  BERLIN (ACCESS)
COMMONWEALTH AFFAIRS
  Victoria Harbour, Hong Kong (United States Naval Vessels)
  Victoria Harbour, Hong Kong (United States Naval Vessels)
EDUCATION AND SCIENCE
  Opera and Ballet
  Opera and Ballet
EMPLOYMENT AND PRODUCTIVITY
  Public Administration and Industry (Earnings)
  Public Administration and Industry (Earnings)
  Coal, Gas and Electricity Industry (Wage Rates)
  Coal, Gas and Electricity Industry (Wage Rates)
  Redundancy Payments Fund
  Redundancy Payments Fund
  Railway Workers (Wage Rates)
  Railway Workers (Wage Rates)
NATIONAL FINANCE
  £Sterling (Purchasing Power)
  £Sterling (Purchasing Power)
  Government Departments (Dispersal)
  Government Departments (Dispersal)
  External Assets and Liabilities
  External Assets and Liabilities
  Nationalised Industries (Accounts)
  Nationalised Industries (Accounts)
  Tobacco and Alcohol (Expenditure)
  Tobacco and Alcohol (Expenditure)
  Government Contracts (Profit Formula)
  Government Contracts (Profit Formula)
HOUSING
  Cost Yardsticks
  Cost Yardsticks
POST OFFICE
  Printed Papers (United States of America)
  Printed Papers (United States of America)
MINISTRY OF POWER
  Coal Industry (Redeployment)
  Coal Industry (Redeployment)
  Coal Stocks
  Coal Stocks
  Nationalised Industries (Commodity Prices)
  Nationalised Industries (Commodity Prices)
  Petroleum Products (Surcharge)
  Petroleum Products (Surcharge)
  Power Stations (Commissioning)
  Power Stations (Commissioning)
TECHNOLOGY
  Supersonic Trainer Aircraft
  Supersonic Trainer Aircraft
SOCIAL SECURITY
  Rate Rebates (War Disability Pensioners)
  Rate Rebates (War Disability Pensioners)
WALES
  Investiture of the Prince of Wales
  Investiture of the Prince of Wales

Preamble
The House met at two of the clock: The LORD CHANCELLOR On the Woolsack.
Prayers—Read by the Lord Bishop of Lincoln.

LORD BLACK
Sir William Rushton Black, Knight, having been created Lord Black, of Barrow in Furness in the County Palatine of Lancaster, for life—Was, in his robes, introduced between the Lord Wakefield of Kendal and the Lord Nugent of Guildford.
LORD JACQUES
John Henry Jacques, Esquire, having been created Baron Jacques, of Portsea Island in the County of Southampton, for life—Was, in his robes, introduced between the Lord Rusholme and the Lord Peddie.

JUTE WORKERS AND CANCER RISK
2.25 p.m.
LORD CROOK: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether the Factory Inspectorate has already investigated and, if not, whether it would now investigate, the question of the risk of cancer for jute workers arising from the mineral oils used in the processing of jute, in the light of the report of the research workers in the Department of Public Health and Social Medicine, Queens College, Dundee, that there is a need to reduce the exposure of jute workers to these oils, and to consider the desirability of replacing the oils with innocuous substitutes.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, it has been known for many years
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that certain oils used in industry may be carcinogenic, but evidence so far available shows that for jute workers the risk of skin cancer is very low. Where it does occur, the condition is fortunately readily identifiable and responds favourably if treated early. Following publication of the report referred to by my noble friend, the Factory Inspectorate made a special investigation into the types and composition of the oils used in the jute industry and into the incidence of skin cancer among the workers to see whether any new factor had emerged, but found no change in the situation.
LORD RHODES: My Lords, may I ask the Minister whether he is aware that there is no necessity whatever to use mineral oils for lubrication of fibres, either vegetable or animal, and that it may very well be that these mineral oils are being used for the lubrication of machinery? May I draw his attention to the investigations which were carried out in the cotton industry into the disease known as spinners' cancer?
LORD HUGHES: My Lords, my noble friend asked whether I was aware of that situation. The answer is that I am not aware of it.

PROCEDURE: QUESTIONS AND WRITTEN ANSWERS
2.27 p.m.
LORD MANCROFT: 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 the Leader of the House whether, without trespassing upon the rights of Members, it may be possible to devise some procedure whereby Questions involving numerous, complicated or divergent matters could be prompted to appear on the Order Paper not as Starred Questions, but rather as Unstarred Questions, or Questions for Written Answer.]
LORD BESWICK: My Lords, I will, with leave, answer this Question on behalf of my noble friend Lord Shackleton, who much regrets that he is unable to be here himself. Without commenting at this stage on the merits of the

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noble Lord's suggestion, we would welcome discussion of this matter and suggest that in the first instance it might be undertaken by the Procedure Committee.
LORD MANCROFT: My Lords, in that case, may I be forgiven for inquiring whether there are any vacancies on the Procedure Committee?
LORD BESWICK: My Lords, the noble Lord may inquire. I shall make inquiries myself and let him know.
LORD ROBERTSON OF OAKRIDGE: My Lords, does not the noble Lord think that sometimes the representatives on the Government Front Bench might get over this difficulty by being a little briefer in their replies and a little less considerate to those Members of the House who ask many irrelevant supplementary questions?
LORD BESWICK: My Lords, coming from one of the most considerate Members of the House, I find it a little difficult to accept from him that one speaking from here should be inconsiderate to others. But certainly we shall bear in mind what the noble Lord has said.
VISCOUNT ST. DAVIDS: My Lords, would my noble friend agree that this Question itself involves "numerous, complicated or divergent matters", and could very well appear on Line Order Paper as an Unstarred Question?
SEVERAL NOBLE LORDS: No.

NUCLEAR POWER
LORD BESWICK: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will be making a Statement on nuclear power.
CITY OF LONDON (VARIOUS POWERS) (NO. 2) BILL
Read 3a, with the Amendments, and passed, and returned to the Commons.

FINANCE BILL
2.30 p.m.
THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN): My Lords, I beg to move that this Bill be now read a second time. I find myself in an unfamiliar position this afternoon, for I have never before taken part in the annual debate on the Finance Bill. In considering what I should say, it seemed to me that the guts of the situation with which the Bill is attempting to deal is our national balance-of-payments situation. This is the central topic which I think most deeply concerns all of us. I propose, therefore, to focus all of my comments on that aspect. I trust I shall be forgiven, therefore, for failing to deal with the many other subjects which the Bill covers. No doubt some of these other subjects will be raised in debate, but I shall leave it to my noble friend Lord Beswick to deal with these in his summing-up speech at the end of the debate.
On the Monday evening after devaluation had been announced, the "Twenty-Four Hours" programme on B.B.C. started with a black screen on which appeared a vast figure stating total United Kingdom liabilities, but there was no mention of the counter-balancing assets. I must confess to being very angry when I saw that, for the public find difficulty in understanding national financial issues, and to quote liabilities in this way without showing assets is highly misleading. I was in Australia recently and met a large number of businessmen, reporters and politicians, and the picture in the minds of many of them of this country's financial and trade situation I found to be highly inaccurate. It was a much more sombre picture than is justified, and they welcomed the rather more realistic picture which I was able to present to them. These are two instances, but such examples of over-playing the gloom and the false image that this creates abroad abound to-day. They are depressing the spirits of our citizens, our businessmen and even, at times, our own politicians.
A recently published estimate suggested that the United Kingdom ended the last war a debtor nation with short and long-term debts of the order of £5,000 million total. Set against these

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there were gold and dollar reserves of well under £1,000 million and perhaps £3,000 million worth of overseas investments—a total of £4,000 million.
LORD AILWYN: My Lords, I wonder whether the noble Lord would forgive me. Could he speak a little slower? It is a little difficult to take in some of his remarks.
LORD BROWN: I apologise to your Lordships. I am afraid it is a fault of mine. I will watch it.
From the 1967 pink book on the United Kingdom balance of payments we find that at the end of 1962, total identified assets had risen to £13,000-odd million and total identifiable liabilities to £11,745 million, giving a surplus of assets over liabilities of £1,355 million. By the end of 1966 our assets stood at £17,800 million, and the balance over liabilities had increased to £1,415 million. An estimate for the end of 1967, taking into account the effects of devaluation on the sterling value of our assets, is not yet complete, but I am advised that it is likely to show that our net creditor position has increased. In other words, since the end of the war we have changed from being a debtor nation to a creditor nation, and this is a fact which comes as a very gratifying surprise to those with whom we trade overseas. I believe it is essential to drive home these facts, for the grossly exaggerated picture of our situation which inhabits the minds of people overseas does damage to our trade relations and makes the job of our exporters more difficult. Those comments have, it is true, to be balanced by some more sombre facts. Too much of our assets is in long-term and too little in quickly realisable investments, and we have incurred heavy, short- and medium-term indebtedness. The need, therefore, for us to earn and sustain a surplus on the balance of payments is paramount. I hope noble Lords will not assume that because I seek a more realistic portrayal of our true position I am in any way depreciating the magnitude and urgency of the task which faces us.
I now wish to draw attention to yet another factor which I think is unnecessarily damaging our imagine among our overseas customers. Noble Lords are well aware that when foreigners withdraw
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funds from London they weaken sterling, but that nevertheless the act extinguishes a United Kingdom short-term liability, and that if we borrow an equivalent amount, say, from international banking sources to replace the funds wits drawn then no monetary change has taker place on our national balance sheet. I hive no intention of belittling either the assistance provided to the support of sterling by international lending facilities or the seriousness of the situation which has caused us to draw so extensively on those facilities. When, however, I find that businessmen and others all round the world are being led to believe, by the manner in which this subject is being treated in the Press, on television and on radio, not only that such activities to support our international currency are current account transactions—this is the impression which is given—but that we are thinking of enhancing our standard of living on these short-term banking transactions, then I really think that it is high time we attempted to clear the air.
When I visit overseas countries and explain matters in these terms I have evoked surprise and a considerable amount of relief. I am convinced that nothing is so damaging to our exporting prospects as unwarranted gloom or confusion over our own national economic affairs. Misunderstanding of the balance of payments position is also likely to occur in relation to our current earnings. The average deficit per month on visible account so far this year is £70 million. These are the widely-published trade figures, but a more encouraging fact which is much under-played is that whereas in recent years our net invisible earnings have averaged about £13 million per month, in the first quarter of this year they averaged nearly £30 million per month. The visible trade deficit is very serious, but as the House knows it has largely been brought about by a volume of imports which has since devaluation been considerably higher than the Government predicted, some special factors have entered into this; and, moreover, the adverse effects of devaluation on import prices hit us sooner than the beneficial effects on the volume of trade. Happily, June trade figures show a substantial drop in imports, providing some evidence that the measures of the Bill before us to curb consumer spending have at last begun to bite.

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I believe that we may be observing the start of a favourable trend.
A great deal of advice has been directed to the Government to impose some sort of direct curb on imports. We deprecate this approach. The Chancellor of the Exchequer warned the country from the outset that devaluation would take time to work, but that it will work we see no reason to doubt. Provided we keep to the economic strategy we are pursuing—and this the Government firmly intend to do—we are confident that we shall achieve the balance of payments surplus which we need. It would be foolish in the extreme to be panicked into restrictive measures which would put at risk the expansion of world trade on which our export performance so very much depends.
In the meantime, policies to promote import savings are being vigorously pursued. The Economic Development Committees are devoting much work to the identification of fields where imports could be replaced by competitive home production. The Board of Trade is playing a part in this work. For example, at the request of the E.D.C. for the distributive trades, it is organising a series of meetings between manufacturers and distributors of a wide range of consumer goods. I do not want to attempt to give this afternoon an exhaustive list of all that is being done in this direction, but I can assure the House that much activity is in train.
All work which the Government are doing to encourage a general improvement in the efficiency of British industry is also relevant to import saving. The spate of amalgamations of firms, much aided by the efforts of the Industrial Reorganisation Corporation, is rapidly leading to the existence of a larger number of companies who have the leadership and the resources to increase their investment in the better design and marketing of goods. This leads to more determined efforts not only in export markets but in the home market also. This should lead to reduction of imports. The efforts of thousands of our smaller companies, which have been gaining momentum over the last six years, to market their goods with more sophistication is also enabling them to compete better with some of the very well
308
marketed imported goods which crowd our shops. I visit, in the course of my duties, a large number of small industrial companies in all regions of the country and though this is a sample selected because they are better than average I am deeply impressed with the changes which are taking place.
Turning now to exports I should first like to mention the Export Credits Guarantee Department's activities. Frankly, I believe that we have in E.C.G.D. the most extensive and efficient department of its kind in the world. It is flexible in its attitude and is continuously planning adaptation of its policies and new types of policies to meet the changing situations of world trade. Recent developments in the granting of lines of credit to overseas countries, in collaboration with the City, will allow our bankers to play an ever greater part in assisting our exporters. I make mention of this subject with caution, for their negotiation and operation involves the attention of highly skilled and experienced officials, of whom we have too few at present, and a cautious rate of development is therefore called for.
In May there were placed in the Printed Paper Office of your Lordships' House copies of documents detailing Government export promotion activities. I would recommend Members who have not seen this to obtain it. It is short and factual. The main theme which emerges is the greatly increased extent to which Government services are being used by our exporters. Here are a few statistics to demonstrate the point. The number of inquiries to our Export Services Branch has increased 20 per cent, since devaluation. There are now 110 export officers in the nine Board of Trade Regional Offices making 1,500 visits each month to individual firms, and there are now 36 well-established export clubs in the country. There are 690 commercial officers entirely engaged on export promotion work in our 200 posts overseas.
Here are a number of comparative figures referring to the changed situation between 1965 and 1967. Joint ventures supported by the Board of Trade at trade fairs exhibitions increased from 70 to 241; the provision of British pavilions from 5 to 11; store promotions from 58 to

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230; inward missions from 28 to 46; outward missions from 45 to 103; and market research missions from 30 to 74.
The very important trade promotion activities of the 230 business men who serve the 12 area committees of the British National Export Council are extremely important and are growing. What is not so fully recognised is the part played by senior chambers of commerce, trade associations and export councils in promoting visits overseas by groups of exporters. Their activities now reach formidable proportions and are growing rapidly.
In the field of consultancy, constructional work, and capital equipment we want our exporters to have the fullest possible support in tackling the great opportunities presented by major projects overseas. We have therefore set up an Overseas Projects Group in the Board of Trade. An operations room is now centralising all information from all available sources about projects overseas. This will build up a comprehensive picture of opportunities for projects and allied consulting work and of how we and our competitors are tackling these opportunities. This will help us to ensure that prospective openings are brought to the attention of those best placed to exploit them and that all the agencies which can assist in securing contracts are rapidly and effectively co-ordinated.
The Overseas Projects Group is presently discussing with the nationalised industries and other Government Departments which are major purchasers in our home market how they may contribute or still further develop their present contribution to aiding British companies to win major contracts overseas. We intend to harness the considerable technical expertise and experience of these national users in combination with private independent consultants in support of the export drive.
A crucial problem facing manufacturers who wish to exploit a new market is the difficulty of finding good agents overseas. Moreover, there are few major manufacturers who have not at least some unsatisfactory agent in some markets. Good agents are scarce, and with the growth of technology and of new sources of supply they are becoming progressively scarcer. Here, then, is an important gap to be closed, and the Board of Trade have devised a scheme, known as the export representative scheme, which has the
310
object of facilitating the format on of groups of manufacturers of non-competitive products who will set up, on a joint basis, their own selling organisatior overseas or, in the case of smaller firms, who will share the cost of employing a direct sales representative in overseas markets.
We are at present exploring the scope for its application in two selected markets, and I feel that this scheme has exciting prospects for increasing exports. There are 700 merchant export houses in this country.
LORD ERROLL OF HALE: All paying S.E.T.!
LORD BROWN: Touché! I have a certain sympathy with them. We have been attempting to sort out this problem, so far unsatisfactorily.
One estimate suggests that these export houses are handling or financing £1,000 million worth of exports each year Unfortunately, they are a somewhat amorphous profession, and it is difficult to identify which export houses can be of specific service to particular would-be exporters. The Board of Trade are financially assisting them to carry out a complete survey of the profession as a means of getting more explicit knowledge of the precise contribution made by each firm and this, they believe, will lead to a situation where many would-be exporters can take far more advantage of their great experience.
As will be seen, the Government already have extensive services for helping exporters and would-be exporters. All this involves the spending of considerable sums and the employment of numerous officials at home and overseas. But not all firms can benefit from the use of these services, and too often time and money which would be of great help to serious exporters are spent trying to help those who are not effectively organised to benefit from that help. Because it is the aim of the Government that the country should get value for money, in the shape of increased exports from the use of these services, problems of priority can at times throw up worrying situations as the load on these services increases.
Exporting is not a haphazard business into which anyone can fall; indeed, some who treat it this way lower the prestige

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of the great bulk of our exporters by failing to perform efficiently in overseas markets. Before a manufacturer can benefit from Government services he must take stock and prepare himself. There must be the right product, the right attitude to marketing, the right organisation and sufficient production capacity, or the ability to create it rapidly, to see the thing through. If a company does not really mean business on these counts it could be working against the general interest by asking our Government services to invest scarce time and resources which it is not equipped to exploit. Because of this the Board of Trade officials and commercial officers overseas have been instructed to use their efforts to the best export advantage, and if necessary to seek evidence, before providing assistance, that it will not be wasted. I think, therefore, cases are bound to arise where it will be necessary to indicate to some would-be exporters that it would be better that they delay their attempt until they have prepared themselves better, or to seek the services of export merchants with their experience to carry out exporting on their behalf. This is the policy of increased selectivity in the provision of Government services and I think it is a little new in that respect.
The Government have been criticised for acknowledging too little the great help given to our economy by our bankers, merchant banks, insurance companies, shipping companies, international traders and others who earn so much foreign currency for our invisible account. Such criticism is certainly not justified by our current attitude. We are participating in the work of the Committee which has been set up under the chairmanship of Mr. Cyril Kleinwort to keep a close and continuous watch on the whole field of invisible earnings, and we are continuously mindful of the fact that since the second half of the 19th century we have almost always had a surplus on our invisible account.
The average monthly exports over April, May and June of 1968 were £488 million as against the average for the whole of 1967 of £419 million. This represents an increase in value this year of 16½ per cent. British industry and commerce is, I think, to be congratulated
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on this increase, but it is clear that this is a good start to an effort which must go much further. I have now little doubt that this effort will succeed. I have sought this afternoon to show the active part being played by the Government in providing assistance to these industrial and commercial efforts. I fear I have detained the House overlong but I thought it was worth while grasping this opportunity to inform noble Lords of what is going on in support of exports.
Moved, That the Bill be now read 2a.—(Lord Brown.)
2.53 p.m.
LORD ERROLL OF HALE: My Lords, it is customary for the speaker from this side of your Lordships' House to convey his thanks to the noble Lord who has introduced the debate, and naturally I do so this afternoon. But I do so with particular sincerity, because I think we have listened to an extremely interesting account of the nation's affairs delivered in a very excellent style—perhaps a little fast for some of the noble Lords on the Benches behind me. But the noble Lord spoke at his own pace—and it is a crisp and exciting pace—and I am sure that Machrihanish will expect Kilmun to reply in suitable terms. I should like to congratulate the noble Lord on a very fine discursion on the problems of Britain, and particularly on the opportunities which his own Department is creating. I feel a natural affinity for his present position because I occupied it myself some years ago, and therefore I am particularly delighted that he is carrying on the tradition of what I believe to be an important Office of State in furthering exports by all the means within the power of the Government of the day. So we are truly grateful to the noble Lord for what he has said.
Of course, my Lords, the noble Lord left a lot of things unsaid. It is hard to believe that although we are to pass the Finance Bill through all its stages this afternoon, the noble Lord made no reference to the Bill at all. However, I admire the fact that he was able to refer back to our international position for many years ago and produce new figures which we shall study with care; and was not content to deal merely with the present situation. He tried to set the matter in perspective, and he paid particular attention to the central problem of the balance of payments. Indeed,

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when I was preparing myself to address your Lordships this afternoon I wondered how far back to go. I also wondered whether I should make the balance of payments, which I believe to be crucial to the situation, the theme of what I am going to say to your Lordships. The noble Lord, Lord Brown, has given me the perfect opening.
I am prepared to go back a little way, and I shall make the balance of payments the central theme of my remarks to your Lordships. To understand the present economic situation—and that is what we are debating this afternoon—I think it is probably right to go back to exactly 12 months ago. Then we were shaken out of our complacency. We had had Mr. Callaghan's "steady as you go" Budget, then suddenly in the middle of July—it is almost hard to remember, but it is true—there were rumours of a serious crisis. Ministers were seen bustling and hurrying about. They took up their usual panic stations. We were told that severe but well-planned measures would be announced, and before we knew where we were we had an economic crisis on our hands with important and severe measures announced in accordance with what we had been told. That was July. So we waited for the gold and dollar reserve figures for August 1 to appear.
In fact, they appeared on August 2, and we learned that the reserves had fallen by a figure of about £66 million, which was not excessive for one month, on a basic total of about £1,000 million. A number of people asked what all the fuss was about. Why had the Government had to take these restrictive measures when the reserves had fallen only by a tolerable amount for one month's trading? Well, my Lords, the answer was in the forward rate, and this was something which was very well concealed at the time.
I hope that noble Lords will forgive a moment's explanation as to how my simple mind works, because I have to put these things in simple terms—not necessarily with the aid of matchsticks, like my friend Sir Alec Douglas-Home, but in simple terms. The Bank of England is concerned basically in regard to its foreign exchange reserves with what I would call a "cash box" position. The gold and convertible currency is a
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label on a particular cash box. During any particular month all our overseas earnings across the exchanges come into the cash box, and during the month all our overseas dues are taken out. At the end of the month the figure in the cash box is published as the figure of the gold and convertible currency reserves, and that figure goes up or down in accordance with the transactions of the previous month. So, if one looks purely at this gold figure which is published on the first or the second of each month, one can draw certain conclusions.
But there were other forces at work. We have to realise that in that month of July, when the crisis arose, many people over the world feared devaluation of the pound. So what they did was to sell sterling forward, and British importers bought foreign currencies in advance of their requirements. This was the new factor in the situation. The normal corrective, of course, is to allow the forward rate to reflect the hopes, the fears and the anxieties of traders in world markets. If the forward rate falls enough, it is not worth the expense of insuring against possible devaluation in this way and the situation is self-corrective. But for the first time in its history the Bank of England decided, on this particular occasion, to support the forward rate by pledging (and I put it in simple terms) what was in the cash box.
Within a few days during the middle of July of last year the total contents of the October cash box were already committed, and that was why everybody was running around Whitehall deciding what should be done to deal with the crisis, although it was not a crisis that any outside observer could possibly appreciate or understand. Clearly, with such a severe drain on the October cash box at the time of July, that state of affairs could not go on, and the publicly announced emergency measures were designed to prevent this situation from continuing.
Perhaps I may say that the lessons of this sorry and largely forgotten story are clear and have great relevance to our debate this afternoon. First of all, it is clear that if we are to succeed in the years to come with all the efforts of the noble Lord's Department and other Government agencies, the contents of our cash box must increase month by month—the receipts by way of trade must increase

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and invisible earnings must exceed payments for imports and Government expenditure.
Secondly, if the world lacks confidence in Britain and the British Government, as happened last July, we can go bankrupt very quickly, because of the slender position of our reserves in ready currency. So the balance of payments, as the noble Lord, Lord Brown, indicated in his opening remarks, is the central feature of our economic situation, and that is why this afternoon I shall devote some time to the various forces which come into operation on it.
We got through July and we departed for our summer holidays, as we always do, but the next crisis of confidence occurred in October-November. The run on the forward rate in October-November was such that devaluation was the only course open to the Government. I heard that a number of important British firms who had never before bothered to buy their foreign currency requirements forward on this occasion did so, and that imposed a great strain on our position. But whatever else might be said about devaluation, I agree that it was inevitable at the time because of the lack of confidence in our position.
Devaluation, I should hasten to add, was not necessary for our exports, because we were capable then and indeed were successfully selling our goods abroad at current prices in world markets at a very high level indeed, so there can be no case for saying that devaluation was necessary to help exporting. It was simply because the world at large, and indeed our own importers, no longer had confidence in Her Majesty's Government to maintain the value and position of the pound. The proof of this is to be found in subsequent events.
Though devaluation occurred on November 10 or 11 last year, it did not do the trick. As observers have pointed out, two devaluations since the war by Socialist Governments was one too many. So immediately, and I thought unfortunately from the point of view of our country, there was talk of a third possible devaluation. Ministers and Members of the Opposition and I, in particular, did our best to discount the possibility of a third devaluation. I still subscribe to that view. I am sure there need be no
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third devaluation if we all do the right things. But it was the talk about a third devaluation which did so much to undermine world confidence in the value of the pound sterling.
After the devaluation, the Bank of England produced a different policy. They allowed the forward rates to fend for themselves and so they reached a record discount by February-March of this year, because people were taking out, in effect, insurance policies against the possibility of further devaluation and the discount—premium, I might call it—for such an insurance policy became so expensive that not everybody was prepared to go along with it. Nevertheless, the situation regarding the forward rate—I stress that it is the forward rate that we must always be looking at—had become so serious that there had to be a scurrying off to Stockholm for another "save Britain" exercise in March, 1968. This staved off the immediate difficulties, because the forward discount fell substantially after the Stockholm agreements were made.
That was all right in trade matters, but in the meantime another situation adverse for Britain was brewing up. Many overseas nations and individuals deposit their money in London, either through sheer force of habit or for the high interest rates obtainable, or for both. For instance, Arab Sheikhs, for whom usury is against their religious code, nevertheless like the high rates available in London. This total—and it is a very big total—is called the sterling balances—that is, the monies which lie here in London, earning good interest, but which can be withdrawn at short call by customers of the Bank of England; in other words, monies that can be converted into another currency across the Exchanges at will.
After November last, many of these holders of sterling balances were still smarting from the losses which they incurred through devaluation. They were worried at the prospect of a further devaluation and some indeed threatened to withdraw their funds. So, hurriedly, the Governor of the Bank of England went off to Switzerland to meet the international bankers, and he came back only a few days ago with a medium-term credit, or standby, of 2,000 million dollars. This will help us to pay out those who no longer want to hold sterling,

