Sitting of 18 March 1968

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  TECHNOLOGY

    Industrial Services (Public Expenditure)
    Mr. Biffenasked the Minister of Technology by what percentage is the net estimate of expenditure for industrial services of his Department under Vote 19 increased in 1968–69 over the previous year; what are these services; and what proposals he has to restrain this element of public expenditure.
    The Minister of Technology (Mr. Anthony Wedgwood Benn): The increase is 22 per cent. Industrial services include general support for industry and, in particular, those industries sponsored by my Department; grants to research associations; and expenditure, other than on staff pay, on research stations. Policy in regard to expenditure on these services was stated by my right hon.
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    Friend the Prime Minister on 16th January, 1968.—[Vol. 756, c. 1577–1618.]
    Mr. Biffen: Is it not a most extraordinary set of circumstances that in this sector we have increases in public expenditure of the order of 22 per cent. at a time when there is supposed to be restraint on the growth of public expenditure? Is the Minister aware that the more the Government interfere with industry the less profitable industry seems to become, and the heavier the burden borne by the taxpayer?
    Mr. Benn: I think that the hon. Gentleman should take account of the industries in which this expenditure is being made; for example, shipbuilding, and the development of the pre-production orders for machine tools. All this expenditure is designed to reinforce, and is likely to succeed in reinforcing, economic performance with the object of switching resources.
    Sir H. Legge-Bourke: Will the right hon. Gentleman bear in mind that every time his Department, or one of his agencies, such as N.R.D.C., moves in on the industrial front, there is always the risk that other companies and enterprises in the same field will say that it is no good their trying, because the Minister has backed the other? Will he bear that risk in mind?
    Mr. Benn: I understand the possible danger to which the hon. Gentleman refers, but this increase, which is about

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    £5½ million, goes on policies which, broadly speaking, won the assent of the hon. Gentleman and his hon. Friends, notably, on shipbuilding, electronics and machine tools, and to raise a general point like this at this stage ought to be considered very carefully.
    Mr. Blenkinsop: Is my right hon. Friend aware that we on this side recognise that the tremendous changes being carried out in the modernisation of the shipbuilding industry could not possibly have been carried out without the support of his Ministry?
    Mr. Benn: It is certainly true that had the Geddes Committee not made the decisions and recommendations it did make, and if the Government had not acted on them, there would have been a very serious danger of the collapse of the British shipbuilding industry.

    V.T.O.L. Aircraft
    Mr. Fortescueasked the Minister of Technology what action he has taken to further the development of a vertical take-off and landing, or a short take-off and landing, airliner for use in the 1970s.
    The Minister of State, Ministry of Technology (Mr. John Stonehouse): The development of such an aircraft will depend upon the outcome of the study which is at present being made by the Department in consultation with other Departments concerned, the aircraft industry and airlines.
    Mr. Fortescue: In view of this country's still long lead in this technique, thanks to the forethought of past Tory Administration, would not the Minister agree that an important part of our technological research should be applied to such projects?
    Mr. Stonehouse: It is being applied, but we have to take into account a number of factors, particularly the cost effectiveness of any such project and the exportability of the products that result from it.
    Mr. McMaster: Does this study cover the multi-jet as well as the deflected jet type of vertical take-off aircraft?
    Mr. Storehouse: It does.

    Multi-Purpose Combat Aircraft
    Mr. Fortescueasked the Minister of Technology what action he is taking to encourage the design and development of a European multi-purpose combat aircraft, with British participation.
    Mr. Stonehouse: Talks have taken place with the German, Dutch, Italian and Canadian Ministers or officials with a view to our entering on such a collaborative project. At the same time, the British Aircraft Corporation is working on various designs of this type of aircraft.
    Mr. Fortescue: Would not the Minister agree that unless an aircraft of this type reaches our drawing boards very soon, the only fighter aircraft available to the free world in the late 'seventies will be either French or American?
    Mr. Stonehouse: Yes, Sir. Our purpose in pressing ahead with these talks is to bring our European partners into a project which will not only be technically successful but will also result in a very viable product.
    Mr. Corfield: Will the Minister bear in mind the importance at this time of preserving design leadership in airframes as well as in aero engines?
    Mr. Stonehouse: Yes, Sir. It is clearly understood that as we have the lead in this technique we would expect to have the design lead.

    Distributors' Margins (Report)
    Mr. Ellisasked the Minister of Technology what action he has taken to implement the recommendation in Report No. 55 of the National Board for Prices and Incomes that the margin allowed to distributors should be cut in any price rises to the consumer due to devaluation.
    Mr. Benn: The Board's recommendations, which concern distributors' margins in relation to recommended resale prices, are being taken fully into account in examining any proposals submitted to my Department. In addition, the attention of trade associations and manufacturers is being drawn to the findings of the Report.
    Mr. Ellis: Will my right hon. Friend make arrangements in his Department to

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    publish what distributors' margins were in relation to cost before and after the Report, so that we can see what effect his strictures have had?
    Mr. Benn: I will consider that proposal, but I do not think that I should assent to it until I have considered whether it is practicable for me to do so.

    Concorde Aircraft
    Mr. Hugh Jenkinsasked the Minister of Technology what will be the range of the Concorde when flying supersonically and when flying subsonically, respectively.
    Mr. Benn: Under typical operating conditions, Concorde's supersonic range is expected to be about 4,000 statute miles. If anyone wished to fly it continuously at subsonic speed, the range would be some 10 per cent. less.
    Mr. Jenkins: Is my right hon. Friend aware that his reply now disagrees with previous Answers he has given on the subject? Does not that fact suggest that there is a great deal of uncertainty about the aircraft, and would it not be better for him to abandon the entire project before losing more money on it?
    Mr. Benn: I know my hon. Friend's views on the Concorde, because he has expressed them on a number of other occasions. I think that I said in answer to previous Questions that the range is approximately the same, and the 10 per cent. figure I have given is in accordance with that statement.
    Mr. Marten: Is it not fairly certain that this aircraft will, when the orders are taken up, prove to be an extremely profitable aircraft? Will the right hon. Gentleman give an assurance that he has no intention at all of following his hon. Friend's suggestion?
    Mr. Benn: I have answered that question on so many occasions that I hardly think it necessary for me to say again that, of course, we hope and expect that the Concorde will be a success. At the same time, there are uncertainties associated with projects of this complexity. Whenever I am asked questions I always draw attention to those complexities, because if the country wishes to be in this
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    business it has to accept that there are uncertainties.
    Mr. Jenkins: In view of the unsatisfactory nature of the reply I beg to give notice that I shall seek to draw attention to the matter on the Adjournment.
    Mr. Corfield—
    Mr. Speaker: Order. Giving notice always cuts out any further supplementary questions.
    Mr. Onslowasked the Minister of Technology what research is being conducted into the noise problems associated with Concorde operations.
    Mr. Benn: Various methods of attenuating engine noise are being investigated. Sonic boom effects are being studied using simulated booms, and fundamental work on the nature of the boom itself is continuing in collaboration with France.
    Mr. Onslow: Can the Minister say what research is being done on environmental noise levels? Is he satisfied that Concorde will come below any such levels likely to be agreed internationally before it comes into service?
    Mr. Benn: It is difficult to anticipate what view will be taken before the Governments concerned reach a decision. We have not yet reached our decision in the matter. Work is going on in the engine side. Work is also going on in conjunction with the Meteorological Office, at Farnborough and at the National Physical Laboratory, the Universities of Strathclyde and Southampton and on buildings with the Building Research Station. I think everything which can be done is being done to study the problem.
    Mr. Hugh Jenkins: Is it not quite wrong to spend huge sums of money on such a project when the effective details of how it will fly and whether it will be allowed to fly over populated areas are not yet known?
    Mr. Benn: I think my hon. Friend's objections would apply to anything that is new. Had the House of Commons had the opportunity at the very beginning of considering the toll of death and destruction which the motor vehicle would produce, and still does produce at

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    a high rate, I am sure our predecessors would have taken a much sterner view.
    Mr. William Hamiltonasked the Minister of Technology whether, in view of the amounts of public money involved in the Concorde project and the risks involved, he will give an assurance that the greater proportion of any profits accruing from the venture will go to the Exchequer.
    Mr. Benn: It will be my intention in negotiation with the companies to see that the Government gets a share in profits commensurate with the risk which it is undertaking.
    Mr. Hamilton: Are not the risks incurred by the Government far greater than any risks incurred by the companies, and does it not follow, therefore, that the Government ought in equity to have a far greater proportion of the profits?
    Mr. Benn: These considerations are very much in mind in negotiating with the companies. There is the levy which was intended to pay off some at least of the research and development costs, the production loans, and other arrangements which will be made. As regards the Concorde, everything really depends upon its success in selling to airlines. If it is very successful, the Government will have a share.
    Mr. Corfield: Is the Minister yet in a position to tell us what will be the effect of the delays in flight testing on the expected date of the certificate of airworthiness?
    Mr. Benn: I think that there is another Question down about that, but, as I got into trouble the other day when I said that, perhaps I had better answer the hon. Gentleman now.
    It is likely to be some months, into the early autumn. It is causing anxiety, obviously, but the delay need not necessarily follow right through to the point in time at which the aircraft goes into airline service. This question has to be set against the background of the even greater delay being experienced on the Boeing 2707.
    Mr. Hugh Jenkinsasked the Minister of Technology, in view of deaths and damage in France owing to sonic booms, if he will cancel Concorde.
    Mr. Benn: No, Sir. Concorde flights will of course be controlled in the interest of those below the flight paths.
    Mr. Jenkins: Is my right hon. Friend aware that the number of deaths in France have now risen to 13 and that 2,870 actions are now pending against the Ministry of Defence? Does he think that if Concorde starts flying a similar situation can be avoided in this country?
    Mr. Benn: Supersonic flying over France is military flying. As my hon. Friend knows, Concorde has not yet flown. I think it reasonable in a project of this kind to go forward and then to study the effect of the boom when we have heard it from the Concorde itself. I had occasion a moment ago to draw my hon. Friend's attention to the accidents inseparable from life at home or from transport of all other kinds. I do not think that the evidence from France would justify the cancellation of Concorde.
    Mr. Onslow: Is the Minister aware that his hon. Friend the Member for Putney (Mr. Hugh Jenkins) is now sufficiently well-established as a spokesman for the lunatic fringe of the anti-noise lobby for it to be unnecessary for him to put down Questions of this kind?
    Mr. Benn: The House will very strongly resent that comment. It is perfectly open to any hon. Member to express a point of view, and there are many Members who would qualify for the title "lunatic fringe".
    Mr. Palmer: I accept what my right hon. Friend says, but will he bear in mind that many of us on this side of the House, particularly those representing the city of Bristol, are firm supporters of the Concorde project? Will he therefore pay not too much attention to the groundless fears of my hon. Friend the Member for Putney?
    Mr. Benn: Bristol is divided, like every other city, between those who want to make Concorde and those who are anxious about the noise it will make. This seems to me a perfectly reasonable controversy, and it does not justify abuse of those who put forward a particular point.

    Atomic Weapons Research Establishment, Aldermaston
    Mr. Dalyellasked the Minister of Technology what steps he has taken to declassify work at the Atomic Weapons Research Establishment at Aldermaston.
    Mr.:Benn: It has always been the practice at Aldermaston to declassify work as far as possible and to publicise the results extensively. For the past five years a large part of the site has been an unclassified area. Work has been undertaken for civil departments and facilities made available to research workers from universities.
    Mr. Dalyell: Is my right hon. Friend satisfied that although it may always be the practice, as he says, in fact there is progress-chasing at Aldermaston to see what can be declassified?
    Mr. Benn: Over the last few years 40 reports have been published from Aldermaston by the Stationery Office and 100 to 150 scientific papers are published every year. Aldermaston was represented at Expo 67 and two other exhibitions. Civil work on computers and for the Forensic Crime Laboratory and for medical and dental engineering are indications of the intention here.
    Mr. Dalyellasked the Minister of Technology what steps he is taking to promote research for commercial purposes at the Atomic Weapons Research Establishment, Aldermaston.
    The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Jeremy Bray): With my right hon. Friend's support, the Atomic Weapons Research Establishment accepts a wide and increasing variety of orders on commercial terms from Government Departments, including the Ministry of Technology, and from private customers for research and development outside the atomic weapons field.
    Mr. Dalyell: Is my hon. Friend satisfied that in fact the establishment itself takes the initiative in bringing work to the notice of what he calls this wide variety of customers?
    Dr. Bray: Yes, indeed. There are constant meetings between the staff of
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    the establishment and the Ministry of Technology headquarters—sometimes involving Ministers—with private concerns of various kinds seeking profitable outlets.
    Sir H. Legge-Burke: In view of the fact that the Select Committee on Science and Technology is examining the advanced research establishments in the current Session of Parliament and that the hon. Member for West Lothian (Mr. Dalyell) is a member of that Committee, will the Parliamentary Secretary consider suggesting to his hon. Friend that it might be as well to allow the Select Committee to do its work?
    Mr. Dalyell: On a point of order. A certain issue of principle arises here. Is it to be that a member of a Select Committee is not to put down Questions on an establishment, which incidentally the Select Committee has not visited? What is this doctrine?
    Mr. Speaker: That is not a point of order.
    Mr. Boothasked the Minister of Technology what were the percentages of military and civil work being undertaken at Aldermaston Research Station in October, 1964; and what are the present percentages of military and civil work being undertaken at this establishment.
    Dr. Bray: The proportion of total expenditure at the Atomic Weapons Research Establishment attributable to civil work in 1964–65 was 14 per cent.; in 1967–68 it will be some 16 per cent.
    Mr. Booth: Would it not be totally appropriate to the needs of Britain's economy if nuclear weapons research at Aldermaston were ceased entirely and civil research put in its place in order to increase our industrial output?
    Dr. Bray: My hon. Friend will have noted from my Answer that the proportion of civil research is increasing.

    Black Knight and Blue Streak
    Mr. Martenasked the Minister of Technology what estimate he has made of the cost and time scale of mounting Black Knight on top of Blue Streak to give Great Britain a national satellite launching capability.
    Mr. Stonehonse: Studies carried out at the R.A.E. indicate that a simple combination of these two vehicles could not put a satellite into geostationary orbit.
    Mr. Marten: Is the Minister aware that I think industry would take a different view of the matter? Has the Royal Aircraft Establishment consulted industry about this? Will he indicate that this can be done?
    Mr. Stonehouse: The Royal Aircraft Establishment is in very close touch with the Departments concerned. I see no reason why we should dispute the result of the work which the R.A.E. has done in this matter.

    European Space Conference
    Mr. Martenasked the Minister of Technology whether he will publish the Report of the Advisory Committee on the future of European co-operative space activities.
    Mr. Benn: The Report of the Advisory Committee on Programmes is a report to all the Governments represented at the European Space Conference, who have agreed that it should be publicised at a Press conference held in Paris on 14th March. Copies of the Report are available for the Press on application to the Secretariat of the European Space Conference in Paris or to my Department. In addition I am arranging for a limited number of copies to be placed in the Library of the House.
    Mr. Marten: Can the Minister say what attitude the Government are likely to take towards this Report when it comes to the conference? May we have an assurance that we in this House shall know what attitude they will take before the conference actually happens?
    Mr. Benn: The issues raised by this Report are very important issues. The Government are now considering them. There is a little time before the Bonn conference takes place. We shall reach our conclusions about them as soon as we possibly can. I cannot undertake that there will be a debate in this House, but as soon as we reach a view we shall be in a position to let it be known.
    Mr. David Price: Would not the right hon. Gentleman agree that more effec
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    tively to co-operate with European projects we have to maintain a minimum threshold of space capability at home? Does he also agree that there is some doubt whether we have the balance right at the moment between the national effort and the European co-operative effort?
    Mr. Benn: These are some of the factors that we are looking at. Of course there is the Black Arrow project at home.

    European Airbus
    Mr. Onslowasked the Minister of Technology what information he has from the German Government about Lufthansa's intentions with regard to the European airbus.
    Mr. Stonehouse: The Governments of the United Kingdom, France and Germany entered into the Memorandum of Understanding on the first phase of the airbus programme in the expectation that their national airlines will support the programme, and we have assurances from the German Government that they will honour this agreement. Lufthansa is making a valuable contribution to the present work of detailed definition of the airbus project.
    Mr. Onslow: If Lufthansa does not buy this aircraft, can it be sold in sufficient quantities to make it a profitable venture?
    Mr. Stonehouse: That remains to be seen, but it is one of the firm conditions of the continuation of the project that the three airlines confirm their requirement and that between them they shall order 75 of the aircraft.
    Mr. Rankin: Can my hon. Friend say if each of the Government's pledge themselves to purchase a specific number of aircraft?
    Mr. Stonehouse: No, it is for the airlines to make their requirements known, but each of the participating States has undertaken to honour the agreement, which implies that the airlines will buy the airbus.
    Mr. Maxwell-Hyslop: Can the hon. Gentleman tell the House whether it lies within the power of the German Government to instruct Deutsche Lufthansa to purchase this aircraft and what happens if the directorate of Deutsche

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    Lufthansa does not wish for technical or commercial reasons to do so?
    Mr. Stonehouse: That is a domestic question for the Germans, but we have had these assurances from the Ministers concerned and I am content to rest on them.
    Mr. Peter Millsasked the Minister of Technology what market research has been carried out by his department among pilots and travellers on the question of the acceptability to them of a 300-seat aircraft with two engines.
    Mr. Stonehouse: The decision to power the European airbus with two engines was taken in the light of all the relevant considerations, including safety, reliability and economy. I expect it to prove attractive to pilots and passengers alike.
    Mr. Mills: Does the Minister realise that the Americans are insisting on three engines because of their problem of flying over the Rockies? With similar problems in Europe—for example, the Alps—would it not be safer and better, and certainly help in selling the plane, if we had three engines, too?
    Mr. Stonehouse: The American airbus is being designed for a longer haul than the European airbus. European airlines generally are attracted by the design with the two-engined configuration.
    Mr. Fortescue: What will happen if one of the engines flares out on landing or take-off with 300 passengers aboard?
    Mr. Stonehouse: The safety requirements for a two-engined aircraft are identical to those for an aircraft with more power. I am satisfied that an aircraft of the two-engined configuration with a failure in one engine will not suffer from any extra hazard as against an aircraft with any additional power.

    Wear Shipyards (Grouping Proposals)
    Mr. Willeyasked the Minister of Technology what progress has been made regarding the merger of Wear shipyards.
    Mr. Benn: The Shipbuilding Industry Board has drawn the attention of the three Wear shipbuilding companies to the need to finalise their grouping proposals and to submit any application they wish to make for financial assistances.
    Mr. Willey: The last time I asked this question I was assured that the Department was hopeful of a rapid solution. As things do not appear to be moving very rapidly, will my right hon Friend again consider whether it would not be advantageous for him to intervene directly to try to end this deadlock?
    Mr. Benn: I understand my right hon. Friend's anxiety—which, as he knows, I share—but the object of the Shipbuilding Industry Act was to invite the Board to negotiate with the purchasers themselves. I should be very reluctant to intervene but I shall consider very carefully what my right hon. Friend has said.

    Superconducting Electric Motor (Industrial Application)
    Mr. David Watkinsasked the Minister of Technology what proposals he is considering for the industrial application of the superconducting electric motor developed at Newcastle-upon-Tyne, under the sponsorship of the National Research Development Corporation.
    Dr. Bray: The responsibility for the industrial exploitation of the superconducting motor, when development and testing are complete, will lie with the National Research Development Corporation and International Research and Development Company Limited, both of which have the strongest possible incentive to see that it gets very fully used.
    Mr. Watkins: Is my hon. Friend aware that this is probably the most important development in electronic motors this century? Will he assure the House that every effort will be made through the Department and the agencies he has mentioned to push its industrial application?
    Dr. Bray: Yes, indeed.
    Sir H. Legge-Bourke: Will the new company—Tracked Hovercraft Company Ltd.—be interested in this project?
    Dr. Bray: Not to my knowledge.

    Warships
    Mr. Wingfield Digbyasked the Minister of Technology how many warships, ordered for the Royal Navy or other navies, were launched in 1967 in shipyards inside and outside the development areas, respectively.
    The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Gerry Fowler): Three submarines, two destroyers and three frigates were launched from yards in development areas during 1967. Ten patrol craft were launched from a yard outside a development area in the same period.
    Mr. Digby: Is it not evident that the Government's action with regard to R.E.P. is creating unfair competition between yards within development areas and warship builders outside?
    Mr. Fowler: Orders for all of the craft I have mentioned were placed before the introduction of Regional Employment and Selective Employment Tax Premiums. It is, therefore, difficult to see what relevance the supplementary question could have to the Question.
    Mr. McMaster: What preference do the Government give to development areas when they are placing naval construction contracts?
    Mr. Fowler: That is a question for the Ministry of Defence.

    Beagle Aircraft Company
    Mr. Ridleyasked the Minister of Technology if he will undertake to prevent the Beagle Aircraft Company from acquiring any other light aircraft firms.
    Mr. Benn: No, Sir.
    Mr. Ridley: Why will not the Minister give such an undertaking? Is he aware that what he is saying is that, if any of the competitors succeed, they are under notice that they may be gobbled up? Will he give an undertaking that he will not interfere with Beagle's competitors in this way?
    Mr. Benn: To say that I will not give an undertaking that there would not be a commercial arrangement between Beagle Aircraft Company and another aircraft company is not the same as saying that, if others succeed, they will be gobbled up. The hon. Gentleman has confused the logic of the matter.

    Privately-Owned Firms (Acquisition)
    Mr. Ridleyasked the Minister of Technology if he will lay down the criteria upon which his decision to acquire privately-owned firms will be based.
    Mr. Croninasked the Minister of Technology if he will state the reasons upon which his decision to acquire privately-owned firms will be based.
    Mr. Benn: As I have taken no such decision, the need for criteria does not arise. The Industrial Expansion Bill now before the House sets out the criteria and arrangements in regard to Government subscription of equity capital with the consent of the firm concerned.
    Mr. Ridley: Will the Minister be more specific? It is no good his having a haphazard shopping list. Will he say under what circumstances he intends to acquire firms, so that we can judge whether he is meeting his own criteria?
    Mr. Benn: I have not a shopping list. The hon. Gentleman has a list of a lot of things which he thinks that I want to buy, but he knows that this is not the provision of the Bill. The provision is that there would be participation only by consent. No compulsory powers are being taken. There is the procedure for the Advisory Committee. In any case, the House of Commons would be required to make an order on individual schemes. I recommend the hon. Gentleman to read the Bill.

    Shipbuilders, East Anglia (Export Orders)
    Mr. Ridsdaleasked the Minister of Technology what was the value of export orders obtained by shipbuilders in East Anglia in 1967.
    Mr. Fowler: The value of export orders for vessels of 100 gross tons and over, taken in 1967, is estimated at £7 million. No information is available about export orders for vessels of under 100 gross tons.
    Mr. Ridsdale: Is not this a considerable achievement? Why should not shipbuilders in East Anglia have exactly the same help as shipbuilders in a development area? When will the Government cease supporting failure and support success for a change?
    Mr. Fowler: The successes enjoyed by the shipbuilding industry are not confined to East Anglia. The hon. Gentleman is well aware of the objects of the Government's development area policy. So far no firm evidence has been submitted

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    which would lead us to consider making an exception of this one particular industry.
    Sir H. Legge-Bourke: Will the Minister be careful not to underestimate the importance of ships of less than 100 tons displacement? Will he, on the contrary, ensure that full recognition is given to the very real export effort being made by some of the smaller boatbuilders?
    Mr. Fowler: We in no sense underestimate the efforts being made by the boat builders, but it is conventional to draw a distinction at 100 tons between boats and ships.
    Mr. George Jeger: Why does my hon. Friend insist on not making an exception of one particular industry? Has not he heard of agriculture?
    Mr. Fowler: I am not sure that the agricultural support system is strictly relevant to the problems of the shipbuilding industry.

    European Technological Collaboration Committee Meetings)
    Mr. Moonmanasked the Minister of Technology if he will consider making available a report of the inter-departmental committee meetings on European Technological Collaboration; how many meetings of the committee have taken place; and if he will make a statement on the future work of the committee.
    Mr. Benn: No, Sir. For obvious reasons, details of the work or reports of interdepartmental committees are not made available.
    Mr. Moonman: In an effort to sustain the interest and enthusiasm for European technological collaboration in this House and in other European Parliaments, will not my right hon. Friend reconsider the position, because clearly we ought to have some information available? Will Professor Sargent's duties also include this vital area of work?
    Mr. Benn: The question about Professor Sargent is a separate issue, but I am happy to inform my hon. Friend that the professor will be advising me over the whole field. Attractive though the proposition is that we should publish the reports of inter-departmental official committees, government would be made
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    quite impossible if that were to happen, and then there would be the additional problem of secret meetings of officials to avoid the risk of publication.

    Tyneside (International Research and Development Company)
    Mr. Blenkinsopasked the Minister of Technology what action he is taking to make full use of the research facilities of the International Research and Development Company on Tyneside.
    Mr. Fowler: We have arranged for discussions between the staff of the International Research and Development Company and officials at the National Engineering Laboratory to see what work could be placed with I.R.D.
    Mr. Blenkinsop: Is my hon. Friend aware of the capacity that is available in this research establishment, of the close links with universities in the area, and of the fact that there has been so far a miserable allocation of Government research work in the region?
    Mr. Fowler: We are well aware of the problem. I.R.D. is operating at the level of about £1 million a year, and about 40 per cent. of its income is from existing Government contracts. The work which is likely to be placed by N.E.L. is distinct from the proposals already put forward by I.R.D. and is work which is likely to be within the competence of I.R.D. and which might normally be placed with industry by N.E.L.
    Dame Irene Ward: Is the Joint Parliamentary Secretary aware that we in the North-East feel very strongly about this matter? It was raised in the debate which we had on the East Coast. What is the Chancellor of the Duchy of Lancaster doing to try to induce his Department to do something more for us than is being done at present?
    Mr. Fowler: We are well aware of the hon. Lady's passions; but, if she wishes to know what my right hon. Friend the Chancellor of the Duchy of Lancaster is doing, she must table a Question to him.

    Nuclear Marine Propulsion
    Mr. Hooleyasked the Minister of Technology if he will approach the Government of the Federal German

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    Republic with a view to working out a joint programme of research and development into nuclear marine propulsion.
    Dr. Bray: The nuclear research ship "Otto Hahn", now being fitted out in Germany, is an interesting national project in which Euratom has participated, and from which some valuable experience will no doubt be obtained. There are other Questions on the Order Paper regarding nuclear marine propulsion.
    Mr. Hooley: Now that the Polaris programme is completed, is it not important that we should take active steps to develop the civil use of nuclear power for marine propulsion? Would not this be an area in which there could be valuable European collaboration?
    Dr. Bray: The reactors suitable for marine propulsion are already available, but it is a question of finding an economic case for their application.
    Sir H. Legge-Bourke: If we are to consider approaching the Germans about the "Otto Hahn", ought we not also to consider consulting the Soviet Union about its icebreaker, the "Lenin", and also the United States about the "Savannah"?
    Dr. Bray: We keep in touch with the nuclear ship propulsion programmes for all nations.

    Wales (Departmental Contracts)
    Mr. Gwynfor Evansasked the Minister of Technology, in view of the fact that in the last financial year his Department spent less than 1 per cent. of its total expenditure in Wales, what his plans are to ensure that a greater proportion of his Department's work will be done in Wales.
    Dr. Bray: My right hon. Friend is encouraging, as far as possible, the placing of Departmental contracts in Wales and other development areas.
    Mr. Evans: Will not the hon. Gentleman agree that his Department has a duty to ensure a spread of expenditure in Wales which is at least in proportion to population, and that the neglect of Wales by his Department and other spending Departments lies at the root of much of our economic malaise?
    Dr. Bray: The Department is establishing industrial units at both Swansea and Bangor Universities. It has placed a large development contract for computer control work with the Steel Company of Wales and a project for automatic assembly equipment with Staveley. It will continue to seek further developments in Wales.