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but to the extent that this is done, to the extent that it is being used, Britain will be saddled with further and substantial debt.
The Basle arrangement, as it is now described, while it is a technical triumph for Sir Leslie O'Brien, the Governor of the Bank of England, is in fact nothing for the Government to be proud of; it is merely an overt expression of lack of confidence on the part of the world in Britain's management of her affairs. Therefore, this standby, important as it is for our sterling balances, does nothing to help our trade and commercial accounts. It is an attempt to allay the new suspicions of holders of sterling, and it will have been achieved at considerable cost if the facility has to be used.
LORD BESWICK: My Lords, I am trying to follow the noble Lord. Can he explain to me how we increase our indebtedness if we exchange one debt for another?
LORD ERROLL OF HALE: My Lords, it is interesting that the noble Lord should be bold enough to ask this question. It was touched on by the noble Lord, Lord Brown, in his interesting observations. What the noble interrogator is in fact admitting is that a number of holders of sterling balances want to get out and make use of this new facility.
LORD BESWICK: My Lords, the noble Lord is twisting in a rather unsavoury way. I asked him to explain how, if we exchange a short-term debt for a long-term debt, we are adding to our indebtedness.
LORD ERROLL OF HALE: My Lords, we hoped that as a short-term debt it would never be withdrawn, but apparently the short-term holders are now going to withdraw their balances and switch into a long-term debt in a form which we shall have to repay to an international monetary organisation with funds which it will be difficult for us to earn.
LORD BESWICK: My Lords, would the noble Lord answer a straightforward question? Does it or does it not increase our indebtedness?
LORD ERROLL OF HALE: My Lords, it does to the extent that it is used, because otherwise it would not be
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necessary for the facility to be made available.
LORD RHODES: My Lords, may I be bold enough also to ask a question? Is it not right that if this standby loan takes the place of the sterling balances, which at present are held here on fairly high interest rates, it is possible that we should save money, in the long run?
LORD ERROLL OF HALE: My Lords, I am sure that the noble Lord, Lord Beswick, will deal with this point adequately in his winding-up speech. I am quite prepared to debate it but I lave a speech to make, and the noble Lord, Lord Brown, was so good in making a crisp introduction, that I do not want to be too long.
LORD BESWICK: My Lords, I am not asking the noble Lord to debate it. I am asking him to be good enough to withdraw an allegation which is shown not to be substantiated.
LORD ERROLL OF HALE: My Lords, when the noble Lord comes to wind up and if he convinces me, I shall be glad to withdraw then, but certainly not before.
The position is that, even if the standby is not used, Britain has a total of about 7,000 million dollars worth of short-term debt to clear off in this next seven years, mostly contracted in the last three and a half years. This means that we need to have a balance-of-payments surplus—a surplus in the cash box—of about £400 million in every one of the next seven years if we are to clear off the indebtedness, quite apart from whether this standby facility is wed or not.
The question I submit to your Lordships this afternoon is: Can we do it? Can we have a £400 million surplus in each of the next seven years? The monthly figures for the reserves for the last six months show virtually no improvement—indeed, there is a small decrease as compared with the position in December, 1967, and that as announced for June of this year. I will deal with the important question of our trade receipts and our import Bill in a moment, but what particularly depresses me in seeing that there is no improvement in our reserve figures is that over the last three and a half years the Treasury and the Bank have been making strenuous efforts,

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by legislation, by Statutory Instrument and by regulation, to reduce the outflow from our reserves and to increase the inflow.
May I suggest one or two examples? As to the improvement of the inflow into the cash box, a great effort has been made by the Bank for the repatriation of company funds held abroad. That has been going on for years. Also, the Bank of England now require that no less than one-third of profits earned overseas must be repatriated as soon as they have been declared. This was never necessary before. On any sale of a dollar security for reinvestment in another dollar security by those people and organisations who hold dollar securities, 25 per cent. of the proceeds of each sale must be repatriated into the cash box. Beneficiaries of overseas wills were formerly allowed to keep those receipts in the country where they had accrued to them. Now they must all be repatriated. On the outflow side, capital investment abroad, the tests for capital investment in non-sterling area countries are now so severe as to make it practically impossible for any investment to take place overseas. The test is that the investment must yield profits within three years sufficient to equal the total cost of the investment.
LORD BESWICK: My Lords, I am sorry to interrupt the noble Lord again, but did he happen to hear the speech which my noble friend Lord Brown made, in which he gave the figures of the increase in our capital investment overseas?
LORD ERROLL OF HALE: Then I can only say that the Government's policy is failing, because the tests are really so severe that nobody can invest abroad. If they are investing abroad, that represents an outflow from the reserves which the Government have been doing a great deal to try to protect. The trouble with this Government is that when presented with a choice of evils they always choose both. They try to stop everybody from investing abroad and try to make a virtue out of the fact that everybody is succeeding in doing so. The noble Lord will be able to clear up this absurd situation when he comes to wind up.
LORD BROWN: My Lords, the noble Lord is being very controversial, and that may be a good thing, but is he prepared to support the thesis that to condition investment overseas on the basis that over the next three years it should be recoverable with increased exports is a reasonable proposition, in the light of the amounts that are being considered for this purpose? Is it not the opinion of the business community that this is an extortionate demand to make for this provision to export? I think it is a pity to present it as a ridiculous condition when in fact it has been welcomed by industry.
LORD ERROLL OF HALE: Perhaps I should make it plain that I was saying that the profit must equal the investment; not that the amount of exports must equal the investment. There is a difference and a distinction in those two. I was trying to give a few examples of the strenuous efforts that the Government have made to increase the inflow and restrict the outflow. The fact remains that the outflow has been strenuously restricted. There is, furthermore, a restriction of capital investment in the developed sterling area. The sterling area is no different really from the non-sterling area, because any movement across the exchanges has to be repaid by the export of goods and services from this country. Thirdly, the Government have made a great thing of the travel allowance of £50 per annum. This is a determined effort to restrict the outflow of funds across the exchanges. It has been in existence since October, 1966, and we have not yet been told what the effects are.
Surely, taken together, all these efforts on the part of the Government to repatriate funds, on the one hand, and to restrict the outflow, on the other hand, should have made a considerable impact on the figure of our gold and dollar reserves. But they have not; they have not made any impact at all. I hope that when the noble Lord comes to wind up he will be able to give us an explanation. He was kind enough to ask me what I was going to say in my speech this afternoon so that the could answer me, and I gave him notice of that point. I studied the Bank of England Review. It is an excellent Review, but it remains

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quite silent on this subject, though it is very voluble on many others.
What is the combined effect of this restriction of the outflow and scooping in of the inflow? I suggest that it certainly ought to be by now, after three and a half years of persistent and calculated effort, no less than £200 million per annum. Where is it all going? If it is not coming in, why pursue the measure? If the restriction of the travel allowance to £50 does not make any difference, why have the restriction? If it makes a big difference, then let us know the value of the restriction, so that it may become slightly more tolerable to the British public, who resent it very much. I suspect that this £200 million a year is disappearing into the hands of those who wish to reduce their sterling balances. That is a figure that has not so far been made public, but I hope that it will be before this debate is finished.
We are left with the contribution of Britain's invisible earnings. Here I am grateful to the noble Lord, Lord Brown, for having informed your Lordships that invisible earnings are running at the rate of £30 million a month this year. I appreciate very much that the noble Lord has admitted at long last, on behalf of Her Majesty's Government, that invisible earnings are of real value and are making a substantial contribution.
I turn now to the trade figures and the trade matters about which the noble Lord told us so clearly this afternoon. While the exports are at a high level, it is worth remembering that, despite devaluation, the June trade figures are still below the figures of January, 1968. Of course it is important that Government assistance in a number of different forms should be given to our exporters, and the noble Lord was eloquent on the variety of measures which are being given. Nearly all of them, of course, were started by the previous Administration, but I am glad to see that they have been added to and strengthened by the present Government. I appreciate particularly his reference to senior chambers of commerce, and what they do, because I am personally involved in that particular capacity. But let us not imagine that because the export figure has gone up by £9 million from May to June our exports are yet doing brilliantly, after the stimulus that devaluation was
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supposed to give them. They are still at £492 million for June, some £8 million below the figure for January of this year. In any case, their high level and what is being done is largely thanks to private enterprise firms who in very difficult conditions seek out these contracts and this business round the world.
As regards imports—and, of course, a fall in imports is just as valuable to the balance of payments as a rise in exports—it is interesting to know that there has been a small fall for the first time this year, between May and June, of just under £40 million. Nevertheless, the import bill remains at over £600 million for June, just as it has for every month of this year. So we welcome this drop in the figures, which, as I say, have been and still are, over £600 million for each month of this year. But I am not one who believes that the import figures are likely to fall very much. Why should they? Food, raw materials, semi-manufactures, which come mainly from countries which have not devalued, are going to cost more, not less, than they did in the past. Nor is their volume likely to be reduced, except only on the margin. I think the important alleviation is in the devaluation of New Zealand. New Zealand butter costs no more; and the Danes have partially devalued. But, for the rest, we are having to pay more in terms of imports of the same amount than we did before. We are a country that makes specialised machinery which goes to many countries abroad. Equally, we buy from advanced industrialised countries their specialised products, which now cost us more. There can be no import substitution here. We simply have to pay more for the same things that have been on order and which we must have now and in the future with which further to modernise our industry.
We are left only with the narrow field of so-called luxuries and non-essentials. What is a luxury and what is a non-essential? I mentioned this point in the debate on the Prices and Incomes Bill a fortnight ago, so I will not elaborate further. May I give an example? Three months ago I went to a departmental store in one of the provincial towns of Sweden, and in that departmental store they had a "Carnaby Street" corner, where we, the Britons, were selling very skilfully our "trendy" export clothes—

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a very good export and unnecessary luxury for Sweden, as the Swedes might argue. In the Strand, at a menswear outfitters, I saw on my return ready-to-wear men's suits, and the label said: "Precision-built in Sweden". Another unnecessary luxury import. But this is what trade is all about. So do not let us get too excited over the marginal fringe of so-called luxury or inessential imports, because in fact we shall go on having these imports if we are to retain the freedom to export to other countries on uninhibited terms.
The noble Lord, Lord Brown, was frank enough to admit this important matter, and his colleague, the President of the Board of Trade, I thought, made a very courageous speech in the other place last week, saying that there was no question of an imposition of import controls by Her Majesty's Government. I should like to congratulate him and the Government on a statement which is courageous in the present circumstances. I apologise to your Lordships for being so long, but I have been interrupted far more than the noble Lord, Lord Brown, was.
I now think it is important to turn to the post-devaluation policy of Her Majesty's Government, because it is that which governs the economic situation to-day. Once they got over the trauma of devaluation they sat back and did nothing, except make warnings about a painful Budget to come. It was going to be advanced from April 5 to March 19. All that time we were told that severe and painful measures were going to be taken. So what did the public do? They went on a spending spree, because they knew it would be worse after the Budget than before. It is very interesting to notice the difference between a Tory Administration and a Socialist Administration, because our great trouble was that in the months from January to April the retail and manufacturing interests came to us and complained that nobody would buy anything because they were expecting taxes to go down in the next Budget and they would therefore wait. Nowadays, every year there is a spending spree between January and April, because everybody knows that taxes are going to go up. It has happened each year without any exception. The noble
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Lord, Lord Beswick, can refute that, if he dare, when he comes to wind up the debate this evening. So, of course, we have a spending spree. We always do under a Socialist Government before a Budget.
However, after four months' waiting a Budget was introduced, and a very serious, tough Budget it was, because it increases taxation by, in round figures, £900 million in a full year. The theory behind this—and it is a theory which I am sure all economists would regard as eminently acceptable—is that consumption in this country will go down because of the higher taxation, for two reasons. Individuals and companies will have less money to spend and, on the other hand, prices will be allowed to rise as devaluation works through the economy, in addition to rises due to tax increases, and the result will be a lower level of home demand and therefore a lower level of imports—good for the import figures—and more domestic goods thereby freed to increase our exports. That is the classical and traditional way of looking at things. And I must admit that the June trade figures show the first faint glimmerings of this trend, but it is much too soon to he certain—
LORD BOWLES: Terrible!
LORD ERROLL OF HALE: I said, "the first faint glimmerings of this trend", but no more.
LORD BOWLES: The noble Lord does not like it, does he?
LORD ERROLL or HALE: I like it very much. I am not one of those "sour" members of the Establishment of whom the Prime Minister was so critical. I think that the noble Lord, Lord Brown, would agree that I do a great deal of work to help our export drive. So if the noble Lord is shooting at me on this, he is shooting at the wrong target.
I say that it is much too soon to be certain, and for very good reasons. The Chancellor of the Exchequer says that prices must be allowed to rise, and in that I would agree with him. On the other hand, Mrs. Castle's Department, "Min. Prod."—[Laughter.]—Well, the Ministry of Technology is called "Min. Tech."; that is what the Minister of Technology called it. Why should we not

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call the Ministry of Productivity, "Min. Prod."? Mrs. Castle's Department, "Min. Prod.", is working feverishly to keep prices down, and with the help of the Prices and Incomes Board is trying to get reductions, and, loud hurrahs!, they have succeeded, with all the apparatus of P.I.B., in all these years of existence of the P.I.B. in getting one price reduction—in soap powders. Congratulations to Her Majesty's Government!
Secondly, the first test of the wage freeze "Mark III," namely the rail go-slow, found the Government putting pressure on British Rail to concede an inflationary increase. The "wreck of Penzance", as it was described in the Economist article last week. I should be too long if I were to go into this matter, but it is quite clear that this was an inflationary wage increase conceded by Her Majesty's Government. Thirdly, I should like to know, and I am sure that other noble Lords on this side of the House would like to know, what Her Majesty's Government are going to do with the extra £900 million they are collecting out of the public in the first full year after the new Budget increases. It is one of Parkinson's lesser known laws that expenditure always rises to meet income—although it is a well-known law to any husband who is rash enough to tell his wife that he has had a pay rise. With all this extra money coming into the Treasury and into the Government Departments, will they really have the willpower to resist spending it? What are they going to do with the surplus? Lock it away in the vaults of the Bank of England? Of course not. They will be spending it before very long.
A NOBLE LORD: What would the noble Lord do?
LORD ERROLL, OF HALE: We should not have created a situation in which it was necessary for this sort of taxation increase to have occurred. My noble friend Lord Dundee will deal more particularly, I think, in his winding-up with the question of the impact of Government expenditure—
SEVERAL NOBLE LORDS: Hear, hear!
LORD ERROLL OF HALE: Well, I want to leave him with a few points. But at this stage I would ask the Government this question. As unemployment
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rises during this winter, will they be strong-minded enough to resist reinflationary measures by means of increased Government expenditure in order to bring the unemployment total down? Will they? I leave the noble Lord who is to reply to answer that question.
In the debates on the Finance Bill in another place a great deal of emphasis was placed on personal savings, and what has emerged from the debates there, and indeed from those in your Lordships' House, is that personal savings are well down on earlier years, and lukewarm support— no more than that—has been given by the Chancellor of the Exchequer to personal savings. All he offered in the Finance Bill was an increase in the value of certain Premium Bond prizes and a proposal for a national lottery—a proposal which was firmly turned down in a later debate in another place. Of course, with the prospects of higher prices in future it is far better to buy now than to save now. This is one A the Government's dilemmas.
But this is only part of a situation which I see to be most unfavourable and unsatisfactory. The fact is that savings and personal wealth are now under attack. Why should this be so? In the Finance Bill we have a retrospective extension of estate duty from three years to seven years, diminishing after five. We have aggregation of income of minors with that of parents, creating many extremely hard cases which the G3vernment have done nothing to all,wiate, except possibly in the case of the thalidomide "babies. We have the special levy on savings incomes, which is of course really a wealth tax. We are told that it is to be once-for-all, but we realise full well that this is only a trial run for a permanent wealth tax.
Why are the Government doing all this? Not because the money is needed —because they are going to have £900 million extra a year which they do not propose to spend. It is not because the unions will moderate their pay delmands—because the Government are doing this to those who have savings. Oh, no! We already see from the settlement of Penzance that this has nothing to do with it at all. They are doing it for a quite different reason. The Government are in fact using Britain's economic troubles, which are of their own creating, as a

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cover for their basic socialist policy, to destroy private savings, private wealth and private companies, little by little. Noble Lords opposite may laugh, but the Minister of Defence gave the game away at Leeds on March 24, when he said that the 1968 Budget was
"the most socialist one since the war".
That is from the Yorkshire Post of March 25—I always believe in quoting my references. That was Mr. Healey; and only Mr. Healey—not one of the Economic Ministers, by the way—has had the honesty to state the Government's real intentions in this Finance Bill.
If this were a private quarrel on a self-sufficient island in the Pacific it would not matter so much. It would be only a matter of the natives' redistributing the palm trees and the coconuts between themselves. But the countries which have lent us, or promised us, so much money are watching us, and this is why I have dealt with this matter in some detail. These other countries believe in the creation of private wealth through savings and wise private investment. They practise vigorously the system of private enterprise in industry and commerce. However, they see a British Government which denigrates private enterprise, and which uses the false cloak of economic necessity to destroy private savings and private wealth. Small wonder that they have little confidence in the present, and temporary, Government! Certainly, we on these Benches have none.
However, in this situation there is nothing wrong with the British people.
LORD BROWN: My Lords, is the noble Lord aware that the percentage of the G.N.P. raised in Germany and France in tax is higher than in this country?
LORD ERROLL OF HALE: Oh, yes: very much indeed. I am fully aware that we are not the most highly taxed nation in the world, as the Prime Minister himself said. But where he mistook the point is that we have the highest rate of marginal tax, which is quite a different story. If the noble Lord would like to pursue the argument I can show him that we have a far higher rate of marginal tax in this country, and that is what really affects enterprise and initiative.
LORD BROWN: It was just that the noble Lord did not use the word "marginal" when he spoke about taxation previously.
LORD ERROLL OF HALE: Then the noble Lord's intervention will of course set the Record right. I was about to say that in this situation there is nothing wrong with the British people.
SEVERAL NOBLE LORDS: Hear, hear!
LORD ERROLL OF HALE: The nation's resources may be slender, but the "all doing spirit" of the first Elizabethan era can be re-created and suitably rewarded—and at reasonable marginal rates, too. All that is needed is leadership of courage, imagination, purpose and compassion.
3.34 p.m.
LORD BYERS: My Lords, I sense that the House is in rather a naughty mood this afternoon and I shall have to tread warily, but I should like to thank the noble Lord, Lord Brown, for the way in which he has introduced this Bill this afternoon, and also for the fact that we are having this debate, because it gives us an opportunity of hearing the maiden speech of the noble Lord, Lord Balogh. How he is going to keep his maiden speech non-controversial is something which I shall be awaiting with the greatest possible interest, although I am sure he will.
The Finance Bill comes to this House so long after the Budget that it is probably better to look forward to the next Budget rather than to job back to the old one, but I think it shows that the Government can at least claim that some effects of devaluation are beginning to bite, and some of the Budget measures are having the deflationary effect which was intended. I am glad, as is the noble Lord, Lord Erroll of Hale, that the Government are eschewing import controls, but the fact is that benefits in the form of lower imports and better exports appear to be beginning to flow. This tempts one to ask two questions. First, why was devaluation delayed so long? Secondly, why was the spending spree between December of last year and the Budget allowed to continue as it did?
As to devaluation, this poses a serious dilemma for all responsible leaders of all political Parties. I do not think it

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is any secret that we in the Liberal Party were under very strong pressure indeed from all our young economists, almost without exception under the age of 35, to come right out in favour of devaluation from late 1964 onwards. If we had done so, we should have been accused of rocking the national boat and therefore causing a flight from the pound. Therefore we did not do it, but surely the Government were in a better position to judge than we were, and with hindsight it certainly seems that putting off devaluation and imposing instead the most severe deflation we have had since the war produced the complete industrial stagnation which we suffered in 1966 and 1967. I am sure anybody can make an error of judgment, but one cannot help feeling that an examination should be made of the way in which Governments are advised in these matters, because as a result we lost a tremendous potential growth. If we assume a growth rate of only 3 per cent. per annum in each of those years, we can reckon the loss in production at something like £2,000 million. That is the whole of the defence budget for one year or about one-third of the money we spend on our welfare services. On top of this, heavy international debts have been incurred, which must inevitably retard our economic growth for some years.
Given that this is the cost of not devaluing earlier, I still fail to follow the Conservative line, which seems to be that we should not have devalued at all, which presumably would have meant over one million unemployed. From what the noble Lord, Lord Erroll, said, I gather that this is Conservative policy, although perhaps I misunderstood him. It seemed to me that he was wanting more unemployment this winter, whereas personally I should like to see more people gainfully and efficiently employed. But I cannot see how one can sustain the argument that there should be no devaluation.
On the question of the spending spree, the House may remember that I put down a Question at the beginning of February, asking whether some action should not be taken before the Budget to stop that spending spree. I received the surprising answer from the Government that a spending spree was not taking place at all. How can a Government be so badly informed? I believe
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the answer lies in the tremendous delay in getting the official statistics. They were about three and a half months too late, and the result was that although I could see people buying cars and washing machines, the Government statistics did not reflect that. Therefore, I should have thought there was a case to look back to that period to see why the Government were not properly informed as to what was happening in the shops and the motor car salerooms. At any rate, I hope sincerely that the national outlook is getting better and that we are beginning to overcome our problems.
May I now ask what exactly is the measure of the international indebtedness which we now face? How big a burden is it likely to be on our efforts to achieve a plus balance of payments? I believe that the balance of payments is so crucial to this country that we ought to have the facts and not make Party play over this issue. We ought to stop pulling the rug from underneath one another at unstrategic moments. I was indeed glad to hear the noble Lord, Lord Brown, if I understood him correctly, say that we had got ourselves into the position of a creditor nation; that our assets were in excess of our liabilities. I am glad that in saying that he took credit for the overseas investments. I wish he could persuade some of his Left Wing friends in another place that it is a good thing to have overseas investments. Not only do they help on the credit side of the balance sheet but they also help British exports in countries overseas.
On the other side of the balance sheet, may I ask whether we are making any progress towards relieving this country of the full responsibility of acting as the banking trustee for the sterling area? I do not understand the argument that was put forward by the noble Lord, Lord Erroll. I should have thought that the new Drawing Rights at least broadened the base and took some pressure off this country so far as meeting the sterling balance problem was concerned. But I have said for some years now, id so have my noble friends, that we think it is very unfair that Britain should always "carry the can" for the sterling area. Would it not be possible to move forward, now that we have got these Drawing Rights and have established the principle of international self-help, and get

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a much broader based reserve currency which is not always going to provide a problem for this country alone?
I should like to turn to the future, and particularly the future of the taxation system in this country. I believe there is a pressing need for reform and simplification of the tax system. We have got to the stage now where the tax system of this country really is a "dog's breakfast". It has been built up over many decades by all Parties; everybody has had a go at it; and there are so many different bits and pieces now that it takes a pretty experienced accountant to find his way through, or quite often around, the system. I believe that one of the difficulties is that to get a firmly based new system will probably take anything from five to seven or even ten years. But it will be worth it; and if it takes that long it is likely to span the life of several different Governments. I ask, would it not be possible to try to get this on to an all-Party basis, to set up an all-Party Committe working with officials, taking advice where they wish to take it, to see whether agreement cannot be reached on the main taxes which are appropriate for this country? If we could get that agreement on structure, different Governments could very the rates of different taxes, they could alter the incidence, but at least we should have a clear system and preferably a simple one.
My own preference would be to keep the taxes to the minimum types, and I hope that the main indirect tax might be a value-added tax, one which taxes business costs as well as profits. If this were taken at a reasonable rate, something similar to that in the Common Market, it would enable income tax and corporation tax to be reduced, and purchase tax and stamp duty to be abolished. There is a great deal to be said for abolishing the selective employment tax. I should like to get rid of National Insurance contributions and substitute a social security tax on payrolls, which could be varied according to regions and according to the incidence of unemployment. But these are my views; others will be put forward. What I am saying is that I believe it would be possible to get all-Party agreement on a simple, understandable tax structure in this country.
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I believe also—though this may be more controversial—that the time has come to abolish surtax and to iron out the sharp steps in income tax as income increases. Instead of the irregular increases in the marginal rates which exist at present, there should be a smooth progression towards higher rates based on a simple percentage system. This would avoid what is happening now, where the weight of the income tax burden is being placed so firmly on the shoulders of people with incomes between £800 and £1,500 a year. In addition the tax rates should also be reduced at the surtax level, and I think it would be possible to bring the upper limit down to something like 70 per cent. This would cause very little drain on the Exchequer, because the existing revenue from surtax is only 2½4 per cent. of the whole, but it would reduce the disincentive to work which undoubtedly occurs from the high top rates which prevail at the moment. What I am pleading for is that the tax system should be looked at as a whole and should be looked at from the point of view of the national interest, not something which one dresses up in a Party manifesto and tries to use as a vote catcher. This is too basic for the whole future of this country to have it as a platform for each Party to bid against the other for better and lower taxes.
In considering variations of the tax system I believe that there are many ways of creating additional incentives and tremendous scope for improving efficiency in industry and business and increasing profitability, by the judicious use either of income tax relief or other forms of encouragement by the Government. I should like to see much more study made of schemes which permit employees to become shareholders in a company or firm. One method which commends itself to me, one of which I have some experience, is where the employee sets aside a monthly sum from his salary or wages to purchase employees' loan stock with a guaranteed rate of interest. He can either retain the stock or convert it at a previously agreed price, and if it is a growth company, with luck it will eventually be advantageous to him. This provides a form of compulsory saving with a reasonable rate of interest.

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I believe that we should consider allowing, even now in a period of wage restraint, a number of salary and wage increases to take place, so long as that increase is ploughed into something like an employee loan stock, something that will take that spending money out of the market for the time being but will allow a rate of interest to be taken as income and will allow for the stock itself to grow over a period. There is no reason why employees should be confined to taking shares in their own company. It may be much better to encourage them to start up funds in which shares can be taken in investment trusts, units trusts and so on. The Government should give consideration now to the various plans which are being thought out, some of which are in existence, others which are being put forward, to encourage savings. Various schemes have been put forward by the Wider Share Ownership Council, by my own Party and by individuals. I know the C.B.I. has done a great deal of thinking in this direction. I am convinced that the Government have a wonderful opportunity here of looking more closely into schemes to encourage savings, preferably from salaries and wages. I believe the old slogan, "The more we save, the less we have to raise in taxation" is true. Moreover, it is another painless way of inducing people to save rather than to spend, and to reduce consumption when we want it reduced. I believe the Government have a great opportunity for laying the foundations of a new, simple structure for the tax system, coupled with the encouragement of savings among our people. I hope they will take it.

THE NUCLEAR POWER INDUSTRY
3.41 p.m.
THE PAYMASTER GENERAL (LORD SHACKLETON): My Lords, I apologise for interrupting the debate just before my noble friend Lord Balogh makes his maiden speech, but, with permission, I should like to repeat a Statement which my right honourable friend the Minister of Technology has been making in another place about the reorganisation of the nuclear industry. This is the Statement:
"In the debate on May 23, I summarised the Government's objectives
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in seeking a reorganisation of the nuclear industry following the report of the Select Committee on Science and Technology on this subject.
"I have now had the opportunity of considering the matter further and have had the advantage of hearing the results of the informal consultations conducted by the Industrial Reorganisation Corporation.
"I have to-day written to the I.R.C. to invite them to help in the reorganisation of the industry and I am circulating the text of my letter in the OFFICIAL REPORT. The Industrial Reorganisation Corporation of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.
"I am asking the I.R.C. to assist in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. We have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of nuclear 'islands'. The proposed two new corn panics would need to work in close conjunction with the highly successful fuel organisation set up by the Atomic Energy Authority, which is already operating on a commercial basis.
"The Government have decided that to make this co-operation more effective in the exploitation of reactor systems, it would be advisable to establish the Authority's fuel business as a publicly owned company under the Companies Acts with the initial share capital wholly subscribed by the Government. In order to emphasise the interdependence of fuel and reactor design and supply the Government intend that the fuel company should take up and hold a minority shareholding in each of the two design an' construction organisations. Since the establishment of the fuel company will

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require legislation, I am proposing that initially the Government shareholding should be taken by the Atomic Energy Authority.
"The exploitation both at home and overseas of new reactor systems, as well as the Advanced Gas cooled reactor, would then primarily be the responsibility of the new companies, whose activities we would seek to concentrate geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.
"In addition, when the proposed new industrial structure takes shape, the Government have in mind the establishment of an Atomic Energy Board on which the Atomic Energy Authority, the design and construction companies, the fuel company and the generating boards would be represented. This Board would concern itself with research and development programming, export co-ordination and major policy matters. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.
"As part of these arrangements, the Government will have to consider the necessity for some modification in the organisation of the Atomic Energy Authority in the light of the proposed legislation for the fuel company and the rearrangement of responsibilities for the exploitation of reactor systems. The necessity for these new arrangements arises from the great success that the Atomic Energy Authority has achieved in developing commercial reactors. The reorganisation will be designed to secure that the most effective possible use should be made of this great national asset, not only in support of the new organisation of the nuclear industry but also in conjunction with the Government's own research establishments in the development of industrial technology.
"These then are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent, since it is new design and construction organisations upon which the task of selling our reactor systems
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abroad will fall. They need certainty for the future and I hope that we shall soon be able to reach an agreement at least in principle, which will allow us to exploit our national research and development in atomic energy to the full.
Following is the letter referred to in the Statement:
"I am writing to you, as Chairman, to ask whether the I.R.C. would be ready to help to carry through a reorganisation of the nuclear industry, which has now been under discussion for well over eighteen months.
"In our earlier talks about this, you were kind enough to advise me personally from your own long experience of atomic energy matters, as a part-time member of the A.E.A. Board. Later you and your I.R.C. staff also took informal soundings from all the parties involved both on the recommendations of the Select Committee and on the development of their thinking in the light of the Committee's report. All this has been most helpful.
"We have, of course, discussed this very fully with the A.E.A. throughout and have now had an opportunity of considering your suggestions in the context of the Government's objectives which I summarised in the House of Commons on May 23 as follows:
"First, to make the best possible use of all the existing resources in this field, cutting out overlapping and duplication, of which there manifestly is some;
"Second, to allow those who have worked in the Atomic Energy Authority full scope for carrying their work forward into the exploitation and sale of the systems which they have developed;
"Third, to get the maximum possible advantage of the technical standardisation, coupled with the most effective design competition in engineering detail and construction method;
"Fourth, to try to link and co-ordinate the effort in such a way as to relate reactor systems to the fuel elements and reprocessing business at which the A.E.A. has excelled, both technically and commercially, through its fuel production group;
"Fifth, to create an organisation which permits the sort of international industrial links which will be of critical importance in all sectors of advanced industry and not just in atomic energy;
"Sixth, to do this with a special eye upon the future of the European nuclear industry in co-operation with our partners in Europe;
"Seventh, to change the emphasis of our national effort in such a way as to increase it on the exploitation side and see that future nuclear research is guided and shaped more directly by the needs of the market at home and abroad
"Eighth, to establish a creative partnership between the public and private sectors as far as possible by reaching a consensus of

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agreement so as to allow all the other objectives I have described to be achieved.
"With these in mind, I am writing to invite the I.R.C. to assist the industry in the creation of two design and construction organisations to be established in place of the three commercial firms and the design teams working within the Atomic Energy Authority. I have in mind a close integration between these two organisations and the manufacturers of the main constituent elements of nuclear 'islands'. The I.R.C. will, of course, be free to recommend to the Government such other measures as it considers advisable to reinforce the new structure of the industry. Until the new structure of the industry is fully operative, the Atomic Energy Authority will continue to meet all the obligations it has undertaken or offers to undertake. Arrangements will be made to ensure that thereafter commitments previously entered into will be fulfilled.
"The proposed two new companies would need to work in close conjunction with the highly successful fuel organisation built up by the Atomic Energy Authority, which is already operating on a commercial basis. The Government have decided that to make this co-operation more effective in the exploitation of reactor systems it would be advisable to establish the Authority's fuel business as a publicly owned Company under the Companies Acts, with the initial, share capital wholly subscribed by the Government. In order to emphasise the inter-dependence of fuel and reactor design and supply, the Government intend that the fuel company should take up and hold a minority shareholding in each of the two new design and construction organisations. The establishment of the fuel company will require legislation, and I would propose therefore that initially the Government shareholding should be taken by the A.E.A.
"Exploitation both at home and overseas of the new reactor systems, as well as the A.G.R., would then primarily be the responsibility of the new companies. The design units of these two new firms, together with the fuel activities, should be, so far as is possible, concentrated geographically in such a way as to make the fullest use of the existing services and facilities built up by the A.E.A. at Risley.
"When the proposed new industrial structure takes shape, the Government have it in mind to set up an Atomic Energy Board, including representatives of the A.E.A., the fuel company, the two new design and construction companies and the Generating Boards. This Board would concern itself with the composition and financing of R & D programmes (to which the two new design/construction companies, and the fuel company, would be expected to contribute), the co-ordination of activities in the export field and major matters of policy. These proposals have already been the subject of discussions between our respective officials. The two new design/construction organisations should be well able to stand up to international competition abroad and should be capable of a powerful effort in overseas markets.
"The Government, as part of these arrangements, will have to consider the necessity for
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some modification in the organisation of the Atomic Energy Authority in the light of the proposed legislation for the fuel company and the rearrangement of responsibilities for the exploitation of reactor systems. This reorganisation would be designed to secure that the most effective possible use should be made of this great national asset, not only in support of the new organisation of the nuclear industry, but also in conjunction with the Government's own research establishments in the development of industrial technology. The necessity for these new arrangement arises from the great success that A.E.A. has achieved in developing commercial reactor systems.
"These then are the lines along which we hope to see a reorganisation of the nuclear complex achieved. The industrial aspects of this are the most urgent since it is the new design and construction organisations upon which the task of selling our reactor systems abroad will fall. They need certainty for the future and I hope that the I.R.C. will be able to achieve an agreement, at least in principle, as soon as possible.
"Sir Frank Kearton. 0.B.E., F.R.S."
3.53 p.m.
THE EARL OF BESSBOROUGH: My Lords, we must thank the noble Lord for having repeated in this House that Statement. I think it will probably be greatly welcomed by your Lordships, especially the decision to create the two design and construction companies, and especially in the light of the Conservative view on the Select Committee and in the light of our debate on May 8. I think that your Lordships on this side of the House and our colleagues in another place may perhaps take some credit for this.
I should like to ask the noble Lord one or two questions. First, will the two new companies now come in much earlier, not only in design and construction but also in earlier research and development into new reactors? Secondly, in regard to the fuel business I under-stand from the Statement that this will, at any rate initially, be wholly publicly owned. Will there be the possibility of European participation in this company, too? I gather from the letter attached to the Statement (which I have not yet been able to read carefully, though I will do so) that the two design and construction companies will be encouraged to have international links, and that the whole future of the European industry will be considered.
Thirdly, it is clear that we must stand up to international competition, as the

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Statement says, and step up our power to sell abroad. Can the noble Lord tell me what the future of the British Nuclear Export organisation is to be? Fourthly (I hope I am not asking too many questions) can the noble Lord say whether any decision has been taken, or whether the Government have taken any view, on the proposal that a Joint Select Committee of both Houses should be appointed to consider this subject—a point also raised in our debate? Finally, when will the new set-up come into being? The letter says that it has taken 18 months to come to this decision. I do not know whether or not these have been 18 wasted months; but I should like to know when this decision will be fully implemented.
3.55 p.m.
LORD SHACKLETON: My Lords, I think the noble Earl is justified in expressing some satisfaction. Whether the Government listen to the views expressed by your Lordships or whether "great minds think alike", at any rate certainly noble Lords who advocated this particular arrangement (and I think in that interesting debate they were the majority) should be pleased at the result. The two companies will of course come in earlier. This is the most important and most urgent of the arrangements. And of course it is true, although I cannot at this stage say precisely how it will work, that we, and I am sure the industry and all concerned, do attach importance to the European links. This question of foreign investment in nuclear power companies is a subject upon which I would rather not express an opinion; but the noble Earl rightly drew attention to the point that the Statement says that initially it will be wholly publicly owned, which would seem to imply that there is a possibility of further investment. But again I think it is early to speculate.
In answer to the noble Earl's comment, I would not myself think that the 18 months have been wasted. I know that a number of your Lordships, among them the noble Lord, Lord Sherfield, and the noble Viscount, Lord Mills, who has had so much experience in this matter, were pressing the Government hard to take an urgent decision. This is a most complex area. I think that the proposed solution represents a rather interesting mixture of public and private enterprise.
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I remember being critical at one time when the noble Viscount, Lord Mills, hived off the Atomic Energy Authority from the Ministry of Supply. I am bound to say that history has justified his decision, as I hope that history will justify the decisions that have been taken on this occasion.
I am afraid that the noble Earl defeated me on certain questions. I cannot answer the question on British nuclear exports. I may have an answer before we conclude. On the point of a Joint Select Committee, which is an interesting one, and in which I personally am interested, I have always thought that your Lordships' House had a particular role to play in these technological subjects. Whether this must wait on House of Lords reform is a question on which I would not speculate now.
3.59 p.m.
LORD BYERS: My Lords, I should like to thank the noble Lord, Lord Shackleton, for making this Statement. I am sure that the British nuclear industry could have a great future. I believe that part of this great future will depend upon the strength of the marketing organisation in the export field; and we shall certainly study this Statement closely to see what strength there will be in export promotion. I am sure the market is there; and I am also sure that our designs are right. But the real problem, as the noble Lord will agree, is, to get into the market.
LORD SHERFIELD: My Lords, is the noble Lord aware that the progress represented by his Statement will be widely welcomed by all those who are concerned with the Atomic Energy Authority and the nuclear industry, particularly because it seems that in principle the kind of integration which is contemplated appears to be the one best suited, at least in my judgment, to lead to an excellent result.
VISCOUNT MILLS: My Lords, I shall not detain your Lordships for more than a minute, but I should like to say that I was very relieved to hear the Statement by the noble Lord, Lord Shackleton. Three weeks ago I visited Dungeness, and I was very impressed with what the Atomic Energy Authority, private industry and the Generating Board had done in combination. It was a wonderful show. We ought to be very proud of it. I think the plan which the noble Lord

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has presented to us will work. It must be a very great temptation to the Government to set up a monolithic structure consisting of one Government-controlled Corporation. They have resisted it, and I am very glad that they have. I think the proposal makes sense.
LORD PEDDIE: My Lords, there is one point on which I think certain assurances would be welcome. At the present moment, the Atomic Energy Authority is involved in a highly important bid in the erection of a nuclear reactor in Finland. I had a certain major personal involvement in this at the time when I visited Finland recently, and it may be that if there is any suggestion that the continued existence of the Authority is in some doubt, it may have some ill bearing upon this bid and the attitude of the Finns. I am sure that all would welcome at this point an assurance that, whatever commitment is involved on the part of the Authority at this moment, there will be no challenge at all to that in any developments which may take place as a result of these suggestions.
LORD SHACKLETON: My Lords, I am grateful for the reception given to the Statement by the noble Lords, who have spoken, and particularly Lord Sherfield and Lord Mills. I think this is an important development. We should not underestimate the difficulties of bringing this scheme into effect, and I must stress that, while the Minister has made his Statement, as it was right to do, certain negotiations have to take place and there is no suggestion of a diktat in this matter.
I think I could now answer the noble Earl, Lord Bessborough, about B.N.X. The answer is that this is still to be decided, but probably the Atomic Energy Board—the new Board to which I referred, and which brings all forces together—may supersede it, but we cannot speak further on this. The point made by the noble Lord, Lord Peddie, is, I think, worth stressing. It is extremely important to make quite clear that there will be absolute continuity, and the Atomic Energy Authority will continue to prosecute with all energy its present responsibilities, and no doubt enter, if necessary, into new ones. I think we ought not to leave this subject without paying tribute to the Atomic Energy
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Authority: it has been a great centre of technological development, and the country owes a great deal to it.

FINANCE BILL
4.4 p.m.
Debate resumed.
LORD BALOGH: My Lords, it is, I believe, the gracious custom of your House to extend to the novice special indulgence. I hope I may count on this kindness for at least one additional reason. While there have been, and are, among your number, distinguished people whose origin goes back to the Continent from diverse periods, starting perhaps from the Saxons, or, as the noble Baroness, Lady Emmet of Amberley, would have it, the Romans, I think, I am the first Hungarian-born subject to be so honoured, and I fear that I shall contribute a further accent to those to which you are more accustomed.
I hope on this occasion I shall be permitted not to follow the two previous speakers in controversy, however strange that may appear on my part, but concentrate on certain long-term considerations on the place of financial control in the armoury of policy-making. By far the most important condition of success in this respect is, I believe, a ruthlessly honest realism about the limitations of the various weapons at hand. Only in this way can the machinery of decision-making he so fashioned as to obtain the package best adapted to the task.
In this country a rational approach to these questions is somewhat impeded by the ceremony surrounding the annual Budget, going back to the annual harvest. This, with its Box, if not bell; and candles, and its breathless secrecy, is a special occasion differing from that of almost any other country in the world where financial legislation is preceded by intensive discussions between the Executive, the Legislature and the private interests concerned. Chancellors, like recurrent annual prophets ascending with their somewhat less-weighty paraphernalia to the Principal Floor rather than descending from the summit, reveal the somewhat transient commandments at one go. In parenthesis, it might also be said that post-First War Chancellors

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also shared the fate of Moses in that they were at most permitted to glimpse a view of the promised land, but never got there.
All this mystery tends to exaggerate the importance of the occasion and threatens to upset the timing of the measures which can be taken. It is also intimately connected with the tendency to embrace simple technical, mechanical theories to explain deep-seated and complicated problems in terms of impersonal and quantifiable—and therefore scientific-looking—economic factors such as the volume of money in circulation, or the Budget surplus, or deficit. Nothing is so inherently stable in economic life as the theories about it. Despite 25 years of almost continuous trial, and perhaps more of error and failure, there is still a persistent and fallacious belief that all our tribulations would be over if we could somehow prevent too much money chasing too few goods, which can best be dealt with by fiscal measures.
It may appear paradoxical, when discussing what is by far the most exacting Budget, to call attention to its limitations, yet this seems in order. As we have had ample opportunities to observe, the influence even of harsh fiscal measures can be, and has been, offset or more than offset by sudden resistance on the part of the public. A Budget surplus could be frustrated, for example, through individuals using their cash reserves, diminishing their savings or, indeed, selling assets, or borrowing. But these factors flag in importance in comparison with two which have bedevilled the British economy ever since the First World War. One of these weaknesses is on the way to being mended, though it is by no means completely cured. This is the tendency of our financial system to generate overseas investment far beyond our capacity to sustain, a tendency which is due to the historical development of London and of Britain as a focal point of the world financial and economic system. Should the national reserve currency system, as we all hope, be superseded by an international arrangement and overlending duly curbed, this problem will have been solved.
The second, I fear, is as yet far from solution, but before I deal with this point
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I should like to say that I have followed the activities of the Prices and Incomes Board with interest and admiration, and I hope to collaborate with them in future. This second cause of our malaise is the consequence of our costs rising faster than those of other competitive economies. It is the consistent decline of our share in manufactured exports, and the equally persistent increase in our manufactured imports, both dating back over the last twenty years at least. This is a problem which cannot be dealt with by liquidating our foreign assets, because they would soon give out and our problem be made much more acute by the loss of revenue from them. Nor can it be solved by imposing import controls or surcharges, however necessary these may be as temporary expedients, as shown, for instance, in the current case of France and our own measures in 1964. They cannot be dealt with by such expedients because the effect of these is once and for all, while the basic forces responsible for our discomfiture are persistent and cumulative. No one in his senses would suggest that we could, especially without provoking retaliation, embark on an inevitably cumulative process of progressively increasing surcharges or reducing quotas.
Our type of difficulty is not the violent monetary explosion customarily associated with the booms of the nineteenth and early twentieth centuries. It is really no more complicated than that old saying that you cannot get a quart out of a pint pot. It is a self-sustaining increase of costs, self-sustaining in the sense that the increase in costs through higher incomes creates the demand to sustain the increase in costs through higher prices. Yet we cannot without deadly danger to our balance of payments increase our costs; that is to say, we cannot increase our incomes relative to the increase in productivity at a faster rate than other countries. If our competitors are able either to repress wage demands through unemployment or other measures, or to induce their trade unions to hold back wage demands until they correspond more closely with the increase in productivity than ourselves, we are bound to get into periodic exchange crises. Our relative weakness in industrial efficiency will then be further increased because the stop phase of

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the stop-and-go cycle is forced upon us and investment would have to be re-judged.
Much of the so-called industrial superiority of the Federal Republic of Germany is not due to aggressive entrepreneurship and better sales organisation; they are certainly not in advance of us in scientific investigations and development expenditure. The steady expansion of their share in manufactured exports has been buttressed by the disinclination of the trade unions in that country to incur the odium of responsibility for higher prices. It is also due to the fact that industrial units are larger and their trade unionism more centralised, which allows more flexibility in plant bargaining while it avoids that bidding against one another of different crafts, which seems to be one of the main causes of malaise in this country.
The Government have, since their inception, tried to tackle this central problem from both sides, by accelerating the increase in productivity and by keeping incomes from going up too fast. But the first, which depends on a restructuring of industry (as Mr. Cousins, who was Minister of Technology, ought to know best), is not an easy task or one which yields quick dividends. All the effort—and it was a tremendous effort—that has gone into the attempt to accelerate increased productivity has only recently begun to bear fruit: despite a fall in employment the rate of this increase has more than doubled in 1967–68. There is now in the British economic system a reserve of productive capacity greater than has been experienced for many a year. It is obvious that, if our balance of current account improve; through increased exports and import substitution, in the first instance, and we are able thereafter to expand employment and production, the increase in productivity might be prodigious. Then we should be able to enjoy the fruits of a virtuous cycle instead of a vicious circle.
It is the "if" in this which is the rub. There is reason to fear that, unless the attitudes of both sides of industry alter, the fruits of the increase in productivity will be anticipated prematurely through an overly increase in costs and the competitive advantage of devaluation eroded, and the possibility of steady expansion
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will once more be frustrated. The fact that our balance of trade is slow in improving makes this even more menacing as wage-round follows wage-round. We shall have to accept changes in our social institutions by which the concentration of economic power, which is an accomplished fact, is matched by a capacity for conscious co-ordination and by the development of the institutions needed to undertake that co-ordination. The establishment of the National Prices and Incomes Board is a crucial piece of social reform of which the country can only be proud. In all countries, even the Communist countries, the relation of incomes to production is the most burning problem, and like many other political and social institutions this country may have originated a new organ which others will in the future imitate, just as they imitated Parliamentary and Government institutions in the past.
This task of social engineering is not easy to make acceptable, as we all know. Yet it is only through the realisation of individual and group responsibility and restraint that we can advance towards a steady and continuous upward trend without reverting, as the French and Italians have done, to an increasing inequality of income and acute strife among broad social classes. This depends in its turn on social cohesion. But then this country has always led the world in this respect. The need for restraint is especially acute in the case of the higher income earners. Once recovery has started and the country has been permanently established on a more dynamic rate of progress the need for this restraint will be less acute. From this viewpoint it is unfortunate that the Donovan Committee's Report was not based on an advanced economic analysis of our inflationary problem set against a world picture of increasingly accelerated change in other countries and did not deal adequately with the role of the structure of the unions and the T.U.C. in that context. It is to be hoped that such an analysis and adequate recommendations for a structural change will now emerge from the Congress itself.
The Budget then, in this broad framework, can play an essential role. This role, in my opinion, is not, as the new conventional wisdom asserts, through its influence on monetary conditions or

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on global demand. No practicable measures of taxation can restore export competitiveness. What it can do at most is to create unemployment through a lessening of demand for home products and incidentally for imports and thus improve the balance. It is much more the social implications of the Budget which, in my opinion, will be decisive, and here again the usual popular notions seem the reverse of what I regard as the evident truth. The persistent increase in wages has not, over the last fifty years, had much, if any, effect on the distribution of income. The free-for-all has in fact led to temporary gain of one group of workers against the others. This was to be expected once it was realised that the regular yearly round of wage bargains concluded between powerful companies and equally powerful trade unions would by itself provide a self-generated increase of demand to clear the market at higher prices corresponding to higher wages. Thus it is evident that wage bargains cannot influence the national distribution of income, for wage demands are met only because prices can be raised.
What the Budget could provide is the creation of conditions needed for social cohesion by varying the distribution of income to accord with the demands of the day. Even in this respect, however, the Budget must be supplemented by a careful watch over prices either indirectly, by promoting freer markets, or directly, through the pressure exerted by public opinion activated by the National Board for Prices and Incomes. In addition, such restraint on prices will be indispensable if we are to reduce the added pressure for wage increases emanating from increases in prices.
Thus fiscal policy and prices policy must be closely dovetailed into an integrated framework for a coherent incomes policy. I think that this country could be at the beginning of the end of that horrendous and excessively long period, when policy had perforce to concentrate on the elimination of menacing deficits in our balance of payments; when the dominant need to emerge from dependence on foreign aid precluded discussion of the really interesting and strategic choices inherent in economic and social policy.
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What this country has been denied for the last fifty years is genuine freedom of action. The cause of this was chronic and persistent, indeed cumulative, economic weakness. This is not to be cured by one Budget or by any Budget. It can be solved only by changed social attitudes and concerted policies. The Budget must therefore be judged from the viewpoint of whether it contributes to this change, and not merely by its immediate effects. Once the country has regained its freedom, economics should, and will, fade back to their proper place. They are means and not an end. The proper subjects for debate in a relatively affluent society are very different from the balance of payments. It is not even the standard of living, but the standard of life. Are we to aim at greater equality, less competitiveness, more tolerance or a further acceleration of material standards? If it is to be the latter, should it be concentrated on further refining private consumption, or devoted to an increase in public consumption? These are the true themes for political debate.
But this freedom of action, this freedom to lift one's eyes above the day-to-day task of trying to fend off crises, and of anxiously waiting for the monthly trade figures, can be attained only if the restraint of incomes and the necessary institutional arrangements are accepted freely; if the individual temptation to snatch advantage, which can only be transient, is successfully resisted. In the end, the success of economic policy depends on, and will come only through, a deep sense of individual and group responsibility.
4.23 p.m.
LORD ROBBINS: My Lords, I am sure that your Lordships on born sides of the House will join with me in congratulating the noble Lord who has just sat down on his stimulating and felicitous maiden speech. He did not altogether avoid controversial questions, yet such was the temperateness of his utterance that I doubt whether the blood pressure of a single occupant of this Chamber was raised one degree by what he said. He has given us much food for thought, and I hope that he will give us the opportunity of further nourishment in the future.

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I should like also to congratulate the noble Lord, Lord Brown, on an absorbingly interesting account of his stewardship in the management of our international trade, and to express my agreement with his fundamental position that the economic state of this country can be depicted in colours which are too dark. But I am afraid that what I have to say this afternoon may not altogether harmonise with the rosy hue which may have appeared as a penumbra to his observations. I agree with what speakers favourable to the Government have said, in this Chamber and elsewhere, that the news from Basle and the improvement in the trade figures are grounds for some satisfaction. But before we follow Mr. Aubrey Jones—or more exalted authorities—in talking of economic miracles, I think we should recognise, in the interests of realism, that all that has happened so far is that the situation has been prevented from becoming worse. Whatever may be the extent of our deliverance in the future—and I agree with the noble Lord, Lord Balogh, that there is a fair chance of that happening—we are still months, even years, away from a state of affairs which can be free from deep anxieties.
Let us take the Basle agreements, or what we know of them at present. It is indeed very good news that the danger of massive withdrawals of the sterling balances seems to have been averted, and I am sure that the gratitude of us all is due to that great and good man, the Governor of the Bank of England, for the ceaseless and dedicated labours which have brought this about. In my opinion, we do not pay sufficient tribute to the men like Sir Leslie and his illustrious predecessor, the noble Earl, Lord Cromer, who by their vigilance and shining integrity have sustained our financial reputation in quarters which have power to help at a time when there was some reason to fear that that reputation was in danger.
But what has happened is essentially that a great disaster has been prevented. If, without support from elsewhere, there had been withdrawal on a large scale of funds hitherto held in London by the central banks of the sterling area, nothing could have prevented a catastrophic fall in the external value of the pound, with all the internal damage and international
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chaos that that would have involved. But there is nothing in what has happened which positively improves our position on current account. There is nothing which finances the present deficit. And if the transfers take place, and our obligations to pay in sterling are transformed into debts to members of the Bank for International Settlements, then in the long run the burden on the balance of payments may be actually increased by obligations of repayment which might not otherwise have taken place. There is not much cause for jubilation here, but some cause for quiet thankfulness.
The improvement in the trade figures, especially the drop in imports, is indeed more positively relevant. If it persists, it will certainly be an indication that the devaluation is beginning to wonk and that internal policy is at last on the right lines. But how premature to proclaim recovery! We are still running a deficit on current account. At the present rate of recovery it is difficult to believe that we shall be breaking even much before the end of the year. As has been said already, if we are to repay the debts which we have incurred recently, still more if we are to accumulate reserves adequate to the business of a great industrial and financial nation, we shall have to run surpluses of at least £400 million a year for years to come. I do not suggest that this is impossible. When one looks around and sees what has occurred in other centres, such as Germany or Italy, which 20 years ago were in a much worse position than we are now, it is clear that it can be done. But it is early days to speak as if it were far on the way. Many years of effort and restraint lie ahead, and at the present time—let us face it—we are still in a position of danger.
In this connection, my Lords, it is worth remembering the narrowness of the margin available. The devaluation was comparatively small. I am not arguing that it should have been greater. I still find it difficult to believe that, given proper internal restraint, the pound was greatly overvalued; and since we were not accompanied downwards by many other centres, as happened in 1949, the cutting edge of what has happened, so to speak, is very extensive. But when due account has been taken of increased costs of imported raw materials, the