    Heavy Electrical Plant
    Mr. Palmerasked the Minister of Technology what action he is taking to avoid long-term damage to the heavy electrical plant industry by the reduction of £17 million in the home generating ordering programme for 1968–69, and the further likely reduction of £20 million for 1969–70.
    Dr. Bray: I am in touch with my right hon. Friends about the future power station ordering programme and its consequences for the manufacturers. Export orders for turbo-generators are at a record level, and there is scope for further increases of export orders for heavy electrical plant, which in the past have been restricted by the pressure of home demand.
    Mr. Palmer: Does not my hon. Friend agree that this important industry cannot hope to maintain its excellent record in the export market with a steadily diminishing home market brought about by short-sighted deflationary policies?
    Dr. Bray: Clearly, it is undesirable to build power stations when there is not a demand for the electricity generated and the power station programme is sufficient to meet expected needs. As my hon. Friend knows, any revision in the power programme comes mainly from changed forecasts of demand.
    Mr. Lubbock: Has the hon. Gentleman had discussions with the Ministry of Power about the forecast maximum demand in the Fuel Policy White Paper, Cmnd. 3438? Are the Government sticking to the estimate of 61,000 MW by 1972–73, and is that what this reduction is based on?
    Dr. Bray: That is a question for my right hon. Friend the Minister of Power.
    Mr. David Price: Will not the hon. Gentleman agree that part of the problem raised in the Question is not so much

    21
    the change in forecast demand but the fact that changes are made almost in the current year, whereas it would be much easier if they were made earlier in the five-year programme under which the C.E.G.B. works and not in the last year before an order would normally be placed?
    Dr. Bray: These are really questions for the Minister of Power. Clearly, once a power station has been started, it cannot be postponed.

    A.E.I.-G.E.C. Laboratory, Rugby (Scientists and Technicians)
    Mr. William Priceasked the Minister of Technology what steps he is taking to ensure that scientists and technicians involved in the Associated Electrical Industries-General Electric Corporation laboratory closure in Rugby do not join the brain drain.
    Mr. Benn: The company has assured me that it expects to be able to absorb almost all of these staff in other parts of its organisation, either at Rugby or elsewhere.
    Mr. William Price: Is my right hon. Friend aware that, despite that assurance, teams of scientists and technicians are being broken up and some of the staff will go to America rather than move to London? What is he doing to ensure that one of the finest research laboratories in Britain is saved from the effects of this merger?
    Mr. Benn: I could not accept the doctrine that one must at all costs always keep all design teams together. If that were so, it would not be possible to have the benefits of mobility of labour. In the case of these laboratory staff, totalling about 225, of the 129 graduates, 104 have already received offers of alternative employment and others are likely to be placed. There has been a difference of policy as between A.E.I., which centralised its research, and G.E.C., which dispersed its development. I do not think that my hon. Friend's anxieties are all that justified.
    Mr. David Price: Does not this issue raise a much wider problem? I have come across individual instances among the staff involved of failure by this Government or the previous Government to
    22
    arrange for transferability of pension rights so that people who are redundant in a design team may move somewhere else within the British economy, without being faced by the alternative of staying where they are on unsatisfactory terms or emigrating.
    Mr. Benn: I recognise, as everyone does, the importance of transferability of pensions. This is a very big question, and it runs counter to the doctrine of many companies which use pensions in order to recruit and hold staff. This particular company is paying the personal costs of transfer to Wembley and is reviewing salaries to try to meet the point raised by my hon. Friend the Member for Rugby (Mr. William Price) about the extra cost of living in London.

    Bristol Siddeley Engines Ltd.
    Mr. William Hamiltonasked the Minister of Technology whether, in the light of the findings of the Wilson Committee of Inquiry into affairs concerning Bristol Siddeley Engines Limited, he will initiate similar investigations into all contracts completed by that company for Government Departments over the last 10 years.
    Mr. Benn: I have asked Rolls-Royce to provde a statement showing the costs and profits resulting from all contracts placed by the Department with Bristol Siddeley Engines Limited between 1st April, 1959, and 31st March, 1967.
    I should add that my right hon. Friend the Chancellor of the Exchequer and I have received from Sir Roy Wilson an amendment to paragraph 177 of his Committee's Report, which referred to the firm's general level of profitability from 1959–60 to 1962–63. This amendment reduces the statement of overall profit on Departmental business, with taxation items excluded, from 29·2 per cent. on cost, equivalent to 36·5 per cent. on capital employed, to 22·2 per cent. on cost, equivalent to 27·8 per cent. on capital employed. A corrigendum slip will be attached to all undistributed copies of the Report. Copies of this slip are being made available in the Vote Office.
    Mr. Hamilton: That is a very complicated Answer which will need careful study by the House. Will my right hon. Friend give an undertaking

    23
    that, if it transpires that this company has been deceiving the civil servants and robbing the taxpayers, he will not hesitate to claw back as much as he possibly can?
    Mr. Benn: I dealt with that in my original statement, and I understand that the Public Accounts Committee is seized of the problem. I apologise for the complexity of the second part of my Answer, but there was this amendment to be made and I thought it right to take the opportunity to notify the House.
    Mr. Corfield: Can the right hon. Gentleman say how the error arose? Obviously, it is of great importance on the question of the credibility to be attached to the figures in the Report as a whole.
    Mr. Benn: I understand that there was a misunderstanding of some figures given—[HON. MEMBERS: "Oh."]—a misunderstanding of some figures given. It does not alter the findings in the Report. The hon. Gentleman will have an opportunity, when he has studied the matter, to assess the significance of it for himself.
    Mr. Ellis: Does my right hon. Friend realise that, whatever the Public Accounts Committee may be seized of—to use his words—the House as a whole does not know what the Public Accounts Committee is doing, and he should pursue his Departmental investigations, whether he proposes to make further evidence available to the Attorney-General or not?
    Mr. Benn: As the House knows, I am pursuing my own investigations. When we have a debate on the matter, I shall have more to say about them myself.
    Mr. Ellisasked the Minister of Technology what action he has taken, and what is now the position with regard to the two additional matters referred to in paragraph 229 of Sir Roy Wilson's inquiry, one an established case of wrongly charging and the other a case referred to in the Report as suspected double charging.
    Mr. Benn: Both the matters referred to in paragraph 229 of the Report following Sir Roy Wilson's inquiry are now being closely investigated by my officials and the company. Investigations are not yet complete. The firm has so far repaid
    24
    £51,000 on account of work charged to the wrong contracts.
    Mr. Ellis: Will my right hon. Friend see what he can do, so that when we have the full debate on Bristol Siddeley we may clear up all the outstanding points at the same time? The matter is doing damage to the aircraft industry. We want it sorted out as soon as we can. Will that be possible?
    Mr. Benn: That is what I hope, but it depends partly on when the House wants to have a debate. There is some advantage in allowing these investigations to be completed before the debate takes place.
    Mr. Moonman: As one of the reasons given in the report by Bristol Siddeley was that there was a need for excessive profits because of the scale of research and development, would my right hon. Friend now give instructions that on all Government contracts there should be clear specifications as to what this is?
    Mr. Benn: I do not think that the question of the rate of profit necessary over the range of Government business to sustain R. and D. has anything whatever to do with intentional misrepresentation to the Government on contracts that are signed.

    Upper Clyde Shipbuilders Limited (Loan)
    Mr. Edward M. Taylorasked the Minister of Technology (1) what is the intention of the Shipbuilding Industry Board regarding the provision of financial assistance to the Clyde Upper Reaches merger on the basis of each of the five individual establishments of that merger continuing to build ships;
    (2) what is the present order position in the Upper Reaches of the Clyde; and what prospects he envisages of further shipbuilding orders being obtained by the new merger in the Upper Reaches.
    Mr. Fowler: With my right hon. Friend's approval the Shipbuilding Industry Board has agreed to lend £5½ million to Upper Clyde Shipbuilders Limited on the basis that the group's facilities will be deployed in the light of changing market conditions. At the end of last year the group announced that it

    25
    had £87 million of business on its books and has just announced £10 million in new orders this year.
    Mr. Taylor: I thank the hon. Gentleman for that very encouraging news. Can he give a guarantee that he will discuss with his right hon. Friend the Secretary of State for Defence the importance of seeing that a fair share of naval contracts goes to the Upper Reaches, bearing in mind that the concentration of the Polaris programme on the North-East Coast means a declining share of naval orders for Clydeside?
    Mr. Fowler: I think that the hon. Gentleman will find that Barrow and Birkenhead are not in the North-East. But there is no doubt that the Upper Clyde will receive its fair share of naval orders, as it has always done. There is no worry in the naval yard on the Upper Clyde at present.
    Mr. Rankin: Will my hon. Friend say a word of thanks to the hon. Gentleman and his friends in Scotland for showing more support to U.C.S. when they are subsidised than they showed to the Fairfield Shipbuilding Company when it set out on its successful path with a subsidy from the Government?
    Mr. McMaster: On a point of order. I clearly heard the Minister, when answering that Question, give an undertaking as to the allocation of defence orders. Is that in order when earlier he refused to give any such undertaking?
    Mr. Fowler: I gave no undertaking whatsoever. I said, I believe, that I was sure that this would be the case. I have confidence in my right hon. Friend the Secretary of State for Defence.

    Atomic Energy Authority Establishments (Research Work)
    Mr. Eadieasked the Minister of Technology if he will list in the OFFICIAL REPORT research work being done by the Atomic Energy Authority's establishments which could have economic advantages to the nation.
    Dr. Bray: All the Authority's civil work could have economic advantages to the nation and this is why it is done. The work is described in some detail in the Authority's annual reports.
    Mr. Eadie: In the interests of the nation and of the miners, will my hon. Friend cause an investigation to be made into the results on coal derivatives? Is he aware that other nations are beginning to outstrip this country in pursuing the use of coal derivatives as an economic advantage to them?
    Dr. Bray: That is a different question.

    Radioactive Waste (Disposal)
    Mr. Eadieasked the Minister of Technology if he is satisfied that the methods of disposal of radioactive effluents from Atomic Energy Authority establishments and other bodies under his jurisdiction are effective; and if he will make a statement.
    Mr. Brooksasked the Minister of Technology to whom notification is made of the transport of radioactive effluent, by road, rail or inland waterway, from the Atomic Energy Authority's establishments and from the Magnox and advanced gas-cooled reactor stations.
    Dr. Bray: Radioactive waste from United Kingdom Atomic Energy Authority establishments can only be disposed of with the authority of my right hon. Friends the Minister of Agriculture, Fisheries and Food and the Minister of Housing and Local Government or the Secretary of State for Scotland. The approval of my right hon. Friends the Minister of Transport or the President of the Board of Trade, according to the method of transport, is required for the movement of radioactive waste in certain cases. Port authorities need to be notified in advance of the movement of some classes of goods.
    Mr. Eadie: Is my hon. Friend aware that there have been various statements in the Press which cast some doubts on the methods of radioactive waste disposal? Is he aware that the Soviet Union has complained that Britain is polluting marine life?
    Dr. Bray: The reports derive from Russia, and I think my hon. Friend will be aware that, as was pointed out in the article, Russia did far more to pollute the oceans by her last series of dirty hydrogen bomb tests than centuries of carefully controlled dumping could do.
    Sir H. Legge-Bourke: Is the Minister aware that we on this side of the House admire the immense care which the Atomic Energy Authority takes not to cause the sort of pollution of which it is accused by the Soviet Union, and that the Soviet Union had better look to its own behaviour first?
    Dr. Bray: Is is certainly true that the greatest care is taken in the disposal of radioactive effluents.

    City In The Sea Project (Finance)
    Dr. Grayasked the Minister of Technology whether he will seek powers to make a financial grant towards the construction of a city in the sea off the coast from Great Yarmouth.
    Mr. Fowler: No, Sir, while commending the enterprise shown by the authors of this exciting concept, I do not think that a clear case for constructing such a city has yet been demonstrated.
    Dr. Gray: Even if my hon. Friend is not prepared to make finance available for this imaginative Pilkington project, will he say what long-range projects he has in mind to cope with our escalating population towards the end of the century?
    Mr. Fowler: I am delighted to see my right hon. Friend the Minister of Housing and Local Government here on the Front Bench. I think that that is a question for him.
    Mr. Ridsdale: As the Cabinet are all at sea, would not it be better to put some suitable Cabinet offices at sea?
    Sir H. Legge-Bourke: Would the Minister bear in mind that most East Anglian Members are far more anxious to see the Government giving adequate fiscal encouragement to industry to complete the development of existing towns rather than have a project of this kind?
    Mr. Fowler: We are certainly well aware of that and share that view.

    Transport Bill
    Mr. G. Campbellasked the Minister of Technology (1) what representations he has received about the effects on the boat-building industry in
    28
    Scotland of the present proposals in the Transport Bill;
    (2) what action he will take to mitigate the effects of the Transport Bill, in particular the abnormal loads charge, on the shipbuilding industry.
    Mr. John Wellsasked the Minister of Technology (1) what representations he has received about the effects on the English and Welsh boat-building industry of the present proposals in the Transport Bill in relation to the industry's export efforts;
    (2) what representations he has received about the effects on the boat show of the present proposals in the Transport Bill.
    Mr. Fowler: Representations have been received from the Ship and Boat Builders National Federation, National Boat Shows Limited, the National Association of Marine Enginebuilders and three firms of boat builders in England. My right hon. Friend the Minister of Transport, is aware of these representations. The effect of the provisions of the Transport Bill relating to the carriage by road of abnormal loads will no doubt be discussed when they are considered in Committee.
    Mr. Campbell: Is the hon. Gentleman aware that the abnormal loads tax will in some cases increase the cost of journeys by 100 per cent. or more on items such as propellers and marine engines? What is the Minister doing to protect the shipbuilding industry from the doctrinaire follies of the Minister of Transport?
    Mr. Fowler: We have acted, as our duty prescribes, as the sponsoring Ministry for this industry and have relayed its complaints to the Ministry of Transport. It is for the Ministry of Transport to decide upon transport policy. However, I think the hon. Gentleman will find that many of the estimates of increased costs have been grossly exaggerated largely because of a misunderstanding of the provisions of a Schedule to the Bill.
    Mr. Wells: Will the hon. Gentleman look again particularly at the export question, because an increasing number of boat-building firms using modern methods of construction are remote from

    29
    sea and water? Firms using fibre-glass methods will have to send their large vehicles to the export ports by land. Can this be looked into again?
    Mr. Fowler: It is perfectly true that many boat builders are in this position, but many boats transported by road would attract no charges at all and most others would attract charges only in respect of their width.
    Mr. Manuel: With regard to the abnormal loads charged, is my hon. Friend aware that the Minister of Transport made abundantly clear on Second Reading and during the Committee stage of the Bill that this matter is again being examined? Is he further aware that many misleading and untrue statements are being propagated by hon. Members opposite throughout the country quite without foundation?
    Mr. Fowler: I am aware of the undertakings given by my right hon. Friend the Minister of Transport, and I am also aware of the campaign, often extremely misleading, being waged in the country, sometimes with the support of hon. and right hon. Gentlemen opposite.

    Fairfield Shipbuilding Company
    Sir C. Osborneasked the Minister of Technology how much public money has now been loaned to, invested in, or guaranteed to the Fairfield Shipbuilding Company; what return it is earning; and when it will be repaid.
    Mr. Benn: £940,000 in Fairfields (Glasgow) Limited Loan Stock at 7 per cent repayable on 31st December, 1975.
    Sir C. Osborne: Is the experiment now earning a profit? Is the money to be repaid, or will it be lost? If the experiment is successful, will the Minister pass on the idea to other Government Departments which are making losses?
    Mr. Benn: I do not know whether the hon. Gentleman is aware that the Fairfield Shipbuilding Co. has joined the Upper Clyde Shipbuilding Group and is, therefore, part of a new business, and that the operating experience of the yard will be available to others in the small group.
    Mr. Rankin: Is my right hon. Friend aware that a few weeks ago the Fairfield Shipbuilding Co. declared a profit of
    30
    £300,000 for 1967? Is he further aware that if the U.C.S. follows the Fairfield method it, too, will show profits?
    Mr. Benn: There is no doubt whatsoever that the work done at the Fairfield yard under the arrangements introduced by the Government permitted a yard which would otherwise have died to restore the morale of the workers and introduce new methods. This experience is now available in the Upper Clyde Shipbuilding Group.

  MINISTRY OF LABOUR

    Temporarily Suspended Workers
    Mr. Blenkinsopasked the Ministry of Labour when legislation will be introduced to provide for short-term sickness and unemployment benefit for shipyard and repair workers and others classified as temporarily suspended from employment.
    The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): If my hon. Friend has in mind the provision to be made for temporarily suspended workers after March, 1969, I have nothing at present to add to the reply which I gave to a Question from my hon. Friend the Member for Chislehurst (Mr. Macdonald) on 29th January, 1968.—[Vol. 757, c. 870.]
    Mr. Blenkinsop: Is my hon. Friend not aware of the urgency of this matter and of the fact that there is a great deal of anxiety in the shipyard and ship repair yard areas about the position because we have no news of any voluntary agreement having been reached?
    Mr. Hattersley: I am very well aware of the urgency and so is my right hon. Friend. I told my hon. Friend the Member for Chislehurst on 29th January that because of the urgency my right hon. Friend took the view that voluntary negotiations were not sufficient and had undertaken the proceedings which would eventually result in statutory measures being taken.
    Dame Irene Ward: Can the hon. Gentleman give a definition of "urgency"? Is not 29th January a long time ago now? When does urgent become doubly urgent so that we can get an answer?
    Mr. Hattersley: It is clear what "urgency" means in this context. It requires that by March, 1969, the provisions will be operating, and that is the assurance that I can give the House.

    Voluntary Early Warning Arrangements
    Mr. Biffenasked the Minister of Labour what is the number of civil servants fully employed in examining proposed income increases notified under the voluntary early warning arrangements; and what changes in numbers have taken place since devaluation.
    Mr. Hattersley: Twenty officials of my Ministry are fully employed on this work and a larger number spend part of their time on it. There has been no significant change since devaluation.
    Mr. Biffen: But since it was the assessment of the Government that the necessity for the prices and incomes policy was enhanced by devaluation, can the hon. Gentleman indicate why there has been no increase in the number of civil servants, and can he indicate whether he expects the number to be increased should the Government seek statutory reinforcement for their policy?
    Mr. Hattersley: It is the Government's view that devaluation made the successful working of the prices and incomes policy all the more important. Before devaluation it was working successfully with the number of civil servants that we then had. Since devaluation it has been working successfully with the same number of civil servants. As to the future number required to operate the policy, that involves a hypothesis, and, therefore, I should not want to comment on it.

  FALKLAND ISLANDS
  Sir C. Osborneasked the Secretary of State for Foreign Affairs if he is aware that the overwhelming majority of people living in the Falkland Islands desire to remain British citizens; and if he will give an assurance that these Islands will not be ceded to Argentina, either without a plebescite being held similar to the one in Gibraltar or against the wishes of the inhabitants.
  The Minister of State for Foreign Affairs (Mr. Goronwy Roberts): I am
  32
  aware that the great majority of the population of the Falkland Islands wish to retain their British citizenship; I do not know of any plans to take it away from them. In any event Her Majesty's Government will see that there is the fullest consultation with the population.
  Sir C. Osborne: Is the hon. Gentleman aware that that will give great comfort to the people in those islands who last year expressed to an hon. Member opposite and myself their absolute keenness to remain British citizens and their utter opposition to being taken over by the Argentine? Since there have been rumours that the islands will be surrendered to the Argentine, will the hon. Gentleman make clear that this will not be allowed against the wishes of the inhabitants?
  Mr. Roberts: We are well aware of the deep feelings of the islanders about their future, and in the discussions which we are conducting with the Argentine we have stated that we shall proceed on the twin principle of consultation and consent.
  Mr. Luard: Is it not a fact that it was made perfectly clear in public, in the United Nations and elsewhere, that there could be no question of the transfer of the sovereignty of the Falkland Islands without the fullest consultation with the inhabitants, and that there is, therefore, no reason whatever for the widespread concern and excessive propaganda on this subject which has been expressed by some hon. Members?
  Mr. Roberts: We have made clear in the United Nations and elsewhere that we shall proceed in the way in which my hon. Friend has indicated. I see no reason why there should be any concern in this matter. We shall, as I have said, proceed on the principle of consultation with the islanders.
  Mr. Lubbock: Is the hon. Gentleman aware that we preferred his phrase that this would have to be "with the consent" of the islanders and not "with consultation"? Will he make absolutely clear that there is no question of the transfer of sovereignty to the Argentine unless all the inhabitants of the Falkland Islands approve, which is most unlikely?
  Mr. Roberts: We are conducting talks with the Argentine about the long-term future of these islands in accordance with

  33
  and in the spirit of the United Nations resolution, to which I should think both sides of the House would pay respect. [Interruption.] In any case, this is our policy. This is in accordance with Her Majesty's Government's policy of working within the United Nations and paying full attention to what advice is requested in the United Nations. These talks have proceeded and are proceeding. They cover a wide range of subjects. It is too early to specify what form the consultations will take.
  Mr. Maudling: That is not good enough. Will the hon. Gentleman answer clearly the question he has avoided? Do the Government intend to transfer the sovereignty over these people against their wishes to another country?
  Mr. Roberts: I have said clearly that we shall proceed on the principle of full consultation and consent. The right hon. Gentleman is well aware that these negotiations are delicate and must be confidential. I have nothing to add to my previous answer.
  Mr. Ogden: Can my hon. Friend give an assurance that there will be no agreement between Her Majesty's Government and the Government of Argentina before this House has been made fully aware of the proposals and has had the right to comment upon them?
  Mr. Roberts: I can give that assurance. Any heads of agreement, any memorandum, arrived at as a result of the negotiations, will of course be published and will be open to discussion in this House and in the Falkland Islands as well.
  Mr. Maudling: In reply to my supplementary question, the hon. Gentleman used the word "consent". Will he make it clear that he means the consent of the people themselves?
  Mr. Roberts: I stick by the phrase, "consultation and consent". We are endeavouring to solve this problem in a friendly way and that is the way we shall proceed.
  Several Hon. Members—
  Mr. Speaker: Order. We must move on.
  Mr. Biggs-Davison: On a point of order, Mr. Speaker. In view of the un
  34
  satisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

GROSVENOR SQUARE (DISTURBANCES)
Mr. Maudlingasked the Secretary of State for the Home Department if he will make a statement about the disturbances in Grosvenor Square yesterday.
The Secretary of State for the Home Department (Mr. James Callaghan): I have had a preliminary report from the Commissioner of Police of the Metropolis.
Demonstrators gathered yesterday afternoon in Trafalgar Square to protest against American policy in Vietnam and later marched to Grosvenor Square. The route to be followed had been agreed between the organisers and the police. The route was by North Audley Street, then around the three sides of Grosvenor Square not occupied by the United States Embassy, with an exit from the Square by way of South Audley Street. But the organisers were unable to keep control of the march and it is estimated that at one time up to 10,000 people were gathered in the Square.
Access to the United States Embassy was guarded by a strong cordon of police and the organisers were aware that the only people who would be permitted to pass through the cordon were a few representatives of the demonstrators. These representatives presented a petition.
A large number of demonstrators broke into the gardens on the side opposite the Embassy. At first they were held back by the police but then a number of demonstrators began hurling missiles. The police, both on foot and mounted, eventually succeeded in clearing the gardens with much difficulty.
On present information some 45 demonstrators received medical treatment, 117 policemen were injured, of whom 4 have been detained in hospital. Proceedings are being taken against 246 demonstrators, mainly on charges of assaulting or obstructing policemen, threatening behaviour and being in possession of offensive weapons. A number of windows were broken both in the

35
Embassy and in other buildings and extensive damage was done to the gardens.
I greatly regret the outbreak of violence by some of the demonstrators and the injuries substained both by members of the public and police officers. There is no doubt that the police showed commendable restraint and self-discipline in the face of severe provocation.
Mr. Maudling: This outbreak of violence has shocked and scandalised the whole country. May we on this side be associated with the Home Secretary in the well-deserved tribute he paid to the restraint and efficiency of the police in this situation?
First, if there is evidence that some at any rate of the organisers of the demonstration were preparing their followers for the use of violence, will he proceed against them with the utmost severity? Secondly, if it be the case that some people of foreign nationality at present resident here either as visitors or students have been abusing our hospitality by stirring up violence, will he have them immediately deported?
Mr. Callaghan: My conclusion is that the majority of people who come to a demonstration of this sort have a genuine desire to protest in a peaceful way in the traditional manner about events with which they disagree. But there seems to be evidence that a not insignificant number of people also organise and come to these demonstrations with a view to provoking violence, and it is this facet of the matter which is extremely disturbing.
As to the question of preparations which may have been made for violence—certain changes are now being preferred and I would prefer not to say anything at this stage. It is true that a number of foreign nationals came to this country for the purpose of taking part in the demonstration.
Mr. Peter M. Jackson: Would not my right hon. Friend agree that the use of mounted police is a provocation? Should not their use in future be discouraged?
Mr. Callaghan: I have discussed the matter this morning with the officer in command of the police. He told me
36
that he was very reluctant to deploy mounted police and that he held them in reserve. But because of the developments the situation became so difficult—and he was the man on the spot who had to decide—that he reached the conclusion that, if he did not use the mounted police, there would be greater damage and greater injuries.
Mr. Edward M. Taylor: Can the right hon. Gentleman give an indication about the report of the quantity and number of offensive weapons taken from demonstrators on the way to the demonstration.
Mr. Callaghan: A number of demonstrators arriving in coaches were intercepted by the police and five of the passengers in one coach were arrested on charges of carrying offensive weapons and one was charged with offensive behaviour. The sort of things found were bags of plaster, flour and pepper, marbles and pots of paint. There have been other incidents which I would prefer at this stage not to go into further.
Mr. Bellenger: Can my right hon. Friend say whether any of the organisers themselves are under arrest or are to be charged?
Mr. Callaghan: The organisers agreed to the route with the police but unfortunately lost control. I do not think that it would be a proper matter on which charges should be preferred against them.
Mr. Bessell: Is the right hon. Gentleman aware that a demonstration involving violence of this kind is utterly repugnant to the British people? Since a large number of demonstrators came armed for violence and were obviously more interested in Communism than in peace, will the right hon. Gentleman take appropriate steps to investigate the organisations concerned?
Mr. Callaghan: The demonstration in Trafalgar Square was peaceable, with no more than the normal amount of heckling and boisterous behaviour one expects on these occasions, and we should be reluctant to discourage a demonstration of that sort. But perhaps I may quote The Guardian on this subject, for I absolutely agree with the words. Referring

37
to the scene in Grosvenor Square, it said:
"The demonstrators seemed determined to stay until they had provoked a violent response of some sort from the police. This intention became paramount once they entered Grosvenor Square."
I think that that is a correct definition of what took place and it is something that the whole House and the country will condemn.
Mr. Hamling: Is it not intolerable that London policemen should lose a day off on a Sunday looking after hooligans? Does not my right hon. Friend agree that this kind of demonstration in Grosvenor Square undermines the long-held view in this country about the right of peaceful demonstration?
Mr. Callaghan: No, Sir. I do not think that it undermines the right of peaceful demonstration. I believe that the overwhelming mass of opinion in this country must make itself felt against these groups of people who come determined to provoke violence and who believe that they are advancing their cause by so doing.
Sir D. Renton: In view of the numbers involved, the violence used, the determination of those concerned and the length of time that this trouble went on, did it not come very near to being a riot? Will the Home Secretary bear in mind for the future the possibility of providing such help as may be necessary for the police in order to avoid such a large number of police casualties?
Mr. Callaghan: I do not know what the legal definition of a riot is. [HON. MEMBERS: "oh."] I would not care to give my definition this afternoon without notice, because I believe that it has certain legal and technical qualifications. [HON. MEMBERS: "The Home Secretary ought to know."] I begin to wonder whether we are getting a bit of a riot among hon. Members opposite. I discussed the situation before the procession took place with the Commissioner of Police, who believed that he would have sufficient police to handle the situation. In fact, the police succeeded in preventing any attempt to get at the American Embassy, which was part of the object of the exercise. To that extent we can say that the police held the situation fully in control.
Mr. John Hynd: It may not have escaped the Home Secretary's notice that there have been certain coincidences, not to say synchronisation, of violent demontrations of this kind in various parts of Europe as well as this country and that they are not always concerned with Vietnam or any particular issue. In the circumstances, does not my right hon. Friend consider that the time is due when the Government ought to make a full investigation of what is behind these violent manifestations and such demonstrations?
Mr. Callaghan: There is no doubt that there is a great deal of international preparation for demonstrations of this kind, especially in relation to Vietnam, but I believe that we can rely on the good sense of the British people and upon the forces of law and order as expressed by the police to ensure that they do no damage.
Mr. G. Campbell: While freedom to demonstrate must be preserved, will the Home Secretary consider in future the possibility of restricting the size and scope of demonstrations in London, as he has admitted that this got out of control? Is it not intolerable that pedestrians and children should be in danger in the streets on a Sunday afternoon?
Mr. Callaghan: I entirely agree that it is intolerable that a large crowd of demonstrators should sweep through some of the main streets of London, but if the hon. Gentleman reflects, I think that he will see that there are great difficulties about proscribing a procession of this sort. It is a suggestion which I shall keep constantly under attention, but it would present very great practical difficulties.
Mr. Heffer: Can my right hon. Friend indicate what other weapons of violence, apart from flour bags and marbles, were used? Is he aware that in student rags in Liverpool over the years flour bags and marbles have been the usual methods adopted by students, and that the ordinary people of Liverpool have suffered as a result?
Mr. Callaghan: Some of the weapons were smoke bombs, and a great many others might have been let off if precautions had not been taken by the police beforehand. People know what purpose

39
marbles and ball bearings can be used for. They can create a very great state of tension.
Mr. Boyd-Carpenter: In view of the heavy cost in terms of police casualties and the most courageous protection of the United States Embassy by the police, is the right hon. Gentleman satisfied that the Metropolitan Police have proper and sufficient equipment to enable them to deal with organised violence of this sort and on this scale?
Mr. Callaghan: I shall review that matter if the right hon. Gentleman expresses some dubiety about it, but I must say that in my talk this morning to the commander in charge of the police operations, he expressed no doubt on that score to me. He believes that it is possible for London policemen by traditional methods to keep control of this kind of situation.
Mr. Wellbeloved: Will my right hon. Friend take note that he will receive 100 per cent. support from this side of the House in maintaining the right of British citizens to participate in peaceful demonstrations? But will he also note that he will have majority support from this side of the House for any action which the police have to take to deal with hooligans undertaking violent demonstrations?
Mr. Callaghan: Yes, Sir. I have absolutely no doubt that the whole country agrees with those sentiments.
Sir A. V. Harvey: Is the Home Secretary aware that it has been suggested that a similar demonstration may take place next Sunday? Will he say what preparations he has made, should this happen, to see that we do not get a recurrence of what happened yesterday?
Mr. Callaghan: A demonstration is being organised for next Sunday. The organisers are in touch with the police about the nature of the demonstration and I hope that the appropriate arrangements will be made between the organisers and the police to ensure that it passes off peaceably.
Mr. Raymond Fletcher: Will my right hon. Friend accept from me, feeling as strongly about events in Vietnam as anybody in Grosvenor Square yesterday, that
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I and many of my hon. Friends recognise the difference between protest and hooliganism, that I support the one and will support him wholeheartedly in his efforts to suppress the other?
Mr. Callaghan: Yes, Sir.