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abolition of export rebates and so on, the advantage to our exports cannot be much more than 10 per cent., if that. It would not take much internal inflation to wipe that out, and to sustain a disposition to import far beyond our present means. It is clear, then, that it is overwhelmingly important that the rate of spending in general, both internally and externally, shall not run ahead of what we can afford; in particular, that incomes shall not rise faster than productivity, and that consumption shall be so restrained as to allow appropriate internal investment and the creation of an external surplus.
My Lords, this brings me to the occasion for to-day's debate—the Finance Bill and its implications. Let me say at once that I am in broad sympathy both with its aims and with its methods. This is not to say that I think that our system of public finance is in a particularly healthy state. I think it has been ailing for some time—longer than the term of office of the present Government—both on the side of expenditure and on the side of taxation; and I certainly think that its ailments have been increased by some measures introduced by the present Government—the capital gains tax without an index number clause, corporations profit tax, and S.E.T.
The immediate need of the situation this spring was a drastic curtailment of consumption; and I agree that, given the instruments at his disposal the Chancellor has done the right thing to get it. I have not much use for the so-called once-for-all special levy: it will not raise a great deal of money and it will impose special burdens on some who have provided for retirement. But if it was the political price for an otherwise sensible policy, perhaps it was not too much to pay. The main tendency to shift to some extent to indirect taxation seems to me in present circumstances to be wholly welcome. Admirers of the Communist system will note that, in spite of some inequality of income, the main instrument of taxation in Soviet Russia is a turnover tax. In this respect, I submit, the Chancellor has done a wise and courageous thing.
Nevertheless, I submit that we should deceive ourselves if we were to regard the present situation in this respect as entirely satisfactory; if we were to think
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that, so far as public finance is concerned, all that needs to be done now is to sit back and wait for an economic miracle. I think that much needs to be done to improve our system of taxation, both in respect of incentive and in respect of justice. I think, too, that not nearly enough has been done to restrain the growth of public expenditure. In this connection I do not wish to give countenance to the vulgar view that within the limits of present policies there are vast areas of waste to be remedied by immediate economies. I mean rather that there are, in my judgment, large fields of expenditure where we need rethinking of fundamental policies—areas of outlay where more selective expenditure would allow at once more to be given to the really poor but less given to others not in need.
Much more immediate is concern for the present volume of spending. In spite of the Budget, and in spite of some reduction in sales in some shops, it seems to me that the disposition to spend is still too high for our present state of convalescence. Taxation or no taxation, too many people have got into the habit of preferring consumption goods to reasonable liquidity and investment. This tendency was already widespread because of continuing inflation; but it has certainly been considerably strengthened by the long delay in introducing the post-devaluation Budget.
With great respect and admiration for the present Chancellor of the Exchequer, I have racked my brains to discover valid grounds for his failure to act earlier; but I have found none. Why on earth did he hold his hand? In the weeks following devaluation this people would have taken anything in the nature of restraint and austerity. As it was, as has been said already in the debate, the delay gave rise to a vast orgy of spending, which must be held largely responsible for the uncertainty regarding the future of sterling which has persisted ever since. Even now I doubt whether the habits thus engendered have been fully abandoned. "After us the deluge" is still too much the prevailing mood in many quarters.
In this connection, I believe that far too little attention has been given by this or earlier Governments to effective encouragement of saving. We all know that

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saving is not something that you encourage in the depths of depression. But I imagine that most of us would agree that, at any rate during the last 20 years, the tasks of all. Governments in this country would have been materially eased had the disposition to save been greater. One of the main reasons why this was not so was, of course, the fact of inflation itself. If the value of money is falling, as it has been falling pretty consistently since the war—under Conservative Governments as well as under Labour Governments—then even high rates of interest may not be a sufficient compensation for the loss of purchasing power; and sooner or later people find this out.
This frame of mind cannot be wholly eradicated while the expectation of inflation persists. But I suggest that far more could be done than has yet been done to reverse the tendency. The tax system as we have it at present positively discriminates against savings: it taxes the incomes out of which savings are made, and it taxes the incomes which they reap; and it adds insult to injury by designating as "unearned income" what a man receives from the provision he has made against retirement. I strongly commend to the Chancellor the serious consideration of measures to rectify this anomaly, and if he has any trouble with the theory involved there is an excellent book by a Mr. Nicholas Kaldor which, in this respect at any rate, would be very helpful to him.
But reform in this direction must necessarily be a matter for the future. Meanwhile, we have to live through the crisis, and here, surely, as the noble Lord, Lord Balogh, commented to us, we must be eclectic. We must use all the instruments that are available. For this reason, in spite of the inconveniences involved, I make no objection to the additional restraints on bank lending which have recently been imposed. Nor would I personally wish to indulge at this juncture in criticism of the Government's incomes policy. I do not believe that this is a long-run solution: in the long run, I fear that it may breed anomaly and injustice, and I doubt whether it will be economically effective. But in our present predicament anything which restrains inflationary cost increases in the short run is to be welcomed. I should not wish to call in question the intention which lies behind
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the attitude of the Government in this respect; rather, indeed, the contrary. I hope to see the incomes policy made more effective, particularly in the public sector, where, if there is not an incomes policy all the time, things are apt to get cut of hand.
And if I may conclude on a somewhat sombre note, I would say that any gratification that we may have felt in the last two weeks at the outcome of the Basle negotiations and the tendency of the June trade figures must be considerably mitigated by the apparent breach of the incomes policy by the settlement on the railways. There is a disquieting story going around of pressure brought by the Government on the Railways Board to influence the conduct of the dispute. I should like to ask the noble Lord, Lord Beswick, who is to reply for the Government whether there is anything in these rumours. I hope sincerely that he can deny them, not merely on points of detail but on the broad substance of the allegations made. For if they were even only broadly true it would be a matter for serious concern.
4.42 p.m.
LORD MONSON: My Lords, I should be grateful for your kind indulgence, not only because some of the things am going to say will, I am afraid, be somewhat controversial—although I hope only mildly so—but also because I am obliged to be at London Airport early this evening in order to catch a flight which was booked many months ago before the date of to-day's debate had been fixed. If, through necessity, therefore, I have to leave before the end of this debate, I hope very much that noble Lords will forgive me.
My Lords, there are three things that I want to discuss, two of which are fairly directly connected with this Bill. All have to do with ways in which specific groups of individuals are, in my submission, being unfairly treated by our fiscal system. I should like to deal first with Clause 53 of the Bill. This may seem to be a relatively unimportant clause but, in a roundabout way, I chink an important principle is at stake here. Let me explain. The clause, in fact, does nothing more than to provide that taxpayers, whether individuals or corporate, whose tax is overdue must start to pay interest two months, instead of

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three months, after the due date. In effect, it adds further weight to a provision in the 1967 Finance Act which raised the rate of interest on such overdue tax from 3 per cent. to 4.
Both these provisions are, in my belief, perfectly fair and reasonable. We live in highly inflationary times, and in consequence interest rates are historically high; and, leaving aside any apportionment of blame for the inflationary situation, the State has to-day, I feel, to be businesslike about monies owing to it. But fair is fair. An individual who owes the State money is rightly being made to pay the proper rate of interest on it, so when the State owes the individual money exactly the same principle, surely, ought to apply. But at the moment it certainly does not.
What I refer to specifically is post-war credits. Here I cannot avoid being controversial. It must be said that no Government since 1946 can escape criticism in this matter. Certainly a start was made with the provision that a tax-free increment of 21, per cent. of the balance outstanding should be added annually from 1959 onwards; but at the present time this is quite inadequate to keep pace with inflation. I know that there are other people who suffer most unjustly from inflation—long-term holders of War Loan, for instance; but however much the latter may have been inveigled into buying War Loan and then into accepting a reduction in the rate of interest from 5 per cent. to 3½ by appeals to their patriotism, in the final analysis theirs was a voluntary act. Those to whom post-war credits are still owed have, and had, absolutely no choice in the matter. I therefore urge Her Majesty's Government to consider raising the annual rate of interest on outstanding post-war credits to 4 per cent., in line with the rate of interest on money due from the taxpayer, to help preserve the purchasing power of the credits outstanding, pending their eventual re-payment.
My next subject is one on which both Clause 15 and Clause 31 have a bearing. It deals with the anomalous and, as I hope to convince your Lordships, totally unfair tax position of children who inherit money, however small a sum, from a deceased parent. Here I must declare an interest, although it is purely in my
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capacity as an administrator and trustee. It may help if I cite the particular case in which I am interested as I think it may be typical of many. The father of the little girl in question was an officer in the Fleet Air Arm who tragically was killed while still in his twenties. His daughter's share of his net estate came to a little over £1,600—I think the exact figure was £1,670. This sum now produces an income of just over £100 a year, which is a little less than £2 a week. Here I must say that I am not in any way criticising Service pensions or State benefits of any sort; I am dealing only with the situation as it affects a person's private income.
Under Clause 15, this £2 a week will, from 1969 onwards, be amalgamated with her mother's income (which, itself, is far from substantial) for tax purposes; and really this is not going to help things very much. But although, with difficulty, I can see that some sort of case can be made out for Clause 15, I can see no justification whatever for what comes next, which is this. Whenever any switch is made in the investment from which the child's income derives, even when it is a question of Government stocks reaching their redemption date, the child—and this goes for any child in a similar position—must pay capital gains tax at a higher rate than a single man with an unearned income of £3,900 a year or of a single man with an earned income of over £7,000 a year. I said that the child pays; in fact, her trustee pays; but the ultimate effect so far as she or he is concerned is the same. The excuse for this completely unjust situation is that the child's interest in the capital is contingent upon he or she attaining the age of 21 years or marriage, if sooner. I must interject here to explain that in the particular case I am dealing with the father died intestate. But this is hardly relevant; for nearly all well-drawn-up wills also prudently provide for the child's interest in the capital to be contingent upon its attaining its majority. I have tried to put myself in the position of the Inland Revenue to try to see what it is that they fear will happen if the rate of capital gains tax were to be linked with the child's income, as is the case with all individuals who have an absolute interest in their capital. Do they fear that lightly taxed capital may ultimately pass into wealthier hands? My Lords, the average age of a child who

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inherits money in this way is 10½—in other words, midway between the day of birth and the 21st birthday. Or perhaps more accurately, it is 10, given that some marry before reaching the age of 21. I am told that actuarially the chances of a child of 10 dying before reaching the age of 21 are 0·3 per cent.; that is to say, 997 out of every 1,000 10-year-olds do survive at least to the age of 21.
In the sad cases of the three who do not survive to whom would their capital pass? Surely my Lords, either to a brother or a sister, if they had one, who would be unlikely to be better off than themselves; or otherwise, in all probability, to their mother who herself is statistically most unlikely to be a high surtax-payer. So I do not believe there are any genuine grounds in practice for the Revenue to worry that an amendment of the law would lead to tax evasion. If it were thought absolutely necessary, such amendment could be hedged around with all sorts of safeguards. It could be restricted to cases where one or both parents were dead. It could be restricted to gains of a relatively modest nature: or, alternatively, a leaf could be taken out of Clause 15 and provision made to treat the child's capital gains as if they were gains of the parents' so that the children of those few surviving parents who happened to have extremely high incomes would be effectively excluded from any benefit. However it is arranged, I feel that something ought to be done.
My Lords, let us return to the nub of the matter. I have already said that a child in this situation pays a higher rate of capital gains tax than a man with an unearned income of £3,900 a year or an earned income of rather more than £7,000 a year. This was the case until March 19 of this year, but since Budget Day the situation has become even more anomalous and unfair, for in Clause 31 the Bill provides that individuals whose net gain in the year does not exceed £50 are to be relieved altogether of capital gains tax.
The result is that if one of the children in question, even if his or her income is as little as £10 a year—which is quite possible—were, because of an unexpected takeover bid or the redemption of Government stock, to make a capital gain of
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£49 in a year (and remember, my Lords, that this is only a paper gain: there can be no question of spending it as "income", which I believe was the phrase used when the capitals gains tax was originally brought in) they, or rather the trustee on their behalf, would have to pay 14 guineas in tax on that £49. But if Mr. Paul Getty, or someone of his financial status, made exactly the same net gain in the course of the year (which, incidentally, he would be able to spend as he wished), he would not pay one single penny in capitals gains tax.
My Lords, I am afraid that I have been rather long-winded in trying to explain this slightly complex matter. Bu: it is because I think that these things are not widely known, and because I honestly believe that noble Lords on both sides of the House, having had them explained, may wish to see them rectified, that I have ventured to speak to-day so strongly on this subject.
Finally (this is a very "long shot" which, pessimistically, I do not suppose has very much chance of coming off), thanks to Press publicity, most people in this country are now aware of the extraordinary state of affairs affecting quite a large number of unfortunate individuals who had put their savings into houses, mainly terraced houses in the older parts of our cities. These houses may lack certain amenities, damp courses and so on, but most of them—not all: one must concede that some were slums and genuinely due for demolitior—are, by any objective standards, homes where families were able to lead tolerably happy lives. Yet the householders, to their amazement, find their homes declared unfit for human habitation; and they are ordered to quit them upon the payment of an amount of compensation which, in the majority of cases, quite derisory. Happily, this appalling state of affairs has now been rectified for some people, and all credit is due to the present Government for finally getting round to achieving this. But as matters stand at present, only the owners of houses acquired after April 23 this year will benefit.
My Lords, we have seen plenty of retrospective legislation during the past few years. Most of it has been heavily criticised in practice, and above all in principle. Nevertheless, the precedent has

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been established. How pleasing it would be if the fact of this precedent of retrospective legislation could for once be used to benefit the individual vis-à-vis the State, instead of vice versa! I think that very few taxpayers in this country (and after all the burden would ultimately fall on them) would begrudge substantial concessions being given to the owners of such houses compulsorily purchased prior to April 23 of this year.
If some form of additional cash payment must, for one reason or another, be ruled out, perhaps the owners of such houses—who may, for example, have paid £500 for them only to have them taken away for a derisory compensation amount of £50--might at least be allowed to set the £450 loss, however long ago it was incurred, against any direct tax which they may now be paying or may have to pay in the future. I realise that there would be a great deal of effort involved, much research and much reopening of dead files; and much money expended and paper work caused. But if there is any action that could be taken to bring belated justice to these people I am convinced that it would be universally welcomed by the people of this country.
4.58 p.m.
LORD ABERDARE: My Lords, it is my privilege to be able to congratulate the noble Lord, Lord Monson, on his maiden speech, to which I know your Lordships listened with great pleasure. It was well thought out and extremely interesting, and I know that we would all express the hope that the noble Lord will address us again in the near future. As I am the first to speak from this side of the House since he made his speech, perhaps I may be allowed also to congratulate the noble Lord, Lord Balogh, on his maiden speech. It strikes me that the two noble Lords who spoke for the first time are in somewhat different categories, one being a professional economist and the other, I would assume, an amateur. But just as at another scene of frantic activity, in this House we recognise only "players", and we all play without hope of financial reward. I hope that both noble Lords will play their parts here on future occasions.
I do not wish to make any comments on the individual items in the Finance
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Bill, although I would make just one general comment following on a remark made by my noble friend Lord Erroll of Hale. It is to express my dislike of what I consider the retrospective element in some of the provisions in the Bill. Not so very long ago, in the course of the Second Reading of an education Bill, there were some retrospective provisions. The Government sought to justify themselves—and I fully agree with their justification—on the ground that they restored the law to what everybody thought it to be before. Certain changes had been made in schools in the belief that they were in accordance with the law. A legal judgment concluded that the law was different and that those changes were illegal. In that case retrospective legislation, restoring the law to what it was supposed to be and granting immunity to those who unwittingly transgressed it, seems to me to be a justifiable use of retrospective legislation.
But there are provisions in this Bill which affect actions taken in the past by those who knew the law as it then was, and who now find that, at a wave of the Government's wand, the law will be different. I have no quarrel with the right of the Government to alter the law for the future, but certain provisions of this Bill cause grave hardship for people who have entered into commitments on which they cannot go back. I believe that this is objectionable and a bad principle.
I wish to devote most of what will be a short speech to the state of the economy as a whole, and I would confine myself to one theme, which I call financial discipline. I know a number of professional economists and I know that there is a danger of over-simplification, but, on the other hand, the professional economists often err on the other side and fall into the danger of over-complication. Certainly few of them seem to agree among themselves, and I am emboldened, as none of them have turned up with the right answer, to "have a go".
Despite what the noble Lord, Lord Balogh, said, I consider that enemy No. 1 of our domestic economy is inflation. That is also the case with our overseas trading position, because it is bound to affect this adversely. Everyone is familiar with the expression: "Too much money chasing too few goods." This is

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an over-simplification, as the Radcliffe Committee pointed out in their Report in 1959 on the working of the monetary system. May I remind your Lordships that they concluded that:
"The factor which monetary policy should seek to influence or control is something that reaches beyond what is known as the supply of money. It is nothing less than the state of liquidity of the whole economy."
It is my conclusion from that that our inflation is due to an excess of liquidity compared to the production of goods and services.
Over the last three years, the Government have been in process of a policy of deflation to reduce this excess of liquidity. They have sought to reduce domestic demand by raising taxes on income and expenditure and by the restriction of credit facilities. Unfortunately, the policy has failed. The liquid funds at the disposal of private persons have risen year by year, from a figure of £290 per head in 1962 to the astonishing figure of £400 per head in 1967, representing a total in that year of liquid assets in the hands of private persons of over £22,000 million. These figures are based on only selected liquid assets and are contained in the April edition of Financial Statistics.
Why has this deflationary policy failed? The simple reason, in my view, is that while more money is being taken out of the economy by taxation, at the same time the Government's total expenditure on current and capital account has exceeded their income and therefore has put more money back into circulation than it has taken out. I am not making a Party point. The story over recent years since 1961 has always been the same. The nation's income and expenditure account has shown a surplus, but this surplus has been more than spent on capital account, principally as a result of loans to local authorities and public corporations.
The figures speak for themselves. For the six years from 1961 to 1966 we had a surplus on income and expenditure account of £3,813 million, but over the same six years capital expenditure amounted to £5,653 million, leaving a deficit of £1,840 million. This may seem a large figure, but the same deficit during last year, 1967–68, according to the Chancellor of the Exchequer in his Budget speech, was some £1,449 million in that one year alone—almost as much as in
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the six previous years. It is this excess of overall Government expenditure over income, sometimes called the Borrowing Requirement, that is the all-important point if we are seeking to control inflation. There is no need for this Borrowing Requirement to create an inflationary situation, if it is met by general borrowing from the market. The point really is: How is it met?
I referred to this matter on the Second Reading of the National Loans Bill on February 27 and the noble Lord, Lord Beswick, was kind enough to give me some figures for the year 1966–67, a year in which the Borrowing Requirement was a mere £740 million. From those figures it is clear that about half was found by general borrowing from the market, raised by the issue of tax reserve certificates and gilt-edged securities, though Treasury Bills and National Savings actually showed a deficit in that year. This therefore represented a general reduction in liquid assets held by the private sector of £360 million.
But what about the other half—£380 million? Of this, £53 million was raised by overseas borrowing, which in no way reduces internal liquidity; £125 million came from the issue of notes and coins, and the remaining £202 million came from the banking sector. It is to this last figure of £202 million that I would draw your Lordships' attention. It is an internal arrangement between the Treasury and the Bank of England without limit and without in any way reducing the liquid assets of the personal sector. If this item in 1966–67 was £202 million, when the Borrowing Requirement was £740 million, what was it, I wonder, in 1967–68, when the Borrowing Requirement was almost double? If the noble Lord, Lord Beswick, is able to give a figure it would be extremely interesting to know, because this is the crux of the matter. The Government make a surplus on their income and expenditure account. This surplus is transferred to capital account, now the National Loans Fund. But the surplus and the Government's borrowing from the market are insufficient to meet their long-term loans to public authorities. The remainder that is required is met by the banking system.
This, to my mind, explains why inflation has continued despite deflationary taxation measures. This is where I believe we should seek to reimpose financial

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discipline. I think we should have two Budgets: we should have an income and expenditure account, more or less on the lines of the present Budget, and we should have a capital account Budget. This capital account Budget should be credited with the surplus (if there is one) from the income and expenditure account, and debited with the estimated long-term loans to public authorities; and the difference would have to be met by genuine borrowing from the market by means of gilt-edged securities, saving bonds and so forth. These must be made sufficiently attractive to ensure the necessary flow of funds—and I fully agree with what was said by the noble Lords, Lord Byers and Lord Robbins, on this matter.
To those who say that the figures are too large to be met by the market, I would merely make two points. The first is that the borrowing requirement of this year, 1968–69, thanks to a tough Budget, has been considerably reduced to a figure of £358 million. The second, reverting to what I said earlier in my speech, is that liquid assets of the personal sector last year were over £22,000 million. Surely, out of this £22,000 million liquid assets held by individuals we can somehow raise, by borrowing in the market, the sum of £350 million or so if we make the terms sufficiently attractive. The objective must be to finance Government lending by Government borrowing from the market. Yet figures show a disturbing tendency for the private sector to switch its resources increasingly from long-term investment into short-term liquid assets. This is the vicious circle that we must break. As the noble Lord, Lord Robbins, pointed out, inflation causes loss of faith in the value of money and a reluctance to invest in long-term securities, particularly fixed interest securities, such as gilt-edged. But until the Government can borrow their capital requirements from the market, inflation will undoubtedly continue.
I do not pretend to be able to answer the problem. I think, however, that we should have made a start if it could be spotlighted in an annual Budget, and pressure put on the Government—on any Government—to exercise strict financial discipline in their expenditure. I believe it is financial discipline that is required to defeat inflation, to remove the
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need for a statutory prices and incomes policy, and to give the citizens of this country faith in our financial future.
5.14 p.m.
LORD BOOTHBY: My Lords, we nave had two notable maiden speeches to-day, and at the outset I should like to make a brief reference to the maiden speech of my noble friend Lord Balogh. He has been a friend of mine (now a noble friend) for the last 35 or 40 years. All I want to say about his speech, which we all listened to, and shall study with great interest, is that I, for my part, welcome his transformation from an eminence grise to an eminence brillante, which is what he now is in this House. I never altogether liked him in the capacity of eminence grise. Now we have him here, we can hear what he has to say and evaluate it; and it is worth evaluating. I should like to congratulate my noble friend. I am delighted that he is here. We hope to hear a great deal from him again, no longer enshrouded in the recesses of that ghastly Treasury but from the much more healthy atmosphere of the red Benches of this House.
This has been a hard Budget. It had to be. Nevertheless, our present system of progressive taxation on earned incomes does amount to what my noble friend Lord Robbins once rightly described as:
"a discrimination against enterprise and ability such as has never before existed for any long time in any large-scale civilised community."
I think that is true, and I do not think my noble friend Lord Robbins would wish to withdraw that statement. Although I do not for a moment suggest that the Chancellor of the Exchequer in this particular Budget should have reduced taxation of any kind, direct or indirect, I agree with the noble Lord, Lord Byers, that a radical reform of the whole system of taxation is necessary. We have had a Royal Commission on this subject. Our present system is out of date. I think we are lumbered up with a mumbo-jumbo of Finance Acts and everything else which makes the position almost impossible. Every stockbroker now, in addition to everybody else, has to be a chartered accountant. I have spent a few sleepless nights (I must say it does not get me any further) trying to find out what

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taxes I ought to pay, where, when and how; and I think that that goes for everybody in this House and in the country.
What I deplore above everything else is the enormous wastage of labour involved in going through these intricate tax accounts and systems. I say to Her Majesty's Government that they must simplify the position; they must get it a bit better. My chartered accountant has had a nervous breakdown; and I am not surprised. Almost every chartered accountant in the country has had a nervous breakdown, and Her Majesty's Government must do something about it. The other disadvantage of this enormous rate of taxation on earned incomes is that to-day no one can save out of earnings. People have to gamble or speculate if they are going to make any money: and that, in the long run, is not a healthy situation for any community. At any rate, that is a thought that is worth consideration.
What is the root cause of our high taxation? Here I agree with the noble Lord, Lord Aberdare, who preceded me. The root cause is, of course, excessive Government expenditure. That is the real trouble with this country to-day. The Government have cut, but they have not cut enough. Here lies the failure—and I go so far as to say that I think it is the only one. But it is a big failure.
I have now, for my sins, been a Member of Parliament—because this House is still part of Parliament—without a break for forty-four years. I have seen a great many people come and a great many go, and I have seen a lot of things happen. But I have never experienced a campaign of personal vituperation such as has been waged against the present Prime Minister for the last eighteen months, with the possible exception of Baldwin, when he was under major attack by Lords Rothermere and Beaverbrook.
LORD GLADWYN: And Lloyd George.
LORD BOOTHBY: Lloyd George had a rough time, too. He fell because he did not accept the verdict of Parliament, but accepted the verdict of the Conservative Party; and it was a disaster for this
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country and the world. But Baldwin stuck it out. What I admire about the present Prime Minister is that I e has stuck it out. He has not talked much; he has not said much. But he must have felt quite a lot when he has seen this going on, day after day, vituperative, bitter—I almost said "bloody", but I think that that is not a Parliamentary expression, so I will withdraw it.
This criticism of the Prime Minister is in my view almost wholly unjustified. It has been said repeatedly that he is a man of no principle. That is quite untrue. He has had, of course, to lead a coalition. All Parties are coalitions. The Tory Party is a coalition; the Labour Party is a coalition to an even greater extent. The Liberal Party, before the outbreak of the First World War, was a coalition between the Liberals and the Irish Nationalists. And you have to hedge a bit and edge a bit when you are leading a coalition. And of course, the Prime Minister has a coalition. Whether you call them the intellectuals or the trade unionists, or whatever you like, it is a coalition. But, given that fact, he has stuck to principles as much as any man whom I have ever known and who has been Prime Minister of this country. Upon the basic necessities he has never deviated.
These basic necessities, according to him, are increased productivity related to wage increases—he has never stopped saying that for a single second since he became Prime Minister—and the modernisation of industry, including a technological revolution. I am bound to say that rigid adherence to these principles has at times made some of his speeches rather boring, because technology is a slightly boring subject in itself. But he has hammered on and away at these. And it is beginning to happen, my Lords. We are not going to have an economic miracle. The Prime Minister cannot walk on the water to-day, as he was depicted doing in a cartoon in the papers the day before yesterday, but I believe hr may well be walking on the water the day after to-morrow. It is going to be a hard slog; but I think it will culminate, if things go as they are going now, in success. If I have any criticism to make of the Prime Minister, it is not that he suffers from a lack of principle but on occasion, as in the case of Rhodesia,

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from an excess of principle. He sometimes carries principles too far.
Again, on prices and incomes he has been inflexible. He has insisted that increased wages must be conditional on increased productivity, and taken legal powers to enforce this. I must confess that I myself was extremely doubtful of the wisdom of this. But when he said that he regarded it at the present moment as essential, and when he was supported by Lord Citrine, in a most remarkable speech on this subject, I swung round and said, "All right. Well, I accept it. If he thinks it is necessary, it is necessary ". And I am very glad to say that your Lordships took that view and did not divide against the Prices and Incomes Act. I think it is an Act that is going to work. I think it is a courageous Act—brave, and a good Act. Why should not we sometimes praise somebody? Everybody these days is "narking" away at each other and saying they are no use, and this and that. I think it is about time to hand out some praise, and I hand out some praise to Her Majesty's Government for the Prices and Incomes Act, which I think is a brave and courageous action which will come off.
My Lords, let us face the facts. I do not want to quarrel with my ex-Party, but the Conservative Government handed to the Labour Government a bankrupt concern. That is all. There is no answer to it. We were still a world banker. Sterling, with the dollar, was still a world currency. But our liabilities far exceeded our assets. That was the simple story and you cannot get away from it. And I have always noticed—at least, I have been taught and noticed it from experience—that a bank whose liabilities are far greater than its reserves is apt to get into trouble from time to time. Look at the result; and this result is not entirely due, or even mainly due, to the present Government. To-day we owe £1,234 million to the I.M.F.; £95 million to the Bank for International Settlements; £380 million on the U.S. Aircraft Loan; about £1,000 million on the Central Bank "swap" credit, and now another £834 million under the Basle sterling area scheme: in short, something between £2,000 million and £3,000 million.
I think the British public does not altogether relish this diet of loans on
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which it has been force-fed by successive Governments since the war. It does not like to be so grossly "in the red". It does not like to be in debt to this tune, because it feels that our creditors may call other tunes—and so they may—and it would like to get out of it all if it possibly could. To use an atrocious pun which is at present in current circulation, we have been "Basled" out too often. And we were "Basled" out again just the other day. Why? Well, my Lords, I am nearly at the end of my remarks, but the reason is, of course, because the international monetary system is not working. It is not right. It all stems from Bretton Woods, that monstrous agreement. I divided the House of Commons against Bretton Woods. I do not know whether the noble Lord, Lord Balogh, was on my side or whether he was against it, but I do not regret it. I divided the House of Commons against the American loan as well, and got into a lot of hot water and trouble. That is why I never held office in this country. But I do not regret it at all, not for a moment.
Not only is the international monetary system not working; it is not even improving. Three of the four largest trading nations have serious balance-of-payments problems, and the fourth seems reluctant to play any part in relieving the others. I say, with due respect to the noble Lord, Lord Balogh, that the international Central Bankers, the economists and all the boys round the I.M.F. and everywhere else should hang their heads in shame. They have had 20 years since the war to evolve an efficient, adequate international monetary system, and how far have they got? They have got nowhere. It is worse than ever. And we are suffering from that.
The late Governor of the Bank of England—the ex-Governor, I should say; thank goodness he is not "late" yet—Lord Cromer, in his famous speech at Stockholm said:
"Confidence in money is essential to continuing and enduring prosperity in the modern industrialised state. There can be no doubt that continuous inflation is corrosive of confidence in money and ultimately of investment. And there is no baulking the fact that the continuing magnitude of the United States deficit and the forced devaluation of Sterling last November has shaken confidence in money in many places. We are now living in the

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aftermath of the latter event. It was a traumatic event, coming as it did, not as the outcome of any international holocaust, but after many years of high world prosperity. It was very much more than a mere technical adjustment ".
If there was any greater recognition of complete and total failure, I do not know of one. That is what Lord Cromer's speech amounted to.
My Lords, the proper solution to this problem, to the problem which we temporarily solved by devaluation, would have been a massive long-term loan to Britain from the International Monetary Fund. Impossible. Why? They have not the money. They do not have the resources. Maynard Keynes proposed an international currency, internationally backed, which he called "Bancor", amounting to 25,000 million dollars. He was brutally defeated by Harry Dexter White, and on top of that he was forced to submit to the fixing of the price of gold, the only commodity whose price was fixed at a wholly artificial rate; and gold was then, and still remains, the basis of international credit. It was fixed at Bretton Woods. How did they know? They did not know how the world was going; they did not know what the trade was going to be; they did not know what the production was going to be, yet they fixed the price of the basis of credit—the only commodity whose price was fixed at a ludicrous figure.
I fought a long battle with the late Richard Stokes on the subject of the raising of the price of gold. It is a subject on which a large number of people are raving mad; and the maddest of all are the Americans. They are raving mad on the subject of gold. They forget altogether that President Franklin Roosevelt hauled the world out of the greatest depression it has ever known by raising the dollar price of gold, in the teeth of opposition from every single central banker and economist in the world. They were all meeting in London under the presidency—God help them!—of Ramsay MacDonald at the time, and when they heard that President Roosevelt had raised the price of gold they all had to be carried out on stretchers. But it was done, and it saved us. And it could be done, and should be done, again.
When all is said and done, gold remains the basis of international credit and exchange; the only
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medium in which the world as a whole has complete and total confidence. It may be irrational, as the noble Lord, Lord Beswick, said the day before yesterday, but it remains—as I see it—a fact. This situation has gone on for two or three thousand years; it will go on, hazard the suggestion, for another two or three thousand years, so we had better adjust ourselves to that fact. The amount of international reserves that are at this moment held in terms of gold is colossal.
LORD GLADWYN: My Lords, I hesitate to interrupt the noble Lord, but will he tell me why it is that this highly prized commodity is now going down in price on the world market?
LORD BOOTHBY: Because, my Lords, the United States of America are trying to force gold on to the market, and they are pushing it on to the market because they will not buy it themselves. Indeed, that is the next point in my notes. I have written in my note: that it would be helpful if the central banks resumed purchases at 35 dollar; an ounce, which the United States are resisting because they are determined to force down the free price if they can.
LORD BESWICK: My Lords, if I may interrupt the noble Lord, supposing more gold was forced on to the market, could the noble Lord say what we are going to do with it?
LORD BOOTHBY: Buy it, keep it, look at it and love it! My Lords, if I had a few gold blocks in my fiat I should be very much happier than I am to-Jay; and I daresay the same goes for the noble Lord. It would be a thousand times more helpful if the central banks paid 40 dollars an ounce. That would give us all time in which to evolve an international currency system which would really work. We have not done it.
The truth is that in the long run gold will beat the Americans. It will beat the noble Lord, Lord Beswick. Gold has beaten everybody in the past, and it will beat everybody in the future. He had better recognise that fact and face up to it, and we shall all be better off. If the Americans persist in their present attitude it will be at a heavy cost, not only to the Free World but also to the Starving World, because the amount of liquid reserves available for the Free World is not sufficient to sustain the

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volume of production and trade all over the world, and in particular it is not sufficient to sustain relief and aid to the under-developed areas.
I should like to see the transformation of the I.M.F., with built-in gold security, into a Central Bank for central banks, equipped like them with powers of credit creation and contraction. It will take time, which a rise in the price of gold would give us. The noble Lord, Lord Beswick, himself said, the day before yesterday—and I carefully copied out his remarks from Hansard:
"Gold has always had a fascination for mankind… It still is, in an important sense, the basic element in the international monetary system."
And—this is the point I was looking for—
"It accounts for about 40 billion dollars out of the world's total of about 70 billion dollars of international rescrves."—[OFFICIAL REPORT, 15/7/68, col. 12.]
The noble Lord, Lord Carron, said in the same debate (col. 22).
"Gold is the basis of the international monetary system."
So it is, my Lords; and so it will remain for a long time to come. And we had better work on that assumption.
What we really need, in the words of the noble Lord, Lord Balogh is:
"the automatic use of an increasing portion of persistent creditor balances for long-term investment in under-developed areas; and the gradual transformation of the two Bretton Woods institutions—the Fund and the Bank —into an effective force to stabilise economic growth."
One could not have anything more concise or more lucid than that, and that is why I was glad when I heard that he was to advise the Government. But I am rather glad that he has now stopped advising the Government and has come over here, because we can now listen to what he has to say and what the advice is.
Meanwhile, my Lords, we continue to carry what the Sunday Times has rightly described as "the expensive and thankless burden", with the United States, of maintaining the world's monetary stability, without any reserves, without any resources. As against the United States, who still have some resources, we are in pawn to the world and, above all, to the United States. It is high time
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this burden was lifted from our shoulders and shared among all the major trading countries, including the Soviet Union. If gold were introduced into the new international monetary system I believe the Soviet Union would join it, because they are considerable gold producers. This could result in a world-wide reduction of interest rates. I hate dear money: it is costly; it is no good for the balance of payments, and it leads to a diminution of public and private investment. Our money in this country to-day is far too dear.
The S.D.Rs in the International Monetary Fund Bill will do nothing to solve our balance-of-payments problem. They are not a funding of the sterling balances, but simply a recognition of the fact that our attempt to maintain a reserve international currency without any reserves cannot possibly succeed. As an international banker we are no longer credible; and we had better make up our minds to accept that. The future of sterling is not yet settled, but I am sure of one thing. We cannot bear the burden of being one of the only two reserve currencies of the world, nor can we bear the burden of the sterling area as it is at present organised for much longer. It puts far too great a stress and strain upon our resources.
I was very glad to read in the Sunday Express last week-end an article by Mr. Maudling in which he said he thought things would get better on the whole, and that he really took a bright view of the situation, and bucked things up. I was horrified by a speech made by Mr. Heath which was repeated on television last night. In all my life (and I have heard a pretty good lot of nonsense talked on television, and talked a pretty good lot of nonsense myself) I have never heard such clotted nonsense as Mr. Heath put out over television solely for Party political purposes—and squalid Party political purposes at that: all this business of the Labour Government selling the sterling area down the river; about how we were diminished in stature, and all that "bunk". If Mr. Heath is going on in this way the Tories will have to wait for a very long time before they get back into power.
That is perhaps not germane to the subject of the debate. But I did say on

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November 2, 1937—that is, 31 years ago —in the House of Commons:
"Any man with power and authority who makes a speech or gives a Press interview which brings about a diminution of confidence does, by that very fact, deal a blow not only at the economic system of the United States and this country, but also at the democracies of the world."
I believe quite firmly that Mr. Heath delivered such a blow last night. It could only diminish confidence. It could not possibly have done any good. He was quite wrong. The Labour Government, the present Government, are not selling the sterling area down the river at all: they are only beginning to realise that we must get an international monetary system which will take some of the burden of maintaining it from our shoulders and put it on the shoulders of others who ought to be playing their part but are not at present doing so.
I believe that the odds are in favour of the impending slog—not miracle, but slog—culminating not in a miracle but in success. I am sun:, that the Chancellor of the Exchequer is applying himself to this problem, and I am particularly glad that the lively and imaginative mind of Mr. Harold Lever has been bought to bear upon this problem, because he and I have had many discussions on this question over the years, and I know of nobody who has a keener appreciation of all the difficulties, all the obstacles, that lie ahead, and yet at the same time is an invincible optimist. I met him in the street the other day, and he said "Bob, it is going to be all right". My Lords, what more do you want than that from the Financial Secretary to the Treasury?
This I would say, in conclusion. If world production and trade continue to expand— and this is dependent very largely on what I have been talking about—all will be well. If they contract, then everything Her Majesty's Government can do, Budgets and everything else, will end in ashes.
5.44 p.m.
LORD WILLIS: My Lords, I should like to join with other noble Lords in congratulating the noble Lords, Lord Balogh and Lord Monson, on their maiden speeches and to echo the praise given to those speeches. I do not know whether the noble Lord, Lord Boothby, noticed that when he was making those
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kind remarks about the Prime Minister a shaft of rather thin light came through the window. Obviously, high places, congratulate him.
I listened with some attention to the noble Lord who opened the bowling for the other side. If I may borrow a phrase from John Arlott, the noble Lord seemed to be having a good deal of trouble with his footholds; because I listened in vain for any new theme, any new strain, any new and exciting forward-looking contribution towards a solution of our problems. There was none. There was not even a variation in the old notes. In fact, all we had was a very old, familiar speech from the noble Lord opposite and I am beginning to know the words by head:. Whenever we have an economic debate it keeps coming back like a song, a very old song from a dog-eared songbook with nothing new in it at all and nothing that is at all relevant to the problems of Britain in the 'sixties and 'seventies.
I wonder whether it is not true, too, to say that there was a slightly different tone in the speech to-day, just as one has noticed recently a slightly different tone in the speeches of many critics of the Government. Is it, I wonder, that those people who only a few weeks ago were already reading the burial service over the Labour Government are now beginning to have second thoughts? Is it that those people who only a very few weeks ago were only awaiting a fine day to have the public execution of the Prime Minister, are now beginning to see that there are in fact many kinds of objective: evidence that we may be in sight of the corner if not turning it? It is strange that this little ray of sunshine has brought such a cold chill to so many stout Tory hearts. The great pompous and optimistic attitudes of a few weeks ago which were already distributing the Cabinet prizes around seems largely to have: disappeared.
I should like to deal for one moment with one specific criticism that has been made, and keeps being made, about the Finance Bill and the Government's economic policy—that is, the so-called lack of incentive which is given to, top executives and businessmen because of the excessive and so-called penal taxation. This is a constantly recurring theme. It is of course true that our tax

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system is in need of reform, and I absolutely agree with the noble Lord, Lord Byers, all the way down the line on this. It needs simplifying; it needs working out, it needs an all-Party Committee of the kind the noble Lord indicated. It is ridiculous, for example, that a married man called Jones, who has three children and earns £30 a week, should get back £174 a year, or over £3 a week, in family allowances and tax relief, whereas a man next door called Smith who earns only £10 a week with the same needs gets back in fact £2 a week less than his neighbour. That is the kind of inequity we have at one part of our scale so far as taxation is concerned. That is a clear injustice and this Bill does nothing to put it right. I believe that there is a great deal to be said for reforming the tax system.
I believe, too, that personal taxation, as it affects people earning between £2,000 and £3,000, or £3,000 and £4,000 a year, is sometimes a real disincentive; and it becomes so particularly for a man and wife who are joint earners. It can and does stop wives going to work, particularly women with professional qualifications. We do not hear a great deal about this group. All we hear, all the moans and groans, are on behalf of people at the top of the ladder, the people earning £8,000, £9,000, £10,000, £20,000 or £30,000 a year. These are the people for whom our compassion is requested.
The other day, the Daily Mail published a maliciously witty article about the Prime Minister's take-home pay and his "perks". Fair-do's. I do not think the Prime Minister would mind. But now let us hear a little about the "perks" of some of our top businessmen, the people who we are told have only £5,000, £6,000 or £7,000 a year left out of enormous salaries after tax. Quite clearly, in the face of their figures they cannot afford to buy a Rolls Royce. So who pays for them? Where do these Rolls Royces come from? Clearly, they cannot afford to have a chauffeur. Who pays his wages? They cannot afford to run a town flat as well as a home in the country. Who leases these £5,000 a year apartments in Mayfair for them? Who, then, buys the luxury flats for £75,000? Who bought the flat overlooking Lords that cost £110,000 cash? Who furnishes it and
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provides the services? I know a managing director, a hard-working man who deserves his position and everything he has, who listed the fringe benefits of his job as follows: car, chauffeur, world travel, telephone, London apartment, theatre tickets, private dining room, drinks, cigars, and the occasional use of a helicopter, all on the firm.
LORD ERROL or HALE: My Lords, I would only say that there is a difference between Ministers having these "perks" and businessmen having them. Having been a Minister and now being a businessman, I know the difference. In the case of a Minister there is no assessment made on the personal use of these facilities, whereas in the case of a businessman assessments are made on the personal use of such facilities. That is an important difference.
LORD WILLIS: My Lords, I was coming to the point about Ministers in a moment. Do not think that I am saying I necessarily object to our top businessmen being taken care of. I am all for saving nervous energy. I do not expect them to ride on buses and tubes. But the amount that is taken into account is very marginal. Most of these things are bought by the firm. We all know that many of them, instead of taking a £3,000 a year rise have it delayed and put in the pension fund so that when they retire they can live in the style to which they are accustomed. I am not necessarily saying this is bad, but the noble Lord must not expect me to weep tears for them.
I believe that we are stupid in our treatment of Ministers. I think it is ludicrous that we should put a Ministerial car at the disposal of a Minister, a man who is working 14 or 15 hours a day in his job, and expect him to leave that car and take a bus or his own car when he goes to a political meeting. I think it is wrong, and I believe that those people who are working hard for the country should have a car put at their disposal without any strings. So, as I say, I cannot find it in my heart to weep too much for the top-paid executives, and to say that there is no incentive. They know how to look after themselves, and they do not do too badly; and I believe that the best of them feel insulted and degraded by the

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suggestion that the only thing that matters to them is their pay packet. When I read, as I did last weekend, that one fifth of the homes in this country have no bathroom, and that on the Hamble River alone there are 3,000 yachts insured for a total sum of £20 million, I am afraid I cannot get very worked up when the noble Lord, Lord Erroll, talks about a tax on personal wealth. I think it is time that we got our priorities right.
I should like to turn now to one smaller aspect which was raised in another place on this Finance Bill and what I feel is the rather shameful injustice in the operation of the selective employment tax. I am not one of those people who condemn the tax outright—I think there are many goods things to be said for it —but it has set up a certain number of anomalies which are wrong and which should be ironed out. I consider it is wrong, for example (and here I must declare an interest) that film-making should be deemed to be a non-manufacturing industry and should have to pay S.E.T. But that is an anomaly.
What I want to refer to is a downright injustice in the area of book publishing. In fact, I believe that the Government themselves are a little ashamed of this one. Two years ago in this House the noble Lord, Lord Shackleton, promised that the Government would examine thoroughly the effects of S.E.T. on book publishing. The "late" Mr. Gunter—I mean the former Minister of Labour—twice received deputations with expressions of great sympathy about what he would do to help book publishers in the matter of S.E.T. And Mr. Taverne, in the other place, only a month ago in the debate on the Committee stage of this Bill admitted that when one looks at the position of book publishers one sees a glaring anomaly. He then went on to say that the Government really could not do much about it, because if they conceded the issue to one they would have to concede to others; which is a little like saying that if a man in gaol is, after all, found to be innocent of the crime for which he is condemned, then you cannot give him a free pardon and release him because all the other prisoners would demand the same right.
I am not again going to deploy all the arguments, but briefly summarised the
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case is this. When S.E.T. was first put before Parliament the newspapers protested that some of them would be put at a serious disadvantage. They pointed out that those newspapers which carried out their own printing on the premises would receive the refund and the premium of S.E.T., whereas those newspapers and periodicals which employed outside printing firms, even if they were only across the road, would have to pay in fall and get no refund; one newspaper was being penalised as against the other. The Government not only saw the injustice of that, but, such is the magic and the power of the Press that within four day:, after a deputation led by the "late lamented" Mr. Cecil King waited upon the Government, the Government put down an Amendment to save all newspapers from paying selective employment tax. But, for some strange reason, when the book publishers pointed out that they were in an exactly similar position, the Government made sympathetic noises but did nothing. Is it because book publishers cannot publish banner headlines every day, or is there some other reason?
This has resulted in a strange, not to say bizarre, situation. We have a situation now where some book publishers pay S.E.T. and others do not; and usually it is the smaller publishers who pay because they do not own their own printing establishments or print on the premises. Thus, for example, the British Printing Corporation, which owns some 13 separate book publishers, the International Publishing Corporation, which owns 17 book publishers, and the Thomson Organisation, which owns 9 book publishers, all in some measure gain a refund and premium of S.E.T. These groups all publish newspapers and periodicals as well. But the story does not end there. Within those firms which are left, which are not connected with newspapers but are concerned solely with book publication, there are still further anomalies. Collins, the well-known publishers who publish in Glasgow and print on their own premises, get a full refund on their Glasgow establishment. But Macmillans, Heinemann, Hodder and Stoughton and other important publishers who do not print on the premises and do not own their own printing works do not get a refund. It is rather like subsidising Woolworth's and Marks and Spencer's and putting a tax on the little

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corner shop. That is, in fact, how this tax has operated.
The real idiocy of the situation is indicated when you compare the situation of the two University presses. In the interests of efficiency, a few years ago Cambridge moved its printing press from Cambridge. Now it is penalised for this and has to pay S.E.T. Oxford, which was not so far-sighted and still prints on the premises does not pay S.E.T. These are two exactly similar firms in the same line of business. One has to pay a huge amount of tax and the other has not. There were many reasons for introducing S.E.T., and some of them are good, as I have said; but, clearly, it was not intended that one section of any industry should be penalised while its competitors in the same field draw a bonus. We are not here discussing a small and trivial and minor matter. I beg your Lordships to listen carefully, On a turnover of £140 million the publishers exported last year £60 million worth of books-43 per cent. of their total. They are one of this country's biggest and most important exporters. This is a staggering performance. The reward is—what? A kick in the teeth; a slap in the face.
There is a moral aspect to this question. As Sir Alan Herbert has pointed out, Parliament refused to put a tax on books in 1940 when Britain was at war and had her back to the wall. Is it not ironic and sickening that what we would not do then we are doing now? Let an author ask for a small royalty from the public lending libraries, and what an outcry there is! I have had it. It is said, "This would be a tax on knowledge. This would be a tax on reading. The free libraries are one of the most important backbones of England", and so on. But what is selective employment tax on books other than a tax on knowledge?
I ask the Government: Why are you so obstinate on this point? Why will you not make a concession which it was widely believed you were going to make up to only a few weeks ago, a concession which would be welcomed on all sides? I have heard that it is because it would cost £1 million. That is one story. But this is an injustice. Are the Government prepared to continue to take £1 million from the pockets of publishers which they have no right to
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take and which is clearly unfair? Are the Government going to put up with a situation in which they kow-towed to the newspapers because of their power, but because they are not afraid of the publishers they are prepared to milk them of £1 million? I am speaking in rather strong terms, but this has been going on for two years. We have had discussion after discussion with the Government. We have had all the most sympathetic noises in the world; and nothing is done. Will the Government now give an assurance, before the publishers march in in serried ranks and organise a sit-down in your Lordships' House, that they will think again about this, and not only think about it, but that they will do something about it?
I want to say one final word on one other matter. As the noble Lords, Lord Boothby and Lord Robbins, and others have said, there are signs that we are beginning to crack the vicious circle of economic crises. We all want the breakthrough to be permanent. But if this is to happen, in my view we must give some long term consideration to the problem of participation by ordinary people in industry and in all forms of decision making.
My Lords, we have to face the fact that there is in our society a growing sense of alienation of people from decisions, which was reflected in its most militant sense by the student activities. There is a feeling of "them" and "us". This is one area in which I feel the Government have not done enough. If Socialism means anything, it must mean the destruction of the "them" and "us" situation; it must mean drawing the people in at all levels of Government and industry. With respect, I believe that the Government have too much respect for so-called "experts and businessmen". We have some excellent businessmen and administrators in this country. We also have some rotten ones. It is said that if you get seven economists in one room you will get seven different opinions. I do not think any of our expert economists—and I speak with the greatest respect—can take too much credit for the various schemes we have had put forward in the last few years. There is really not very much there to inspire the Government with confidence in the wisdom of experts. We must have them,

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I suppose, but do not let us worship them as gods or regard their specialised knowledge as being the be-all and end-all of everything.
I have met directors—and so, my Lords, have you—of important companies, great companies, that I would not give house-room to. I would not put them in the kennel with my dog. I could name a dozen, fifty, shop stewards, trade unionists and other ordinary people of all classes who could do better. It seems to me that a lot of people who get on to our boards of directors are there because they went to the right school, had the right connections, the right name, play the right game and probably vote the "right" way in both senses of that adjective.
I think the Government could do a great deal more in the way of advancing the talent that is there among ordinary people. It should not be mesmerised by university degrees or board room qualifications. A B.A. is not necessarily a mark of real intelligence, and twenty years of board room experience does not necessarily indicate talent. There are many potential Ernie Bevins and Aneurin Bevans in this country who should be given their chance to serve, and if the Government tack its eye off the bridge for just one moment and looked down into the engine room it would find many people who could breathe fresh life into the board rooms both in our national and our private industries, and even put a bit of life into such august bodies as the Arts Council, the National Theatre, the B.B.C., I.T.A., and all those other bodies. We go round in too many circles choosing the same sort of people when we think of these things.
LORD BOOTHBY: My Lords, may I interrupt the noble Lord for a second just to tell him that if anybody ventures to criticise the Governor of the Bank of England at any time, it can be taken as absolutely certain that he will never get on any board in this country.
LORD WILLS: My Lords, I am happy to say that I have not, as yet. criticised the Governor of the Bank of England, but in order to show good faith I am willing to join with the noble Lord, Lord Boothby, in a joint protest.
I want to ask the Government seriously whether they would consider setting up a high-level commission to investigate the
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whole question of participation by people in industry in the nationalised and the private industries. The sort of thing that the noble Lord, Lord Byers, was talking about, all those things, could be investigated—the buying of shares, the bringing in of people on to boards of a management, the promotion of people to be directors, the seeking out and finding of the great talent that is there in the country which is not being used but which is, in a sense, turning in or itself, out of a sense of frustration. What has happened among the students has happened in another way among the adults, and that is that as far as politics is concerned in the last few years we have had a certain apathy they feel it is "them up there" taking the decisions. The recent by-election results were not really a success for the Tories so much as a failure for us and an expression of apathy by people faced with some of the political decisions which they feel they can not influence.
I should like to end on the note on which I began. By and large, I believe this Government have got it right. They have not only got it right but they have stuck to it, and that is what I like most about what the noble Lord, Lord Boothby, said. They stuck to it—and I wrote this note before he spoke—through the worst barrage of criticism and mud-slinging that any Government have had to face. I have had to criticise them at times and I cannot promise I shall ever stop. I thought the reintroduction of prescription charges was a paltry and unnecessary measure, and there were other things which I, for one, would criticise in detail. However, by and large they have shown nerve and courage, and not least the Prime Minister has shows great nerve and great courage. It is a sign of good government, if not great government, when a Government is prepared to risk electoral defeat and loss of popular support to carry through policies which it believes to be in the long-term interests of everyone. That is what has been happening in this country, and I believe that the people are beginning to realise just that. I think they will fully realise it before long, and I say this to the noble Lords opposite: "Make yourselves very comfortable, because, barring any Act to reform this House, you are going to be sitting on that side of the House for a very long time".
6.6 p.m.
LORD MOWBRAY AND STOURTON: My Lords, I, too, should like to start by congratulating the noble Lord, Lord Balogh, on his interesting maiden speech. I should have liked also to congratulate the other noble Lord, Lord Monson, but I was unavoidably out of the Chamber when he spoke. However, I am sure I should have enjoyed his speech if I had been here.
Having listened to the last two exciting and provoking speeches I should like to pick out of the speech of the noble Lord, Lord Willis, a continuation of his theme on selective employment tax, because I want to draw the attention of the Government to the effect of this on security companies, which provide security guards and night watchmen for the protection of premises against fire and crime. I must declare an interest here, because for many years I was closely connected with one of the bigger of these companies, and have a friendly and loose business connection with one of these companies.
Having said that, I would add that the reason I am going into this rather small detail of these groups of companies dealing in crime and fire prevention is that this problem would have been raised in another place on July 4, but although it was one of the two Amendments selected for debate on S.E.T., unfortunately it did not come up or get debated. In the other place one of my honourable friends, Mr. Rees-Davies, the Member for the Isle of Thanet, supported by six other Conservative Members of Parliament, did put an Amendment down on what was then Clause 47 of that Bill (in the new Bill as amended in the Commons it is now Clause 52). I want just to draw the attention of Her Majesty's Government to this anomaly which we think exists, and which unfairly discriminates against the security companies. It is generally agreed, certainly by the Home Office and by the police, that security companies are doing a very good job in helping the forces of order and protection.
The main complaint lies in the fact that if a company which is engaged in manufacturing work which is entitled to a refund on S.E.T. has more than half its men employed on productive work, then, as we know, the company is entitled
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to get back on the less than half in office work, or other parts of work in that industry, building, factory, or company the S.E.T. as well. In this case we are talking about guards employed by these companies from professional companies which supply guards trained for the purpose. If it were just a question of people being allowed to do this, all would be well, but the relevant section of the Selective Employment Payments Act 1966, Section 10(6)(a), specifically says:
"For the purposes of this Act—
(a) a person's employment shall not be treated as employment in, or carried out from, any establishment unless it is an establishment of that person's employer;"
My Lords, obviously no security company which sends men to a particular industrial premises will own that industrial premises. These security companies are penalised because of the anomaly that the firms which use them cannot get the tax back. If these companies use their own old-fashioned type of retired men, they are able to claim back the tax. It is fairly obvious that the large factory, which is at enormous risk, can afford to have a large security force. It is able to employ a large force and get the tax back. But in a smaller company, with only one or two watchmen, it is impracticable for such a company to have watchmen on duty all night.
The essence of security is that one has to have people checking all through the night; inspections have to be carried out, and people's backgrounds have to be gone into. Generally the security companies are better able to provide security, and in the event of illness other people are sent out immediately, so that a firm is guaranteed proper security. If a firm has only one or two people, then if anything goes wrong "old Bloggins" or "old Tompkins" tends to be at a loss. He tries to telephone somebody, who may not be at home, or who may be in bed asleep, and he himself is not equipped to do very much in an emergency.
In the particular firm with which I have business connections, and with which I am very friendly, out of 5,000 premises which are watched over by their guards some 3,750 of them, or 75 per cent., are engaged in export work, and the firm's employees qualify for S.E.T. rebate. Not all of them are directly engaged upon exports: some are indirect exports, such as the supply of component