INTERNATIONAL MONETARY SYSTEM
The Chancellor of the Exchequer (Mr. Roy Jenkins): The House will have noted, I hope with satisfaction, the communiqué issued in Washington yesterday from the conference of the active contributors to the former Gold Pool. The Gold Pool is now at an end and has been replaced by the following arrangements:

First, the seven Central Banks will no longer supply gold to any free market.

Second, they have stated that they no longer feel it necessary to buy gold from the market.

Third, they will not sell gold to monetary authorities to replace gold sold by those authorities to the market.

The co-operation of other Central Banks in these policies has been invited.
In order to give time for these new arrangements to settle down, we have agreed to close the London Gold Market for the next two weeks. While I recognise the difficulties this causes for the London Market, I am sure that it was a necessary step towards restoring normal conditions. As the House will be aware, all other markets reopened in London this morning.
The conference also expressed its support of the policy of the United States Government to continue to buy and sell gold at the existing price of $35 an oz. in transactions with monetary authorities. They also agreed—and the House will appreciate the importance of this—to cooperate even more closely than in the past to minimise flows of funds contributing to instability in exchange markets and to offset as necessary any such flows that may arise; and recognising the importance of sterling in the international monetary system, they agreed to provide further facilities which have brought the total of credits immediately available to the United Kingdom authorities to $4 billion. This includes the I.M.F. standby of $1·4

41
billion which we are free to draw on in full should the need arise.
This agreement represents a signal achievement. The gold stocks of a very important part of the international monetary system have been conserved for monetary use and an opportunity has been created for the system to be developed in an orderly fashion and to be put on a more rational basis.
Mr. Iain Macleod: Is the right hon. Gentleman aware that, although we are grateful for that statement, the serious implications of recent events are best left to the Budget speech and the debate, and that I will deploy my criticisms then? I will confine myself to two main points. First, although I agree that the two-tier system is the best in present circumstances, would the right hon. Gentleman agree that it is not a long-term fundamental answer, but that it buys time? Would he therefore review, either in his own speech on the Budget or in some other speech in the Budget debate, the Government's thoughts on what the final solution should be, including, in particular, a reference to the scheme of special drawing rights?
Second, he must be aware that it caused some surprise that massive support had once more to be offered to the £. I put this tentatively to him, but is there not some danger that this, like so many other recent statements, might be psychologically unsound and, therefore, the reverse of reassuring? Would he finally clear up one point? Sir Leslie O'Brien said yesterday, when asked if we would draw on the standby credit, "I would not be surprised". On the other hand, the Chancellor said in his statement on 30th November:
"'We have no intention of drawing on this credit in the near future."—[OFFICIAL REPORT, 30th November, 1967; Vol. 755, c. 643.]
Therefore, what is the position now? Has he drawn on it or does he intend to?
Mr. Jenkins: On the right hon. Gentleman's first point, I know that he will reserve his main points for his Budget speech, and I have no doubt that he will understand that I will reserve what I say in reply to his invitation to my speech. I think that the two-tier system is the best thing which could have come out of Washington, and I see no reason why the arrangements should not be successful in
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restoring stability, at least for a considerable time. The gold reserves of the countries co-operating in the pool are vast, and there is great importance to be attached to their determination to work together to maintain the price and the present system. I also attach, as I think did the members of the conference, great importance to the steps which the United States Government are taking, as well as those which we are taking, to restore our balance of payments situation.
The right hon. Gentleman's second point was about support for sterling. He and the House know, I think, that sterling, as an international currency, is bound to be involved in international problems such as arose at the end of last week. I think it was right, in these circumstances, that we should show that we had massive reserves behind us.
As to the I.M.F. standby, the view which I took and continue to take is that it would be utterly wrong to draw on the I.M.F. standby as a subvention to a British standard of living which was not being earned by our trading performance abroad. However, of course, the purpose of the standby—there would be no point in having it otherwise—is that it should be ready for use if necessary to deal with spasms in the international currency market such as we saw at the end of last week. The standby has not yet been drawn upon, but it could be, if necessary, at short notice.
Mr. Barnett: Does my right hon. Friend agree that the way to prevent speculators causing chaos of the sort seen recently is to use the time to get away from using gold, sterling and the dollar as currency units? Would he therefore instil a sense of urgency into international circles by getting a new world currency unit, something more ambitious than the S.D.R.?
Mr. Jenkins: I certainly attach great importance to activating the S.D.R. scheme, and possibly going beyond it. However, it is no use saying that we are going to abandon all three existing international units of exchange until we have something which is not merely on the horizon but in our hands to put in its place.
Sir H. d'Avigdor-Goldsmid: Is the hon. Gentleman aware that, despite the optimism of his statement, this is indeed

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the moment of truth for the dollar and for sterling and that, by the tenor of our affairs, which he will deploy tomorrow, and by the conduct of American affairs, those currencies will be judged, and that the judgment will be taken by those who seek only security and not national advantage?
Mr. Jenkins: I am certainly aware that this is an important and delicate moment for the whole international monetary system. I think that we, as a nation which has a large part to play in that system, have a great duty to put our affairs right, and I believe that the United States also has a position to play so far as this is concerned. I am bound to say to the hon. Gentleman that I approach this problem also from the point of view that the interest of all of us is or should be that of the stability of international money and the consequent stability of international trade.
Mr. Dickens: Can my right hon. Friend tell the House why the Government have once again chosen to incur a further standby credit for this country in preference to reintroducing exchange controls to protect the £ against speculative pressures? What will the cost of this standby credit be? Is a new letter of intent in course of preparation? Will there be no end to this process of continually incurring this sort of needless burden for the people of this country?
Mr. Jenkins: No, there is no question of a new letter of intent. The Central Bank facilities have never involved and do not involve any question of undertakings or letters of intent. On my hon. Friend's other point, I do not think that the remedy which he proposes would have helped in the situation with which we were confronted, in which it was extremely important to retain the greatest possible degree of international co-operation that we could.
Mr. Thorpe: With the realisation that a failure this weekend could have had a traumatic effect on the economy of this country and particularly on the maintenance of full employment, is the right hon. Gentleman aware that there will be relief at this agreement and appreciation for the part which representatives of this country played in arriving at the
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bargain? I have certain short-term questions to put to him. First, does he regard the American undertaking to maintain the price of 35 dollars an ounce as of a permanent or temporary significance? [Interruption.] Since this is a question to which at least the Chancellor will have addressed his mind in the last three days, does he regard the undertaking as one of permanent duration or of temporary duration? What are the implications of the latest standby credit for our freedom of manoeuvre in thiscountry? Third—[HON. MEMBERS: "Too long."] If I may put a third and final short question to the Chancellor—what effect does it have on our trading relations with the dollar countries?
Mr. Jenkins: I agree with the right hon. Gentleman at least to the extent of being extremely glad to have the opportunity of expressing my appreciation to the representatives of the United Kingdom who played a significant, although for them exhausting, part in the negotiations in Washington during the weekend. As to the United States undertaking to preserve the price of gold, this is an undertaking given unilaterally and with complete conviction by the United States, and I accept it completely.
The standby credit in no way affects our freedom of manoeuvre. I would, if I may, taking up a point which I might have made in reply to my hon. Friend the Member for Lewisham, West (Mr. Dickens) which was not among his other questions, say that should it be necessary for us to draw in any way upon this credit it will not, of course, increase our total indebtedness. It would be used only in order to relieve other debts which were reduced by money going across the exchanges.
As to our trading relations with the dollar area, this agreement affects not only our trading relations with the dollar area but our trading relations with the whole of the world, and indeed the trading relations of other parts of the world with other parts of the world, and it offers, I think, a more hopeful prospect than looked likely three days ago.
Mr. Sheldon: Does my right hon. Friend accept that the arrangements which have been made depend on considerable restraint being shown by various Central Banks in not selling gold

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and making a profit from it after receiving it from the American Treasury? Bearing in mind the number of small Central Banks, is this not too optimistic an assumption? Therefore, would he ensure that the interim period is used properly to make sure that there is some long-term solution to this problem, since this seems like no such one?
Mr. Jenkins: The arrangement at the moment is between the seven Central Banks which took part in the Washington Agreement. Others are invited to join if they wish, but by joining they would have to accept the rules of the club, and were they to sell gold other than to monetary authorities, the United States and the other original member countries would not sell gold to them to replenish their stocks. That is a very important position indeed, although, while I would think it a grave mistake by the House to regard it as a purely temporary arrangement, I would equally think that there are still considerable problems to be solved in international liquidity, and I certainly hope that we and other countries can play our part in getting a constructive, long-term solution to these problems.
Mr. Maudling: Would the right hon. Gentleman look again at his decision to keep the London Gold Market closed until 1st April? If all gold markets in other countries are to be open, will not this merely mean a substantial, possibly permanent, loss in invisible income to this country? Is there any reason to suppose that the London Gold Market is less capable than others of coping with the immediate problem?
Mr. Jenkins: No, but the London Gold Market does have a very special position. It is the most important in the world. It is the gold market through which the Gold Pool operated. There are advantages in being the most important market in the world, but there is also the disadvantage that when a situation like this arises it may be more necessary to take steps to allow a stabilisation to occur in that market than elsewhere. Although I attach importance to this, and it was certainly the unanimous desire of the Conference that the London Gold Market should be closed for a period—[Interruption.] In spite of the importance which I attach to the London Gold Market, which will
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certainly reopen, I am bound to say that I attach still more importance to international monetary stability in present conditions.
Mr. Alfred Morris: I thank my right hon. Friend for his statement, but can he indicate whether the Washington meeting is to be followed by a meeting of Finance Ministers for the purpose of longer-term thinking and discussion on the world monetary system?
Mr. Jenkins: There is already in prospect a meeting of the Group of Ten at Stockholm in ten days' time which I propose to attend myself. I hope that this meeting may begin a process of advancing further on the points which my hon. Friend has in mind.
Mr. Birch: Reverting to the point made by my right hon. Friend the Member for Barnet (Mr. Maudling) about keeping the Gold Market in London shut until 1st April, does not the right hon. Gentleman anticipate that this is likely to lead South Africa and other gold-producing countries to sell in Paris and Zurich instead of London?
Mr. Jenkins: There is certainly a possibility of this. [Laughter.] Hon. Members opposite must keep a sense of proportion. As I have said, the London Gold Market is of importance and value to this country, but, compared with the importance and value of the stability of the international monetary system, it is one to a thousand. It would not have been right for us to have taken an uncooperative attitude in this matter. I am anxious and determined that the London Gold Market should open as soon as is reasonably practicable.
Mr. Ginsburg: My right hon. Friend has just made an important statement about other Central Banks. Would he consider paying a visit to Paris in the near future to discuss the future with the French finance authorities?
Mr. Jenkins: I hope to see the French Finance Minister in Stockholm in 10 days' time. I look forward to an exchange of views with him, as do Finance Ministers of the other members of the Group of Ten, but I am not sure that at present bilateral discussions would be particularly useful.
Sir C. Osborne: Does the right hon. Gentleman know what the attitude of the

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South African Government and the other gold-producing countries will be to these proposals? If not, will be try to get to know and make a statement to the House as soon as possible?
Mr. Jenkins: I propose to make a fairly substantial statement in the House on another matter tomorrow afternoon. In the meantime, I am not sure that I wish to enter into a further commitment.
Mr. Paget: Can my right hon. Friend say whether South Africa was consulted about this? After all, we do not want to see South African gold all transferred to Paris. The position was pretty ticklish even before this.
Mr. Jenkins: I think that it is clear from what happened on Friday that, with the London Gold Market closed, the amount of gold deals is very greatly reduced indeed. The London Gold Market has facilities which it will retain. I hope that it can open and retain its business in a fortnight's time. South Africa was not represented by her central bankers at Washington. [HON. MEMBERS: "Was she consulted?"] No. This was a decision for us to take in relation to the whole world monetary situation.
Mr. Biffen: As the Washington arrangements to which the Government are now committed provide for a free market for private dealing in gold, can the right hon. Gentleman indicate when he will nullify the Exchange Control (Gold Coins Exemption) Order, 1966?
Mr. Jenkins: No, I cannot, nor do I necessarily see why this change should lead to a difference in the position relating to United Kingdom or United States citizens about the fact that they should not buy gold.
Mr. Atkinson: Would my right hon. Friend accept that the political future of this Government is now at the mercy of gold and currency speculators? Would he also accept that any attempt to placate speculators can be done only at the expense of wage earners in this country? Therefore, will he denounce the activities of these people and tell the House when it is his intention to introduce exchange controls to put an end to the antics of these people?
Mr. Jenkins: What I accept, not now but always, is that not the political future of this Government but the economic future of this country is very closely bound up with a sensible international monetary and trading system. It did not need the events of the past weekend to teach me that, and I should be surprised if they were needed to teach my hon. Friend that. I cannot think that he believes that we can achieve a climate in which we can get the expansion of world trade which is essential to our future prosperity and the turn-round of our balance of payments by taking a purely inward-looking view of the present situation.
Mr. Tapsell: Would the Chancellor accept that, while the new arrangements, which he has reported this afternoon, may well have the effect of persuading the short-term speculators in gold to take their profits and, therefore, provide a temporary respite, they are most unlikely to persuade the long-term hoarders to abandon their prejudice against paper currencies? Is he further aware that the distinction which he has been drawing between the stability of the gold arrangements and the stability of the international monetary arrangements is artificial? Would he, therefore, give great attention to the first point put to him by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod)?
Mr. Jenkins: The hon. Gentleman asked me to accept so many and such complicated things that I am not sure that I can give him the assurance that I do accept them.
Mr. Mendelson: While we accept that we must await my right hon. Friend's Budget statement before he reveals any long-term view, and while it is understandable that he cannot say very much now about the period beyond the interim period, may I ask him whether he would bear in mind that, if he so firmly rejects any unorthodox approach, a considerable body of opinion would be opposed to any policies of deflation and sacrificing the interests of ordinary people if the interim measures are not successful? Would he take special steps then to protect the interests of the people of this country?
Mr. Jenkins: Certainly I regard it as my duty to protect the interests of the

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people of this country. But I cannot think of anything which would more surely lead to a danger of all-round deflation than the collapse of international monetary confidence.
Mr. Hastings: What is to prevent South Africa from maintaining exactly the same level of gold dealings through Zurich and Paris during the next two weeks as she would otherwise have done if the right hon. Gentleman had allowed the London Gold Market to reopen?
Mr. Jenkins: There is nothing to prevent South Africa from doing that. But, having been the centre of the London Gold Pool, and the Gold Pool having closed, as was I think right in the circumstances, it is for us to decide whether we should allow a period for the new situation to settle down. We have thought it right to do that.
Mr. J. T. Price: Whilst my right hon. Friend's very cautious statement will, no doubt, be very favourably received in most parts of the House, may I ask whether he is aware that many of us are still sceptical about the future activities of speculators in this country and on the Continent of Europe? Would he agree that while we have condemned gunrunning as a treasonable activity, until we make the same condemnation of people who gamble with the future economic welfare of our citizens we shall not make much progress in the direction he has indicated?
Mr. Jenkins: I appreciate what my hon. Friend says, and, of course, we can all condemn anyone we like, but it is a little difficult for us to make effective laws against the nationals of other countries.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. Mr. Marsh, statement.

GAS, COKE AND ELECTRICITY PRICES (REPORTS)
The Minister of Power (Mr. Richard Marsh): The National Board for Prices and Incomes has submitted its reports on gas and coke prices and on the bulk electricity tariff to my right hon. Friend the Secretary of State for Economic Affairs and to me. They are being laid before the House today.
For gas, the Board recommends the approval of increases in tariffs varying from board to board and averaging 8·7 per cent. over the industry as a whole; and of increases in coke prices to yield additional revenue of about £5 million. In the light of the analysis contained in the Board's report, the Government accept these recommendations. Revised tariffs will accordingly be presented by the area gas boards to the appropriate consultative councils.
Of the 8·7 per cent. increase in gas tariffs, 2·7 per cent. is due to the effects of last year's Middle East crisis on the costs of the industry's oil feedstocks. When the need for this part of the increase has passed, boards will be asked to review their tariffs in the light of the circumstances then prevailing.
The Prices and Incomes Board has, in the interests of speed, made these recommendations in advance of its report on the further studies which it is making into certain aspects of the industry's operations and problems of pricing policy. It has emphasised that the increases now proposed should be effected in such a way as to secure that the true costs of supplying different types of consumer are reflected more closely in the tariff.
The electricity bulk supply tariff governs the price charged to the area boards by the Generating Board and is thus separate from retail tariffs. The Prices and Incomes Board has recommended that the average price per unit under the Central Electricity Generating Board's bulk supply tariff for 1968–69 should be increased by about 3¾ per cent. over the 1967–68 level, which will give the Generating Board £3·6 million less revenue than it had proposed. The Government accept this recommendation and the Generating Board is being asked to take it into account in drawing up the 1968–69

51
tariff. The higher bulk supply tariff will not, however, affect retail tariffs.
Mrs. Thatcher: We shall, of course, need to look at the reports in detail. In the meantime, may I ask the Minister two questions? With regard to the electricity bulk tariff, as the Prices and Incomes Board has granted increases much less than the Generating Board wanted, would it not be reasonable to assume that the increases in the retail price of electricity which the Government granted last autumn would have been much less had the Prices and Incomes Board had the chance of adjudicating on them in the ordinary way? Will the right hon. Gentleman, therefore, now take steps to refer that claim to the Prices and Incomes Board for comment?
The very large increase in gas prices is, however, less than the Government's allotted increase in electricity prices. The Minister has given an average figure of an increase of 8·7 per cent. Will he say what the maximum increase will be and in which areas?
Mr. Marsh: The hon. Lady is right to wish to examine more closely the Board's report before she commits herself to views on it, because the Prices and Incomes Board recommends that the Central Electricity Generating Board should increase its prices by £3½ million less than the C.E.G.B. proposed. This, however, will still represent a higher price per unit than the area boards allowed for in drawing up their retail price increases announcement in September and there will not as a result be a further increase in retail prices. The one cancels out the other.
As to gas prices, it is, of course, impossible to say how the increase will be distributed within the areas, because it is now for the area boards to draw up their proposals in the light of the overall recommendation and to submit them to the consultative councils. It is worth pointing out that the increase for an average domestic consumer of, say, 200 therms a year will be between 6d. and 1s. 6d. a week.
Mr. Palmer: Would not my right hon. Friend agree that, in view of the recommendation concerning the C.E.G.B. tariff, it would be wise to look again at the
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area board electricity tariffs which were so steeply increased?
Mr. Marsh: No. There is a confusion between the bulk supply tariff and the retail tariffs. This announcement does not call for a reassessment of the area board tariffs.
Mr. Peyton: In so far as there is a difference of view between the Central Electricity Generating Board and the Prices and Incomes Board, on which side of the argument do the Minister and his Department come down?
Mr. Marsh: We are always in favour of that which is right. As I have said, the Government accept the report of the Prices and Incomes Board.
Mr. Lipton: Is my right hon. Friend aware that the general public will view with some degree of suspicion this proposed estimated figure of an 8·7 per cent. increase in gas prices? Is he aware that after he made a similar estimate of the extent by which electricity prices would increase, in the London area the increase is working out at twice as much as he originally estimated?
Mr. Marsh: The problem has to be faced. No area gas board has put up its prices since the first half of 1966. Six of the 12 area boards have not increased their prices for over four years. Between 1962 and 1967, the average revenue per therm sold rose by less than one-half of 1 per cent. compared with a 15 per cent. increase in prices generally over the same period.
Mr. Lubbock: Will not people find it difficult to understand why the Minister should agree to increases of 8·7 per cent. in the cost of gas so soon after the Minister has announced in the House that the Gas Council is buying gas from Phillips at a price of one-quarter of what it costs at present to produce?
With regard to the electricity tariffs, is it not also quite extraordinary that when nuclear power is coming into its own and is able to produce electricity at far less than it is produced from oil or coal, suddenly these enormous increases have to be imposed upon the consumer?
Mr. Marsh: But there is an immediate problem. The gas industry, for example, has financial objectives which were set

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in the first place by hon. Members opposite. Without these increases, the shortfall this year would have been about £40 million. That money has to be met by the public in one way or another and, on the whole, it seems right that it should be met by the people who use the service.
Mr. William Hamilton: With regard to the gas price increases, can my right hon. Friend say whether there is any differentiation in treatment as between domestic and industrial consumers? Can he give an assurance that the gap between Scottish and English gas prices will not be widened, but will be reduced?
Mr. Marsh: I appreciate the point made by my hon. Friend. In its report, the Prices and Incomes Board devotes attention to the question of the difference between domestic and industrial consumers. Again, it has to be accepted that there is a need to ensure that manufacturing industry gets the benefits of cheaper fuels. To that extent, while one cannot say in detail how the increases will be distributed until area boards have had an opportunity to look at the position, the movement will be towards the advantage of industrial consumers.
Mr. Edward M. Taylor: Is the Minister aware that Scottish gas prices are at present 24 per cent. above the national average? Will the increase announced today reduce or increase the differential?
Mr. Marsh: We have to wait, first, to see the recommendations of the area boards, which, in turn, will go to the consultative committees.
Mr. Wilkins: When might we hope that the electricity industry becomes a truly nationalised industry with standardised domestic tariffs throughout the country?
Mr. Marsh: That raises a very big issue indeed.
Mr. Wilkins: It was promised after five years.
Mr. Marsh: It raises a very big and different issue. It raises issues of the extent to which one wants the costs of particular services to reflect the true costs of a particular area.
Mr. Doughty: Will the Minister tell us how much of the gas and electricity boards' revenue which is now being in
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creased will be spent upon new capital works—works which ought to be financed not from revenue but from capital?
Mr. Marsh: One of the problems we face as far as gas is concerned is that even after this increase the level of self-financing is only at around 22 per cent. I do not think anyone would regard that as particularly high.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. We must pass on. I must protect the business of the House.

BUSINESS OF THE HOUSE MOTION (THURSDAY, 14th MARCH)
Mr. Speaker: I have a short statement to make arising out of the proceedings last Thursday evening on the Business Motion relating to the sittings of the House and the suspension of the 10 o'clock rule.
My advisers have consulted me on whether those proceedings should be taken note of to serve as precedents on any future occasion which may arise, since these events may appear to modify the strict application of the 10 o'clock rule.
The directions I have given in reply are that the proceedings at 10 o'clock last Thursday night were unfortunate and certainly should never be regarded either in the near or distant future as forming any sort of precedent. I hope that my directions in this unhappy matter will commend themselves to the House generally.
May I again express my profound regret to the House, and my sincere appreciation of its generosity.
Hon. Members: Hear, hear.
Sir Harmar Nicholls: Could it be made clear, Mr. Speaker, who ought to take the initiative on suspension, the Clerk or the Prime Minister?
Mr. Speaker: We dealt with that point last Thursday and I thought that I had made it quite clear.

BUSINESS OF THE HOUSE MOTION (THURSDAY, 14th MARCH)
  NEW MEMBER SWORN
  Sir Branden Meredith Rhys Williams, baronet, for Kensington, South.

PERSONAL STATEMENT
4.23 p.m.
Mr. George Brown: Mr. Speaker, with your permission, I should like to make a short personal statement.
I do not propose today to go into the history of my various disagreements with Government decisions, and, even more, with the way in which they have been increasingly made and the considerations on which they were so often based. There will be time enough for all that. But in view of some of the wilder speculations and exaggerations over the weekend, I feel I owe it to the House and to my right hon. Friends on this side of the House, in particular, and, if I may say so, to myself, to say why I decided to resign at this time.
It was not despite the gravity of the situation; it was, in a sense, because of it. It is in just such a situation that it is essential for Cabinet Government to be maintained if democracy is to be assured, and equally it is in just such a situation that temptation to depart from it is at its greatest. Power can very easily pass not merely from Cabinet to one or two Ministers, but effectively to sources quite outside the political control altogether. [HON. MEMBERS: "Oh."]
It is open to anyone to challenge my judgment of the situation on Thursday night, when it was learned that the Prime Minister and two other Ministers were already at the Palace, or to feel that I exaggerated the dangers in it. But I am very conscious of past parallels in my own political lifetime, and felt strongly enough on the issue to gather some of my colleagues together and to protest then. When that protest was virtually brushed aside on the basis that what I had done was in itself irregular, I felt that the time had come to leave the Government.
But for what I have read over the weekend, I would feel it quite unnecessary to say that, of course, my purpose in the action I have taken is not to challenge the Prime Minister or to set out to lead a Left-wing revolt against the Cabinet.
Mr. Frank Allaun: My right hon. Friend can say that again.
Mr. Brown: I had a feeling that that suggestion might have amused and surprised some of my hon. Friends, as it did me.
I do, however, feel most strongly that if the authority and success of this Government is to be re-established, as, indeed, it must be, then the basis on which they take their decisions must be changed and their communications within the Government and with those outside must be greatly improved. Just making what are called tough decisions on occasions, valid as they may be, is not enough. There must be a thread of continuity evident in all that is done.
Whether I can help to bring about the necessary change by my resignation and by acting outside of the Government only time and experience can tell; but I shall loyally try. I believe that restoring the morale and the enthusiasm of those who elected this Government with such high hopes in 1966 is a most vital and urgent task facing us. It has seemed increasingly to me over a period that we were ignoring the basic reasons for the decline, that we were misreading all the political signs and refusing to recognise that we ourselves were at least partly responsible for the mood of cynicism in the nation which, whatever our future policy decisions may be, is Britain's greatest threat.
I completely accept that so long as I remained in the Government I fully shared the responsibility for all this, whatever my private or semi-private reservations. I have decided by this action to end that responsibility.
To those who say I did it on the wrong issue and at the wrong time and in the wrong temper, let me just say this. There never could be a wholly right issue or a wholly right time, as those who before me have walked this unhappy road and made statements from this seat can no doubt testify, and if one waited for the cold, calculating consideration of all personal and other consequences one would probably never move at all.
In my view, there is no practicable alternative to this Government which would not be infinitely worse for the nation, to put it mildly. Our business is to try to make this Government very much stronger and more effective and, meanwhile, to campaign as powerfully as

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we can in the country to restore confidence in and support for this Government. I propose to do all that I can to those ends.