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parts to export industries. But they qualify for rebate. It seems unfair that those firms are being penalised as compared with other firms which do not have efficient security.
Last year in this country the figure for fire damage alone in industrial premises was something like £90 million. I think that that is nearly double the amount of money lost by crime. It is a frightening figure. In the company with which I am associated 555 cases of fire were detected by the night watchmen or guards involved; it may have been at night, at the week-end or in the day-time but they were detected in time. Of those 555 cases, only 19 did damage costing over £100, and only five did damage of over £1,000. When one thinks of some of the fires which one has read about, causing damage amounting to hundreds of thousands of pounds, it is very important to encourage the use of professional people who are trained to look for the causes of fire, such as electric fires and electric kettles left on, bare wires, and so on.
The Home Office and police forces in the country are very grateful to have the assistance of these extra forces who are well trained, well looked after, and supervised so closely. This is all to the good in prevention of disruption in the export field. Therefore the firms who wish to employ these people should not be penalised, and if the Government were to give this matter their attention it would be a service to the country. It would help the production industry and would assist in the better security of premises. The security industry is trying to modernise and improve itself. It is hard to do this when it finds itself penalised by firms' being encouraged to use cheap, unsupervised labour, which obviously is not so good as genuine approved and supervised staff. I would ask Her Majesty's Government to give this matter consideration.
6.15 p.m.
LORD MILNE: My Lords, except to re-echo congratulations to the two maiden speakers, I trust that noble Lords will bear with me if I deal broadly with some criticisms of the Bill rather than follow them in the economic debate. In doing so, however, I support the noble Lords, Lord Byers, Lord Robbins, Lord Boothby and Lord Willis, in their plea for a simplification of tax law. The three criticisms which I have selected are the
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drafting of legislation by so-called reference, the lack of consideration which it is alleged this Finance Bill has received, and the complexity of tax law generally. These three criticisms may not seen very important, and they are certainly very dull, but they concern me and others very deeply.
Most of us have heard the after-dinner speaker who makes play with the wording of an Act of Parliament. Well done, it can be quite funny, but it is far easier to criticise than to construct. In some Bills it may be possible to re-enact sections from past Acts, or to reprint and attach as appendices the sections of earlier Acts to be amended. But with Finance Bills, where every word tells, one is defeated at the outset by the very manner in which our tax laws have been built up. Personally, my sympathy is largely with the draftsman in his struggle between brevity, clarity and accuracy. His personality often leaks through in the little explanatory comments which he interjects into the references.
As to lack of consideration, this House having no powers to amend such a Bill, it is essential that it receives proper consideration in another place. Here, perforce, we take its contents for better or for worse. After reading the reports., and in spite of opposition in St ending Committee, can one really feel that this Bill and others have had proper scrutiny, or that the representatives of the people have had time to judge the contents of this Bill and to consider and comprehend what is involved? I am now thinking of the fantastic spate of Amendments tabled and passed through the various stages of this Bill, rendering the first and the last Bill entirely different animals.
In my view, lack of consideration is largely due to the manner in which fiscal legislation is handled. At the time of the Income Tax Management Bill in 1964 I put forward a suggestion that pure budgetary legislation should be divorced from amending legislation. While I accepted then the reply that amending legislation would affect the revenue of the ye we now have the precedent of mini-Budgets scattered throughout the year con pared with which the fiscal effects of technical amendments would be trivial. It n ay be thought that recent Acts like the Capital Allowances Act to some extent meet my point, while revision has been promised

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of certain aspects of tax law which are thought capable of isolation. Nevertheless, unless and until the whole of tax law is reconsidered, I am convinced that time should be found each year for some tidying-up operation.
This brings me to my last point, to which reference has already been made in this debate, which is the complexity of taxation and what can be done about it. I find myself here presuming to answer yesterday's speech by the Leader of the Opposition. Of course he is right, but, without being defeatist, it is far easier said than done. We go on piling Pelion on Ossa, building a crazy edifice of amendments and case law upon a foundation designed for an earlier century. This, however, is inevitable in a democracy where the complexion of Government changes every five years or so and where tax is an implement of policy, changing like last year's fashions.
It is naive to think that even if there were a best method of taxing income it would be followed for long. Taxation in a sophisticated society is bound to be complicated if equity is to be preserved, and even then anomalies will abound. Simplification will almost always be achieved with a loss of some equity. In my opinion it is impossible to isolate one section of taxation from the rest unless new concepts are to be introduced. While the gestation period of such concepts may be the period of Opposition, even then the active life may be only five years or so.
Corporation tax is such a tax. Presumably conceived in Opposition, it is vaguely related to the then conservative thinking of taxation on the actual profits of the year. Even ignoring the transitional provisions it is only relatively simple, but there are one or two features of interest in it. First, it is stated as a percentage of the income tax. Secondly, in the final analysis it accepts a measure of inequity in that it is possible to set off tax at the then standard rate against a varying rate of corporation tax. Thirdly, it was founded on the new but unpopular concept of the separation of the company from its shareholders, whereby company taxation could be isolated from the taxation of the shareholder, whose dividend nevertheless came
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to him taxed at the standard rate of so much in the pound.
Estate duty is another tax which, at first sight, may be considered in isolation and presumably might be consolidated. If so, we should then lose our old friend the Finance Act 1894, which occurs in almost every Finance Act. In fact, however, this tax is an aspect of the taxation of gifts, and such a consolidation, even with annual afterthoughts, would probably last only as long as present thoughts on the subject.
Capital gains tax, on the other hand, is a new tax and as such was able to be brought in fairly quickly. As a result, it was not completely thought out. As its name suggests, it is an aspect of the taxation of capital. I do not think its best friends would consider it a good tax. Like surtax, it is expensive to collect and is wildly complicated and tedious in operation. It is purporting to tax capital profits, but without a provision against inflation it almost certainly erodes savings.
What then can be done? Who can find the time and the expertise to attempt something which, due to our method of government, may be abortive from the start? Some societies have suggested a Select Committee—a ball which, once more in cricketing terms, the Chancellor blocked pretty smartly. But whatever the Chancellor of the day may say, this is the germ of an idea. Any major reconsideration of tax must come from Parliament. But even if in other branches of taxation the underlying concepts are to be transitional, it seems to me that the simplification of personal taxation could, and should, be attempted on a basis agreeable to both sides of the House, and in this I follow the noble Lord, Lord Byers.
We, in the second half of the 20th century are still using methods of collection conceived in the 19th century to tax the high incomes of a few. In this age of computers and of electronic handling of vast quantities of information, it seems to me that there is real scope for approaching taxation as such with a view to its assessment and collection by these modern and advanced methods. As promised, I have made no reference to detail, although much might be said of the inequities and anomalies of many clauses of this Bill to which reference has already

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been made by one of our maiden speakers.
6.26 p.m.
THE EARL OP DUNDEE: My Lords, I doubt whether anyone unfamiliar with your Lordships' debates who had listened to our discussion in the last four hours would have guessed that we were supposed to be talking about the Second Reading of the Finance Bill. But it is one of the advantages of the lenient, liberal Rules of Order which we have in this House that we are able to expand on these subjects.
We have heard two excellent maiden speeches. The noble Lord, Lord Monson, has been a Member of your Lordships' House for the last ten years, which I do not think he mentioned, and I feel that his speech is a little belated. He has been a long time in screwing up his resolution to come and make his maiden speech here. But now that he has done so, I think your Lordships will agree, first, that it was well worth while, and, secondly, that, we wish he had thought of doing so long ago. His speech showed great knowledge and great diligence of study on these economic questions which we are discussing, and I hope that he will now try to make up for 10 years of neglect by speaking as often as he can.
The other maiden speech was that of the noble Lord, Lord Balogh, whose presence in this House is greatly welcomed by all of us. I particularly welcome him, because he happens to be a Fellow of my College at Oxford. He is also a very distinguished economist, not only in the academic field but also in the literary field, and we were very interested to hear all that he said this afternoon about the balance of payments, about the trade unions and about many other things. Your Lordships will not imagine that I should be able wholly to agree with all the political and economic opinions of the noble Lord, Lord Balogh. In the first speech I ever made from this Box, in a debate on the Address in 1964, just after the noble Lord had been appointed Economic Adviser to the Cabinet, I implored the Government not to take the noble Lord's advice. I am not at all sure that they ever have taken his advice. I also feel that they have made an even greater mess
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of our economy than they would have made if they had taken it.
My Lords, it was the noble Lord, Lord Brown, who started the debate with a speech which I think was thoroughly appreciated and enjoyed by everybody. There was not a word in it about the Finance Bill, but it was none the worse for that. The noble Lord gave some very good and relevant figures, to which we ought to pay attention, about our deficits compared with our assets, both long-term assets and other assets abroad. He showed that under the present position we actually have £17,000 million worth (I think he said) of assets abroad which he very rightly took trouble to talk about to the people he met in Australia who were worried about the financial position of Great Britain. I could not help wishing that these who lead the Government of which the noble Lord is now a member had all done the same in the autumn of 1964, when, on the contrary, they were inclined to say that they had been left with a bankrupt economy.
Here, my Lords, I really must very flatly take issue with my noble friend Lord Boothby, with whose views about the International Monetary Fund Bill I agreed so completely the other day. What happened was that, if you allow for the change in the value of money, in 964 we had assets very much the same in amount as we have now; and as the noble Lord, Lord Brown, pointed out, we had built up these assets since the end of the war from something like £4,000 million to £13,000 million by 1964. At the same time if you take the whole of our trading, credit and debit balance,—some years a deficit, some years a credit—up to the end of 1964 we still had on the current account a net credit balance of £71 million including and in spite of the large deficit of 1964, nearly half of which had consisted of those foreign investments to which the noble Lord has referred with such gladness.
LORD BROWN: My Lords, the noble Lord is claiming that in 1964 this Government were going around saying that the assets of this country were less than the liabilities. This Government have never concentrated on that. What they did concentrate on when they carne into office was the fact that they had a deficit

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on current balance of payments of nearly £800 million. That was a fact, and the Party opposite have always objected to attention being drawn to it, although we have had no hesitation in drawing attention to the facts, as I did this afternoon, for instance, when I said that for the first six months of this year there has been a deficit of £17 million per month on average. We are quite frank about this: we say that it is an awful situation. Why should the previous Conservative Administration deplore the fact that we draw attention to a simple fact which was extremely embarrassing for us?
THE EARL OF DUNDEE: My Lords, we have never wished to diminish the fact that there was this trading deficit in 1964. More than that, we did what I think this Government have never had enough foresight to do yet: we predicted a deficit on this scale at the time of the Budget in April. And when Mr. Maudling said that he expected a deficit of these dimensions he also told the House of Commons the measures which he had taken to deal with it—the guarantees which he had got under the General Arrangements to Borrow and with the International Monetary Fund and the Swiss Banks, so that by the end of the year this deficit was fully covered. There was not the slightest need to take the panic crisis measures which the Labour Government took as soon as they came into office and which I believe to have been the beginning of all their present problems—and it was done, I am afraid very largely because they wanted to make out that they had been left a bankrupt economy, whereas nothing could be further from the truth.
The noble Lord, Lord Boothby, cannot have been listening to what the noble Lord. Lord Brown, said at the beginning of his speech about the relationship between our assets and our liabilities. But I agree with what Lord Boothby went on to say, which I think contradicted what he said earlier: that the disadvantage to all trading countries was the inadequacy of the reserves in the International Monetary Fund. He reminded us that he divided the House of Commons against the International Monetary Fund; and not long ago, when I was reading the biography of Lord Keynes, I noticed that, according to his biographer, when
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the "General Agreements on Principle" arrived at at Bretton Woods were discussed by Lord Keynes with a group of Conservative Members of Parliament, Lord Keynes's explanation was received "with some rumbling growls by Mr. Boothby". This was also mentioned by the noble Lord, Lord Byers, who I do not think was in the House the day before yesterday, for our debate on the International Monetary Fund Bill.
LORD BYERS: Yes, I was.
THE EARL or DUNDEE: In that case, may I just refer to what he said about the S.D.R.s, which he hoped would be a complete solution to all our difficulties.
LORD BYERS: No—a beginning, a basis.
THE EARL OF DUNDEE: I do not know about their being a beginning, but I hope the noble Lord is bearing in mind that they cannot even be activated until 1969.
LORD BYERS: My Lords, I think the noble Earl is not intentionally misleading the House as to what I said. I said that here is an opportunity where different nations are beginning to take responsibility for helping the sterling area, to build it into something bigger.
THE EARL OF DUNDEE: My Lords, I quite accept what the noble Lord says as to what he said. I have no doubt he did; but the difficulty is that this opportunity is such a very tiny one. According to the noble Lord opposite in his reply, after it has been activated in 1969 it is expected to increase the reserves of international credit only by about 1,000 million dollars every year, and that is much less than 1 per cent. of the total volume of world trade. However, I agree that we should hope for the best.
My Lords, since I have mentioned the noble Lord, Lord Byers, may I just say that I listened with particular pleasure to-day to his speech, in which he demanded the abolition or reduction of almost every kind of tax, including surtax. I tried rapidly to calculate, as he was speaking, how much it would cost the Revenue to remit the taxes which he wished to remit. I am afraid that I could not keep pace with him, and I completely lost count. But he did go on to say—and I agreed with his argument entirely

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—that the taxes he wanted to abolish were having a bad effect on our economy because they were discouraging productive saving and investment, in which I think the Government do not really believe. I feel very strongly that this is true.
The noble Lord did not shirk his duty —not his duty; but when you say, "We are going to abolish all these taxes", the natural question is, "What are you going to put in their place?", and the noble Lord mentioned the added-value tax. I can speak only for myself on this, but I have always been in favour of it. I do not know whether or not my colleagues in the Conservative Party would be when the time comes, but I think it is a thing which obviously ought to be favourably considered. What has been decided by those colleagues of mine who decide our policy is to abolish one of the taxes which the noble Lord said he wished to abolish, and that is the selective employment tax.
The noble Lord, Lord Robbins, who we all wish could come here more often than he is able to do, argued, again I thought very rightly, that our economy requires more incentives for saving and investment. He made two suggestions, of one of which the Conservative Party is now positively in favour. One was of some kind of selection in the social services so that we shall be able to give more to those who need it most. The other was one which rather surprised me to hear from him and one about which I do not think our Party has come to any conclusion: I was interested to hear him mention it. It was that he thought we should abolish the distinction between earned and unearned income in the matter of taxation. I was even more interested to hear that a book or an essay in favour of this had been written by Professor Kaldor. I am often in favour of a little bit of real reaction. No doubt the noble Lord, Lord Robbins, is familiar with the Report of the Royal Commission on Income Tax in 1856 which, I think, gives a very brilliant analysis of this question and which reaches the unanswerable conclusion that there should be no distinction between earned and unearned income. That conclusion held the field until the beginning of this century when a distinction was introduced.
LORD ROBBINS: My Lords, if the noble Lord will permit me to say so,
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I should be sorry if the House were to be misled by anything that I have said in regard to Professor Kaldor's views. The book by Professor Kaldor to which I ventured to draw your Lordships' attention was entitled Consumption Tax; and his argument was that our present system of taxation hits savings twice. I should doubt whether he would wish to abolish altogether, in conception, the difference between earned and unearned income. My remarks about the injustice of tax on savings made for retirement must not be attributed to him.
THE EARL OF DUNDEE: My Lords, I am grateful for that elucidation. I had understood the noble Lord to say that Professor Kaldor was in favour of either abolishing or reducing this distinction. I must confess that I was surprised to hear that he should be; but I think it is a very interesting point.
LORD ROBBINS: My Lords, Professor Kaldor has been in favour of a great variety of taxes which cannot, obviously, all be imposed. I commend to noble Lords this particular book on the tax on consumption in which he produces an argument which I think was first developed by the mid-Victorian, John Stuart Mill, that income taxes hit savings twice. It is an interesting and important idea and one that deserves more attention than it has receive d in the 100 years since it was put forward.
THE EARL OF DUNDEE: My Lords, that was the argument of the Royal Commission in 1856 and it was accepted by all Parties until early this century.
My Lords, the noble Lord, Lord Willis, made some rather emotional observations about rich people which I shall not pursue. But I think it is a usual mistake made by many members of the Party opposite: that because there are a lot of exceedingly rich people who, so far as we can see, are not doing any particular social good (and of whom we may perhaps be rather envious and may resent what they are able to enjoy) we are therefore justified in discouraging others from trying to accumulate substantial fortunes. I think it is to the general economic benefit of the country that savings, under a graduated system of taxation, should be encouraged It

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is no argument against this to say, "Oh, I saw two or three millionaires in a yacht the other day. It surely cannot hurt them to have these taxes!"
My Lords, I will conclude with a few words about the Finance Bill, which is what we are supposed to be talking about. The thing I dislike most about the Bill is that it is not only retrospective but viciously retrospective on certain points. Retrospective legislation is a bad thing not only in law, which has been referred to, but also in finance. On the aggregation of insurance policies taken out by those who cannot benefit themselves from them, I think this is very wrong. I think it is wrong to aggregate them in any case; but it is morally as well as economically wrong to make this aggregation retrospective in respect of policies which have already been taken out; because this upsets the calculations of people who had acted according to the fiscal laws of the country as they stood. They had acted in the belief that those laws would not be altered before the person who took out the policy died; or, if they were altered, that they would not be altered retrospectively, but that the new law would apply only to those who took out policies after the alteration.
When the Government, two or three years ago, put an end to the exemption from taxation of charitable or educational covenants, they did not do so retrospectively. I think it was a pity that they did it at all. But you cannot complain, if they think it right, that they should say that no future covenants shall be exempted from taxation. The injustice of retrospective legislation was not committed in the case of educational covenants. If all the people who had accepted these endowments in the knowledge that they would be able to get them only because the beneficiary did not have to pay tax on the benefits they received, it would have been a great injustice. And on death duties, when Sir Stafford Cripps prolonged, in 1948, the period during which the donor of a gift inter vivos must live before the gift became exempt from death duty, from three years to five years, Sir Stafford Cripps did not make it retrospective. Anybody who made a gift after the Cripps Budget would have to live for
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five years before the gift became exempt from duty; but Sir Stafford Cripps did not provide that anybody who had made a gift two years before, and had already lived two years would have to live another three years before the gift became exempt from duty.
That is what this Government have done although they have made a small concession about the so-called "tapering period". I think it is economically and morally wrong. Equally, I am very much opposed to the aggregation, again retrospectively, of children's income and gifts which have been made by other people. If you think it right to treat an income tax family under a kind of family means test do it for the future; say that any future gift which does not come from the parents shall be aggregated with the income of the parents. I think that would be an economic mistake; but it seems to me both morally and economically wrong to apply it to gifts already made by people who made them in the belief that children would be able to receive an income without having that income reduced by aggregation with the income of their parents. There are all kinds of consequences of this which I do not think the Government have thought out. I believe it is a fact that if a young unmarried mother is given a maintenance grant under an affiliation order, that will have to be aggregated with the income of the parents with whom she is living and will therefore reduce the value of the affiliation order that she gets.
I do not think that another place has considered this matter at all. They have not had time; the thing has been rushed through too quickly, and we cannot do it in your Lordships' House. I do not think that there is any constitutional method of rectifying these anomalies before the Bill reaches the Statute Book, but I hope that the noble Lord will try to see whether these very undesirable anomalies cannot be corrected if this is continued next year. Here again, this is one matter on which the Conservative Party is committed. We do not intend to continue this aggregation of children's income with that of parents.
My Lords, I shall not say anything more about the Bill. I think the case against the Government's policy was very fully put by my noble friend Lord Erroll

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of Hale at the beginning of the debate. The only part of his speech which I did not like was near the end, when he suddenly said that he expected me to talk about Government expenditure, which I had not thought of doing. However, I will say one thing about Government expenditure, and that is that I think excessive Government expenditure is the main cause of inflation in this country. I do not think inflation is caused primarily by trade unions pushing up wages, prices going up, and so on. I think it is caused primarily by pan of the Government's expenditure below the line having to be paid for, not by borrowing in the open market, which would take money out of the economy, but by the issuing of notes, or Treasury Bills, or some other kind of very liquid asset, which has the effect of increasing the purchasing power of somebody in the country. If that is done to an extent which is in excess of, or out of proportion to, our economic growth, it is bound to cause inflation through whoever's hands the new currency passes.
I thought my noble friend Lord Aberdare put this case very well indeed when he pointed out how much of the Government's present expenditure, their "borrowing requirement", is in fact met not by taxation, which takes money out of the economy; not by borrowing from private investors in the open market, which again takes money out of the economy and puts it into the Government's purse—that is, the "borrowing requirement"—but, in effect, by issuing new money. The issue of new money is usually greater than the amount which the Government have aimed at extracting from the economy in one of their "stop" Budgets, one of the deflationary Budgets. My noble friend gave good reason for thinking that severe though this Budget is, and large though the figure may be which he desires to take out of the economy the Chancellor may find that he has put back more than he has taken out because of this inflationary borrowing outside the money market.
My Lords, when the Government, any Government, are asked to reduce public expenditure, they always reply, "All right, tell us how to do it. Do you want to cut pensions? Do you want to cut education? Do you want to cut roads?"—or this or that But the real point is that Government expenditure, which
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always keeps on increasing, should not be allowed to increase out of proportion to the growth in the economy. I think that is the essential point to keep in sight.
I do not know whether the noble Lord saw a very interesting article in The Times newspaper on April 4, which gave figures which I have done my best to check and which I think are right. The article stated that after having made their National Plan the Government proposed to accompany this five-year plan with a five-year programme of expenditure. Since they abandoned the National Plan and reduced the growth target from 25 per cent. in six years to whatever it is now, plus whatever we can do in the next three years (it is not likely to be more than 15 per cent.; and it has not yet been more than 7 per cent. or 8 per cent. for the first 3½years) Government expenditure below the line had been actually more up to now than the proposed expenditure under the National plan; although the basis for it, the growth in our economy, had almost entirely disappeared and although the National Plan itself had been abandoned. That, my Lords, is, one reason why, in spite of all he can do, I am afraid that the Chancellor may not make much impart on rising prices and internal inflation, and why our economy may not recover as soon as we would all wish that it could. No Government has ever been completely successful in planning the relationship between its expenditure and its revenue and its estimated economic growth; but between 1951 and 1964 we did manage to reduce taxation by £2,000 million.
In terms of the gross national product, it came down, I think, from 30 per cent. to 23 per cent. of the gross national product, but it has now gone up again to 28 per cent., or 38 per cent. if you include the insurance contributions and local taxation. We did that, and at the same time we increased our expenditure, largely on social services, from £4,200 million to £7,400 million in these 13 years having nevertheless made this very large reduction in taxation which benefited every section of the community. In that period we increased the standard of living of this country by no less than 50 per cent. My Lords, if the Government can do anything like that in the rest of their term of office, they will really be entitled to claim credit for having performed the

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economic miracle which is now nothing more than a prospect.
6.57 p.m.
LORD BESWICK: My Lords, I am grateful to the noble Earl, Lord Dundee, for explaining how we are able to use these procedures to get the Finance Bill through in one day. His explanation will probably be helpful to me in the later stages of the Bill and it may also explain why, although we are nominally dealing with the Finance Bill, I shall not deal in detail with some of the detailed points which have appeared in the Bill. The noble Earl himself made a closely reasoned argument about certain aspects of the Bill. I shall not take up the time of the House in trying to controvert what he said. But what he has said, and what was said by the noble Lords, Lord Monson and Lord Milne, will, I can assure noble Lords, be considered.
There seems to be one point on which we are all largely agreed. The noble Lord, Lord Byers, made a very strong plea for the simplification of the tax system. This was taken up by the noble Lord, Lord Boothby; by the noble Lord, Lord Monson; by the noble Lord, Lord Milne, and my noble friend Lord Willis. I shall take back to my right honourable friend the information that if we are agreed on one thing in this House, it is that the taxation procedures should be simplified. I doubt, however, whether the proposal for an all-Party Committee on this would be as fruitful as was almost the case on certain other matters we have had to discuss.
My Lords, with one curious and outstanding exception, I think it can be said that there has been something in this discussion much nearer a note of optimism than for some years past. We are really, it seems, as my noble friend Lord Balogh phrased it, at the beginning of the end of the horrendous period. I hope that phrase will not qualify for the strictures that the noble Lord, Lord Robbins, had for what he called a premature proclamation of recovery. It was a good deal more modest than the "economic miracle." Nevertheless, both phrases in their respective contexts, approximate to the truth.
The reference to that quotation of my noble friend brings me to my first pleas-
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ant duty—to congratulate the two maiden speakers. In a sense I agree with the noble Lord, Lord Boothby, that it is not quite correct to say that my noble friend Lord Balogh has made his maiden contribution in your Lordships' House to-day. As an eminence grise his words have been frequently quoted by noble Lords opposite, often incorrectly, for the purpose of refuting them, and I share the pleasure of the noble Lord, Lord Boothby, at the prospect that in future my noble friend will be here to present his own ideas and will be able to challenge those who endeavour to controvert them.
I think it was my noble friend himself who called attention to his accent. If that accent springs from the plains of Hungary, I imagine that the accent of the noble Lord, Lord Monson, is influenced by the playing fields of Eton. I agree with noble Lords who have said how warmly we welcome both noble Lords and how much we look forward to hearing them, accents and all, in future debates. I sincerely congratulate my noble friend and the noble Lord, Lord Monson. I would also express my sincere congratulations to those already voiced from the opposite Benches and from behind me to my noble friend Lord Brown for his impressive progress report, for which he is personally responsible. I thought he added a note of realism to our debate.
The note of exception to the general optimism was of course that struck by the noble Lord, Lord Erroll of Hale. I think that we all admired his efforts to maintain foreign confidence in sterling. He went about it, however, in a somewhat curious way. It is not true to say as I understood him to say, that the Bank of England followed procedures in forward foreign exchange dealing in recent months different from those under the Conservative Administration. None of their procedures has been changed in this respect, and it is wrong to suggest otherwise. It is equally wrong for the noble Lord to suggest that we have somehow squandered our overseas assets. That is not true. I do not believe that the noble Lord could have been listening to what my noble friend Lord Brown said in this respect. The fact of the matter is that the total identified assets and liabilities have gone up since the

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end of 1962 from £13,100 million to £17,800 million at the end of 1966. These are increases in our assets. It is wrong, and it does not help anybody, him or us, for the noble Lord to suggest that we have been running down our foreign assets.
The noble Lord, Lord Aberdare, and again the noble Earl, Lord Dundee, took up an argument which we had in a previous debate about the way in which, as they allege, the Government inject purchasing power into the economy, though the Chancellor of the Exchequer by fiscal means takes it out of the economy. I am grateful for what the noble Lord said and also for the pamphlet which he sent me, which I read with great interest. I shall study again what he has said because I was not in the Chamber throughout his speech.
The noble Lord asked about the proportion of the borrowing requirement met by the banking sector in 1966–67. The figure I am given of the total borrowing requirement of the Government is £1,134 million—£231 mllion of which was met by the banking sector. I would not think that this was injecting an undue amount of purchasing power through the back door, as it were, into the economy.
The noble Lord, Lord Erroll of Hale, asked about the effect of earlier efforts to help the balance-of-payments position. He was good enough to give me notice that he would ask about the expenditure of our tourists overseas. The figures do not suggest that there has been a massive saving. What they do indicate is that there has been a restriction on the previous rate of increase. In 1958 the expenditure outside the sterling area was estimated at £112 million. In 1966, our tourists overseas in the non-sterling areas spent £222 million, or something of that order. It is estimated that as a result of the action taken by the Government there is a saving of £20 to £25 million a year to our balance of payments—not a lot hut it is helpful.
The noble Lord also asked about our overseas investments, and we had some exchanges on this. What he does not realise was that there is no contradiction between the statement, which I claim to be a fact, that our overseas investments have been increasing (this can be shown) and the fact that the rate of increase has
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slowed down, as a result of the steps which have needed to be taken during the last two years. The figures given to me show that we have arrested a sharp upswing in direct investment abroad. It reached a peak of £316 million in 1965 but subsequently fell to £283 million in 1966, and to £244 million in 1967. These are still large sums, although we have done something to curb the increase.
The noble Lord, strangely enough, made some comment, again an inaccurate one, about the way in which we are restricting investment in the developed sterling area countries. In fact, the one area where our measures have not been so successful has been in the developed country of Australia, where the estimated portfolio outflow in the first quarter of this year was about £45 million, compared with the normal figure of about £5 million. So the noble Lord may make the point that we are failing in wt at we profess to be trying to do, but at any rate, he was inaccurate in the criticisms he made in his opening speech.
LORD BYERS: My Lords, is that the money actually remitted from this country to Australia? That cannot be right.
LORD BESWICK: My Lords, I was about to say something about remittances, but this is the money actually invested in Australia from here. The important factor here is the extent to which the sterling counterpart to this portfolio outflow will be held in the Australian reserves here, rather than being converted into Australian currency.
The noble Lord, Lord Byers, also asked about the total amount of our foreign indebtedness. I am sorry that I cannot give him that figure. I am told that it is a figure that is not normally given. My noble friend Lord Willis, and the noble Lord, Lord Mowbray and Stourton, had some rather scathing things to say about the impact of selective employment tax. The case put by the noble Lord. Lord Mowbray and Stourton, was a telling one, but I must say to him that a concession for security companies would lead to a great deal of pressure for similar treatment by other services, such as industrial canteens run by caters, firms undertaking industrial and office cleaning, and manufacturing and secretarial agencies. It would, as I think he will see, open

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the area to a very wide number of other service employments of similar kinds.
LORD MOWBRAY AND STOURTON: People employed on office cleaning and canteen work do not need any particular skills. The point I was trying to make was that this was a form of security which involved supervision and training.
LORD BESWICK: That is a point of view expressed by the noble Lord. I am bound to say that I admire the skill of those who clean the offices which we occupy in this building. There is, nevertheless, the point that it would be difficult to draw a line here. There are services which have similar if not stronger claims. The export houses have already been mentioned as one case in point.
My noble friend Lord Willis made a most eloquent plea for the publishers. As he knows, their case was considered at great length in the other place, and it was not found possible there to make any concession. I am afraid that what my right honourable friend was unable to do in the other place I cannot undertake to do in this House. The best I can do for him is to say that the Publishers' Association have been told that the Government do not feel precluded from reconsidering the matter when circumstances are more favourable.
My noble friend Lord Balogh made, I thought, an extraordinarily powerful case in support of our prices and incomes policy. I am sorry that he was not here when we were discussing the Prices and Incomes Bill. All that he has said will, I hope, be considered most carefully by some of those in our own Party who have had their reservations to date. What the noble Lord said was echoed by another economist, the noble Lord, Lord Robbins. It was interesting to see that two economists from different parts of the political spectrum should have come so closely in agreement on this particular point. They emphasised the importance of a credible incomes policy, especially at the present point of time. My Lords, since the noble Lord, Lord Robbins, asked me the question, I tell him as firmly as I can that the Government accept that view. They would not have accepted the electoral penalties that have
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gone with the Prices and Incomes Act if they did not believe that it was the right view to take.
In this respect, I should like to say one thing about the remarkable intervention of the noble Lord, Lord Boothby, in regard to the Prime Minister. I was moved by what the noble Lord said about the attacks made on the Prime Minister of this country. He is a human being, after all; and so is Mrs. Wilson, his wife. The pernicious attacks that have been going on, go far beyond the bounds of reasonable democratic politics.
I was talking about this unpopular prices and incomes policy, and I was asked specifically by the noble Lord, Lord Robbins, about the rail settlement. He asked me whether the rumours were true that there had been an intervention by the Government to bring pressure on the Railways Board to reach the settlement which was reached. I have asked that this question be considered, and my answer to the noble Lord's straight question is: No, the Government did not intervene. They were informed, but they did not intervene in the way that was suggested, for example, in the Economist. The Government have throughout indicated their support for the British Railways Board in its stand in accordance with the policy of productivity, prices and incomes, and they have asked that increases in rail pay be related to increases in productivity. They are determined that this principle should be maintained in the continuing negotiations. Although one may say that one sticks one's neck out by saying that again, we shall see on September 2, or whatever is the date, the extent to which the requirement, that the settlement be absorbed in the productivity agreement, is in fact carried out.
EARL BATHURST: With respect, would it not have been better if there had been Government intervention? In that case, presumably, there would have been no "go slow" strike; the terms of acceptance would have been just the same, and the British public would not have been inconvenienced. It seems most extraordinary for the noble Lord to say that there has been no intervention.
LORD BESWICK: What seems so extraordinary to me is that certain noble Lords on the Benches opposite think that

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industrial relations in this country can be handled so easily as all that.
EARL BATHURST: We are aware of that.
LORD BESWICK: I was about to say, against this background of the rail settlement and the prices and incomes policy, that I was particularly interested to hear what the noble Lord, Lord Erroll, and other noble Lords, including, I think, the noble Lord, Lord Robbins, said about depriving executives of financial incentives. The question of material incentives to human beings is a fascinating subject. I have tried to study it and to get to the truth of the matter. I wonder sometimes whether financial incentives are as important as all that. I wonder whether the noble Lord, Lord Erroll. would have said that financial incentives were all-important when he was in uniform in Burma in 1944. There are cases where one makes a great effort not simply because of the financial rewards at the end of it.
In any case, I agree with my noble friend Lord Willis, I am not sure that these bright young executives are as financially deprived by the present tax system as is sometimes suggested. My noble friend said something about the Rolls-Royces that are provided. There was, in fact, a party not very far from here, given by someone not unconnected with this House, and there were many of these bright young executives there. I was told that one count showed that there were no fewer than 17 Bentleys and 5 Rolls-Royces drawn up in the drive outside the particular house. I cannot see how these machines can be acquired if the situation is as bad as the noble Lord suggests. And I do not think he is really as naïve as all that. I believe he knows how the opportunities of life assurance are exploited in order to give rather more than appears on paper. It will be extremely interesting to see what comes out of the reference to the Prices and Incomes Board with regard to the payment of higher executives.
But the justification for this criticism, as put by noble Lords opposite, is that it makes it impossible to increase the capital in this country. But even here their fears are not justified by the facts. The gross domestic fixed capital forma-
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tion has gone up. At 1958 prices, in 1956 it was 3,297 million; and in 1966 it was 5,634 million. The rate of accreton slowed down certainly just after 1966, but since then it has been going up again. So it is not really true to say that it is not possible to accumulate capital in this country. And, my Lords, is it really honest to justify on economc grounds, at this point of time especially, that extra payments to the highly paid are all right, and yet to get so hot under the collar if we should award an increase of 8s. a week to a shunter on the railway who is getting a basic pay of £13 3s. Od. a week. Why is it that extra awards in the higher paid groups are considered incentive, and in the lower paid groups inflation? I feel that in this matter we run very close to kidding ourselves. We are not being honest with ourselves when we look at this matter on some occasions.
The noble Lord, Lord Byers, asked about the possibility of sharing the sterling balances. He hoped that this would help us "carry the can", as he put it. The Basle agreement—I am sorry it was criticised again by the noble Lord, Lord Boothby—was in effect a funding operation. Of course, any further steps along that road would be a matter for international discussion. The noble Lord, Lord Boothby, made an impassioned attack on the Bretton Woods Agreement. I think that every time he makes it it sounds better. I have heard him now over many years. I am not sure that in the early days of 1946—was it?—I did not also say a few words in the Commons against the agreement, and I am not absolutely sure that I did not vote against it. He will agree with me that the strains on the international monetary system since that day have, to say the least, not helped the economic situation in this country.
There is no need for me to go into all the details of it: the weakening pf confidence in the two reserve currencies, sterling and the dollar, and the associated rise in the speculative demand for gold; the constant pressure on world liquidity and the inevitable threat posed for the future growth of international trade; the long-standing problem of sterling balances, and the effects fluctuation in these balances have on the British economy and our management of it. That is the problem. I agree with the noble

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Lord about his identification of the problem. I disagree with him when he says we have done nothing about it. We have in fact in recent years, recent months, indeed in recent weeks, done a very great deal about it.
LORD BOOTHBY: My Lords, it the noble Lord will forgive me for interrupting for one moment, I did not say you had done nothing about it; I said you have not done enough.
LORD BESWICK: Well, my Lords, we have never done enough. I think that as the noble Lord goes through life he learns this more and more clearly. We have not done enough, but in recent months we have seen the emergence of at least the beginnings of solutions.
In Washington last March the Central Bankers reached agreement on the establishment of the two-tier gold system, which served to insulate official monetary reserves from the impact of gold speculators. Soon afterwards, in Stockholm, agreement was reached in the I.M.F. on the establishment of the Special Drawing Rights scheme. And, despite the doubts expressed by the noble Lord and by the noble Earl, Lord Dundee, I still insist that when ratified, as we hope by the end of this year, it will open the way for an appreciable increase in the supply of world liquidity. Now, only 10 days ago, agreement has been reached in principle among leading central banks for this "standby" arrangement for sterling balances. The noble Lord, Lord Erroll, really was in error when he said this was a further increase in our indebtedness. It just is not true that if you exchange a short-term debt for a medium-term debt you are increasing your indebtedness. It is not true, and he serves no good purpose in suggesting that it is.
The vital point in that scheme is that we do gain time by transferring an obligation for highly liquid debts to medium-term debts. The immediate significance of all these different developments, in the international monetary sphere, is that they give us greater latitude, greater breathing space, in which to concentrate on the fundamental problem here at home. That problem, basically, is to get our whole economy into such shape that
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we can make and sell enough goods, and offer enough services, abroad to enable us to meet all our overseas obligations. Lord Brown showed that, despite all the fears of financial crises and despite all the moans of discontented politicians, there are British men and women who are tackling successfully this basic job. I cannot think that all this (what shall I call it?) taking of the economic temperature has helped the men and women who have been working in the factories and in the offices up and down the country. The truth is, it seems to me, that we have been getting near becoming, as a nation, economic hypochondriacs. Every twitch in the indicators has been seized upon, examined and analysed ad nauseam. The time now has come to "snap out of it". With these international monetary developments strengthening, as it were, our external bulwarks we have a chance of putting our economy in order once and for all.
Only one more thing I would add. The noble Lord, Lord Balogh, gently reminded us of what he called the true themes for future discussion. What sort of society do we want to build with any new economic resources? My noble friend Lord Willis, too, was right when he said that material advance is purposeless unless there is genuine participation in the planning of that advance by the people in whose interest the advantage is supposed to be. My Lords, in asking the House to give a Second Reading to the Finance Bill I echo those pleas: that we should recognise that any economic advance is a means, as the noble Lord, Lord Balogh, said, and not an end, to a better life.
On Question, Bill read 2a; Committee negatived.
LORD BESWICK: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Finance Bill, has consented to place her interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purposes of the Bill.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 15), Bill read 3a, and passed.

REDUNDANCY PAYMENTS EXCLUSION OF MERCHANT SEAMEN ORDER 1968
7.27 p.m.
LORD HUGHES: My Lords, I beg to move that the Redundancy Payments Exclusion of Merchant Seamen Order 1968, a copy of which was laid before the House on June 11, be approved. The direct effect of this Order is to exclude merchant seamen from the provisions of the Act. As a corollary, it enables the Secretary of State, under Section 31 of the Redundancy Payments Act, to make refunds of Redundancy Fund contributions to employers of excluded employees. The reason for making refunds under Section 31 of the Act conditional on exclusion under Section 16 is so that employers who, at substantial cost to themselves, have set up their own arrangements to deal with redundancy in their own industry, and have thereby eliminated the need for claims upon the Redundancy Fund, can, by this provision, be relieved of the burden of contributing to the statutory Scheme as well as financing their own arrangements.
A good example of this policy of exclusion and refund is provided by the docks industry. The National Docks Labour Board has a statutory duty to provide from a levy on port employers a weekly fall-back wage to registered dock workers when they terminate employment with an individual port employer. Registered dock workers cannot become redundant from the industry as a whole except by a reduction in the numbers registered, in which case compensation is normally agreed between both sides of industry.
The position in the Merchant Navy is somewhat similar. For many years now the shipping industry has had its own decasualisation scheme, known as the Merchant Navy Establishment Scheme, which provides payments in supplementation of unemployment benefit and, in suitable circumstances sickness benefit, to seamen temporarily unemployed between voyages. In the year ending March 31, 1968, this scheme cost shipping employers £797,000. Various improvements to individual contracts of service are being negotiated which will add at least £400,000 a year to this bill. Your Lordships will nevertheless appreciate that to
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exclude any section of industry from participating in the benefits of an important social measure like the Redundancy Payments Act is a serious step. Such a step would not be contemplated by the Secretary of State unless she were satisfied that an exclusion order was desired by all sections of the industry.
My Lords, I am pleased to say that this condition is amply fulfilled. As long ago as December, 1965, the Department of Employment and Productivity was approached by the National Maritime Board, which is the joint negotiating body for the shipping industry and on which are represented the employers and the unions serving the various categories of seamen. The National Maritime Board submitted a draft redundancy scheme to be substituted for the statutory scheme when the exclusion order came into operation. Since Merchant Navy Establishment Benefit already covered the situation of the seaman who was unemployed between voyages but who still remained within the industry, this scheme was designed to deal with the seafarer who became redundant from the industry as a whole, bearing in mind that from the nature of their calling redundant seamen had particular difficulty in obtaining equally remunerative work ashore. The details of the scheme have been the subject of protracted negotiations and discussions, not only between the parties concerned, but also with the Depart bent of Employment and Productivity and the Board of Trade. The Confederation of British Industry and the T.U.C. have also been kept fully informed of the progress of the negotiations.
The finally agreed scheme is substantially more generous than the statutory provisions. For example, the statutory scheme imposes a maximum of 20 years' reckonable service, whereas the agreement allows 25 years' service to count; under the statutory scheme the weighting for age is limited to one and a half weeks' pay for each year of service over forty years, whereas the agreement additionally allows two weeks' pay for each year of service over 50; under the statutory scheme pay up to £40 a week is taken into account, but under the agreement this limit is raised to £50 a week. Moreover, all seagoing service, whether with one or more employers, is aggregated.

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But, my Lords, neither employers nor employees are tied to the agreement for all time. It is provided that any of the organisations signatory to the agreement may terminate the agreement so far as that organisation is concerned provided six months' notice of intention is given. Your Lordships will of course appreciate that in the event of this happening the Secretary of State would wish to review the position regarding exclusion. She would also wish to review it if there were a substantial fall in the value of benefits provided under the agreement compared with the value of contributions refunded.
I must now draw your Lordships' attention to one other provision in the order. Article 3(2)(a) specifically excludes a merchant seaman who is neither domiciled nor has a place of residence in Great Britain. These seafarers, although outside the scope of the National Maritime Board Redundancy Agreement, are by definition unlikely to qualify for benefits under the statutory scheme, and it is therefore right that contributions paid on their behalf by employers should also be refunded. I beg to move.
Moved, That the Draft Redundancy Payments Exclusion of Merchant Seamen Order 1968, laid before the House on June 11, be approved.—(Lord Hughes.)
On Question, Motion agreed to.

FIELD BEANS SCHEME 1968
7.35 p.m.
LORD BESWICK: I beg to move that the Field Beans Scheme 1968, copies of which were laid in draft before this House on July 4, 1968, be approved. The grant is intended to encourage the development of field beans because of their importance as a break crop for cereals, particularly wheat, and also because they are a source of protein, which saves imported feeding-stuffs.
We discussed all this in some detail during the passage of the Agriculture (Miscellaneous Provisions) Bill, and I am sure it is not necessary for me to go into further detail now. The scheme comes into operation as soon as both Houses have approved the Order, and it relates to the crop year commencing July 1, 1968. I beg to move.
Moved, That the Draft Field Beans Scheme, 1968, laid before the House on July 4 be approved.—(Lord Beswick.)
On Question, Motion agreed to.

HIGHLANDS AND ISLANDS DEVELOPMENT (SCOTLAND) BILL
LORD MITCHISON: My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Lord Mitchison.)
On Question, Motion agreed to.
Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of July 15), Bill read 3a, with the Amendments, and passed and returned to the Commons.

LOANINGDALE APPROVED SCHOOL, BIGGAR
7.37 p.m.
LORD FERRIER LORD FERRIER rose to ask Her Majesty's Government whether, in the light of the evidence in a recent murder trial in Edinburgh, they will institute an inquiry into the administration, security and discipline of the Loaningdale Approved School at Biggar. The noble Lord said: My Lords. I beg to ask the Unstarred Question which stands in my name on the Order Paper. On Saturday, August 6 last year, a fifteen-year-old schoolgirl did not arrive home, although she had said "Goodnight" to a girl companion at about 7 o'clock in the Biggar High Street, and set off to walk the mile or so through the main road to her parents' house. The next morning her body was found in the cemetery by that road; she had been strangled, partly stripped and horribly mauled. Had she not been a good girl she might he alive to this day.
The occurrence stunned the town and countryside, and the people hardly dared to think that the culprit might be an inmate of the approved school, 500 yards away. However, police inquiries did in fact trace the murderer to the school. The boy had slipped out of the school in the dark and then slipped back half an hour or so later when he realised what he had done, and proceeded to clean up and destroy nearly all the clues to his guilt. The piecing together of the case against

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him took a long time, and I need not worry your Lordships with the details. He was convicted at the Court of Session in Edinburgh on March 7. An appeal followed on a point of law, but this was rejected and in May the conviction was upheld.
I would assure, your Lordships that had the case not remained sub judice for such a long time I would have asked this Question long before this. When your Lordships debated the Court Lees case on October 25, 1967, I referred, without mentioning names, to this school, and I hope that it will suit your Lordships if I quote extracts from my speech on that occasion as probably the quickest way to complete the background to my Question. I said then, inter alia:
"There is an approved school in Scotland, close to a prosperous little town of, say, 1,500 to 2,000 inhabitants."
I went on:
"It is my present intention to put down specific Questions, one for Written Answer, and to follow this up as time goes on. The school of which I speak—the only one of its kind in Scotland, one which was accepted as an experiment—was established in 1963. Many people in the locality were surprised that it had been located in a property so very close to the town. But the public was assured that the boys to be sent there were those who appeared likely to make good as decent citizens in the minimum of time. It has been suggested, actually by one of the governors to me, that the townspeople did not try to co-operate. This was not at all my impression. They were naturally hesitant, as any country community would be, at the arrival of an organisation of this nature, but in general they were absolutely willing to help, despite the absence of a member of the town council or, indeed, of the locality at all on the Board of Governors.
"Unfortunately, from the first, discipline was such that the boys started making trouble almost straight away. Had they not done so, things may have been very different, because the sympathies of the neighbourhood were directed towards helping the whole scheme, and these were in a measure alienated from the beginning. If you want the local people to help, please make certain that discipline is adequate ab initio. Unfortunately, the trouble has continued, and in the case of which I speak the damage done to neighbourly relations of the locality is now so serious that it will take years to re-establish, if indeed that is ever possible."—0FFICIAL REPORT, 25/10/67, col. 1694–51
I would remind your Lordships that it was not known to me or to the public at the time I said this that the murderer had in fact been apprehended and that he was an inmate of Loaningdale School.
The murder was the climax of the local anxieties and reactions which I described at the time. Not that I wish to raise the matter as a parish pump complaint but rather in the very much more important context of the whole problem of the place of the approved school and of the importance of its task in our social environment and the absolute necessity for the future of taking advantage of experience such as ours has been, no matter how bitter. The story of Court Lees and its aftermath of local trouble under a new régime is there to see.
Let me turn to the further history of this school and the various errors of judgment which have bedevilled the whole undertaking. As I understand it, the position is this. First of all the school was intended to be near Haddington in a place which was an Approved School before, and perhaps it was a mistake that that school was ever closed down. Be that as it may, the Board of Governors, under the chairmanship of Lord Birsay the much respected Chairman of the Scottish Land Court, were drawn from East Lothian or from the neighbourhood of Edinburgh.
When one turns to the Articles of Association, it is indeed interesting to note that after Sir Harold Leslie, now Lord Birsay, there was Sir Gerald Reece of Bolton Old Manse, near Haddington; G. M. Carstairs, a professor in Edinburgh; Norman Murchison, Edinburgh; David Wyllie, a farmer in East Lothian; Mrs. Macdonald Watt, a married woman from Dalkeith, that is nearby; another lady; a farmer from Dunbar; a lady from Edinburgh, and a Mr. Walker from West Lothian.
When the building in East Lothian was found to be unsound, the house at Loaningdale to which I am referring, some 400 yards or so from the outskirts of Biggar in Lanarkshire, was purchased. That was some 60 miles away front the house in Haddington. In my view, error number one was that at that juncture the Board of Governors was not adjusted to include local people. We have seen from these Articles that it was obviously the intention of the original plan that such should be the case.
I would turn to the letter I had from the Church of Scotland Committee on

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Social Service, whom I had consulted, wherein appears the sentence:
"The Managers of our Approved Schools are the Social and Moral Welfare Board, which is of course a Committee of the General Assembly. In addition, in respect of each individual school, however, we have a local committee of management, on which the Board is represented, and on which there is a majority of local people, including a member or official of the local authority of the particular area."
Error number two, as I see it, was that one of the several available houses not so close to the town as that of Loaning-dale might have been considered more suitable by a Board with local knowledge, which, as I have shown, the Board did not have.
Error number three was that although the property is only just outwith the burgh boundaries, little or no effort was made to make contact with the Provost or the council of this township which was to be an integral part, as it were, of the scheme to rehabilitate the boys by associating them with the community during the period of their treatment at the school. One side effect of the school is that it pays no rates to compensate the township for the extra load its existence places on the town finances, such as extended street lighting.
Error number four was that very considerable latitude, putting it mildly, was allowed to the boys by the headmaster. They were not only allowed into the town, often unaccompanied, but their unruly behaviour and dirty language caused great offence and had a bad effect upon the youth of the town, both boys and, I regret to say, girls. As for the latter, no doubt with the best intentions an invitation had been issued to the girls from the town to join in specific dancing parties—"Bring your own records" sort of thing—no doubt properly supervised in the school. That was a mistake because thus acquaintances were started up which eventually went a good deal further than was intended, especially as the boys could and did get out at night.
As to the cost to the public purse, in October I said that I would ask more questions on that topic, but I never did so orally, because of the long-drawn out trial with all its unpleasant details and grim legal arguments. It was the first
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time that tooth marks on a body had been used as evidence in a murder trial in Scotland. However, I put down a Question for Written Answer, and I elicited the fact that the original price of the property had been some £20,000 and that, as at March 31, 1967, a further £150,000 had been spent on extensions and equipment—and much more must have been spent by now. I must say that the school is a fine place and splendidly equipped, fully staffed with skilled and dedicated people. I have it on good authority that last year the running costs approached some £40,000 for an average of some 20 boys. The figures for previous years were given in the Answer to my Question for Written Answer, and they were: for 1964–65, £20,600, for an average of 16·6 pupils; for 1965–66, £20,200 for an average of 15·1 pupils; for 1966–67, £23,800 for an average of 17·1 pupils. The Answer to my Question also indicated that the number of pupils were thirty or so last Autumn.
Here I come to error number five, which consists of a combination of the number of pupils and the outlay, and in this matter I have considerable sympathy for the headmaster. The original plan was that the school should contain, say, 20 or 30 boys "who appeared likely to make good as decent citizens in the minimum of time", as I quoted before. It was enlarged to accommodate 40 or 50 boys, and the Department, I believe, despite the headmaster's protests, started sending boys to the school who had a number of convictions, and who were thus mixed in with the originally intended types, some of whom had no convictions at all. The influence of the new intake was a serious matter—trouble, trouble and more trouble ensued; driving away cars, housebreaking, shopbreaking, petty theft, minor assaults, carrying weapons. All this placed a heavy burden on the police and magistracy and a gradual crescendo of protest from the public. In some respects the community's pattern of life was changed. I can say that because it has even extended to the surrounding country, including the village in which I live some three miles away.
After two years, in 1965, two local people, including the Provost, had been co-opted by the Governors. So far, so good. After the murder in 1967, the

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Member of Parliament met the burgh council, and the Under-Secretary of State, Mr. Bruce Millan, has taken a close personal interest in the matter, meeting the council and introducing changes to widen the Board and to tighten the discipline. Two more local governors were appointed earlier this year, one being the minister of one of the local churches and the other a local doctor—both valuable additions. When the two original local directors had completed three years, one retired, and the other, the Provost, was not invited to continue. Two more local individuals were invited, but they refused, perhaps because they felt that the local authority should be entitled to nominate. This is my own conjecture. I make the conjecture because this point has now been conceded, and forthwith the burgh council nominated a lady councillor and another man who was in fact the brother-in-law of the murdered girl. So things have changed very much for the better.
But have the steps taken gone far enough? As I have said, I have a considerable measure of respect for the headmaster and for his theories, although he must bear his share of the blame for what has happened. He is dedicated to a permissive approach to the redemption of young delinquents which may ultimately be the right one. I wonder how many of your Lordships heard the item on the B.B.C.'s programme this morning called "To-day", about the Ipswich open borstal experiment, which I found quite fascinating.
I look forward to the Minister's reply to my Question, and hope that the Government will institute an inquiry, with the broadest terms of reference, to establish if nothing else, what went wrong: because, make no mistake, my Lords, a great wrong has been done. I repeat, over the past few months great strides have been made to meet the clamour of the burgh—a clamour which, in my view, should never have been induced. But the present strict control of the boys if they leave the premises, is contrary to the main theme of the experiment.
What, then, is to be done? If the permissive experiment in all its details is to be continued, it is fair to suggest that this might be done elsewhere. Why? Because it seems to me to follow that a
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continuation of the experiment where it is will mean a return to the comparative freedom of the inmates' movements, but from now on in a deeply injured and consequently antagonistic community. Would this be fair to the future of the school? It might take a generation, perhaps more, in a countryside such as the southern uplands, for what has happened to be forgotten.
Another point is that if it is too early yet to assess the success or failure of the experiment, in overall terms of the end-product who have passed through it, what are the present indications? We know that another horrid murder has been committed by an ex-inmate. We know that there have been fire-raising troubles. But I should like to know: are the after-care services adequate? If not, should permissive experiments be continued until the after-care services are adequate? Such and such would be the questions that an inquiry might answer.
It could go further. It could deal with such questions as: Is the screening of entrants adequate? Should a school of this size be established cheek by jowl with so small a community as 1,500 to 2,000 people? Has the headmaster power of summary expulsion? In a good establishment this would be punishment indeed, and a warning to other pupils. Should such a school have an active local committee of governors? If the chairman is not a local man, should he appoint a local deputy to act in an emergency? Has the extensive experience of the Church of Scotland's Social Services Committee been drawn upon?
Whatever happens, I look forward to some sort of public admission that mistakes have been made over Loaningdale, mistakes which have had terrible consequences, and the burden of which—an unnecessarily heavy burden—has been laid on a neighbourhood. The great bulk of the people—and I am one—say "Carry on with the experiment by all means, but do not continue here. Despite the heavy cost, cut the loss and start again elsewhere." Cannot the premises be used for some other social services?
My Lords, I conclude with a sentence or two from a letter I have had from a much-respected Scottish lawyer. At the end of his letter he says:
"There is, I fear, an increasing and dangerous clash of opinion appearing between the