FALKLAND ISLANDS
Mr. Gower: On a point of order, Mr. Speaker. I beg to move the Adjournment of the House under Standing Order No. 9, to call attention to a matter of definite urgent and public importance, namely,
the policy decisions announced by the Government today regarding the future of the Falkland Islands and their people.
It is a matter of deep concern, it is a matter of great public importance, and I hope sincerely that you may deem it proper to accede to this request.
Mr. Speaker: Order. I understand that the hon. Member for Barry (Mr. Gower) was trying to catch my eye at the appropriate time when I called upon the right hon. Member for Belper (Mr. George Brown). In that case, I will deal with his application.
The hon. Gentleman seeks 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 policy decisions announced by the Government today regarding the future of the Falkland Islands and their people.
The House will remember that, under revised Standing Order No. 9, agreed to on 14th November, 1967, Mr. Speaker is directed to take into account the several factors set out in that Order and to give no reasons for his decision. In the light of the new provisions, I now rule that the hon. Gentleman's submission does not fall within the provisions of the revised Standing Order, and, therefore, I cannot submit his application to the House.

FALKLAND ISLANDS

  BUSINESS OF THE HOUSE (SUPPLY)
  Ordered,
  That this day Business other than the Business of Supply may be taken before Ten o'clock, and that if the proposed Resolution relating to the Civil Estimates and Defence (Central) Estimate 1968–69 (Vote on Account) shall have been agreed to before Ten o'clock, Mr. Speaker shall proceed to put forthwith the Questions which he is directed to put at Ten o'clock by paragraphs (7) and (9) of Standing Order No. 18 (Business of Supply).—[Mr. Grey.]

ORDERS OF THE DAY
  SUPPLY
  [17m ALLOTTED DAY],—considered,
  SUPPLY

    GREY AREAS
    Motion made, and Question proposed,That this House do now adjourn.—[Mr. Ioan L. Evans.]
    4.33 p.m.
    Sir Keith Joseph: We have put down as the subject for today the grey areas, and I suppose that had better start by explaining what we understand by that term. They are those parts of the country where economic stagnation or decline is taking place, though the results are not necessarily shown in high unemployment figures. It is a subject which concerns a considerable part of the country, and there are large numbers of hon. Members who would wish to speak, had we more time.
    Without any disrespect to the Joint Under-Secretary of State for Economic Affairs, who I see sitting on the Government Front Bench, I must start by expressing our amazement that, on this important subject, the Government have not chosen a Cabinet Minister to reply to the Debate—[Interruption.] Do I see the Secretary of State for Education and Science laughing at that?
    The Secretary of State for Education and Science (Mr. Patrick Gordon Walker): No. I was laughing at something else.
    Sir K. Joseph: I see. The Government have not even arranged for the relevant Ministers concerned to attend. Where is the Secretary of State for Economic Affairs? Where is the President of the Board of Trade? Where is the Secretary of State for Scotland, part of whose area does not have development status?
    Mr. R. J. Maxwell-Hyslop: Perhaps they have resigned.
    Sir K. Joseph: No one can tell from minute to minute with this Government. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) may be right.
    We have chosen this subject because we feel that the grey areas deserve a

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    fair deal, which they are not getting from the Labour Government, and because we want to state categorically that the grey areas will get a fair deal from a Conservative Government, but not at the expense of the development areas.
    Prosperity in the regions, grey, development or neither, depends on national prosperity. The Government can only create the right conditions. The rest must be left to the enterprise and efforts of the people. Subsidies, controls, taxes, however strict or generous, cannot by themselves generate development, create jobs or canalise work to any chosen areas if the economy is stagnant and confidence is lacking. It is a stagnant uncertain economy now.
    Last year, for instance, there was a fall of no less than 14 per cent. in real terms in manufacturing investments. So there is far less creation of new jobs going on, except in the Civil Service, than is needed in the regions. Not only is there too little employment, but, as I shall seek to show, an extravagant and ineffective set of development area policies is actively damaging the non-development areas. No wonder Regional Economic Council chairmen are nearly all complaining or resigning. No wonder the regions are squabbling with each other over development area and grey area policies.
    The Government seem no longer even to be trying to encourage regional enterprise. Last week, the Government gave a negative, stonewalling, discouraging and inert reply to the proposals affecting the South-West from the South West Regional Economic Council. There was a "No" to the spine road and a "No" to a large number of other proposals—
    Mr. W. A. Wilkins: That is not true.
    Sir K. Joseph: Well, a long delay to the spine road, which is a virtual "No". If the hon. Gentleman wishes me to withdraw that and say that it was not a "No", and will accept that it was, "Not in the foreseeable future", I will alter what I said to that extent.
    Mr. Wilkins: The right hon. Gentleman should remember what the Council said.
    Sir K. Joseph: No doubt the Government will reply that the country must wait for the outcome of the Hunt Committee. We are glad that that Committee has been set up. We believe that it had to be set up largely because of the policies which the Government have been pursuing, which have exacerbated the problems of the grey areas. However, there is plenty of action which can take place, even before the Hunt Committee reports.
    The objective is clear. Our aim should be—
    Mr. J. J. Mendelson: Right hon. and hon. Gentlemen opposite never did anything about it.
    Sir K. Joseph: Oh, come. The figures show that the disparity between the grey and the development areas was a great deal less under us than it has become in the stagnant economy of this Government.
    Mr. Mendelson: Will the right hon. Gentleman give way?
    Sir K. Joseph: No.
    Mr. Mendelson: Why not?
    Sir K. Joseph: Because I hope that the hon. Gentleman will have an opportunity of catching Mr. Speaker's eye later.
    Mr. Mendelson: The right hon. Gentleman must not make false statements.
    Sir K. Joseph: Our aim should be to reduce the gulf in employment between the development areas and the rest of the country, and to stimulate the grey areas, where, although there may not be development area levels of unemployment, there is either severe depopulation, a significant fall in the number of jobs, or a general drabness coupled with too low a level of prosperity to lead to spontaneous regeneration. Our aim should be to do all this while keeping the economy as a whole within balance. Those are our objectives and, within them, we shall lean towards the areas of high unemployment.
    We need no reminding that, in some development areas, there are six unemployed for every vacancy. In the grey areas, overall, the proportion is nearer three to one. So we must keep proportion in our policies.

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    We must also recognise that no Government can guarantee to each community a precise continuance of its shape, size or pattern. Functions vanish and old needs are replaced by new methods. We cannot cast the economic map in a permanent mould and keep it there.
    The Labour Government inherited a sensible working system of development area policy which did not in itself damage the non-development areas.
    Mr. Mendelson: Eight years ago, when the right hon. Gentleman the Member for Barnet (Mr. Maudling) was President of the Board of Trade, I moved an Amendment which included encouragement of new industry and diversification of industry in the grey areas. The President of the Board of Trade replied, "Sorry, but we cannot do anything for these areas. We must spend what little money we have on the development areas." There was a direct contradiction in the mouth of the right hon. Member for Barnet.
    Sir K. Joseph: The evidence is not for me to give. The evidence was given by the people of this country just over eight years ago when the Conservative Party won a majority of 100, including a vast majority of the seats in the grey areas. That indicated satisfaction at that time with the performance of the Conservative Government in the grey areas. The hon. Gentleman the Member for Penistone (Mr. Mendelson) was quoting from eight years ago. I am giving him the evidence from eight and a half years ago.
    Mr. Mendelson: They did nothing about it.
    Sir K. Joseph: At that time the people, including those in the grey areas, were broadly satisfied.
    The Labour Government, as I said, inherited a sensible working system of development area policy. It was largely the creation of my right hon. Friend the Leader of the Opposition, my right hon. Friend the Member for Barnet (Mr. Maudling) and my right hon. and learned Friend the Member for St. Marylebone (Mr. Hogg). The strategy was to choose an area, generally based on a large town, and to concentrate resources on improving the infrastructure, housing, transport, amenities, schools, colleges and universities serving that area, thus making it
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    so attractive that firms would want to go there and, once there, would spread their own growth over a wider area. This is the growth centre concept which we believe is the right one. Aid from the taxpayer to individual firms, under the Conservative Government, was in the form of an allowance against profits so that only viable enterprises were encouraged to open up in develpoment areas.
    But our policies did not stop at growth centres. Through our Local Employment Acts, which the Government have kept, we were able to inject new industry into an area far removed from any growth centre where, because of a particular closure, new jobs were urgently needed and industry was willing to supply them. Conservative regional policy thus had both flexibility to deal with pockets of unemployment, as the need arose, and long-term measures to create conditions for self-generating growth in regions where it was needed and likely to succeed.
    The Government have substituted cruder weapons. They scheduled whole regions for help. They put grants in the place of tax allowances, thus supporting activities whether viable or not. They developed the discredited monster, Selective Employment Tax, and, when they feared that the consequences of their own economic misjudgments would wreck their regional policy, they introduced the elaborate and extravagant Regional Employment Premium. Yet, despite all this, the stagnation and lack of confidence created by the present Government have led to no fewer than 36 empty advance factories now in England, Scotland and Wales.
    This new policy of the Government's is costing the taxpayer immense sums. Quite apart from the cost of jobs under the Local Employment Act, where the cost per job under this Government is roughly about the same as the cost under the last Government and in some cases cheaper—I grant this Government that!—a most charitable calculation of the cost of the creation of jobs by R.E.P. and S.E.T. brings out the cost per new job as likely to be somewhere between £3,500, at the lower end of the bracket, to no less than £21,000 per new job created, at the top end of the bracket. The uncertainty of the cost per new job is explained by the fact that the Government have not

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    committed themselves to the number of new jobs they expect to be created by R.E.P. and the S.E.T. premium in the development areas. We have had to interpret what they have said in working out how many new jobs will in fact be created. On the most charitable calculation, each new job will cost £3,500. At the other end of the possibilities, the creation of each new job may cost no less than £21,000, or even more if our assumptions are too optimistic.
    All these different helps to the development areas, investment grants at specially high rates, selective employment tax premiums for manufacturing, R.E.P. for manufacturing employees—the last two go to existing employees; they are not reserved for new jobs—and training grants are all being poured out indiscriminately over vast areas regardless of commercial viability and regardless of job creation or growth generation.
    R.E.P. and S.E.T. go to all existing manufacturing workers, regardless of whether they need it to be kept in business or not. If jobs are the criterion, what nonsense it is to penalise the employment of people in service industries by S.E.T. and what nonsense it is to penalise the very industries—agriculture, tourism and other services—which are so vital to Scotland, Wales, the South-West and parts of many other areas. What humbug it is to boast of a regional policy and allow the Transport Bill to wreck the job prospects in our remoter areas.
    The point is that indiscriminate help spread all over vast sections of the map and unrelated either to new jobs or commercial viability, does no lasting good to the development areas. Such indiscriminate help does not make them inherently more attractive to industry. But that should be the objective. Subsidies, like those the Government are giving to many areas, make areas dependent for survival on more subsidies. We want to make these areas become prosperous in their own right, and our policy is to help them to do so.
    While the vast sums spent may not make the development areas any more inherently attractive, they succeed, coupled with the rest of Government policies, in wreaking havoc in the grey areas. These are areas where, because
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    of the decline of staple industries or the growing capital intensity of some industries or the gradual by-passing of their facilities, like some seaside holiday resorts, or growing productivity, as in agriculture, employment has fallen, or is falling, and Where often there is am outworn environment with decay, dereliction and obsolete housing.
    The results of these cumulative conditions do not always show in employment statistics, because residents travel to work—and within limits this has to be accepted in some areas; because the number of women seeking jobs, and therefore registrable, falls, and because people move out of the area; firms close down, services dwindle, and the unemployment registers do not show the full decline.
    The grey areas—Yorkshire and Humberside may be becoming one, parts of the South-West are to be called grey and perhaps parts of the South Coast, and North-East Lancashire is another—are suffering from the pull of the South-East and the Midlands, on the one hand, and the pull of excessive discrimination in favour of the development areas, on the other. This discrimination has reached a level which we think is far too high. With large investment grants and unemployment subsidies available in the whole of the Northern Region, almost the whole of Scotland and Wales, in a wide Merseyside area and in the South-West, the grey areas are up against severe, perhaps excessive, competition, and all, we claim, without any necessary lasting benefit to the inherent attractiveness or viability of the development areas themselves.
    Industrial development certificate control is being applied toughly, say the Government. Yes, but sensibly, not always. An i.d.c. system is an indispensable part of any regional policy. But the Government say "No" to virtually any i.d.c. in a prosperous region, however much it may increase efficiency. Firms seeking i.d.c.s in grey areas are often shunted off on a tour of the bargains in the development areas, however much the work they might bring would benefit a grey area.
    The effect of this rigid policy is becoming increasingly apparent. Seventy firms are said to have moved recently from Yorkshire. In Yorkshire and Humberside industrial building approvals

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    and employment are falling off against the national trend. The Economic Planning Councils in the North-West and the South-West are complaining of frustrations, and chairmen of these councils have resigned, or talked of resigning. Today we see what L.A.M.I.D.A., that very effective promotional body in Lancashire and Merseyside, has to say about Government regional policy. Moreover, there is sharp unfairness between rival firms inside and outside development areas.
    The present Government's sledgehammer policies are doing no lasting good to the development areas, are certainly hurting the grey areas, and are costing a very great deal of taxpayers' money without proportionate benefit to anyone.
    There must be better ways of achieving our common regional purposes without so much damage to the grey areas. But we should try to avoid either too many varieties of help or too many distinct sorts of area.
    There are development areas. There are special development areas, where coal mines have closed down. There are overspill areas. The larger the number of variants and the more the changes that are made the greater the uncertainty of business men and the less effective will the policy be. Already, business men make a decision on one set of criteria only to find their assumptions invalidated by a change made too late for them to alter course. This may, to some extent, be inevitable, but the fewer and the simpler we keep our distinctions and devices the more business men will regard and trust them.
    That is one of the arguments that predisposes me against a graduated set of grants for grey areas at a lower level than in the development areas. There would be endless disputes over shades of grey, the cost to the taxpayer would be larger, and more distortion and more uncertainty would be introduced. And, if my argument is valid that the present indiscriminate development area largesse produces no inherent improvement in the areas themselves, by spreading the jam more widely we would simply spread a palliative and not a cure. Our strategy would, we believe, help the development areas far more effectively and permanently and with far less harm to the grey
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    areas. Not every part of every development area or grey area can itself be helped, in fact, by any Government, but in development areas and grey areas alike we can aim to stimulate the creation of growth centres which will radiate prosperity and jobs.
    A Conservative Government will retain a bias in favour of development areas, but a bias that is more effective in its real purposes of making the development areas more inherently attractive to industry and less sharp and costly and wasteful than now. We will reduce the sharpness of the difference in the treatments of development and grey areas respectively, helping both more effectively, though at less cost to the taxpayer. I will explain how.
    First, we must be a shade more flexible with i.d.c.s When an i.d.c. is needed outside a development area for a genuine cost-reducing operation which will improve the competitive position of the firm concerned, with only marginal labour implications, we should surely consider it. We will still try to steer to the development areas or, when appropriate, steer to or allow in the grey areas, new projects that can economically go to them. Refusal of i.d.c.s in non-development areas often either kills sensible projects or causes new equipment to be packed inefficiently in unsuitable buildings.
    We are now spending £125 million per annum in R.E.P. and S.E.T premium in the development areas. R.E.P. was presented as permitting without inflation an injection of buying power into the higher unemployment regions. Economists are split on the validity of this argument. Many people concerned with the C.B.I. and Scottish Development Council, for instance, have come out strongly against it. We argued against it, and we voted against it from this side of the House. Though we would have to consider transitional arrangements for those who had made their investment on the basis of R.E.P., we would want to use the money better or leave it in the taxpayer's. pocket.
    We would set out to improve the infrastructure—housing, transport, education, amenities and other services—benefiting the growth centres of the development areas and strategic parts of the grey areas. We would aim by those means to make those centres inherently more

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    attractive to investors. Every improvement in the transport network, for instance, benefits communities not just at the termini, but all along the route. Our air should be to make investors, entrepreneurs and managers want to go to such areas because of their own advantage and their labour supply.
    We would, as I say, keep the bias in favour of the development areas by some tax benefit such as an investment allowance, which helps the profitable, viable firm. Local transport facilities round the growth centres should be improved so that work may flow out and workers flow in from nearby till jobs and investment have been spread. Unemployment must not be the sole yardstick. We must use powers also, as we did, to help isolated towns and areas outside of growth centres where, perhaps, depopulation is a threat to the very survival of a community. We cannot preserve the present pattern of employment, but we must be able to take special situations into account.
    But when all is said and done, the prime, overwhelming need is for greater confidence and buoyancy in the economy, and these are commodities which this Government are unlikely to generate.
    Our strategy will be to save on the extravagant and indiscriminate features of the present Government's policies, and to concentrate help on the infrastructure in both the development and the grey areas, with particular emphasis on growth centres from which we would expect prosperity and jobs to spread. We would act on special situations outside such growth centres when we could properly do so. We shall discriminate in favour of growth centres in development areas by way of tax allowances and training grants, and use the i.d.c. system toughly, but more shrewdly and sensitively than now. We shall retain a bias of a much more constructive, less costly and less damaging nature than now in favour of the areas of highest unemployment, while keeping our arrangements as simple as possible.
    It is economic lunacy to rescue some areas at the expense of others that are less, but only marginally less, in need. The outcome of the Government's policies will only be to turn the present grey areas into development areas without curing the
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    problem of the existing development areas themselves. By our methods, even with the present limited volume of expansion, we would do better for both development areas and grey areas.
    I am sorry, I repeat, that the Government have seen fit not to select a Cabinet Minister—and I make no aspersion on the Joint Under-Secretary—to reply on such an important subject which, but for the time table today, would have commanded a far bigger attendance of hon. Members.
    By our general policies we can expect that a Conservative Government will secure the rising level of investment which, more than anything else, will enable grey and development areas alike to prosper, but we hope that the Government will tell us today what steps they are taking, even before a Conservative Government are returned and before the Hunt Committee reports.
    4.57 p.m.
    Mr. Douglas Jay: The account of the facts given by the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph) both before the present Government and after is a complete caricature. He could have made a better case for some of the things he recommended if he had not so misrepresented the facts at the beginning. I will quote just one fact. Under the Conservative Government, and up to 1964, almost the whole of not merely Wales, but South Wales was descheduled from being a development area at all, with the result that the recovery in Wales has been delayed to a later date than in the other development areas.
    I agree with the right hon. Gentleman and others that the problem of areas intermediate between the development areas and the congested areas is extremely important, but it is essential to understand what the problem is, otherwise—and this was shown in the right hon. Gentleman's speech—we shall be in danger of pursuing policies which will do more harm than good.
    The main need at the moment is not to be misled by the temporarily high unemployment figures into action that would reverse the real progress we have lately made in the development areas. We should avoid hasty decisions until the

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    Hunt Committee has reported, and until unemployment has fallen from the exceptionally high figures of the winter. The prospect is that unemployment will fall over the country as a whole, and with unemployment levels outside the development areas falling, I would expect, apart from some very special cases, the levels in the intermediate areas to become quite low once again.
    We must continue to realise—I think that the right hon. Gentleman admitted this—that unemployment in most of the development areas is still much higher than it is outside in the areas which he called grey areas. The real local employment problem in the next two years or so will be in the really seriously hit pit closure areas which are, in almost every case, inside the development areas. [HON. MEMBERS: "No."] With some exceptions.
    Mr. Mendelson: This is not correct. South Yorkshire, certain parts of Lancashire, and certain other parts of the country are areas of pit closure or scheduled pit closure but are not development areas.
    Mr. Jay: My hon. Friend misunderstands me. I did not say that there were no pit closure areas outside development areas. I said, and I think that my hon. Friend will agree, that the areas where pit closures seriously threaten local employment are largely, perhaps not exclusively, within the development areas.
    Sir Frank Pearson: I hope that the right hon. Gentleman, will not forget that East Lancashire faces not only pit closures but also a very substantial run-down in the textile industry.
    Mr. Jay: I shall come to Lancashire and the North-West. I think I agree with the, right hon. Member for Leeds, North-East that it would be a serious mistake to start extending development area grants to even wider areas than the very wide development areas which were extended in 1966. Of course it is necessary to discriminate in policy between congested areas, on the one hand, and intermediate or neutral areas, on the other. The main way to do this—this is what I think the right hon. Gentleman ignored—is by pursuing an easy i.d.c. policy in the intermediate areas and a very much firmer i.d.c. policy in the congested
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    areas. It then becomes possible, if that is done, as obviously it ought to be, to treat all three types of areas—development areas, intermediate areas, and really congested areas—in a different way.
    Mr. Jasper More: For the sake of clarity, will the right hon. Gentleman make clear what he means by "the congested areas"?
    Mr. Jay: I mean mainly the South-East, London, the West Midlands and, to some extent, East Anglia. They are the main congested areas. The fallacy of supposing that more grants must be paid out, as some people have suggested, in the intermediate areas springs from not recognising that the i.d.c. policy is not merely much more effective but is also much more flexible than a policy with grants. It is also less visible, because people do not see the figures and are not aware of the differences between i.d.c. policy—
    Mr. J. T. Price: I am obliged to my right hon. Friend for giving way in mid-flight. At this point I want to assure him that I know from my local experience in Lancashire that it is very unlikely that with an i.d.c. policy industrial development applications would ever come from the grey areas which are outside development areas. When there is a discrimination between 25 per cent. grants outside the ring fence and 45 per cent. within, the applications simply will not come from any prudent investor who has a 45 per cent. grant available to him. We have debate this issue before, and I hope that we shall debate it again.
    Mr. Jay: A study of the actual figures will show my hon. Friend that a very large number of i.d.c.s are being granted in almost all areas. I do not think that it is generally realised how easy an i.d.c. policy has been followed in these intermediate areas and, in particular, in the North-West Region outside the congested Manchester area. The figures now show that in many ways the policy followed has worked remarkably as intended.
    I do not know whether the right hon. Member for Leeds, North-East has studied the figures worked out by the National Institute, which were set out in The Times Business News of 29th February. Those figures showed that from 1965 to 1967 unemployment in the development area

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    regions, as was intended, has fallen as a proportion of unemployment in the country as a whole. The fact that this was due to the deliberate policy followed is shown by the striking fact that in Wales the improvement only started a year or two years later, and this was because Wales was not schedule as a development area fully again until 1965 because of the policy of the Conservative Government.
    Sir K. Joseph: I saw those figures in The Times and I saw the self-congratulatory letter from the right hon. Gentleman applauding The Times for publishing the figures. I think that it is very dangerous to base any conclusion on two years' figures. What The Times did not do about the N.I.E.S.R. figures was to compare those two years with the same two years of the cycle back in the 1950s and the earlier 1960s. Had that been done, I believe that it would have been shown that the same trend was visible in each of the cycles at that period of cycle. I do not think that the N.I.E.S.R. table copied by The Times proves anything: it was over too short a period.
    Mr. Jay: I think that the right hon. Gentleman is wrong. The table compared the absolute levels of unemployment in 1963, in 1966, and at two dates in 1967. It showed that over that period unemployment was relatively improved in the development area regions. This is a very important fact, and we should all be glad that it has been achieved.
    The other fact that the right hon. Gentleman may not have noticed and which is equally interesting is that the North-West Region has benefited very notably compared with the rest of the country, as well as the development area regions, in the last two years. This is certainly due to the easier i.d.c. policy followed in the North-West, together with the very wide development area of Merseyside, which has undoubtedly improved its position in the last two years.
    To some extent the right hon. Gentleman's expression "grey areas" causes confusion. I think, too, that the expression "growth centres" causes confusion, but I will not pursue that point. What the grey areas really need is urban renewal and—I agree with the right hon. Gentleman—the renovation of what he called the infrastructure. That is what
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    they pre-eminently need, rather than a very great influx of new employment, though some new industry is always necessary in almost all areas. This problem is just as much one for the local authorities and for the Departments concerned with the basic services as it is a matter of industrial development. We need the right treatment in the right area.
    There is a case for saying—here I come, perhaps, a little nearer to the right hon. Gentleman—that, with the heavy investment grants now being paid and the Regional Employment Premium, the handing out of public money for this purpose has gone as far as it ought to go, if indeed it has not gone too far already. Quite a number of experienced people in the development areas take the view that it would be much better to spend the money that is available on capital development, particularly on building factories and extending industrial estates, than on giving subsidies to firms which are in the areas already. This is an arguable view, but it is one strongly held in development areas.
    It is also very high grants in development areas which tend to provoke a feeling of unfairness in the other areas and a demand that the grants should be extended. I therefore hope that we shall not make any hasty decisions to hand out grants in still wider areas than we are doing at present. Indeed, if £100 million is paid out in development areas and £50 million, say, is paid out in other areas outside, very much the same result will be achieved, but at a very much higher cost, as if £50 million were paid out in development areas and nothing, or very little, were paid out outside. In any case, I think that the attempt to draw a hard and fast line for a further group of intermediate areas within which grants are paid would turn out to be geographically impossible, as almost anyone who has tried to draw such a line will agree.
    Therefore, since on the evidence of the figures and facts present policies are broadly speaking producing results, the right course is on the following lines. For the development areas we need on the one hand capital development by the Government, particularly on factories and industrial estates, and on the other—for the time being, anyway—continuation of the present system of grants. For the

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    genuine intermediate areas we should continue the present easy i.d.c. policy, which has the great merit over the system of grants of being flexible both from place to place and time to time, and secondly, urban renewal, renovation and reconstruction of the basic services. In the really congested regions, I hope the Government will continue their present firm i.d.c. policy, which is not nearly one of 100 per cent. refusal which the right hon. Member for Leeds, North-East seemed to consider.
    If the Government continue on these lines, I believe the results which are beginning to be achieved can be pushed further and consolidated, but, if we depart from them in mid-stream there is a real danger that we shall spend more and more money without achieving anything more. Above all, we shall fail to get the employment where it will be needed most in the next few years—in areas seriously affected by pit closures.
    5.12 p.m.
    Mr. Selwyn Lloyd: I do not agree with much that the right hon. Member for Battersea, North (Mr. Jay) said, but, as I want to speak very shortly, I shall not argue with him in detail.
    I wish to make a personal point at the beginning of my speech. Owing to the large number of Committees in this House, I may not be able to listen to criticisms of my speech because I am Chairman of one Committee and have to be there in a short time. I also want to speak shortly because I put my case in the debate on 13th December and I now want to bring it up to date. I am afraid that that constructive, temperate and well-reasoned debate achieved little, except that perhaps it was the reason why the Prime Minister went to North-East Lancashire in January. I was there for three days last week.
    Before speaking on that matter, I wish to say something about the former Member for Nelson and Colne, Mr. Sydney Silverman. I knew him for 40 years. He was a young solicitor in Liverpool when I started at the Bar and he gave me many of my early briefs. We differed violently politically, but we had exciting times together professionally. I had a great admiration for him. I admired him for his courage, for his knowledge of procedure and his respect and feeling for the
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    House of Commons and for his generosity of mind. I remember one case particularly when he showed this just after Mr. Profumo's resignation. In spite of political differences, we maintained friendly relations. The last time he came to the House I remember walking up the stairs with him to the Members' Lobby. Had he still been alive I think he would have been deeply interested in this debate. I felt that I should like to say those few words of personal tribute.
    When I was in North-East Lancashire last week, I attended a meeting of the North-East Lancashire Development Council. The hon. Member for Burnley (Mr. Dan Jones) was there and the Mayor of Burnley was in the chair. It was an all-party meeting. I was told the substance of what the Prime Minister said on his visit in January. He had said that the Government were prepared to act in advance of the Hunt Committee's Report, and that North-East Lancashire could not be allowed to suffer further migration. North-East Lancashire had had a tough time and had difficulties greater than the rest of the country. He looked forward to better times for the area at an early date.
    He went on to say on 8th January that a turn round in the economy had already taken place and that there was clear evidence that the pace of pick-up was quickening, particularly with the advantages provided by devaluation. He left behind an atmosphere of modified hope, but at the meeting of the development council I heard how ill-founded those hopes have proved. I heard a very different story with reference to the actual facts of what is happening in the locality, rather than mere theorising. I was told that in the last two months there had been no improvement in the confidence of inhabitants of North-East Lancashire in their future.
    Although there has been a reduction in the amount of short-time working, the number of wholly unemployed is still higher than it was a year ago. The number of unfilled vacancies is comparatively small. This clearly showed that no industrial expansion was taking place. I was given an example of Burnley Council's plan to rehouse people from London and Manchester and Liverpool at the rate of 250 houses a year. The jobs available