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Judiciary and the Executive, and at the moment the civil servants are winning. The balance may be redressed when the general public, as in Biggar, see where this is leading."
As I can only ask my Question, I should like to thank in advance any noble Lords who take part in this debate. I could have said much more, but I have tried to be as objective and as restrained as I can. The English Press carried hardly a word of the affair, which in my opinion is far more dreadful than the Court Lees case. There were, of course, banner headlines in the Scottish papers, so it will not surprise your Lordships if I remind you that feelings in Scotland have been deeply disturbed. One result of the experiment has been to show that error and miscalculation in planning can result in cruel blows to innocent people. Let us do what we can to atone and to provide that such a thing does not recur. My Lords, it is for that reason that I beg your Lordships' leave to ask my Question.
7.55 p.m.
LORD BALERNO: My Lords, before I intervene I must declare a certain interest in this matter. For nearly thirty years I have been a manager of an approved school in Scotland, and for about eight years I was chairman of the board of management. Since I joined your Lordships' House my visits to the approved school have been fairly infrequent. What the noble Lord, Lord Ferrier, has said about the anxiety of the people of Biggar over this sad case at Loaningdale is entirely true. But I would say this from my limited experience: that what has happened at Loaningdale could, I think, have happened at any approved school. I would go further and say that it does, unfortunately, happen elsewhere in society to-day; therefore, sad as we are at this event, we must not pin it, as it were, too precisely on this one particular school.
I do not know the headmaster—I have never visited Loaningdale—but I have every reason to believe that the headmaster is a most admirable man. Lord Ferrier supports me in that. I am informed that he is most sincere in his methods and in his ideas, although his methods are not those that I think would be generally accepted by those who are responsible for the running of senior ap-
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proved schools in Scotland. I suppose the noble Lord, Lord Ferrier, expressed it rightly when he said that it was exceedingly permissive. The headmaster seems to be experimenting, and this one incident should not, I think, be regarded as a failure of the experiment. There can be no doubt whatsoever that a measure of freedom is of great therapeutic value in redeeming this type of boy. It is not easy to know where to draw the line, just as it is not easy to know where to draw the line in the administration of discipline. Discipline and freedom go together. But there is one lesson which we must learn from this particular incident: that in an approved school of this nature it is most important to have adequate night security. Lord Ferrier has drawn attention to the lack of this.
LORD FERRIER: My Lords, if I may interrupt the noble Lord, this has now been put right.
LORD BALERNO: My Lords, I am glad to hear that. The other point also made by the noble Lord, Lord Ferrier, is that of the value of close contact with the local residents. I can speak from experience and say that if you do not have the closest association with certain local residents then you are almost certainly bound to have trouble between the school and the community. The school of which I was chairman and of which I am a manager had, and has, members of the local authority ex officio. They are appointed by the local authorities to the board of management. Such persons are busy. They are on other committees of the local authority as well as being managers of the school. It is not reasonable to expect them personally to make very frequent visits to the school, but I maintain—and I speak from actual experience of having difficult incidents, not so bad as that which the noble Lord, Lord Ferrier, has recounted—the importance of having local authority representatives knowing about the school on the board of managers, because, sure enough, at any approved school there will come a crisis and they are invaluable people to have at your back at a time of crisis and to go to for guidance. For the day-to-day running of the school it is important to have other managers who are drawn from persons of experience and

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who are willing to spend, say, up to a couple of days a month at the school in contact with the masters and getting to know some of the boys.
Loaningdale and Court Lees seem to me to be merely the symptoms of a malaise which is due to the expediency of the moment being allowed to postpone long-term action. The purpose of an approved school is to rehabilitate and to educate the toys. It is quite unreasonable to think that this can be achieved with many of the boys in less than one year. The decision for a boy to be released from an approved school must rest on the headmaster's recommendation and be approved by the managers or by the chairman of the managers.
The consideration of the approved school cannot be separated from that of borstal. I beliese that a boy sent to borstal as a rule serves a shorter period than if he is sent to an approved school —at any rate, this certainly is a current belief among juvenile delinquents in Scotland. Such ones, if sent to an approved school, on occasion, perpetrate a crime which necessitates their being committed to borstal. Release before the time is ripe must not be done in order to clear a place for another boy, and that is what is liable to happen at the present time. The throughput at these approved schools or at borstal must not be art the expense of completion of the training of the boys who are already at the institution.
I am not entirely certain of my facts as regards the relative length of time at borstal and at approved school, and I would therefore, like to ask the noble Lord, Lord Hughes, who is answering, whether he can give us an indication of the average length of time spent by a boy at borstal compared with the average length of time spent by a boy at a senior approved school in Scotland. Further accommodation for these delinquents is urgently required both at borstal and at approved school. In approved schools, to achieve success, treatment must be in groups, not too large groups, and it will not succeed if it is applied in the mass. The forward thinking of those who are concerned is for houses for small numbers, and these houses may indeed be linked to the existing approved schools and used for the final period of training.
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The noble Lord, Lord Ferrier, has spoken of the cost of the construction of Loaningdale, and it is something of which we must he fully aware that for accommodation for something like 30 boys the taxpayer has to put up a capital of something approaching £200,000. It is costing, according to Lord Ferrier's figures, something like £2,000 a year to keep a boy at Loaningdale, apart from finding the capital. Nevertheless, I think it is important that some of the schools that we have in Scotland should be brought more up to date than they are and, if necessary, further schools should be opened.
As a result of my experience of the school of which I am a manager and of meetings at conferences of approved schools which I used to attend regularly, I am convinced that in Scotland—and doubtless the same is so in England, but my experience is of Scotland—a most dedicated set of men are the headmasters and the masters of approved schools. They are men who have set themselves very much apart for this particular kind of work. They are desperately interested in the boys and in their rehahilitation and education. They are men of great humanity, and their anxiety and determination to adjust their methods to meet the changing circumstances of the times, the changing circumstances of the juveniles, of the boys, is quite outstanding. They are always willing to try fresh ideas, and they must always be encouraged to do so. The Social Work (Scotland) Bill, which we have been discussing will, I think, lead to an increase in demand for places at what will be called "residential institutions". I would ask whether the Government are considering making provision for this when the Act comes into force.
I should like finally to re-echo what the noble Lord, Lord Ferrier, has said about the work of the Church of Scotland with boys of this type. I should not confine it to the Church of Scotland only; the Roman Catholic Church has done, and is doing, outstanding work, and I had the fear when we were discussing the Social Work (Scotland) Bill that full recognition might not be made, when the Act is put into force, of the work that has been done by the churches. I would reinforce the plea of the noble Lord, Lord Ferrier, for full consideration to

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be given to getting the assistance of those in the churches who have such experience and humanity in this type of case.
8.9 p.m.
LORD MITCHISON: My Lords, I apologise in advance for intervening in this discussion, but I shall not take long. I am only speaking on this matter—about which I know little more than what I have heard to-night—because a letter from the noble Lord, Lord MacLeod of Fuinary, was handed to two of my friends and they asked me (I hope it was not too irregular) to put his views before the House. His views are very definite. First of all, he thinks, as we all do, that this was a most deplorable incident, and I am sure he would agree with me in saying that we are in no position, any of us, to decide questions between crime on the one hand and irresponsibility or ill-health, or whatever it was, on the other. He thinks that the school was a very good one indeed and it was a very valuable experiment. That is what I rise to say in the first place to your Lordships.
The second point which I want to mention is in his letter and it has been strengthened a great deal by what I have heard this evening. This is not at all a hopeless situation. It is not a case where the school must be moved. On the contrary, the events which have followed on this crime, for such it was, are not unlike what, with foresight, one might have expected. It was natural, particularly if there was a little local feeling already, that it should become much stronger at this stage on both sides.
I hope that the noble Lord, Lord Ferrier, will not think me condescending and impertinent if I humbly congratulate him on the complete fairness of what he had to say. I thought it was absolutely fair to both sides. That being so, an inquiry might do a great deal of harm. The trouble about litigation and inquiries is that people who are not certain of their views and who were prepared to listen to the other side of the case become a little more convinced of the rightness of their own case by what happens. It was suggested by the noble Lord, Lord MacLeod of Fuinary, that for that reason an inquiry might be a mistake.
I did not understand the noble Lord, Lord Ferrier, to be pressing the question
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of an inquiry. Indeed, towards the end of his remarks he said something which was most encouraging for the view which I am humbly submitting to your Lordships—I know how humble an English-man has to be over Scottish matters—that is, that there had been a distinct and marked improvement. Anything formal in the nature of an inquiry might make it rather difficult for that improvement to continue, as one hopes it will. Is it not a matter which perhaps is better dealt with by the kind of inquiry which already seems to have occurred? I notice that Mr. Bruce Millian was there. I know him personally and would regard him as a very fair-minded man. Therefore I hope that the Government do not commit themselves to anything too formal. I express the hope, which I think we all feel, that this matter, I was going to say may blow over, but that is not quite the right term—may lead to an improvement of what obviously has been, and still seems to be, a very valuable experiment.
LORD FERRIER: My Lords, may I point out that I put down the Question on March 21? Many of the improvements have taken place since then.
LORD MITCHISON: My Lords, may I repeat how very fairly I thought Lord Ferrier put the whole matter. I hope that he will forgive me for intervening in what is only vicariously my business.
8.12 p.m.
LORD BANNERMAN OF KILDONAN: My Lords, it is with some diffidence that I intervene, especially after the noble Lord, Lord Balerno, but I feel that what was said by the noble Lord, Lord Ferrier, about the proximity of this school to the small town of Biggar must have some relation to the disturbances and incidents which occurred in the school. There can be no question at all but that the staff of these approved schools are of exceptional quality; I have visited several of them and I know from first-hand experience. But in this case is it not right that there should be an inquiry, not necessarily into the administration, security and discipline, but into the actual siting of the school so close to the small town of Biggar? No one is more sympathetic than I am to the tremendous work that is done for the rehabilitation of these boys, but, at the same time, we

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have a duty to have regard to the communities where these schools are placed. The trouble which has taken place, according to my reading of the affair, is that a great measure of the difficulty—even the tragedy—arose not from ordinary circumstances of discipline and administration, but mainly from the school's dangerously close proximity. For that reason I would back an inquiry, not necessarily into the type of administration or its quality, but most certainly into the location of the school so close to Biggar.
8.18 p.m.
LORD BROOKE OF CUMNOR: My Lords, I wonder whether the noble Lord, Lord Hughes, will forgive me if I intervene very briefly before he comes to reply. I feel particularly apologetic to him because, if eventually he makes a long reply, I may not be enabled to remain to hear the end of it. I know that I am only an Englishman, but I am very interested in approved schools. I venture to think that if there are lessons to be learnt from this tragic Loaningdale story, they will be of value to approved schools throughout England and Wales, and not only in Scotland.
In listening to this debate I have been greatly impressed with the fairness and balance of all the speeches, and I was particularly glad that the noble Lord, Lord Bannerman, paid his warm tribute to the staffs of approved schools. It would be tragic if a debate like this were to take place in your Lordships' House and any of the men and women who work so devotedly for the benefit of the boys—and sometimes, too, of the girls—in approved schools were to get any impression that we were not fully sympathetic with them and failed to understand the tremendous difficulty with which they are coping, day and night, and the considerable success which in many cases is accompanying their efforts.
The Loaningdale story seems to me to emphasise the tremendous amount of care that needs to be taken in the allocation of boys to approved schools. I do not know how large a choice there is in Scotland. In England it is fairly wide. I am quite certain that, although the arrangements for the allocation to particular schools have been improved, there is continuing scope for further improve-
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ment. This is particularly important. If a school is going to be established with a permissive form of discipline, it is most important that the right boys sho rld be selected, particularly in the first year or two of the school, so that it shall have every chance of proving the experiment a success and gaining the confidence of the locality.
When I heard my noble friend say that not only had a boy at the school committed murder but that a boy who had been discharged from the school had also later been convicted of murder, and other-serious crimes were thought to have been committed by boys who had been in that school, it made me wonder whether there were boys in that school who should have been in borstal. I assume that there is under Scottish law, as there is under English law, provision—under proper safeguards, of course—for the transfer of a boy from an approved school to borstal, if experience shows that he is not really suitable for the approved school régime and that he is likely to do better at borstal. I must say that at first sight, I should have wanted to ask whether the boy who committed a murder while he was at this school had been behaving before that time in such a way as to raise the question whether he should have been in borstal; and whether in fact the arrangements were flexible and swift enough to ensure that the moment a question like that arose it was thoroughly considered.
My last point, which has been brought out in all the speeches, is the importance of gaining and winning the support and sympathy of the locality. The noble Lord, Lord Bannerman of Kildonan, questioned whether one should have an approved school near a small town like Biggar, which I happen to know. In this case, Biggar has quite clearly been put through a deeply traumatic experience, and I can well understand my noble friend Lord Ferrier asking whether, in all the circumstances, an approved school should remain there. In principle, I do not think it should be said that there should never be an approved school near a small town: one has to take all the circumstances into account. But when a new approved school is being started, just as when a new detention centre or a new borstal is being started, a tremendous amount of trouble must

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be taken to seek to ensure the understanding, the good will and the co-operation of the local community; and certainly it sounds to me, from what my noble friend said, as if there were defects in that respect on this occasion.
It appears to me to be even more important if the school is to have a permissive type of discipline, because that means that the boys will be about the place, outside the school grounds, the more. It is extremely important, therefore, that all who are living in the neighbourhood should be fully alive to what is being done in that school, and should be listened to if they have complaints to make. The obvious way of ensuring that complaints are quickly listened to is by building up a body of managers for a school, or a board of visitors for a borstal, largely from among people in the neighbourhood, so that the people in the neighbourhood know exactly with whom they should have a talk. If they know that Mr. So-and-So or Mrs. So-and-So is a manager, then that is an outlet for their complaints, and a channel through which their views can be conveyed to the authorities. There, again, it sounds to me from my noble friend's account that things did not get off to the right sort of start in this case.
I happen to know how much publicity the tragic event of this murder and its relationship with the approved school attracted in Scotland, even though it was hardly reported in the English papers. I am quite sure, therefore, that my noble friend Lord Ferrier was amply justified in raising the question. I simply express the hope that, whether there is an inquiry or not, all the lessons that can be learned from what has gone wrong in this case will not only be learned but will be disseminated through the approved school system in England and Wales, as well as in Scotland. There has been tragedy here and it is incumbent upon us to do all we can to see that that tragedy is not repeated.
LORD FERRIER: My Lords, the noble Lord, Lord Mitchison, was kind enough to say that I had been fair but I might have been fairer. In view of what the noble Lord, Lord Brooke of Cumnor, has said, it is only right that I should say that the headmaster himself told me that he did not want this boy any
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more, and he would have been moved within a day or two if things had not happened that way. He had already decided that the boy who committed the murder was not fit for the place.
8.25 p.m.
LORD HUGHES: My Lords, I should like to say at the outset how much I appreciate the way in which this Question has been put and discussed. Particularly I would express thanks to the noble Lord, Lord Ferrier, for the way in which he stated the case, coming as he did from the community concerned, and inevitably having stronger personal feelings on the matter than any other Member of your Lordships' House. I disagreed with only one thing he said, and I shall come back to it, because it was also touched on by the noble Lord, Lord Brooke of Cumnor.
May I say how very much I appreciated what the noble Lord, Lord Balerno, said, particularly coming from his experience. I think he was absolutely right when he pointed out that we could not possibly regard the school as having failed because of an accident of this kind, since the one thing which is quite certain in this life is that there is no way of recognising a potential murderer, whether a boy of 16 or a man of 80. There is no such thing as the murdering type who should be recognised.
A variety of subjects have gone through the remarks of all noble Lords who have taken part, and one of those is the question of selection. The boys who are admitted to Loaningdale are accepted if they satisfy certain selection criteria, as I think the noble Lord, Lord Brooke, expected would be the case. They are, for want of a better description, not so bad boys as are admitted to other approved schools. No boy has been taken who did not measure up in the first examination to these requirements. But, naturally, there have been those who have proved on closer examination to be unsuitable. Some boys have been transferred to other schools to complete their training, and when a Loaningdale boy commits an offence in the locality he is automatically moved elsewhere.
I must point out the difference between the position where a boy is known to have committed an offence and the position where there is suspicion that an

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offence has been committed by a boy. One of the unfortunate things (and I do not suppose this is confined to Biggar or to Loaningdale) is that when there is an approved school in a particular area there is a tendency to regard everything which happens in the area as having been committed by the boys from the approved school. So when I say that a boy is moved, it is when he is known to have committed an offence; and this movement is automatic. This is a special arrangement in relation to Loaningdale, because of the special nature of the school, and this is something which is not ordinarily available at other approved schools.
As the noble Lords, Lord Ferrier and Lord Balerno, have both made quite clear, this school is trying new methods which, among other things, involve release after a fairly short period of detention—about six to nine months—and the results, so far as they are measurable, are being closely watched. So far, the proportion of Loaningdale boys appearing before the courts following their release is rather less than the proportion for the system as a whole; and this, considering the shorter period of training, may be regarded as a favourable sign. Evaluation of methods in the rehabilitation of delinquents is notoriously difficult, and more experience of a greater number of boys is necessary before any sound conclusions can be reached.
It has been suggested that discipline within the school, as well as outside it, falls short of what may reasonably be expected. There have been—not here—allegations of uncontrolled misbehaviour and of rudeness. Some of the incidents which have been looked into have shown cause for concern, and the managers have assured my honourable friend the Joint Parliamentary Under-Secretary of State that they will try to ensure that behaviour by all connected with the school will not give cause for offence.
My Lords, while I deplore any shortcoming on the score of conduct, I am bound to point out, as I have already suggested, that in the case of some of the incidents reported it seems very doubtful whether any Loaningdale boys were in fact involved. And, of course, occasionally difficulties arose when the boys were, quite properly, in the town unescorted. On this point I should say
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that the managers had not previously received any complaints about behaviour. They would be very ready to investigate any points brought to their notice, and naturally it is important that incidents should be reported both quickly and directly to them.
So far as behaviour in the school is concerned, I understand that the general philosophy of the régime is to encourage self-discipline rather than to impose a discipline of conformity. Relations with the staff are deliberately informal, so that a responsible attitude may be achieved. This does not mean, however, that the boys are given licence to behave as they please. All are e expected to behave in a civilised way, and unacceptable conduct is penalised by loss of privileges or by extra duties. In general, sanctions are applied by the boys themselves, but the staff and the managers of course ensure that misbehaviour does not go undealt with.
On the subject of selection, this brings me to the one point in the remarks of the noble Lord, Lord Ferrier, which I regretted—and it was something to which the noble Lord, Lord Brooke, referred. That is when he said: "Another horrible murder has been committed by a former inmate". My Lords, the situation is difficult. Obviously, the community is not going to be helped, and the boys in Loaningdale School are not going to be helped, if there is any suggestion that all the boys in the school are potential murderers. I know that nothing that the noble Lord, Lord Ferrier, said could be construed in that way. But I had reason to believe that there might be reference to this other murder, because it was so very recent. I think it would put things in perspective (and I am sure the noble Lord, Lord Brooke, will be interested in this) if I were to give some information about this other case.
The boy concerned was admitted to the school in March, 1963, at the age of 13 years and 3 months. The only offence of which he had been guilty was persistent truancy (he came from an exceedingly bad home), and he went to the approved school for that reason only. In April, 1964, his conduct had so improved that he was released from the school. I have said that he came from a very bad home. The home circumstances were such that in July of the same year—that

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was four months later—the boy was readmitted to the school, and he remained there until March, 1965. He left the school at the age of 15-. Subsequently he got into trouble in different places; he was in borstal in England; he eventually came back to Scotland at the beginning of this year, and a month later he murdered his grandmother—an offence of which he has now been found guilty.
My Lords, how could that possibly be regarded as a criticism of Loaningdale in the case of a boy who, at the age of 13 years and 3 months, came in because of truancy; who, during the period he was in the school, was responding well to the treatment; and who left at the end of a year and then came back, because of the unfortunate effects of his family life, for another year? How could anyone in the approved school, in any institution, even in your Lordships' House, possibly be expected to know that a 13--year-old truant was to become an 18-year-old murderer? My Lords, this is so completely removed from any aspect of approved school administration that I have felt justified in giving the details of this case in order that your Lordships may realise just how completely different the outcome may be from anything which may be anticipated in the beginning.
On this subject of security, it is probably unnecessary for me to remind your Lordships that approved schools are not penal establishments. All schools have their share of absconders, but this is not, I am happy to say, a major problem in any of them. Indeed, so far as information is available from the police and from the school, abscondings from Loaningdale have not been numerous, although there have on occasions been undetected absences. The managers fully appreciate the need to assure the community of Biggar that the school does not constitute any sort of threat to them, and the security arrangements at the school, and the liaison with the police, have been strengthened to offer as great a safeguard as possible—short of adopting absolute prison standards—against abscondings. In particular, the managers have installed a night-alarm system in the dormitories, and have now also appointed a night supervisor. The daytime routine is such that the chances of a boy's absence re-
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maining undetected for more than a very short time are now very slight indeed.
On this subject of administration, local interests must certainly have a voice. At the same time, Loaningdale, even more than other approved schools, is carrying out a special kind of task with boys drawn from all over the country, and it seems right to have a broadly based board—and the noble Lord, Lord Balerno, stated this in a way which I could not possibly better. Thus, its members include those who have practical experience and interest in dealing with delinquent youth, and representatives of the County Councils and the Counties of Cities Associations, as well as representatives of the community. If a mistake was made—I do not think it can possibly be denied that it was in the beginning—in not having sufficient local representation on the board, as the noble Lord, Lord Ferrier, has been very fair to point out, this has now been remedied. It was not in fact until June, 1965—and I think he said this—that the Town Council had the opportunity of appointing a nominee, and another local person was adopted into membership at that time, too.
LORD FERRIER: My Lords, may I interrupt the noble Lord? Is he sure that at that time they were nominees of the Town Council?
LORD HUGHES: One was.
LORD FERRER: With respect, I suggest that they were nominated by the governors.
LORD HUGHES: Yes, one was adopted by the governors, but he was the nominee of the Town Council. I think it was then that Provost Telfer went on the board, and there was another local person, not a nominee, who also went on. So at that point there was one from the Town Council and one other.
Following the difficulties which arose last autumn, the number of local representatives has now been increased to four, two of whom have been nominated by the town council; and the noble Lord, Lord Ferrier, named these two representatives. It seems to me that these changes will ensure a reasonable balance of interest and should improve the lines of communication between the

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school and the community, which I must admit have been deficient in the past.
On the subject of costs, the noble Lord, Lord Ferrier, quoted figures which by and large, are as accurate as I think we could expect, except in one thing. He under-estimated—I think it can only be an estimate on his part—the average number of boys. Although he did not turn it into a cost per pupil, he misled his noble friend Lord Balerno into an erroneous calculation. The noble Lord worked it out at almost £2,000 per boy. In fact, the estimate for the current year will be £1,180. It is very slightly more than the average for approved schools up and down the country; and having regard to the special nature of the school I do not think the figures are out. I would not have mentioned costs except that by taking the average at about 20 it produced an inflated figure; although the total running costs which Lord Ferrier quoted are accurate.
I should like to say that there has been a most careful appraisal of all the matters involving the management and the conduct of the school and the interests of the community, which have been most strongly, and I think properly, up-held by the town council. The changes which have been made should not be taken as a criticism of the able management and leadership which the school has enjoyed since its inception. I think they will offer a sound basis for re-establishing the good relations which are a necessary component for the success of the school. My honourable friend Mr. Millan has written in the past few days to the town council conveying to them assurances from the managers on the important points at issue. I am certain that closer links with the community will make for a better relationship—not necessarily immediately, but, I should hope, improving gradually and steadily.
I may say that before I came into the Chamber this afternoon I was handed a note of the reply which Mr. Milian received from Provost Telfer. It would be wrong for me to read the whole of the letter; but I shall read a little which I think is typical of the whole. It says:
"All of us appreciate that you and your officials and managers are pushing reform to the limit, consistent with the original concept
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of the running of the school. As you state, the measures may not conform in entirely with views held here, but that does not meen that we hope we are proved right. On the contrary. My sincere thanks to you personally for your deep interest in the matter, and I shall pass on the contents of your letter to my town council as soon as possible".
For these reasons—and as the noble Lord, Lord Ferrier, pointed,out, his Question was put down a very long time ago and he has very reasonably held it back while a lot of things were being done—the Government have come to the conclusion that an inquiry is not necessary.
I had intended to mention the reference that the noble Lord, Lord Bannerman, made to having an inquiry for totally different reasons from those stated in the Question. It was on the subject of whether the school was in the right place. It is true to say that most approved schools are in large communities; but I do not think that it can be argued that this is the only right place for them. I should like to point out that this matter came to a head because of this tragic murder. There would have been just as much outcry about it if the murder had taken place in the city of Glasgow or in Edinburgh. The impact on the community was very much greater because the probability is that everybody in the town knew the girl concerned. In a bigger community it may well be that there would be twice as many people who knew her; but they would represent only a fraction of the total population of the community.
For all these reasons the Government feel that what requires to be done in relation to Loaningdale has already been done as a result of a great deal of work done by all concerned, locally and in the Department. We therefore do not propose to instigate an inquiry such as has been requested. The noble Lord, Lord Ferrier, would accept that what has been taking place since his Question was put down originally has, in fact, been a very continuing inquiry into most of the subjects which he has mentioned as being suitable for inquiry. I would join with noble Lords in hoping that the tragedy and the unfortunate aspects of this school now all lie completely in the

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past. I know it will be more difficult to have complete acceptance in a small community than would have been possible in a much larger community, but I am satisfied, from what has been said during this debate and from the reception which the Provost has given to action taken by my honourable friend, that real efforts will be made by all in the town and in the approved school itself to make certain that the relationship in the future is as good as it can possibly be.

DURHAM COUNTY COUNCIL BILL
Reported, with Amendments.
GREATER LONDON COUNCIL (MONEY) BILL
Reported, without amendment.
HOUNSLOW CORPORATION BILL [H.L.]
Returned from the Commons agreed to, with Amendments: the said Amendments considered, and agreed to.

GREAT NORTHERN LONDON CEMETERY COMPANY BILL [H.L.]
Returned from the Commons, agreed to.
House adjourned at fourteen minutes before nine o'clock.