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    have not matched the building which is taking place. In the last six months there have been 224 applications from the South-East for jobs in Burnley, but they could find jobs for only 41 people.
    On the question of expansion by local firms, I did not get the feeling that a modification of the i.d.c. policy was expected to do much good. I was given six cases of firms, which otherwise would have expanded in North-East Lancashire, abandoning their plans or thinking of going to a development area. I was given a particular case, which seemed the height of absurdity, in which it was found that it was cheaper to build a factory to house a computer in Liverpool than to provide the computer in an existing building in Nelson.
    Through migration from the area since mid-1967, the population has declined by 880 and in the Rossendale Valley I was given some very alarming figures of the trend. Perhaps one mistake of the 1960 Act was to make assistance depend on the local employment statistics. Frequently if there is migration the actual statistics are not the whole story, particularly in a textile constituency where there are women workers.
    Mr. Mendelson: That was precisely my argument with the right hon. Gentleman the Member for Barnet (Mr. Maudling) at the time.
    Mr. Lloyd: I have not tried to argue this things on merit in the past. I am glad that this is not to be the test now and that wider considerations will be taken into account. I was given figures which show how one has to look at the facts in each area bit by bit with relation to industrial building. In 1965 the average was 6·9 sq. ft. per insured person in Great Britain, in the North-West is was 6·7 sq. ft., and in North-East Lancashire it was 0·6 per sq. ft. In 1966 it was 8·5 sq. ft. in Great Britain, 7·5 sq. ft. in the North-West and 1·2 sq. ft. in North-East Lancashire. In 1967 I was told the figures would not be likely to be much better. Therefore, it seems quite impossible to say that an area such as this should be treated on a par with other more prosperous expanding and growing areas. Something should be done about it.
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    One worry there is the question over the Leyland Chorley new town. No doubt this is an excellent project, but an impact study is taking place and the result is expected soon. But that study will be only on the effect of the new town, not the effect on the wider area from South-East Lancashire to Preston. Professor Carter, the Chairman of the Planning Council who has resigned or is about to resign, said that it would be better if the Study were made of the whole area. He said that it was on a false basis. The basic assumption was wrong that the new town would have no advantage over neighbouring areas.
    Mr. Ronald Atkins: The original project was for Leyland Chorley, but it now includes Preston.
    Mr. Lloyd: I was quoting Professor Carter. Perhaps the hon. Member would like to take the matter up with him, but leaving aside Preston, it would be better to have a study of the wider area. I was coming to the assumption that the new town would have no advantage over neighbouring areas. It cannot be so. The point made by people in Nelson and Colne and Burnley was that, if there is to be a new town with advantages similar to a development area, no industry will expand in the towns round about Chorley New Town. There must be equality of treatment for the new town and the existing surrounding area, in which case would there be a new town?
    I said that I would speak briefly, but I wanted to show, from my personal discussions last week, that there is no feeling of improvement. A more generous i.d.c. policy is not the answer. The problem is urgent. The present situation is intolerable, not only in the area of which I have spoken but in other areas of which hon. Members know. Immediate steps must be taken to deal with these special areas, whatever they may be called.
    The question is, what steps? I have already said that there should be an immediate adjustment of the Regional Employment Premium and the S.E.T. premium as between the development areas and the intermediate areas. There must also be an immediate adjustment of investment grants. The advantage of that solution as a short-term measure is that it could be announced by the Chancellor

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    of the Exchequer tomorrow. There need be no difficulty about it; it could happen at once.
    As for the longer term, I rather agree with the right hon. Gentleman the Member for Battersea, North that it is wiser to await the result of the Hunt Committee's consideration before getting involved too much in policy decisions. But there mast be much more selectivity both within development areas and outside them in the longer term. I do not see how matters can go on as at present. I agree with the right hon. Gentleman also—this is, perhaps, the only other point on which I agreed with him—that a great deal of the target at which public expenditure should be aimed is the improvement of the infrastructure of these areas. They have valuable assets, and it is nonsense to create completely new places for industrial development when there is already the infrastructure of schools, hospitals, roads and so on on which we could build. Many of these places are close to very beautiful countryside. They could be made places to which people would be glad to come and live, migrating from other parts of the country.
    5.21 p.m.
    Mr. Dan Jones: It gives me a good deal of pleasure to follow the right hon. and learned Gentleman the Member for Wirral (Mr. Selwyn Lloyd) because I have to tell the House that, although we were both at the same meeting together, the right hon. and learned Gentleman was highly selective in his figures. This is not like the right hon. and learned Gentleman, who is usually very fair. My case is that the Conservative Government were guilty of 13 years of neglect in North-East Lancashire.
    I shall speak exclusively of North-East Lancashire, the area comprising Burnley and Nelson and Colne. I saw some self-satisfied smiles on the faces of hon. Gentlemen opposite when I mentioned their 13 years of neglect. I invite the House to look at the figures with me. From 1951 to 1966, this area of the country failed to secure its fair share of the national economic growth. Those years, 1951 to 1966, covered the 13 years of Tory rule and one and a half years of the Labour Government.
    In that period, the national growth in the insured labour force was 13·6 per
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    cent. I could tell the House precisely where the changes came. The growth in the insured labour force on Merseyside was no less than 12·5 per cent. The decline in North-East Lancashire was no less than 11·6 per cent. Those figures come from the Ministry of Labour, and I defy any hon. Gentleman to question their authenticity. On the basis of facts, I have the right to accuse hon. Members opposite of calculated hypocrisy when they try to condemn this Labour Government for the industrial decline in North-East Lancashire. We know the truth.
    In that same period, in the area of North-East Lancashire which I have mentioned we lost 23,000 jobs, and we lost 9,500 people through migration. If hon. Members opposite are trying to challenge the present Government, they can base their case only on false assumption and political argument.
    Sir Frank Pearson: Does not the hon. Gentleman realise that more cotton mills have closed during the past two years in Lancashire—a total of about 150 mills—than in any previous two-year period throughout the past 20 years?
    Mr. Jones: I shall not dispute that. I am making my case upon the truth. Moreover, I challenge any hon. Member opposite to say that anyone tried to do more to remedy the situation than I have done. The hon. Gentleman the Member for Clitheroe (Sir Frank Pearson) knows the facts and knows what I have done.
    The right hon. and learned Member for Wirral gave figures about industrial building in North-East Lancashire. I can give rather different figures, and they are true figures. They were quoted at the meeting in Burnley which he and I attended. In North-East Lancashire we had only one-eleventh of the national rate of industrial building during the period I have mentioned. That is another count in the indictment which I direct at hon. Members opposite. The position was better in 1966, when our share became one-eighth.
    But that is not the end of the indictment. I was a Member from 1959 to 1964, and time and again from the Opposition benches I urged that something be done. So much so that I was called by hon. Members opposite and by some people in the constituency "Dismal

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    Daniel". [Laughter.] Hon. Members opposite can laugh. I do not give a damn for their laughter. I was representing the interests of my constituents and the people round about, and when the Conservative Government at that time had an opportunity to do something, they did damn-all about it. That is the truth.
    Here is an example of the difference between this Government and the Conservative Government. The House will remember well Ellis Smith, the Member for Stoke-on-Trent, South. Ellis Smith and I co-operated for months on end with a company in the Midlands over an expansion in Burnley which would have brought 1,000 additional jobs to Burnley. There was to be a minor expansion in Stoke as well. We had reached the stage when we had the chairmen of the development council in Burnley and the development council in Stoke joining forces with us. Everything was settled. But the then President of the Board of Trade, who now sits in the other place as Lord Erroll, refused to give an i.d.c. Those jobs were sent away from North-East Lancashire.
    Hon. Members opposite may talk glibly about the relative value of industrial development certificates. Had a more generous i.d.c. policy been applied then, we should have been at least 1,000 jobs to the good at that time. Those are the facts. Time and again, when the right hon. Member for Barnet (Mr. Maudling) was President of the Board of Trade, I begged him and other Ministers to come up and see the area for themselves. In the five years 1959–64, not one senior Minister from the Conservative Government came to the area. Only one junior Minister came up, and that was the hon. Member for Penrith and The Border (Mr. Whitelaw)—now Opposition Chief Whip—when, as Parliamentary Secretary to the Ministry of Labour, he paid a visit at my request when I wanted a training centre to be established in Burnley. He came up to analyse the situation, but, in the event, we did not get our training centre.
    The indictment against hon. and right hon. Members opposite is heavy, and today's speech from their leading spokesman, the right hon. Member for Leeds, North-East (Sir K. Joseph), savoured very
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    much of almost calculated political hypocrisy.
    In the just over three years since the Labour Government came to power we have had in North East Lancashire my right hon. Friend the Prime Minister, the President of the Board of Trade, the Minister of Transport, the Minister of Health and the Minister of State, Board of Trade. I do not think that so many people in authority have visited the area in all its history. I do not pretend that the total effect has been satisfactory—[Laughter.]—I am being perfectly honest. That is something that hon. Members opposite have not yet learned.
    It is, of course not satisfactory, and I shall be advocating that satisfaction should not be long delayed. But at least we have the free use of i.d.c.s and the Bury by-pass and the Edenfield-Rawtenstall by-passes, which we failed to get from the party opposite. These transport facilities will make a great difference to the area, and more are scheduled. This is concrete work which the party opposite failed to do. But it would not be right to be satisfied, in view of the facts I have given.
    I should like to put a plan to the D.E.A. What the right hon. and learned Gentleman the Member for Wirral said about six firms wanting to expand in North-East Lancashire was perfectly fair. I know the firms concerned, and they not only want to expand but to export the production from the expansion, which is truly in the interests of the nation. We shall undoubtedly hear my right hon. Friend the Chancellor of the Exchequer say tomorrow that he wants to transfer about £500 million from national consumption into exports. He will undoubtedly be right, and in that case the expansion of the firms of which I am talking is wanted this year. I believe that if we are to save the £ and the economy we must see to it that devaluation works in 1968; 1969 might be too late.
    If those six firms go into development areas, where I agree the financial attractions are very substantial, it will certainly be 1969 by the time they stabilise themselves, tool themselves and train their labour. I want that expansion now because I want the exports in 1968. Even

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    if the gesture were made to the area now it would be belated justice, and there is no reason why the Government cannot decide to give at least 50 per cent. of the difference between 25 per cent. and 45 per cent. grants to these firms which can expand. In short, they and the area at least have the right to the expansion they have earned. That should be possible, and since my right hon. Friend the Prime Minister has said that we can act in advance of the Hunt Committee if circumstances warrant it, I humbly suggest that, notwithstanding what good work has been done, this seems to be vitally necessary, and there seems to be no reason why it cannot be done for these areas.
    I sometimes become very annoyed with responsible people who talk about the area as though it were all cloth caps, satanic mills and cobbled streets. The right hon. and learned Gentleman was quite right when he said that adjacent to such areas there is very lovely countryside. He might have added that throughout the whole of North-East Lancashire there are new central developments, massive and commendable slum clearance works. It is possible to buy a home in North-East Lancashire of comparable value to one in the South for about 50 per cent. of the price. Therefore, people—especially responsible people—must cease to talk about the area in a denigratory manner. It is a commendable and highly civilised area to live in. I have a more than fair knowledge of music, poetry and the arts, and in this area one finds plenty of expression for all three. That is part of living, at least according to my civilised standards.
    I find that people talk about Burnley and Nelson and Colne as though they were textile areas. Of course, they are nothing of the sort. The industry of Burnley at present is rather less than 15 per cent. textiles. It is not generally known that from Burnley came the first jet engine. Every jet engine from Sir Frank Whittle's first to the present Concorde engines bears the results of experimentation at a Burnley factory. In one company alone in Burnley we have over 300 research and development engineers, who have made a handsome contribution to aviation through their engines for quite a long period.
    Another firm has produced a most ingenious dough-making process for
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    bread. The United Nations should be vitally concerned about products of this kind, with about two-thirds of the world's population living in a sub-standard condition. [Interruption.] I do not know what the hon. Member for Clitheroe is laughing about. If he were living in sub-standard conditions that smile would quickly vanish from his face. I am trying to make a serious contribution. Whether he likes it or finds it amusing is a matter for him, but I shall not be diverted. I persist in saying that this is engineering of a very human character. and that I do not understand why the United Nations has not been more concerned about products of that kind, so that we can send such machines to the areas needing our assistance rather than money, which I am not powerfully convinced is altogether properly used.
    Throughout the whole of the three regions there are companies of a comparable standard. It is only two years ago that Lord Brown, a colleague of ours at the Board of Trade, came to Burnley. He went through the industries and spoke to the commercial people and to the people of Burnley. Let us remember that Lord Brown is not really a politician. He is a very shrewd industrialist, able to assess a people very accurately. He said of the people of Burnley that they were ebullient people in an ebullient town.
    I seriously ask the D.E.A. to give some regard to my observations and not to be chastened by the Opposition, for there is certainly no need for such a reaction, and I ask the D.E.A. to see that the Conservatives' failure over 13 years is not perpetuated. The area could make splendid use of any opportunity the D.E.A. chooses to give.
    5.39 p.m.
    Mr. Peter Mills: It is not true to suggest that it is only in the North that there are grey area problems. We certainly have them in the South-West. I speak with experience as a Member representing a constituency which is half and half; half is in a development area and half is not. I know the difference, and the people also know it, for we have seen a very real improvement in overcoming the economic problems in the half which has development area status.
    Indeed, this was started by a Conservative Administration. It is true that the

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    present Socialist Administration has extended it, and we are grateful that this has been done. It has certainly made all the difference to North Devon. Over the years we have had 12 or 15 new factories. This has brought hope, and it has helped many young people to find technical employment which they would not have had in the past. So I speak as one who knows the practical advantages of development area status.
    But I also speak as one who knows the very real disadvantages of not being in a development area. The grey areas present a very real problem. In my constituency it is almost developing into the "haves" and the "have nots". It is as serious as that. The strange thing is that the development area creates a powerful suction effort. One finds that extensions of existing firms in grey areas do not take place, that the firms are prepared to uproot themselves and move into a development area, with all the advantages that are to be found there.
    So the poor grey area suffers doubly. It does not get the factory extensions and, therefore, the employment. Indeed, it loses the small factory that it had. That is the sort of suction effect that occurs. There is no hope, of course, of having any new factories in the grey areas. It is true that the Board of Trade has promised industrial development certificates for certain towns that I have in mind, such as Okehampton, in the grey area. But this never becomes a reality because as soon as it realises that there is no grant the firm immediately looks around and goes to the development area, which may be 12 or 15 miles away. This may be right and the policy that the Government and the Board of Trade want, but it has the very real and serious effect on the small town that, in spite of promises of i.d.c.s, firms never go there because it is not worth their while. So this has a very real suction effect.
    The small town of Okehampton has a very considerable problem. We have made many representations to various Ministries and they have always promised to be helpful and give i.d.c.s. But I regret to say that the problem is as bad as ever. Indeed, it is worse. In my constituency the grey area is deteriorating, and will go on doing so unless something is done.
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    We recently had the Report by Professor Tress on the South-West which went into all these problems in very great detail. Indeed, it spotlighted the problems of the grey areas. It said, in effect, that in such areas agriculture and tourism could not overcome all the problems and that it was necessary for an area like the Okehampton area and, indeed, the Plymouth area, to be included in a development area so that its problems might be overcome.
    What has happened? We have had this Report, but the Government have failed to take any notice of it. Certainly they have promised an extension of the motorways in the future, but they have done nothing. It is as if one went into a restaurant and the waiter kept bringing the menu but one never got the food. This is what is happening all the time. We have report after report, but nothing is done. We are now being put off again. We are told that we must wait until the Hunt Committee reports. The menu is being presented again, but we are not getting the help that the area so desperately needs.
    I hope that the Minister realises that he has destroyed the confidence of the Regional Developmnt Council. I believe that there will be resignations from it in the very near future because the Government have given nothing to the Council to hang its hat on. There is not one concrete fact to enable it to say, "The Government have taken notice and are going to act." It is very sad. I should have thought that the whole future of regional councils was in jeopardy because the Government have dismissed all that they have recommended.
    I want to say something about the men in the grey areas, the people who would like to have these jobs. They are most adaptable men. This has been proved in North Devon, particularly where industry has been brought in. Rural people have been brought into the factories and trained, and they have proved to be very adaptable and willing. The output per man has been very high, and labour relations are very satisfactory. This illustrates what could be done if more light industry were brought into the grey areas. The labour is there and the men are willing and adaptable. With the excellent training schemes that exist, these men can be trained to do a useful job. The country

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    desperately needs increased output per man. These men are willing and ready and need only the help and encouragement.
    I cannot understand—I may be going against my own party on this, but I do not really mind—why when the Government have dealt with one problem by having development area status in one place they cannot move on to the next place. When we have had development area status for some time and new industry has been brought in and things have begun to work in the area, why cannot the Government then be more flexible and move on to the next area which needs help?
    Mr. Charles Fletcher-Cooke (Darwen): This is exactly what we did under our series of development or scheduled areas. We had the courage to de-schedule areas after the medicine had been received.
    Mr. Mills: I am very glad to hear that. I hope that the Government will take note of it. I believe that that is the solution to the problem of the grey areas. Speaking for my constituency, I am certain that once the problem has been righted in a certain area it would be correct o move on to deal with other areas.
    I speak from experience on a very minor scale compared with the very big problems in the North of England, but even though it may be on a minor scale, these are very real problems to the people in the grey areas. I should have thought that there should have been a little more flexibility on the part of the Government and that the Government should take note of reports of regional councils and certainly act upon something. They should have the guts and courage to say, if necessary, "We cannot do it all at once but we will at least do something." If that could be done, I am sure that in time these problems could be overcome.
    5.49 p.m.
    Mr. Derek Page: I listened with great interest to the speech by the right hon. Member for Leeds, North-East (Sir K. Joseph). I should have found it a little more compelling if I had not seen some of the rather desultory results of that planning in my part of East Anglia.
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    When I was elected in 1964 I found that a large estate to accommodate overspill from London under an agreement with the Greater London Council was just being completed, but virtually no factories were coming to offer employment. We ended up shortly after that with 400 empty houses—in a country with a desperate housing shortage—and we had to start right from the bottom buildings up the flow of i.d.c.s. I know that we quadrupled this over the following two years compared with the previous two years only by the good-hearted support and sympathy of the Board of Trade, which has been extremely helpful under the legislation as it stands.
    I have been perturbed and depressed to hear one hon. Member after another speak of "intermediate areas". We have also seen this phrase many times in the Press. Time and again we are given the impression that the really bad problem which dominates everything is unemployment and that all our help must go towards solving it. Of course it is a very bad problem for those areas which have it, but there are other problems which, although different in nature, can be much worse and, indeed, in some parts of the country are worse.
    In East Anglia and other areas there are parts where average incomes are just about at the level of social security benefits. Yet taxation from such areas goes to helping areas with unemployment problems—where perhaps 5 per cent. are unemployed—and this aids not only the unemployed but also the 95 per cent. who are employed. Every man in such an area is getting more than my people get after a week's work, yet my people have to contribute towards help for development areas.
    No wonder that people get angry and that I get complaints that "So-and-so up the street will not take a job because he gets more from the unemployment benefit than when he is at work". I can understand that feeling, but the answer is not to cut the benefit but to raise the standard of earnings in those areas. We have to understand that the problems of these areas are at least as important as unemployment. The great emphasis on unemployment has been due to the hard work put in by hon. Members for such constituencies. I do not blame them, but it is time that more noise was

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    made about the pressing problems of low-wage areas such as East Anglia.
    It is a pleasure to be able to congratulate the Government at this time, and I do so on the work of the Hunt Committee. This is a considerable step forward in regional planning, and I congratulate the members of the Committee on the pace at which they have got on with their work. I understand that they will finish taking written evidence at the end of this month, which indicates that their report might be expected towards the end of the year. That is only a guess, but I expect to see that kind of time scale. The Committee has got a move on, and my sincere thanks go to it.
    I also pay tribute to the various committees and other public-spirited bodies in Norfolk which have put in a tremendous amount of time drawing up evidence of the problems of their own areas. One report, by the "Growth In Norfolk Campaign Committee", sets out in great detail the pressing problems of Norfolk. I recommend my right hon. Friends responsible to read it. It is first-rate material. Several other bodies are putting in a lot of time collecting evidence to submit.
    The questions put by the Hunt Committee make good sense. The first is, what should be the criteria for the definition of these intermediate areas? One must criticise the narrowness of the previous basis. I have already mentioned, with some heat, how I feel about the unfairness of the concentration on areas of unemployment. The previous system has had a strongly deleterious effect on the development of overspill towns. It is true that, since the Government came to office, there has been a greater move towards regional planning, but this needs strengthening much more.
    There is a strong tendency for development areas to draw away firms which would otherwise have gone to the overspill areas, and that makes consistent planning extremely difficult. Time and again, I am told that the Government are not refusing industrial development certificates for the overspill towns, and I am sure that that is largely true. But we know what happens. It is not that these certificates are refused but that,
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    as soon as a firm inquires where it would be suitable for it to go, it is shunted to a development area and it never reaches the stage of putting in an application for an i.d.c. I ask my right hon. Friends in the Departments dealing with this problem, particularly the Board of Trade, to ensure that pressure is not put on these firms, behind the scenes, before they reach the stage of applying for an i.d.c. Many of us are convinced that that is where the damage is done rather than in the refusal of i.d.c.s for which applications have been made.
    One difficulty which the Hunt Committee will meet is in establishing the proper boundaries of the grey areas, because the boundaries of the regions of Britain are based on antiquated administrative criteria which do not conform in most cases to economic reality. When I lived in the Lancashire areas we had constant trouble in the local authorities in trying to achieve proper planning because, although the Mersey Basin is one economic geographic area, the hostility between one side of the river and the other and the difference in treatment between the two produced great friction.
    In East Anglia, the only official statistics which we are able to get refer to East Anglia as a whole. That includes Essex, with Dagenham, Romford and other places with a lot of industry and high levels of employment and earnings. It is economic nonsense to take East Anglia as including such areas. An economic area must be considered as an area of a common economic life, and in East Anglia it is clear that there is a great part, which seems to stretch from Wisbech through King's Lynn and Fakenham to the Suffolk coast, where the economic features differ tremendously even from parts of South Norfolk and certainly from Suffolk. That is an area which suffers badly from low earnings.
    I ask that the boundaries for areas for which statistics are provided should be realistically drawn. I realise the problems which must be incurred in doing so, but the Hunt Committee has a competent staff and the effort should be made. What should the new criteria be? First, I press most strongly that low earnings should be a prime criterion for consideration of help in any future Government policy changes. It is utterly

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    beyond bearing, as I have mentioned, that a man can put in a full week's work for just about the social security level.
    There are large stretches of East Anglia where earnings of £14 a week are not only common but average. I have here tax tables which show income as distinct from earnings. They certainly show that incomes in the area call for attention. I will give the figures on the 1964–65 basis. These show that 50 per cent. of the families had incomes below £825 a year. In the United Kingdom as a whole, 50 per cent. of wage earners earned up to slightly more than £900 a year.
    Mr. Peter Mills: I remind the hon. Gentleman that it is even worse in some parts of the South-West, where the figure is only £12 a week.
    Mr. Page: One of the difficulties is that statistics for employment and earnings are not drawn up by counties. A map was published in the Observer about 12 months ago showing income per head county by county, and Norfolk and Cornwall were the lowest in the country. But there are major differences between different parts of Norfolk.
    Migration should also be considered. Our unemployment is a little above the national average, but it has been kept down by migration. Graphs which the Growth in Norfolk Committee has carefully prepared show this tendency. The 1961 sample census showed that the population structure in Norfolk was about the same as in Great Britain as a whole up to the age of 30, but considerably lower during the working life from 30 to 60 compared with the rest of the country, while there was an excess of old folk in Norfolk. As many of the services for old folk are paid for out of local income, that burden falls on the backs of local workers. The 1966 census showed the position to be even worse, because the proportion of youngsters had markedly dropped and the proportion of workers appeared to be a little worse, while the proportion of old folk was slightly higher. This deterioration must be due to the migration pattern, which also masks unemployment.
    We also have areas of seasonal unemployment. Although the average for the county is only a little above the
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    national level, some areas on the coast, such as Hunstanton, do not have too bad a position in the summer, but get into a catastrophic state in the winter. The problem of seasonal unemployment requires separate consideration and separate remedies.
    As others have rightly said, the infrastructure needs attention. It is impossible to build a sensible social structure by building factories alone. The infrastructure must be built as well, but in Norfolk, although some local authorities want to attract firms from London, the firms are sometimes reluctant to come because of the lack of facilities, such as entertainment centres. This creates a vicious circle, because the local authorities do not have the money to get on with such schemes until the factories have arrived and are contributing to the rates. Special help to build the infrastructure should be considered.
    Another factor is that of economic credibility. Large public funds go into areas where it is difficult to see any sense in building up industry. Some parts of the present development areas have persistent low levels of unemployment, but are still entitled to the grants. I wonder what sense it makes to encourage industry to go to Kendal or Keswick. They may have a good argument, but it is nonsense to encourage industry to go to those areas rather than to Norfolk.
    By "economic credibility" I mean whether it will make sense in the return on the public money invested. Some parts of East Anglia have large resources of manpower resulting from the rundown of manpower in agriculture and they have other facilities which would show a good return from a build-up of industry. For instance, a tremendous source of power is available, just off the coast, from natural gas. These potential economic factors are present and we ought to take account of the likely return on public money invested in one area as against the other, and I hope that the Hunt Committee will note that consideration.
    Incomes in my area are scandalously low. It is sometimes said that the cost of living in rural areas is extremely low and that in the countryside people live on next to nothing. But that is absolute nonsense, as the figures in the Family Expenditure Survey of 1966 show. It is

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    true that rents are about 10s. a week below the national average, but some telling points emerge from the rest of the figures. The cost of fuel and light is the same as the national average, as is the cost of food, which some people assume to be cheaper in the country. Expenditure on clothing is the same, while transport is appreciably more expensive because of the greater distances which people have to travel. There is less expenditure on alcoholic drinks compared with the towns. Expenditure on tobacco is only 19s. compared with 23s. 9d. in the rest of the country, and expenditure on domestic durables such as vacuum cleaners and television sets is only 20s. 3d. compared with 26s. 11d., but that is because the people in these areas do not have the money left to spend on those things. That is the picture of Norfolk and other areas which emerges from the figures of expenditure and income.
    The remedy for these economic difficulties is, first, realistic boundaries. The present boundaries of areas for which statistics are available are economic nonsense, and realistic boundaries must be drawn in the consideration of remedies for the problems of the grey areas. Secondly, as I have said, it is not just the refusals of i.d.c.s which cause trouble, but the fact that firms are often shunted away before they get to the point of applying for an i.d.c.
    Thirdly, capital investment is needed. If earnings are to be increased, it is imperative to have capital-intensive industry. Decent earnings cannot be obtained from labour-intensive industries. If earnings in the grey areas are to be raised, the 45 per cent. investment allowance must be applied at least to certain specified centres—and I agree with the use by the right hon. Member for Leeds, North-East of the phrase "development centres".
    Grants for infrastructure are also imperative if balance is to be obtained, especially in areas such as Hunstanton and Heacham where the building of industry might not make particular sense. The Government should consider the advisability of having Government establishments in these areas. There was considerable local unemployment, distressing half-a-dozen villages in the Bircham area of Norfolk, but the Construction Industry Training Board has done a wonderful
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    job by mopping up unemployment in the villages around. Government Departments on the coastal area of Norfolk could do much to boost employment, particularly during the off-season.
    The strengthening of regional government is essential to effective regional policies. There has been some move in this direction by the Government, but it is time that we considered having Select Committees for these areas so that hon. Members could bring much more effective pressure to bear in their investigations and in their representations to Ministers. It is often difficult to get details about regional proposals. Select Committees which could bring forward and examine witnesses on regional developments are long overdue and should be urgently considered. One last point—[HON. MEMBERS: "Hear, hear."]—I have waited a long time to make it. I have great fears about some of the effects of the Transport Bill on rural areas—[An HON. MEMBER: "What about Beeching?"] Yes, we had a rotten deal from Beeching and I hope that the Transport Bill will not have a similar effect on road transport in remote rural areas.
    I appreciate the need to build up the railways, but large areas of Norfolk do not have railways at all and are much more dependent on road transport than those in the towns realise. A limit of 100 miles may be small in a large conurbation, but North Norfolk, which is just over 100 miles from London, almost the only conurbation within reach, will feel a disproportionate effect from this arbitrary limit—
    Mr. Bert Hazell: Would my hon. Friend not agree that such remaining railway lines as there are in rural Norfolk are now threatened with almost immediate closure?
    Mr. Page: We are negotiating about that, and I am grateful to my hon. Friend for his help in putting on this pressure, for which I, too, have had some responsibility. Does the 100-mile limit make sense in these areas? Firms might tend to stay within 100 miles of London rather than risk a refusal of licences.
    One hon. Member after another has spoken about the employment problems of North-East Lancashire, but until now, no one has spoken about Norfolk. Through the Hunt Committee, the Government are offering us a chance of

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    action. When we get these firms, as I am sure we shall, the trade unions will have to play their part to see that some of the extra income goes to the workers, which has not always happened. All the wings of the Labour movement have a part to play, and I hope that the political wing will now do its part.
    6.13 p.m.
    Mr. Charles Fletcher-Cooke: I have one short, sharp suggestion for the Hunt Committee and the Government Front Bench. If the Government are determined upon this violent discrimination between those who get the "lolly" and those who do not, they must realise that there will be a blight at least 50 miles from, and parallel to, the frontiers of the development areas, as was so well explained by my hon. Friend the Member for Torrington (Mr. Peter Mills), through whose constituency runs such a frontier.
    I am against this violent contrast. It would be far better to concentrate not on direct industrial aid but on the infrastructure, the housing and those things which make for the quality of life. I fear that the Government are too far committed to their present policy to hope for a reversal, but, instead of drawing the frontier around those areas which are particularly badly done by, it should be drawn the other way around—around those which it is particularly desired to hit.
    By drawing a frontier around Wales, Scotland and the North, we would primarily hit not Birmingham or London but the areas between Birmingham and the North, Birmingham and Liverpool and Birmingham and the Welsh border. They will experience the suction effect, and they are not the areas which this Government or anyone else want to damage, or at least not to expand. Those areas are the Midlands, the West Midlands and the South-East.
    Would it not be better to recognise that, difficult though it may be politically, and to draw the boundaries around such areas as it is desired not to expand and to allow the remainder, while having less benefit than development areas at present get, to have at least some benefit? That is a suggestion for the Hunt Committee and is in line with the general proposal that unemployment should no longer be
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    the criterion. That is the message from the C.B.I. and from the Lancashire and Merseyside Development Association. All recent reports have been unanimous that other criteria should be considered, in which case I think that the boundaries which I suggest will be found to be right.
    Then the areas disadvantaged will be those which it is desired to disadvantage, which already have a high rate of growth and production and are in danger of boiling over. Therefore, if this contrast is to continue, if these rebates are to continue, if this policy of all-or-nothing on each side of the frontier is to continue, the frontier must be redrawn on that basis.
    After all, I do not believe that the Government wish to hit the grey areas. Neither the Government, the Hunt Committee nor anyone else believes that the desired effect in the intermediate or grey areas is achieved by means of i.d.c.s. First, those who might apply are shunted off into development areas or shunt themselves off, because they get such enormous benefits thereby. I am sure that North-East Lancashire, Norfolk and half of my hon. Friend's constituency would be much better off if the frontier could be drawn negatively rather than positively, with an eye to the areas which we wish to damp down rather than to those which we wish to pump up. I promised to be brief, and I think that I have observed that promise.
    6.18 p.m.
    Mr. Edward Lyons: I hope to be even briefer in the hope that one or two other hon. Members may be called—and I hope that that will be remembered in my favour in future.
    I am the first speaker so far from the West Riding of Yorkshire, although I am aware that others, including the hon. Member for Bradford, West (Mr. Haseldine) whose constituency adjoins mine, have been waiting patiently, listening and learning and hoping to speak. Perhaps, to some extent, I can speak for them.
    I am concerned about the Government's policy over areas such as mine in Bradford. The more help which is given to development areas the worse becomes the situation of towns in the West Riding. For example, in Bradford we have been losing 2,000 jobs a year for the last five years, and this year

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    we have lost nearly 4,000. The population has been leaving at the rate of 8,000 a year since 1961.
    These results are due to an over-dependence on one industry and a lack of amenity which is comparable to larger towns in Britain. When an industrialist situated in Bradford thinks of expanding his business, he is likely to do it elsewhere in a development area. If he thinks of coming to a place like Bradford, he says, "How does it compare in amenity with certain larger towns?" If amenity is what he wants, and if he decides that Bradford cannot provide it, he goes to a larger town. Or he may say, "What about the financial inducements?", and then decides to go to a development area. While the Government are seeking to prevent a few hundred people from leaving development areas, 8,000 people a year are leaving Bradford. I am sure that that situation is repeated in many towns in the West Riding.
    I know that it is a long-settled policy of the Board of Trade not to assist grey areas. The right hon. Member for Leeds, North-East (Sir K. Joseph) carefully did not say what the Conservatives had done for the grey areas during their period of office. They did nothing at all. We are reaping the cumulative fruits of that long period of neglect.
    I hope that the Government will consider how much they can get for the investment of each £ in a grey area compared with what they can get from the investment of each £ in a development area. While they are creating a few hundred jobs in development areas by the expenditure of a fixed sum, they might find that the expenditure of the same sum would prevent thousands of people from leaving the grey areas in the West Riding.
    It is essential to attract people to industrial estates. It is interesting to note that in Bradford an average of only 13 industrial development certificates a year were issued between 1961 and 1966. That is not the sort of number which will produce a revolution in towns of that kind. Over half the working population is employed, directly or indirectly, in the textile industy. That industry is fighting hard to keep abreast
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    of modern developments and to keep its markets. But mills are closing and the labour force is contracting, partially due to the introduction of modern methods.
    There are real problems. Unless the Government appreciate that the harm done to some other areas may be greater than the good which their assistance does to development areas, the present trend will continue. I beseech them to pay heed to what is happening in areas such as the West Riding. I feel that when the Hunt Committee reports the picture will be shown in its stark reality, and that does not suggest a great future for areas such as mine.
    6.23 p.m.
    Sir Frank Pearson: I shall be very brief. The number of interventions made in this short debate indicates how important is the subject of the grey areas. It is clear that there is great dissatisfaction and unease, not only in North-East Lancashire, which is particularly badly hit, but in many other parts of the country, because the development district policies which have been applied since 1966 are totally misconceived. They are unbalancing industrial development and distorting the normal industrial development, and in the existing situation of stagnation it is very doubtful whether they are doing any good at all to the so-called development districts.
    The hon. Member for Burnley (Mr. Dan Jones) referred to North-East Lancashire. I was sorry that he dwelt so much on the past and so little on the present. The people of North-East Lancashire want to know what will happen to them and what action the Government propose to take. I particularly regret that there is not a Cabinet Minister on the Government Front Bench to tell us what the people of North-East Lancashire can expect. They will be particularly grateful to my right hon. Friend the Member for Leeds, North-East (Sir Keith Joseph) for stating where the Conservative Party stand and for saying that help will be given to areas such as North-East Lancashire even if their demands take assistance from the development districts. We shall not begin to deal with this very difficult problem until an entirely new look is taken at development district policy.

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    Is it right that a great industry like Fords on Merseyside, which is profitable and well-established, should draw about £1 million per annum in subsidies for their employees when places like East Lancashire receive no assistance at all? Surely there is a case for the grey areas, which were in the forefront of the first industrial revolution but which are lagging behind in the second. I do not think that anyone in North-East Lancashire would ask for full development status to be given to the area, but we ask for special consideration and some assistance for investment in machinery and priority in the development of communications. Nothing more useful could be done for North-East Lancashire than to sanction as a matter of the highest priority a new motorway linked with the motorway at Preston.
    As the hon. Member for Burnley said, many Ministers have visited the area in the last two or three years. The other day we had the President of the Board of Trade. We have had the Prime Minister. But after every visit all we get is another inquiry and another committee. That is no good. I hope that when the Parliamentary Secretary replies he will be able to give the people of North-East Lancashire a solid promise of assistance. If he does not, an amount of disillusionment will be created in North-East Lancashire from which his Party will never recover. Let the hon. Gentleman tell us what the Government propose to do for North-East Lancashire. The time for promises and inquiries is past. We want action.
    6.28 p.m.
    Mr. E. S. Bishop: I wish to be very brief because a few more Members wish to take part in the debate, which is of great importance to many areas, and the grey areas need far more publicity than they have had. While we welcome the great support in the way of finance and facilities given by the Government to the development areas, the grey areas need far more of the industrial and financial spotlight than they have been getting.
    I wish to make two main points. First, there should be a reassessment of the grey areas based not purely on geographical considerations, but on various other factors. One is the population loss from dying industries. We should have regard
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    to the contraction of industries such as mining and textiles. We should have regard to the unattractive industrial environment in some places. I refer to slag heaps, disused factories and other factors which do not make the areas very attractive industrially or socially. We should have regard to the over-concentration on one or two areas. Speaking on behalf of my colleagues in Nottinghamshire and Derbyshire, in particular, I refer to the coal mining industry, in which the contraction will be very considerable between now and 1980, and to those areas in which the textile industry is contracting.
    We should have regard to the poor communications in many areas, to the lack of good routes and roads and to areas in which travelling distances for workers are very great. We should certainly have regard to the low earnings of the workers of many regions. This aspect has been referred to by my hon. Friend the Member for King's Lynn (Mr. Derek Page) and others. In the East Midlands area, the average earnings are below the national average. This represents a real problem. We should also have regard to the poor industrial facilities.
    The Hunt Committee should be approaching its task on the basis of these considerations as well as the others which have been raised in the debate. On those grounds, I suggest that there should be a new assessment of the basic needs of these areas. There should be a review to channel some of the help—which is now likely to go to the development areas—to the grey areas, which, unless positive action is taken very soon, will become the black areas and the development areas of the very near future. I believe strongly that i.d.c.s should be given to far more applicants who want to settle in the grey areas after consultation with the local authorities concerned.
    My second point is the need for greater public accountability. Firms receiving Government aid in the form of money and facilities should be pressed far more strongly to go to the grey areas and to the development areas if they are to get that assistance. Secondly, where Government aid is given, there should be proper and early consultation concerning possible closures and redundancies. Far too many firms are putting off workers without adequate consultation, with no consultation with economic development

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    boards and councils or with local authorities and no consultation with Government Departments. This is important. Consultation must take place at the earliest opportunity so that all agencies concerned can help to draft more work into these areas and give them the help which they need.
    My third point is the important aspect of social and human relations in industry. The workers concerned, who have given their lives to the industry, have a right to know what is going on and should be consulted at the earliest opportunity. The Government should draft small study teams from the Ministry, management and trade unions into some of these areas to ascertain the potential of the firms where industry is dying, so that the potential of the workers and the facilities can be known and, if possible, work can be drafted in as soon as possible. The Government have a job to do in drafting more publicly-owned industries into these areas. I should like to see far more publicly-owned industries taking their part in these areas alongside private enterprise.
    These are important points. Those of us who represent the grey areas are concerned about the way things are going, although we recognise the priority which must be given to the development areas. I hope, however, that the points which I and other hon. Members have raised in this debate will be studied very closely, and before the Hunt Committee reports. We hope that that Committee's report will be produced very soon.
    6.32 p.m.
    Mr. Jasper More: My constituency is what the right hon. Member for Battersea, North (Mr. Jay), in reply to a Question from myself, described as a congested area. That is to say, our average of population is about the thinnest and smallest in the country and we live with simply a collection of small country towns. As a result of being in what is called a technically congested area, we get no i.d.c.s for new industries. Our employment rate does not increase appreciably, simply for the reason that our population goes away. It has been declining for a hundred years and is still declining.
    We have three problems. One is the proper implementation of i.d.c. policies.
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    This has become so ridiculous in an area like ours that it should be looked at as a matter of urgency, particularly when we are threatened, as we are in part of my constituency, with closure of a coal mine which employs 750 miners.
    My second point, to which many hon. Members from rural areas have already referred, is not only the declining population but also their low earnings. Obviously, if the level of earnings is to be brought up to the level of the West Midlands industrial area, more industry must be brought in.
    My third point—and these points have been raised both by the Salop County Council and by the West Midlands Economic Planning Council—is the question of overspill areas. I wish in particular to refer briefly to the problem which an hon. Member who spoke earlier probably has in his constituency: that is, the location of a new town.
    In my constituency, we have Dawley New Town. Its development is entirely dependent upon the movement of industry into it. Under the i.d.c. system as now administered, industry is not allowed to move into it unless it comes from the very small area of the Birmingham conurbation. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) will remember with pride and only too well the establishment of Dawley New Town. He will know that it has recently been doubled in size by the present Government. It is not much use doubling the size of a new town, however, if no provision is made to bring industry into it.
    I urge as a matter of the utmost importance that this problem, which has been brought to the Government's attention both by the county council and by the West Midlands Economic Planning Council, should be given first priority in any reassessment of the existing policies for development areas, grey areas or even, as we are still called in our part of the world, congested areas.
    6.35 p.m.
    Mr. Raymond Fletcher: I can add only a short footnote to what has already been said. I should, however, have liked rather to change the character of the debate, because I object to the terminology which is used. I do not like planning terminology in any event. The

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    terms "grey area" and "intermediate area" give a totally false impression to the industrialists whom we wish to attract to these areas.
    They are not grey areas in any sense of that term. That is planners' jargon, which I do not like. They are areas filled with people who have contributed much to the past prosperity of the country and who can contribute even more to our future prosperity. They are areas, and I speak of my own constituency, which contain miners—ex-miners now, unfortunately—who have demonstrated in factory after factory throughout the East Midlands that they can be trained in a very short time to do the most highly-skilled jobs.
    It is a matter of great satisfaction to me that the firm which I consider to be the best in the United Kingdom, and I will savage any hon. Member who challenges this—I refer to Rolls Royce—has had remarkable success in taking people literally from the coalface and transforming them into highly-skilled workers in a very short time. Let us, therefore, get away from the image of hunger marchers and grey people with a grey outlook, grey faces and in grey cloth caps. That is not an adequate presentation of the situation as I see it in my constituency and in other constituencies.
    These are areas with the labour. They are areas with the skill. They are areas with the adaptability. Let us say to all industrialists who want to expand—and let us hope that even after tomorrow's events there will still be some industrialists who want to expand—that these are the areas in which they should expand, not because we need help, not because we need charity and not because we have 10,000 committees telling them to expand, but because there are very good profits to be made. That is the carrot which will attract those people to these adeas. I proclaim to the entire House, in the fervent hope that it goes outside the House, that there are big profits to be made in my constituency. So come along, boys.
    Just as much as I resent some of the terminology, however, and much as I resent at times the constant proliferation of all types of committees, amateur as well as profession, which try to do my job for me as a Member of this House,
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    I resent even more that people in the grey areas are silently suffering. I speak from experience of my constituency.
    My right hon. Friend the Minister of State, Board of Trade, with whom I have been practically living in the last two years in an effort to deal with this problem, knows very well that there are many area—mine is a conspicuous example—which have done a lot to help themselves. They have cleared the sites, shifted the slag-heaps, negotiated the loans, bought the land, laid on the sewerage and water. I could give more detail, but I have no time. I had prepared a speech which would have lasted 90 minutes, and I am in difficulty.
    These areas, which have helped themselves, have made themselves attractive and have prepared the sites for industry, face one difficulty. I do not quarrel with Board of Trade policy on i.d.c.s, but the difficulty is to bring these areas into effective contact with potential customers for the sites.
    I want to make one practical suggestion, and I hope that my hon. Friends from the Department of Economic Affairs will support me in a little campaign which I intend to mount against the Board of Trade on this matter. Would it not be possible for them to establish location of industries bureaux in these areas to act as public relations outfits for the grey areas and the local authorities in the grey areas, and as a means of maintaining effective and fruitful contact between them and industrialists who want to expand?
    I repeat, we do not want charity, we want industry, and in my area we can offer industrialists a very good profit.
    6.40 p.m.
    Mr. Paul Hawkins: I am very pleased to follow the hon. Member for Ilkeston (Mr. Raymond Fletcher). I agree with practically everything he said, although my area is not the same as his: on a map, mine would be coloured green: it is a rural area. However, it is suffering from the same sort of problem that we cannot get i.d.c.s. I fought for about 12 months to help bring in a factory which would employ 15 men. The firm had had all sorts of suitable offers in other parts of the country. In the end the firm came, and it has been a great success and has

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    fitted in the sort of people we want employed in that town.
    The trouble in my area is the low wages which result from a lack of assistance to agriculture. The agricultural worker in my area sets the tone for wages for everyone else. The average earnings, as I have said on innumerable occasions in this House, of the agricultural worker are £5 a week less, for working five hours a week longer, than the averge of every other manual worker in the country. That is the extent of the problem we have in East Anglia. In my opinion, the first priority ought to be to make agriculture prosperous enough to pay the right wages for skilled men remaining in that industry.
    Nevertheless we still want to have suitable industries for our small market towns. One small market town, East Dereham, is famous for the firm of Crane-Fruehauf, and yet we still, nevertheless, have a large number of unemployed for a town of such a size. We do not want charity, but we do need light industries, and I would ask the Board of Trade to be a bit easier about issuing i.d.c.s. We have highly-skilled men who can maintain very expensive machinery on the farms, but many, especially of the younger men, are looking for jobs off the farms and in light industry and we badly need light industries in my part of the world.
    Mr. Hazell: Would the hon. Member not agree that when an industry goes into a purely agricultural area somehow or another the agricultural industry is able to pay higher wages—because of the competition for labour?
    Mr. Hawkins: I do not think that is correct. Otherwise earnings would be higher. I do not believe that that is in fact the case. I am sorry to disagree with the hon. Member. I know the interest he has in farm workers and in the agricultural industry in his part of the world, but I still do not agree.
    The costs of living of the sort of people I am talking about are far heavier than many townpeople believe. This has got to be borne in mind. The majority of farm workers today in my constituency have to have a car to travel to work, and that is a costly thing, and I am very
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    much afraid that we may find it even more costly after tomorrow. In addition, though it sounds strange, food costs in many small market towns are higher—because we have not got supermarkets. A very large number of retired people have come into my constituency and they all complain because they cannot go shopping around supermarkets, and their weekly housekeeping costs are several shillings a week more.
    In short, in East Anglia, even in the prosperous agricultural areas, we need more i.d.c.s, and we need more help for agriculture to enable it to pay a proper wage for the job.
    6.45 p.m.
    Mr. Arthur Davidson: I shall make one of my usual "mini-quickie" speeches and shall make just two points which perhaps will be dealt with in the Government's reply.
    I speak for North-East Lancashire, and I want first to suggest that the Minister should suggest to the Hunt Committee that it brings in an interim report, a skeleton report dealing with North-East Lancashire, because in North-East Lancashire we firmly and passionately believe that for remedial measures we should have a short list.
    On i. d. cs, I do not want to dwell upon what has already been said except to say that I should like the Minister to consider whether he will not only actively encourage i.d.cs in North-East Lancashire and similar areas but will actively discourage i.d.cs being granted to firms from such areas to develop in development areas. In other words, I want not only the encouragement of i.d.c.s for firms to develop in these development areas, but I want positive disencouragement to them to develop outside them. I believe that the whole purpose of regional policy should be, not to lure industry away from areas like North-East Lancashire, but to lure it from what are described as the over-heated areas.
    6.46 p.m.
    Mr. A. G. F. Hall-Davis: I think all of us will pay tribute to the brevity of the remarks of the hon. Member for Accrington (Mr. Arthur Davidson). The whole tone of the debate has been one of moderation, but I should not like the Government

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    to be under any illusion, because of that, about the fact that there exists very considerable bitterness and dismay in the grey areas at the apparent lack of urgency with which the Government are addressing themselves to this problem.
    My hon. Friend the Member for Torrington (Mr. Peter Mills) was one of many who put their finger on the difficulties. Like my hon. Friend's, my constituency is half in and half out of a development area. He spoke of the suction effect being strongest on the nearest localities. I think that that has been the theme which has run through many of the speeches in the debate. He also said that in his view the grey area half of his constituency was deteriorating. This brings us to another point which is perhaps one of the crucial issues of the debate.
    I believe that there is a general feeling in the grey areas that their position is deteriorating, that they are not enjoying as good prospects at the moment as they were some years ago. We have had, by chance, a considerable emphasis on North-East Lancashire. There was the speech of the hon. Member for Burnley (Mr. Dan Jones) and the speech by my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), who has paid a great deal of attention to that area, and now there is myself, by chance replying for the Opposition. As the hon. Member for Burnley knows, I worked in that area for the whole of the 13 years about which he was talking. The whole of my business interests at that time lay in that area. I always endeavoured to subordinate my political views to promoting the general welfare of the interests of the district.
    I would offer a view which must be partial but which I am trying to make as impartial as possible—that there was more confidence in the North-East Lancashire area in 1964 before the previous Government left office than there is now. I think it was the hon. Member for Accrington who interjected, "What did the Tories do for North-East Lancashire?"
    Mr. Arthur Davidson: No, I did not.
    Mr. Hall-Davis: If the hon. Gentleman says i: was not he, then I withdraw that comment. Certainly I heard that in
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    terjection from someone on the benches opposite.
    It was designated as a development area for seven years. During that period I was happy to witness a number of major and national firms establishing factories in North-East Lancashire. If one looks at the figures issued by the Lancashire and Merseyside Industrial Development Association as an appendix to its evidence to the Hunt Committee, it appears that North-East Lancashire had a very high approval of industrial building per employee in 1960. The figure was 14·5 sq. ft. per employee. That compares with 1·2 sq. ft. per employee in 1966. I feel that it is not necessary for me to say more than that in order to show that there are at least two sides
    to the question.
    Mr. Dan Jones: While there was a 13·6 per cent. increase in the insured population, there was a decrease in North-East Lancashire of 11·2 per cent. in that same period. Those facts are beyond dispute. When it is remembered that these areas made a tremendous contribution for fifty years to the industrial well-being of the nation, those figures show how they were let down.
    Mr. Hall-Davis: I thank the hon. Gentleman for that intervention. Having lived there for the whole of my life, I am as well aware as he is of the long-term background, and, in a moment, I shall say a few words about the age structure of the grey areas. He will find that some of the reduction in the employed population in East Lancashire in the 1950s was completely unavoidable due to the deterioration in the age structure which took place in the 'thirties and 'forties, which were grim periods for Lancashire.
    I hope that the Joint Parliamentary Secretary will deal with one matter which is of considerable significance to the area, and it is the criticism made by Professor Carter of the fact that the impact study for North-East Lancashire is being based on the assumption that no special development incentives will be available to the Preston New Town. I see great advantages in the Preston New Town concept. It is a development on the scale which one needs to bring life to the area.
    That the judgment must be right about the impact on these North-East Lancashire towns is vital to the future

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    of the area. If the decision were taken on the basis that no investment incentive would be given to Preston and then, when the decision to proceed had been taken, the basis of investment attraction in Preston was changed, a grave disservice might be done to North-East Lancashire. This is a point of great substance, and I hope that the Joint Parliamentary Secretary will deal with it.
    Throughout the debate, great sympathy has been shown to the development areas, as it has been in the evidence submitted to the Hunt Committee. I believe that we can get the basis of any discussion on the grey areas right only if we are clear that areas with unemployment running at rates of 4 and 6 per cent. should have priority. I am sure that that is something which we all accept.
    What I want to do at the outset is to sound a word of caution. The fact that they must have priority does not mean that no help should be given to grey areas until all the problems of every development area are solved. The right course to follow, if the problems of some high unemployment areas proved intractable, would not be to delay action towards solving the problems of the grey areas. It would be to re-examine the efficacy of the present policies pursued in respect of those areas.
    I believe fervently, as I have said in this type of debate before, that the grey areas embrace not only some of the major industrial areas in this country and in Europe but areas of fundamental economic strength which are ripe for growth a second time round. We are not trying to rescue a drowning man but are helping someone who has got into a strong current for a particular historical reason. It would be the height of folly to allow the problems of the grey areas to become as grave as, and perhaps even more intractable than, those of many districts now designated as development areas.
    I want to turn to the Government's present attitude towards the grey areas, and this ties up with and in some way refutes what the right hon. Member for Battersea, North (Mr. Jay) said in his speech. I do not know whether they do it deliberately or unwittingly, but the Government try to give the impression
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    that they adopt a position of benevolent neutrality towards the grey areas. In fact, they split their attitude into three. The first is one of positive financial encouragement to investment in the development areas. The second is one of firm restrictions, through the control of industrial development certificates, on expansion in what one might call the fully prosperous or congested areas. The third is an intermediate attitude to the grey areas, with no financial incentives to investment but the freer granting of industrial development certificates. Incidentally, when I say that no investment incentive is given to the grey areas, I mean that it is no different from that available in prosperous areas.
    When one analyses what is happening, one realises that the Government's neutrality is a fiction. To maintain a neutral attitude to the grey areas would mean deciding the correct differential to establish between the financial incentives available for investment in development areas and those in the grey areas and then maintaining the differential unchanged. That would be neutrality. It would mean increasing grey area investment incentives step by step with development area investment incentives, while taking no action about the truly prosperous regions. That has not been done. Each time that the Government have increased aid to the development areas, they have committed a hostile act to the economy of the grey areas. That was particularly evident when the Regional Employment Premium was introduced, and it has happened again with the withdrawal of the Selective Employment Premium from manufacturing industry in the grey areas and its retention in the development areas.
    There are other reasons why the Government's intermediate attitude of neutrality is a fiction, and this hinges upon the problem of control through industrial development certificates. That control operates only on new buildings. Firms can stuff as much new plant and machinery into existing buildings as they can get in them—and it is a fact of life that, in the prosperous regions, factories tend to be newer than those in the grey areas. As modern machinery is very compact, in the prosperous regions obsolete machinery can be replaced and new projects can be launched in existing buildings having a reasonable expectation of

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    life and an acceptably high degree of suitability.
    In the grey areas, much industrial building is very much older. The construction of buildings is often such that they are unsuitable for new machinery. Even when it is a case of normal renewal as a result of obsolescence, the argument for housing the replacement machinery in a new building is very much stronger. So the management begins to look around. The knowledge that there will be an industrial development certificate available at the other end of the town is a poor makeweight for the availability in a development area of a 25 or 35 per cent. building grant, a 45 instead of a 25 per cent. investment grant, and a wage-cost advantage of almost £100 a year per man.
    I am not saying that these things are necessarily wrong for the development areas, although they seem to involve a heavy expenditure for each new job provided. But it is not possible for the Government to pretend that they are maintaining an attitude of benevolent neutrality towards the grey areas when they have progressively widened over the last two years the investment differential between the grey and the development areas.
    There is one last reason which has been brought out by a number of hon. Members, but particularly by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) as to why it is nonsense to say that there is no discrimination against the grey areas of the North compared with the more prosperous Midlands and South-East. It is that the grey areas of Lancashire and Yorkshire are much closer geographically to the development areas. It is much easier to move a factory from Central Lancashire to Merseyside or from the West Riding of Yorkshire to the Northern Development Area than from London either to Merseyside or the North. Not only is it easier to move, but it is much easier for the senior staff to reorient their own personal lives to their new surroundings and, therefore, there is less inhibition about moving. It is also much easier to supervise an additional factory or a subsidiary factory in a development area if the main base is comparatively near.
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    These are all reasons which militate against the grey areas.
    I accept that the investment incentive bait is intended for industry in the Midlands and the South-East, but I believe that it is all too often increasingly swallowed by firms from the grey areas. This is why I suggest that there is taking place an erosion of the industrial base of the grey areas and that people there are right in sensing it.
    The Government are in a position to test that statistically. It is shown in the Third Report of the Estimates Committee. The Board of Trade's estimates for investment grants were first prepared on the basis that the qualifying expenditure would be in the same proportion as the number of people employed inside and outside development areas, 20 per cent. to 80 per cent. We have not had a full year's figures, as the Minister knows, but the evidence to the Estimates Committee suggests that claims are being received in the ratio of 33⅓ per cent. to 66⅔ per cent. a ratio not of one to four but of one to two.
    This is welcome for the development areas, of course, but I should like to know whether any action is being taken by the Government to find out who is getting less than average investment under this new scheme. That should be determined. Can the Joint Parliamentary Secretary tell us whether it has been done, whether an investigation has been set in train, and, if not, can he give an undertaking to do so, because this is evidence which should be available to the Hunt Committee?
    I turn to the question of urgency. One might think that because this is a long-term cycle and the industrial structure is weakening comparatively slowly, perhaps the need for urgent action is not very great. It is not only that the industrial structure of the grey areas is being weakened the age structure is being distorted. There is a grave danger that the young, active elements of the community are leaving and, if they do, they are hard to attract back.
    Another point of perhaps even greater importance is that the skill structure of these grey areas is being weakened. Week by week and month by month we see advertisements appealing for skilled people to take their craft and work to

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    the congested areas of the country. This cannot be reversed quickly.
    What can the Government do? Briefly, for the holiday areas—and some of these are remote and have particular problems—the Government could and should act on the Hotel and Catering Economic Development Committee's recommendations that tax assistance should be given to hotel establishments on the same basis as it is given to industrial establishments. I must declare an interest here, which is well known, at any rate to some people.
    There is the question of severe rural depopulation. I am glad that this was brought out in the debate, because it is a real problem. This should be met by the Government creating mini-growth centres in the more remote areas. That may require the largest inducements of all to make it work, but in this modern era our farming communities cannot be restricted to one-job communities or one-industry communities. It is not fair on the young people who are growing up in farming families.
    What should be done in the industrial grey areas? May I put in one specific plea: that the Government should separate the anti-dereliction provisions of the Industrial Development Act from the general investment incentive provisions. It would not be a highly controversial step to have a geographical basis for the anti-dereliction provisions different from that for the investment provisions of the Act. But the first priority, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, is to create confidence. That lies at the base of the question, because the need is for the renewal of social and industrial capital investment.
    Investment requires a high cash flow from the Government for the infrastructure, and particularly for road communications. It also requires a high cash flow from trade and industry covering commercial as well as industrial investment. It requires a high' cash flow from individuals, because much housing renewal must come in the private sector financed by the owner-occupier and his building society. The people in these areas are among the thriftiest in the country and they have a strong sense of local pride. They will save and invest, given the confidence to do so.
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    Concerning the grey areas, I suggest that the Government are in the position of underwriters. In resolving the problems of the grey areas—and we literally cannot afford not to solve them—the higher the degree of confidence in the undertaking the more capital will be forthcoming from other sources and the less the Government themselves will have to find in the long run. This is why, to restore confidence, the Government must declare their attitude now, even if they are not able to outline in full a detailed policy.
    7.8 p.m.
    The Joint Under-Secretary of State for Economic Affairs (Mr. Alan Williams): May I start by congratulating the hon. Gentleman the Member for Morecambe and Lonsdale (Mr. Hall-Davis) on what I believe is his first appearance on the Opposition Front Bench? I hope this first appearance will be followed by many more.
    The right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph) objected that there was no Cabinet Minister present. Quite frankly, having listened to most of the speeches from the Opposition, I do not think that a Cabinet Minister was necessary. [HON. MEMBERS: "Oh."] In fact, I think that my back-bench colleagues have appropriately dealt with most of the points that were made.
    Sir K. Joseph: I think that the Joint Under-Secretary is making a bad start to his speech. The complaint from this side is that the subject deserves a Cabinet Minister.
    Mr. Williams: I would point out to the right hon. Gentleman that there have been Ministers from the Board of Trade, the Ministry of Housing and Local Government and my own Department present during the debate. It is interesting to ask how many Opposition Front Bench Members have been present during the debate.
    Sir Frank Pearson Sir Frank Pearson rose—
    Mr. Williams: I am sorry, but I have, in all fairness, confined myself to one speech. I have co-operated as fully as I can with hon. Members opposite to give back-benchers an opportunity to contribute to the debate. I

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    think I am entitled, not having interjected very often, at least to make my points.
    The right hon. Gentleman the Member for Leeds, North-East raised a great many points. One concerned the South-West. He referred to the spine road and said that the Government had said no to it. This is a misrepresentation of the fact, because the approvals for roads in the South-West that were given, in response to the Tress Report, amount to £70 million over and above previously known schemes.
    The hon. Member for Torrington (Mr. Peter Mills) referred to Plymouth and its case as a development area.
    Mr. Peter Mills: And Okehampton.
    Mr. Williams: And Okehampton. One must not forget the hon. Gentleman's constituency interest. It is perfectly legitimate.
    I would ask only one question: how can one justify a locality with 3 per cent. unemployment being given development area status when we consider the unemployment level in the development areas overall? The hon. Member for Torrington agreed with his hon. Friend the Member for Clitheroe (Sir Frank Pearson), who said that he wanted to deschedule some of the development areas. I cannot help wondering whether the hon. Gentleman would include those districts in his own constituency which have a far lower unemployment level than the areas he would deschedule as development areas.
    The right hon. Member for Leeds, North-East, spoke of 36 advance factories being empty. I do not understand why he got so indignant about this position. During the 13 years when the Conservatives were the Government they built 49 advance factories—that is all. We have built 53 advance factories in 3 years, and 37 of them are already allocated. I think that any hon. Member who has an advance factory in his constituency, even if it is at present standing empty, would rather have it there than have to wait, after a possible customer has been found, for planning permission and the period necessary for construction.
    The interesting feature of the debate is that the subject was chosen by the Opposition, but had the Conservatives had a regional policy when they were the Gov
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    ernment, the debate would not have been needed. Much of it has revolved around the preference given to development areas, but this preference is given now to make up for the lack of fair treatment of the development areas during the Conservatives' period of office.
    During the Tory period of office, the number of insured working population increased by 11 per cent. In the development areas it increased by only 6 per cent., but in other areas by as much as 15 per cent. The average, as I say, was 11 per cent. Had the Conservative Government had a regional policy, and if they had spread that 11 per cent. evenly throughout the country—though I recognise that it is not always possible in these matters to get absolute uniformity—it would have ment that Wales would have had another 30,000 jobs over and above those in 1964, Scotland would have had 190,000 more jobs, the North of England would have had 65,000 more, and we would not have needed to worry about R.E.P. and all the other incentives which incense hon. Members opposite. Interestingly enough, even the grey or intermediate areas would have benefited if only the Conservative Government had achieved a more even distribution of employment.
    I take as an example the North-West, to which many hon. Members opposite have referred. During the period in which the average rate of growth was 11 per cent., the rate in the North-West was 1·7 per cent. Had there been the same growth there as in the country as a whole, the North-West would have had a quarter of a million more job opportunities available. That is one of the facts that has to be faced. With the same distribution in the East Riding and the West Riding, there would have been 110,000 more jobs. Therefore, the development areas might not now have been development areas, and the grey areas, as hon. Members opposite call them, perhaps would not be grey. The consequence was that when we came to office it was inevitable that our first responsibility had to be the high unemployment level in the development areas. We are now working on policy for the intermediate areas.
    As numerous references have been made to the work of the Hunt Committee, let us first establish the form that its work takes. The Committee has two major functions: first, it must deal with

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    the diagnosis and definition of areas, and then it has to prescribe an appropriate solution. Diagnosis and definition are not easy. We have all heard the wide range of criteria that hon. Members have thought would be appropriate.
    By contrast, the development areas are easy to define, because while they have probably all the characteristics that have been put forward by hon. Members as qualifying their constituencies, or parts of them, for grey area or intermediate area status, they have, above all, this high level of unemployment. This is the common element among them which makes definition much easier—
    Mr. Hawkins: rose—
    Mr. Williams: No. As I explained earlier, I did not interject in anyone else's speech. I have tried to avoid interrupting any hon. Member, and I should now like to get on with the debate.
    I want to demonstrate, not that we should not have a classification of areas—that is why the Hunt Committee was set up—but some of the difficulties that confront us and which make it impossible to have simple criteria.
    Emigration has been quoted as a suitable criterion for intermediate status. No one would deny that, for some areas, migration is a problem, that it leads to loss of skill, to break-up of family units and to waste of social capital, but, in itself, that is not enough, because there are other areas in which migration is of benefit because it relieves pressure on inadequate social capital. We must be careful not just to substitute the population argument for the employment argument, because population is not static: it is a dynamic, mobile element, and there should not be anything sacrosanct about population distribution if people are willing to move from an area. Otherwise, we are in danger of allowing the unplanned pattern of the 1870s to dictate the planned pattern of industry and society that we want to create for the 1970s.
    Poor communications was another factor mentioned. Many of us could quote examples of poor communications in our areas, but those are areas that we all agree to be intermediate areas, while there are other areas that none of us would seek to propose as intermediate areas.
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    Poor communications alone are not an adequate criterion.
    My hon. Friend the Member for King's Lynn (Mr. Derek Page) spoke very eloquently about low earnings, and said that, to some extent, the earnings level has to be related to costs. In the case he quoted the disparity was very wide, but in other localities the margin is much narrower. It is therefore difficult to decide whether that factor, in itself, would merit the treatment of a locality as an intermediate area.
    I agree with those hon. Members who have said that unemployment, in itself, is not adequate for this objective, otherwise we could have a situation in which the Fylde towns would be in and North-East Lancashire—which all of us will agree must receive some form of treatment—would be out because its unemployment is below the average. We also have to decide whether we want a blanket policy or a finer point policy whether we want to deal with localities or subregions. I am not trying to dodge the issue, but seeking to show its sheer complexity, and the sheer diversity of the criteria that have made it necessary for us to establish the Hunt Committee to do the background research and give us the guidance we require before we eventually decide on the policy for the areas.
    Many hon. Members have said that these areas are distinctive in that they have hidden unemployment. That point was made in relation to North-East Lancashire. Nobody would deny that hidden unemployment can exist in a place such as that, yet it can exist equally within development areas. In North-East Lancashire there is a high activity rate and, therefore, people put out of work but, in other areas, there is a low activity rate, which means that people have not been able to get work. The difference therefore exists inside and outside the development areas.
    The Hunt Committee started its work in October last. I spoke to Sir Joseph Hunt on Friday, and he is fairly confident that he can produce his report in time for Parliament to have it in the autumn. I therefore join my hon. Friend the Member for King's Lynn—and, I am sure, all hon. Members will agree—in saying that the Hunt Committee should be congratulated on the expedition with which it is dealing with so complex a

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    problem. The early stages of its work inevitably involve a mass of data collection. There has to be a time-lag while every interested body—local authority, the C.B.I., the trade unions, individual firms—can put in their evidence. In this early stage, it is the input from these bodies which dictates the speed of the Committee's work. This stage of the work is nearly completed. We hope that the Committee will soon be able to start on the analysis and its solutions, and recommendations based on its analysis.
    A livery contribution was made by my hon. Friend the Member for Burnley (Mr. Dan Jones). He and my hon. Friend the Member for Accrington (Mr. Arthur Davidson) asked for some form of interim action. The Government have said that they do not preclude this, but we have to hear in mind that most of the problems are not of the type that will be seriously impaired during the six months involved—what has been called "Waiting for Hunt". Dereliction, migration and growth rate are not problems which will suffer very severely or which could be transformed remarkably in this period.
    Mr. Hall-Davis: There is the exceptional case, with which I was confronted in my constituency, where a major basic industrial unit might move out with harm to the whole economy of the area.
    Mr. Williams: I shall deal with that. One point which has to be borne in mind is that many of the measures which hon. Members would like to see introduced as interim measures would require legislation. If we wanted to give an interim level of R.E.P., which has not been suggested in this debate but it has been suggested elsewhere, that would inevitably mean some form of legislation. Local Employment Act assistance would need some form of legislation. To refuse i.d.c.s for firms leaving certain localities would need certain legislative backing.
    If we entered into legislation when we have only a six months' gap before the Committee reports, that legislation would be eating up most of the time in which it would be hoped that the measures would be achieving benefits. I think we would all agree that as the Hunt Committee is so near to reporting we should not prejudge or prejudice the the application of its findings at this stage by designating areas or undertaking
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    policies which might not conform to its recommendations.
    Mr. Mendelson: Would not my hon. Friend have to tell the House that six months is not the period because publication of the report will not coincide with the day of action? The report will have to be gone through and considered and discussed with the interests involved, including local authorities. Eighteen months would more likely be the period than six months. So the case for interim action remains.
    Mr. Williams: I can assure my hon. Friend that expedition shown by the Committee can be matched by expedition by the Government in an emergency. I shall however deal with one form of interim action which has been referred to by many hon. Members. That is the i.d.c. policy. This is exercised with considerable discrimination in favour of grey areas. We take into account the needs and resources of these areas. The Board of Trade readily grants local expansions and modest new developments within a locality. I can assure the hon. Member who asked about pressure being applied to firms to leave grey areas that the Board of Trade applies no pressure whatever on firms that leave them.
    We have had many arguments about the North-West. Hon. Members opposite are in a rather difficult position because when they were in Government they descheduled many of the areas of the North-West and so deprived them of development aid. In the old North-East Lancashire Development Area, Nelson and Colne, and in the D.A.T.A.C. areas Accrington, Middleton, and Oldham, were descheduled. Hon. Members opposite have not a particularly good record in relation to the needs of those areas. Looking at the facts of the situation, I hope to be able to demonstrate that those areas are not unable to compete with development areas for new industry.
    Take the North-West about which there has been most discussion. In the last three full years when hon. Members opposite formed the Government, 17 million square feet of i.d.c. approval was given. In our first full three years there were 25 million square feet, 50 per cent. more than under the type of policy exercised by hon. Members opposite.

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    As for the idea that development areas inevitably draw their growth from grey areas, we can demonstrate—again within the context of the North-West—that 90 per cent. of jobs on Merseyside have come from the South-East and the West Midlands. Of 35 firms within the Merseyside development area which have initiated factory development since early 1966 with 9,000 possible jobs, 21 with 7,000 jobs have come from outside the North-West, 11 from Manchester and the Altrincham area. Only three very small firms with only a little over 100 workers have come from elsewhere within the region. So it cannot be alleged that Merseyside has been drawing industry away from the North-West.
    And to the increase of 50 per cent. in i.d.c.s approved for the North-West, L.A.M.I.D.A. has estimated that there has been an extra 8 million square feet in 1965 and 6 million in 1966 in existing vacant premises within the area—that is, new firms which have moved into the locality and gone into existing premises. Eleven new firms have moved into empty premises in the cotton belt since the same time in 1966 and they are expected altogether to create about 1,700 jobs. I could give a similar analysis with relation to York and Humberside but time does not permit of that.
    There has been a reference to the need to improve infrastructure. The right hon. Member for Leeds, North-East explained that he had to leave at 7·15 p.m. His absence now entails no discourtesy. If dereliction is so important, when he was the Minister of Housing and Local Government, why did he do little or nothing about it? The only assistance that was given by the Conservative Government was that within development districts. Nothing whatever was available outside those districts. Astonishingly, it was not until September, 1964—one month before the General Election—that the first comprehensive annual survey of derelict land was available. Yet these are the hon. Gentlemen who are telling us about the problems of dereliction and what should have been done in the last three years.
    There are 126,000 acres of derelict land in the country. We have to have proper priorities. They are, first, safety; secondly, utility; and thirdly, amenity.
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    For this reason we have instituted a 50 per cent. grant to encourage local authorities to clear up derelict land. In addition, the Ministry of Housing and Local Government, in consultation with planning councils, is now encouraging local authorities to develop a rolling programme on a systematic basis. I am sure hon. Members on both sides of the House will be interested in this because we all want to see this dereliction cleared. We are now trying the technique of rolling programmes based on three-year units to clear dereliction.
    One criticism which has been made in the past has been related to delay. To speed up the granting of approvals within areas, recently the Ministry of Housing has delegated power to give approval to its regional offices, so approval should now be much quicker.
    A question was asked about the new town. I can assure the House that every element will be taken into account by the Government when we have to make our eventual decision on the report we have received. We will not overlook the factors referred to by the hon. Member for Scarborough and Whitby (Mr. Michael Shaw).
    Mr. More: Will the hon. Gentleman also refer to Dawley New Town?
    Mr. Williams: That is a different issue. I do not know the answer offhand. I would advise the hon. Gentleman to put that question to my right hon. Friend the Minister of Housing and Local Government.
    As has been said on both sides of the House on numerous occasions, the prosperity of the grey or intermediate areas, whatever we care to call them, depends ultimately on the general level of activity in the economy. It is for this reason that I think that the pattern which has been apparent in the underlying employment trends since September encourages us to hope that there can be an improvement during the next 1–2 years. This will be added to by the boost which has been given to certain exporting industries, such as shipbuilding, and so on, by devaluation.
    I think that we would all agree that anything which helps the nation to recover also helps the intermediate areas. We would all equally agree that anything which hinders the nation's recovery

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    hinders the intermediate or grey areas. For that reason, I cannot but wonder at some of the Opposition's utterances. On Saturday the right hon. Member for Barnet attacked General de Gaulle for his mischievous activities in relation to the economy. I shall not discuss the question whether the right hon. Gentleman was right or wrong. I suggest that he might do well to turn his attentions and criticisms somewhat nearer home—to some of his Front Bench colleagues, because no one can deny the damage that has been done to our economy and to the standing of the £ by the irresponsible statements that were made by the Leader of the Opposition on such subjects as the Vote on Account. Unfortunately, it is not realised abroad that no one in this country takes much notice of the right hon. Gentleman.
    I was equally astonished at the statement by the right hon. Member for Barnet—if, indeed, this is what he said; it was what I read in the Sunday Times—that he would co-operate in the right measures for this country if we would promise to have an early election. What an amazing thing for the Opposition to be saying about national recovery, that they will not co-operate if they do not get an early election. I hope that this will be noted in the development areas and the intermediate areas.
    Finally, by contrast, on Saturday the Leader of the Opposition said that he would do absolutely nothing to help the Government. That was the best news of last week.
    Mr. Alan Fitch (Lord Commissioner of the Treasury): I beg to ask leave to withdraw the Motion.
    Motion, by leave, withdrawn.

  CIVIL ESTIMATES AND DEFENCE (CENTRAL) ESTIMATE, 1968–69 (VOTE ON ACCOUNT)
  Question proposed,
  That a sum, not exceeding £3,244,048,000, be granted to Her Majesty out of the Consolidated Fund. on account, for or towards defraying the charges for the Civil Departments and for Defence (Central) as set out in House of Commons Pa per 125 for the year ending on the 31st day of March, 1969.
  7.34 p.m.
  Mr. Terence L. Higgins: Debating the Vote on Account on the
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  eve of the Budget is rather like appearing as the prologue in "Pagliacci". We are just waiting for the Chancellor of the Exchequer to ring up the curtain. It is singularly appropriate that we should be doing so.
  I want to say a few words about the closing remarks of the Joint Under-Secretary to the Department of Economic Affairs in the last debate. The position of the Opposition is absolutely clear. We believe that it is our duty to attack the Government when they are doing things which we consider to be wrong. The Government can expect to receive our support only when they are doing things which we consider to be right. It is surely the Opposition's duty to attack the Government if the Opposition believe that the Government are not acting in the interests of the country as a whole. It is in that spirit that I intend to pursue this debate.
  I said that this is rather like waiting for the Chancellor to ring up the curtain. It might be more accurate to say that in this debate we are rather in the position of someone describing a thrilling melodrama between one instalment and the next. Tomorrow we shall be in the position of saying, "Now read on". What I want to do tonight is to bring up to date the story as it is. I think that probably we shall be very glad if tomorrow we could find the Chancellor of the Exchequer in much the same position as a journalist once produced on finding that his hero was tied to the rails with the express train due shortly. The journalist wrote, "With one tremendous leap, our hero extricated himself from his predicament".
  It is right that we should debate the very large sum covered by the Motion. The purpose of the debate, as we conceive it, is to examine some of the reasons why the Government are in the present economic situation and why they have brought the country to the present economic situation, so that we can, we hope, avoid a repeat performance next year.
  However, it is to be noted that it is very unusual for the Vote on Account to be debated as such. The researches which I have conducted with the assistance of various bodies in the building tell me that there is no precedent for debating it as such—that is, the sum total of the Vote on Account—at any rate since

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  1945 and probably since a great deal further back than that. The whole tradition of the House is that money shall not be granted to the Government unless redress has been given to grievances. Perhaps there can be no greater or relevant redress than saying that we think that the total sum involved needs to be reconsidered and discussed.
  This came out very clearly in two interventions made on 13th March, when my hon. Friends the Members for Louth (Sir C. Osborne) and Twickenham (Mr. Gresham Cooke)—I am glad to see that they are both in their places—endeavoured at the beginning of the day's business to raise this very question of the sum which is to be given to the Government to run the country's business in the forthcoming weeks until such time as the individual amounts can be debated and authorised by Parliament.
  The crucial point which needs to be made at the outset is the enormous aggregate amount covered by this year's Vote on Account. I put it into perspective by pointing out the extraordinary variation which occurred between the Estimates of expenditure which were made last year and the extent to which it has been necessary to augment these by Supplementary Estimates during the past year. It is in this context that we should consider the position of the Vote on Account.
  As well as granting the Government the money which they need to run the country, the Vote on Account provides us with a first glimpse of the Government's expenditure plans for the forthcoming year. It therefore clearly falls into place alongside the speech which we shall hear tomorrow from the Chancellor and the following debates this week and next concerned with how that money is to be raised.
  The figures in the Vote on Account are open to a number of detailed objections as to consistency between one year and another. It may be, for example, that foreign aid is to be financed out of one Vote rather than the Vote by which it was previously covered. It may be that some of the measures which are undertaken by the Government will in turn bring in tax revenue and, therefore, that an adjustment needs to be made for that. None the less, it cannot be seriously dis
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  puted that the Vote on Account is a very important document and one which should be suitably scrutinised by Parliament.
  At this point, it is right to remind the House that the Government's own attitude towards the Vote on Account has been singularly inconsistent. Last year, the Department of Economic Affairs in its Progress Report for 1967, in effect, extolled the virtues of the Vote on Account and rightly, in our view, emphasised the importance which the Government attached to it:
  "The Vote on Account is presented to Parliament in mid-February each year and published as a House of Commons Paper. It provides the first official indication of the shape of Central Government spending in the coming financial year, and is the most important single statement of expenditure proposals which the Government makes to Parliament each year."
  One could not be more forthright than that in saying that the Vote on Account which we are now debating is a most important document. It includes a summary statement of all Supply expenditure in the coming year, including defence expenditure.
  It was rather curious, therefore, that the Government's approach to the matter this year strongly suggested that, by one means or another, they had suggested to the Press that, perhaps, the Vote on Account was not as important as was usually thought. Certainly, the implication was that it was not as important as the D.E.A. Paper last year suggested. The whole tenor of reports in the Daily Telegraph, the Guardian, The Times and the Financial Times was that the Vote on Account should, perhaps, be regarded with some suspicion. We fully accept that one needs to make adjustments of the kind I have described, but it is extraordinary that there should be a clear statement from the Government one year about its importance and that the whole implication of Press reports next year should be that the Vote on Account is not as important as one had thought.
  Strangely enough, in spite of going into the matter as thoroughly as I could in the Library and elsewhere, I have not been able to find any clear statement from the Government this year of their view on the subject. It all seems to have been reports in the Press, though the unanimity of those reports suggests that,

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  perhaps, some guidance was given to the newspapers. If so, I hope that the Chief Secretary will tell us precisely what the guidance was. It is undesirable that the Press should have it and that we should hear about it only at second hand. Perhaps we may in the future have a clear statement of the Government's view on questions of this kind.
  I turn now to the Estimates themselves and the Vote on Account. One set of figures in the Vote on Account shows a remarkable trend. The first page shows that the Estimates—the "General Position" as it is described—as between 1967–68 and 1968–69, that is, the Estimates in the Vote on Account which will be covered by the Chancellor's Budget statement tomorrow, present an increase of £1,014 million. It overlooks that Supplementary Estimates have been produced during the year, and I shall return to that in a moment. None the less, it is a very large increase. No doubt, adjustments of the kind I have mentioned can be made. Perhaps the right hon. Gentleman will tell us of the various adjustment; which he himself would regard as relevant in this context. At all events, the sums involved are very large, as is the sum covered by the present Motion.
  The D.E.A. in its Report last year gave a table expressing the increase in constant prices. I realise that the right hon. Gentleman is usually inclined to think in money terms rather than in real terms, but I hope that he will tell us what these figures represent in real terms. Last year, the D.E.A. said:
  "In comparing one year's estimates with another, a more informative picture emerges if one adjusts the figures so as to eliminate the effect of changes in costs between the different years."
  A table was published at that time, but, so far as I know, we have had no corresponding figures showing what is represented in real terms this year.
  I turn now to the relationship of the Vote on Account to the more economically orientated statements about public expenditure in 1968–69 and 1969–70 which we had in the White Paper, Cmnd. 3515. The crucial point here was brought out clearly in an article by Mr. David Wood in The Times on 26th February, in which he said that the Government's inconsistency in their attitude to the Vote on Account ought to be empha
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  sised. He made the point that the Government's figures in the Vote on Account now before us were firm, real figures whereas the statements which the Government themselves had made, in particular the statements of the Chancellor of the Exchequer, were merely a declaration of intention in broader economic terms. Mr. Wood suggested that Ministers wanted to
  "bury the message of the Vote and erect as the significant economic indicator the Chancellor's ipse dixit that the rate of increase in public expenditure…will fall from 7½ per cent. in the current financial year to 3¾ per cent. in 1968–69 and 1 per cent. in 1969–70"—
  and he went on to suggest that, perhaps, we ought to take more notice of the Vote on Account rather than the broad generalisations in which the Chancellor had been talking.
  I shall examine the relationship between these two figures. One curious feature which emerged from the discussion of the cuts in Government expenditure before Christmas and after was that the arithmetic did not seem to add up. One point has been worrying me, and I hope that the right hon. Gentleman will clear it up. We were told before Christmas that there would be cuts in Government expenditure, following devaluation, of £400 million. There would be cuts of £100 million on defence expenditure, £100 million on the S.E.T. premium, £100 million on the export rebate and £70 million in delayed Government expenditure on the nationalised industries. That makes a total of £370 million, and I have not been able to discover what happened to the other £30 million. Presumably, if I understand the matter aright, it would be reflected in the figures in the Vote on Account. I am a little worried about losing £30 million in this way, and I should like the right hon. Gentleman to tell us what the other £30 million cut announced before Christmas represented and what the impact has been in the present Vote on Account.
  Be that as it may—I hope that we shall have an answer—the crucial point which emerges from a comparison of the White Paper on Public Expenditure and the Vote on Account is that, even making adjustments for the figures to reduce them to real terms and for the cuts, too, public expenditure in 1969 will still be higher than that foreseen in the National Plan two and a half years ago. This is true

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  even though the National Plan target in terms of actual growth in G.N.P. has completely failed to be realised. This is a matter which should worry us all very much. It implies that the share of Government expenditure in the national economy is growing very fast. We cannot view that with equanimity.
  I hope that the Chief Secretary will be able to tell us what the relationship is between the figures in this Vote on Account and certain other items which have increased the amount of Government expenditure expected in the forthcoming year. There is, for example, the Concorde. There is also expenditure under the Industrial Expansion Bill, not the main part of the Bill which gives a global figure but certain separate small amounts. Will they be added eventually to the Vote on Account?
  Finally, I relate the Vote Account to the overall question of last year's expenditure and the expenditure which we foresee in the year ahead. At this stage it is not inappropriate to look at what the Chancellor said in his Budget statement last year. It seems a dreadfully long time ago. He said:
  "First, public expenditure, notably public investment, will still rise rapidly this year. In our present circumstances I do not regard that as a cause for alarm. It is quite justifiable that during a period when private investment is declining public investment should be allowed allowed to advance quite rapidly,…"
  He added:
  "This means that public expenditure, which cannot be quickly changed, must be reined back in good time."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 990.]
  That is, if the economy was to be kept under control. Yet we find ourselves at the end of a year which was opened by that Budget statement in the extraordinary position where the extent of overspending in the economy has amounted to about £440 million more than the original Estimates. In homely terms, that is something like the equivalent of a shilling on the standard rate of Income Tax. That is extraordinary after the Chancellor was saying so gaily last year that the message was "steady as she goes." In fact, the ship was not on a steady course at all but was swerving very fast on a course where the Government's expenditure was completely out of control to the extent of £440 million.
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  It is not irrelevant to look at the Third Report from the Estimates Committee on the Spring Supplementary Estimates. The first thing that catches the eye is the following statement in page vi:
  "As Your Committee stressed last year, the objective should be to ensure that the out-turn should be as near as possible to the original Budget Estimates. This year the Treasury estimate provisionally that there will be an increase of about £440 million."
  In a number of places the Committee examines the specific increases in expenditure. Paragraph 5 is startling. It says:
  "A Treasury witness was unable to give any specific explanation for the large total of Supplementary Estimates this year. Apart from two main items, the foot-and-mouth epidemic, which Your Committee examined in their First Report, and investment grants, which they examine later in this Report, ' there were a variety of causes which, of course, are very difficult to identify and certainly not possible to quantify'…The two other factors mentioned by the Treasury were' the sagging in the economy' which had led to bills being submitted faster than normal, and the fact that the original Estimates' were drawn very tightly'."
  One would hope that the original Estimates were very tightly drawn, but it is extraordinary that after the expenditure has exceeded the Estimates by that amount, and when we are asked to approve a similar Vote on Account this year, the Treasury witnesses were unable to produce any explanation. I hope that the Chief Secretary will be able to do rather better than that this evening and at least give us some explanation.
  The Chief Secretary to the Treasury (Mr. John Diamond): This is an important point. Is the hon. Gentleman quoting from the Report or from the answer given by the witnesses?
  Mr. Higgins: I was quoting from a statement in the Third Report from the Estimates Committee as to what answer it received from a Treasury witness. The Treasury witnesses could not give any specific explanation when questioned, and I thought that it was not unreasonable to suggest that the Chief Secretary might give some explanation this evening, because the point we are making is that Government expenditure is out of control. The basis on which this Vote on Account has been established is considerably suspect. That, too, is a point which the Estimates Committee brings out.

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  To quote again:
  "These figures"—
  that is, the £440 million to which I referred—
  "reveal such a marked contrast between the present year and previous years that Your Committee think it right to highlight certain aspects of them. In a year when cuts in public expenditure amounting to some £300 million have been announced by the Government, the total of Supplementary Estimates amounts to £562 million, or more than double the comparable figure in any of the last ten years. The average difference in the audited outturn of expenditure compared to the original Estimates over the previous five years is £-4 million. In the present year the audited outturn is expected to be £440 million greater than the original Estimates."
  I do not want to weary the House with quotations from the Report, but the occasions when we have an opportunity of bringing out this kind of point are far too few.
  There is one particular point directly related to the Vote on Account we are now considering which we should make allowance for. In discussing the increase of investment grants to 39·4 per cent., the Estimates Committee says that the reason for this discrepancy is twofold:
  "one a change of policy by the Government, the other a miscalculation by the Board of Trade."
  It says later:
  "With regard to the miscalculation one of the purposes of the investment grant scheme is to encourage investment in development areas."
  The Committee analyses this in some detail, and says:
  "In forming their Estimates, therefore, the Board of Trade had to calculate not only the total amount of claims which were likely to be made but also the proportion of these claims likely to come from development areas."
  The system of Board of Trade calculation is quite extraordinary. It seems to imply that it anticipates that the policy will actually fail. Unless I am mistaken, that seems to be its assumption when making its estimate of what the policy will cost, because it makes no allowance for the policy's having any effect.
  The Report continues:
  "A Board of Trade witness admitted that estimating these two factors was 'pure guess work'. The only basis used by the Board of Trade for calculating the proportion of claims likely to come from development areas was the amount of employment in these areas;
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  since this amounted to 20 per cent., they assumed that 20 per cent. of eligible investment would be in development areas. As their, witness put it, 'We had no other basis on which to rely' He was unable to hold out any hope that future initial Estimates for the year would be much more accurate, and it would not be until the following January that the total for the year could be calculated with any precision."
  That kind of statement is relevant now, because it suggests that a large number of figures in the Vote on Account are extremely suspect and that we should therefore view the whole question in great detail.
  Similarly, for the Industrial Reorganisation Corporation there is an increase of 33⅓ per cent. over the amount originally estimated in last year's Vote on Account. The Committee comments:
  "A Treasury witness was unable to give any account of the reason for the Supplementary Estimate except to say that it was a drawing from the Exchequer which the Corporation was empowered to make from time to time, and that 'This is not money that they are drawing at the moment for any specific purpose that is known to us'."
  We should know whether any similar nebulous sums in this Vote on Account are being sought for similarly nebulous purposes.
  Finally, I stress as strongly as I can that the Vote on Account must call into question the whole extent of the Government's proposed expenditure cuts. In a great many cases they would seem to be phoney cuts. Saying that is not to undermine the basis of the Government, or to shake sterling, but to fulfil our duties as Members of Parliament to ensure that the Government spend the money in a right and proper way, and that the interests of the taxpayers and the rest of the people of this country are protected.
  Tomorrow we shall no doubt hear a great deal about making devaluation stick. It may be that it would be less of a problem if the Government had taken action of the kind I and my right hon. and hon. Friends suggested some months ago. Be that as it may, to say that tomorrow's Budget, if it is tough, is something to make devaluation stick is only a small part of the truth. No one doubt's that it will be tough, but in large part that is because the growth in public expenditure has been far in excess of what we on this side of the House think

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  that it should be, and far in excess of what the Government said it would be last year.
  Therefore, we look with suspicion at the figures with which we are presented in this Vote on Account. I hope that we shall in future take very much greater care in estimating them and achieve the Select Committee's objective, which is to make the Vote on Account as closely as possible resemble the actual course of expenditure in the following year.
  8.0 p.m.
  Mr. John Boyd-Carpenter: Although it is personally agreeable that the Chief Secretary should be winding up this debate, I am sure that hon. Members will feel that it is very unfair to him that he should have this penitential experience, because the figures in this Vote on Account represent his failures. It should be the victors in the conflicts inside the Government, the great spenders—the Minister of Health, the Secretary of State for Education and the Minister of Housing—who should be here to answer the debate, and not the Chief Secretary, who, I am sure the House knows, did his level best to prevent all this happening.
  It is noticeable, too, that the Chief Secretary is having no oratorical support from the benches behind him. This is worth noting. I hope it will be noted outside the House that on a Motion which involves the spending of over £3,000 million not a single Labour Member rose to speak when my hon. Friend the Member for Worthing (Mr. Higgins) sat down. Tomorrow, when all our constituents will have to suffer under the blows of swingeing increases in taxation, I think the constituents of hon. Members on the Labour benches will want to know why when the spending which will play so large a part in these increases in taxation was under discussion the Labour Party did not think it a matter worth discussing, not worth a single speech.
  This is the spending for which the Chancellor of the Exchequer will present the bill tomorrow. The Vote on Account contains the goodies. The bill will be presented by the head waiter tomorrow. Therefore, it is, as my hon. Friend the Member for Worthing rightly said, extremely fortunate that it has been
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  arranged that we have this discussion, far too brief though it will be, on the spending of this money on the very eve of the day when the Chancellor of the Exchequer takes action to pay for it.
  It has always seemed to me that one of the great defects of our Parliamentary procedure is that we fail to relate the attractive, agreeable and popular proposals for spending money with the grimmer and less attractive methods of raising the wherewithal to pay for them. I think the House owes something to the Opposition in that we have, from the point of view of time, produced as close a juxtaposition as we could between the spending of the money and the action which will be taken to pay for it.
  What the Chancellor does tomorrow will undoubtedly be in very large measure affected by what we are called upon to vote for tonight. The Prime Minister said last week that "the task of the Budget would be to release resources for the unfulfilled requirements of overseas trade". There is no doubt that the Chancellor will treat us, in his agreeable manner, to a disquisition on the necessity to divert resources from personal consumption into either investment or exports. In parenthesis, I do not think that anything that the Chancellor will do will do anything other than discourage investment if he follows the line he has followed recently.
  The line that I hope the House will follow is that there would have been much less need to put on the individual taxpayer a large additional imposition to free resources for export if the Government had not themselves pre-empted so large a part of our additional production. It appears that for every £ of additional production last year some 15s. are being hypothecated by the Government into public spending. It was well put the other day in The Times, in Mr. Ian Trethowan's column, that the Budget would not have needed to be anything like so tough on the taxpayer if the Government had been a little tougher with themselves. It is the spending contained in this document which will be a major factor in the incentive-paralysing, miserable and oppressive additional taxation which there is no doubt the Chancellor will be imposing on us before tomorrow is out.

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  It is no good the Government pretending that the need for these measures, the need for this pre-emption by the Government of so large a part of the additional national product, results from devaluation. The claims of the individual taxpayer as against Government spending are in that context even stronger. The taxpayers on whom this additional burden will be imposed tomorrow have already had—I quote the Prime Minister—their savings and their wage packets reduced in real value by devaluation. It is upon people already so penalised by the Government's action a few months ago that the Chancellor will be imposing this further burden rather than exercising proper and effective control over spending by the Government themselves.
  So the Vote on Account, as my hon. Friend indicated, reveals unprecedented public spending in peacetime. It reveals an increase of £1,014 million from £9,503 million to £10,517 million in expenditure borne on the Estimates. If one makes the comparison—which I think is the wrong one—not from estimate to estimate but between this coming year's estimates and last year's estimates plus the lush supplementaries to which my hon. Friend referred, there is even then an increase of £452 million.
  The sort of figures that we are talking about are of the order which outside commentators suggest the Chancellor of the Exchequer is contemplating it may be necessary to abstract from consumption by taxation measures tomorrow, and if that is so, it vividly underlines the point that it will not be the wicked speculators, it will not be those mysterious people who operate in the gold market, it will not be forces over which the Government have no responsibility, but in large measure the Government's own failure to control this expenditure which will be the main reason why the Chancellor of the Exchequer will, rightly or wrongly, feel it his duty to impose this additional taxation tomorrow. And it reveals what a pathetic sham the so-called economies in Government expenditure have been.
  We remember the agonising Cabinets, the threats of resignation, the right hon. Lady the Minister of State for Science and Education indicating the principles on which she would go or remain, and Ministers emerging from No. 10 grim-faced after wrestling for their Depart
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  ments—the whole build-up of drastic economies of £300 million. The end of it is that for the coming year, so far from saving £300 million, when all allowance is made for whatever savings there will be in that largely inflated figure, the actual increase, estimate to estimate, is over £1,000 million. This shows that the Government, if they attempted to economise, have failed.
  I know it is unfair on an issue of this kind—I know that this is a point which the Chief Secretary will take if I do not anticipate it—to criticise expenditure in general without being prepared to criticise it in particular. I want to put what are only a handful of examples—we could extract many more but time is short—of why the figure is so high. I do not suggest that a great deal of this expenditure may not be wholly admirable, that there may not be a strong case for it, taken in isolation. No one knows better than the right hon. Gentleman that one of the great problems of controlling Government expenditure is that the claims are so persuasive. If they were not, they would not be put forward. But when the total becomes too high, as in this case, it is the Government's plain duty to decide on priorities and to cut back some in order to enable others to go forward.
  Today, for example, it was elicited by my hon. Friend the Member for Oswestry (Mr. Biffen) that Class IV, Vote 19—Ministry of Technology (Industrial Services)—was rising this year compared with last by 22 per cent., or £5½ million. Of course, the Minister of Technology says that this is to help industry. But what the Government, in this respect as always, do not seem prepared to face is the question of whether it would not be better to help industry by allowing it to keep more of its own money to spend as it thinks fit, rather than to take it away by taxation in order to allot it as the Government think fit. The right hon. Member for Battersea, North (Mr. Jay) held the opinion that the gentleman in Whitehall knows best, but in truth and in fact most industrialists know better how to invest their money than either he or the Minister of Technology does.
  I note from the Vote on Account that the total expenditure on the Department of Economic Affairs is to rise from £2,467,000 by nearly one-sixth to just

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  under £3 million. At least that is not a system of payment by results. Indeed, since there has been a Department of Economic Affairs the economy has never been out of trouble. Surely this increase or, indeed, the provision for the Department at all, could be removed without causing the slightest public disadvantage. I am willing to bet that if the Chief Secretary were prepared to indulge in the same frankness as the right hon. Member for Belper (Mr. George Brown), he would say that he wholly agreed on that point.
  According to this document, the provision for the Legal Aid Fund rises from £6,757,000 to £8,821,000, an increase of over £2 million or over 30 per cent. Why? Is it because those who administer legal aid are going on the same principle as those who decided to allow Dr. Savundra legal aid on the fullest scale, although he was travelling to court in a Rolls-Royce from a luxurious mansion? This is a substantial increase.
  Mr. Diamond: The answer is that the increase in the rate of remuneration of Members of the right hon. Gentleman's profession largely accounts for it.
  Mr. Boyd-Carpenter: As I am no longer a practising member of the Bar, that is not a particularly wounding retort. I must ask whether the right hon. Gentleman thinks it right, at a time when the Chancellor is urging that there is no room for increasing the individual standard of life, that increases of this sort should be made. I must also ask whether he is satisfied that, as in the case I quoted, legal aid is not being given to people who, if left to themselves, could perfectly well in one way or another pay for it themselves. If he told me he was satisfied about that, I should be surprised.
  Then there is the case of overseas aid. I believe that, properly administered, this work is magnificent, particularly in the smaller underdeveloped countries of the Commonwealth. But it is up by £9,263,000. Is some of it necessary in present circumstances? I do not know whether this figure includes it, but what about the proposed £20 million loan to Egypt. Is it really necessary in the present situation if that is so?
  Since Egypt is spending so much money on re-arming for the renewal of her war
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  against Israel, and since she is keeping the Suez Canal closed, thereby penalising herself and us, I wonder whether the British taxpayer should have to find such large provision for Egypt. I wonder whether it is really right that, as the Minister of Overseas Development has told me, we should be providing aid to 10 countries who have either broken off diplomatic relations with us or have expropriated British property without compensation.
  A little more discrimination in the administration of overseas aid, a little more appreciation of the desirability of helping our friends rather than countries like Egypt or, for that matter, Indonesia, which have done us so much harm and whose own mismanagement accounts for their troubles, would help a great deal in the present situation.
  Mr. Julian Ridsdale: There is also the £12 million which the Government have just given to Aden.
  Mr. Boyd-Carpenter: We can multiply these cases. We must be selective because of the shortness of time, but I am indebted to my hon. Friend for giving another example of money which, in the present situation of the country, one is entitled to ask is it necessary to provide.
  Coming closer home to the Chief Secretary, there is the growth of 50,000 in the number of non-industrial civil servants since the Government came to office. On a normal basis of calculation, that means about £62½ million additional expenditure annually. I quote these figures in no attack on civil servants, for whom I have the highest regard and with whom I worked for 13 years. They are among the hardest working people in the community. But this increase in numbers means that the Government are expecting the Government machine to do too much by taking on marginal functions which might be desirable in ordinary times but which the right hon. Gentleman should look at with severity at this time when we are told that standards of consumption must be cut in order to make resources available for export.
  There is an even greater increase in the staff of local government. A small example is the squads of uniformed Amazons who prowl the streets of Chelsea to see if a desperate character has tried

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  to park his car outside his own front door.
  Then we come to major items of expenditure. Vote 2 of Class IV deals with Transport Boards, which I take to mean substantially the subsidy to British Railways. This shows an increase of about £11 million to just under £150 million a year. The rising cost of this subsidy is the price we are paying for the abandonment of the Beeching Plan, which sought to make the railways economically viable, and the weak-kneed surrender to those who clamoured that railway lines should be kept open at the expense of the taxpayer. What limit is the right hon. Gentleman proposing on the increase in subsidy to the railways?
  It is still not clear how much expenditure is being found for keeping open uneconomic pits. What is the direct subsidy to the National Coal Board for the losses involved and what is the indirect cost resulting from, for example, compelling the C.E.G.B. to use the most expensive form of generation in order to maintain employment in the pits?
  For light relief, we may turn to the activities of the Land Commission. Does the right hon. Gentleman really say that anyone in this country, except the 1,900 employees, would be the slightest bit worse off if he wound the Land Commission up tomorrow? Is it not irrelevant to the needs of the country, whose expenditure on vital matters such as defence is being pared and whose citizens are to be subjected to the highest taxation they have ever known in time of peace?
  Class IX Vote 2 involves certain mysteries and perhaps the Chief Secretary can explain them. The cost of accommodation services in the United Kingdom goes up by the sizeable figure of £12 million, from £74 million to £86 million. I assumed for a moment that that was because of the Government's proposal, ill advised though it is, to bring home the Armed Forces from overseas. But then I looked at Vote 3 and saw that the cost of accommodation services overseas was up by more than £1 million, from £8 million to £9·4 million. Perhaps the Chief Secretary can enlighten us about why this happens. Is it because expenditure is still being continued on military accommodation in the Persian Gulf, as the Minister of Public Buildings
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  and Works admitted to me, on top of the £14½ million which the Government have spent there since they came to office, and have continued since the Government's announcement of their decision to scuttle out of that area?
  Then there is the curious paradox of Votes 4, 5 and 6 in Class IX. As the effective strength of our Armed Forces is ruthlessly cut away and as they are deprived of aircraft, aircraft carriers and effective arms, the cost of building for the Armed Forces goes steadily up. The building which the Ministry of Public Building and Works is undertaking for the Services is up by £4 million for the Navy, £13 million for the Army and £4 million for the Royal Air Force, coming to the sizeable total of £166 million.
  In Class X Vote 10 expenditure on the Ordnance Survey is up from less than £4 million to £5·2 million, nearly a 30 per cent. increase. How has this come about? The country is not any larger so as to require a 30 per cent. increase in the cost of surveying it. Is it, again, simply a failure by the Government to take a firm grip on spending?
  In Class X there is one bitter exception. It is a small reduction, only £6,000, but it is a reduction in the provision for the National Savings committees. This, presumably, is a sorry indication that in the economic climate which the Government have produced the task of these committees has been made very nearly impossible.
  So large an item as present Government expenditure is a major factor in the operation of the economy, Our present troubles have been substantially contributed to, to put it no higher, by the fact that public expenditure has risen so much faster than the gross national product. That generates inflationary pressure and creates an overstrong home market, and the consequent increases in taxation have a demoralising effect, stimulate the brain drain and diminish incentive. Since the Government came to office, they have already increased taxation by £1,300 million a year, and that before whatever the Chancellor of the Exchequer does tomorrow.
  The lack of confidence at home and abroad in our economy and its operation which has bedevilled the Government's

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  efforts for the last year or two will not be resolved until the Government take a firm grip on public spending. Until they do so, lines of credit, loans, I.M.F. standbys and all the complicated expedients available to a modern Government will only temporarily prop up the structure, because there will not be confidence in the economy of a country whose Government are persistently over-spending and whose Government have shown, as this Vote on Account shows, an inability to control that spending. The Vote on Account is an indication that in this task of controlling spending the Government have failed and, whatever the Budget contains tomorrow, it will do no more than minimise the serious damage which that failure has caused.
  8.25 p.m.
  Miss Margaret Herbison: I had no intention of intervening in the debate, but the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) did himself less than justice. I shall deal with only four of the matters which he raised. Because of his experience as a Minister, he should have a great deal of knowledge about two of them, and if he had used that knowledge, he would not have made the kind of speech to which we have just listened.
  The right hon. Gentleman spoke of the increase in the Civil Service. Like the right hon. Gentleman I pay the greatest tribute to the Civil Service and the hard and devoted work it does not only for the Government but for the whole nation. I want to discuss one considerable increase in the Civil Service over the last three years. It has occurred in the Ministry for which I was responsible, the Ministry of Pensions and National Insurance, for which the right hon. Gentleman was responsible for many years, which became the Ministry of Social Security.
  It has far more civil servants than when we became the Government in October, 1964, but, as the former Minister, I make no apology for that increase. It occurred because we introduced great improvements in social security over those three years. The right hon. Gentleman knows better than anyone in the House, and almost better than anyone in the country, that with a great change like that
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  from flat-rate unemployment and sickness benefits to earnings-related sickness and unemployment benefits and earnings-related widows' benefits, there must be a greater number of civil servants, particularly in local offices, to ensure that the new scheme works smoothly and also to ensure that benefit is paid on the day expected—the right hon. Gentleman knows how important that is.
  There is another reason for the increase of which I am proud and for which I make no apology. The right hon. Gentleman will remember how often when he was the Minister we discussed the plight of old people who would not apply for National Assistance. I thought that they were wrong not to do so, as the right hon. Gentleman did, but, I am happy to say that with the introduction of our new scheme more than 500,000 more old people are in receipt of supplementary pension. Civil servants are needed to administer that. The right hon. Gentleman knows better than anyone else in the House that the former National Assistance Board, now the Supplementary Benefits Commission, not only ensures that old people get the financial assistance they need but also that their welfare needs are taken care of. Many of these officers are the best welfare officers in the country. Therefore, if we are to do that kind of welfare work, without which many old people would be neglected, more civil servants are needed. I have spoken only about the Department of which I have great knowledge. I do not know whether any other Departments, except the new ones, have had as large an increase in civil servants.
  The right hon. Gentleman made great play about legal aid and about Savundra getting legal aid. I do not know the details about Savundra, but the right hon. Gentleman knows the body which decides whether a person gets legal aid. He knows that when he was in the Government and in the job which I had, it was the National Assistance Board which investigated an applicant's resources. Only when that board, now the Supplementary Benefits Commission, decides that a case should have legal aid, is it granted—
  Mr. Boyd-Carpenter: I do not think that the right hon. Lady has it right. The old National Assistance Board, now the Supplementary Benefits Commission does

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  extremely well, I agree, with the investigations into means. The decision as to whether legal aid should be granted, however, is taken by the legal aid committees. It was their administration which I wanted to criticise and did criticise.
  Miss Herbison: The right hon. Gentleman quoted the amount which was spent. One cannot isolate one part and say that that is being criticised, because often the committees decide on the information which they get from the Commission. Therefore, he was no doubt playing politics on both those subjects.
  Another matter which he criticised—
  Mr. Diamond: The right hon. Gentleman is the expert in these matters, but I thought that the Savundra case was a criminal and not a civil case. He is therefore saying that, despite an appropriate Government authority being satisfied that there was no income available to the defence, a person charged with a criminal offence who had no money to defend himself should not have the opportunity to do so.
  Mr. Boyd-Carpenter: I did not say that at all, but that the appropriate Government organ was wrong in coming to that view.
  Miss Herbison: But what my right hon. Friend has said is true, which is why I come back to the point that the legal aid committees decide on the information which they get from the Commission.
  I want to turn now to the criticism of subsidies to the National Coal Board and British Railways. When the right hon. Gentleman was saying how strongly he felt about the subsidies to keep open uneconomic pits and railway lines, I wondered whether he would pass on to the next natural case of subsidies, which are almost the biggest provided by this Government, the subsidies to farmers. I do not criticise these subsidies, because, if we want to get our balance of payments right, we must produce as much food as possible. There are many people who would like us on this side to argue that farmers are getting too much, but, unlike the right hon. Gentleman, I am not playing politics.
  This weekend, I spent most of my time in discussions with a branch of the National Union of Mineworkers and officials of the National Coal Board
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  about a pit in my constituency which is threatened with closure. About three weeks ago, they had the first of what are now called the "jeopardy meetings". That colliery employs 484 men and the Coal Board has told the union and me, as the Member representing the area, that the greatest number of men whom it will be able to redeploy to any other colliery is about ten. In the area where that pit is situated, unemployment is already running at about 7 per cent. Is the right hon. Gentleman saying that this Government should do nothing when faced with that kind of position? Does he want them to say that willy-nilly that pit will close and throw at least another 470 men on the scrapheap before alternative employment can be provided for them?
  The Government have spent a great deal of money in trying to build up the infrastructure of areas such as that which I represent, but we will not see results from their efforts until there is an improvement in the economy and until industry gets on the move again. But as soon as it gets on the move, industrialists will want factories almost overnight. The Government are already providing these advance factories. I think of those 480 men and the amount which they will get from the National Insurance Fund—not only their flat unemployment benefit, which they received when the right hon. Gentleman was Minister, but, in addition, their earnings-related payment and their redundancy payment. A Government is sensible if it weighs the cost of one against the other.
  I am not one who has shouted for uneconomic pits to be kept open, because I regard it as of the greatest importance that the mining industry should become viable. I told my constituents years ago that the price of coal comes into almost everything a wife buys in the shops. I have tried to be truthful and honest with my constituents. But within a year not only the pit to which I have referred but the one two miles away employing nearly 500 men may be closed. I give the greatest praise to the Government for the humanity they have shown to the people who work in the coal mining industry.
  I turn to the question of British Railways. Does the right hon. Member for

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  Kingston-upon-Thames think it totally wrong that uneconomic lines should be kept in being? Again, there has been a great deal of planning and of building the infrastructure. If we are to have industrial expansion in these areas, the railway line must be kept in being to ensure that it is successful.
  It is easy glibly to twit a Government because they are spending this or that and to say how foolish they are. But, having examined the reasons why the Government are pursuing their humane policies, I say good luck to them and hope that they will continue with them.
  Mr. Boyd-Carpenter: The right hon. Lady asked me a direct question and I should answer it. Under the Conservative Government, and during Lord Beeching's term of office, the deficit, which was a very serious one, was being steadily reduced because the Government and the Railways Board were administering the railways with a view ultimately to making them viable. I criticise the Government for abandoning that and for allowing the deficit to go on rising and thereby destroying the morale of those who wanted to make the railways viable.
  Miss Herbison: The Government's decision was perfectly right. I represent a Scottish constituency. For generations, a large part of Scotland has been neglected. It would be the easiest thing in the world to make the railways pay if only a few of the lines were retained. The Beeching proposals were backed up by hon. Members opposite. When it came to closures, the Scottish Tory Members who voted for the Beeching proposals made the strongest representations to the Government. The right hon. Gentleman's intervention has made me much more convinced that what the Government are doing is right.
  8.39 p.m.
  Sir Cyril Osborne: The right hon. Lady the Member for Lanarkshire, North (Miss Herbison) has made a very human and humane plea for the spending of money for social purposes. No one in the House could make a better plea or make it with greater sincerity. However, I should counter the right hon. Lady's arguments with the one concern which I have had since I have been a
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  Member: can we afford it? We cannot spend money which we have not earned and we cannot for ever keep on borrowing other people's money to spend.
  No matter how socially desirable certain expenditure may be, ultimately we have to face the question where the money is to come from. That is why I think that my hon. Friend the Member for Worthing (Mr. Higgins), who opened the debate, was wrong in saying that it was rather strange that we should be debating these matters now before the Budget tomorrow. This is the very time when we should be debating them. We are now saying what we are to spend, and tomorrow we shall have to find the money.
  Mr. George Willis: Will the hon. Member give way?
  Sir C. Osborne: No. The right hon. Gentleman has only just come into the House.
  Mr. Willis: Thousands of people live on unearned income.
  Sir C. Osborne: I am, therefore, grateful that time has been found tonight to discuss this huge Vote on Account. I protested about it last week because I regarded it as monstrous that this vast sum should go through "on the nod". That is why I am protesting.
  My constituents, for whom I am speaking, would ask three questions with which, I think, the right hon. Lady the Member for Lanarkshire, North would agree. They would ask, first, whether we can afford this vast expenditure. Secondly, they would ask whether we were getting value for money. Thirdly, they would ask whether it was necessary. It is on the first question—whether we can afford it—that I want to concentrate. Any fool can, for a short time, enjoy a champagne appetite on a ginger beer income, but sooner or later the bill must be paid. It is the bill which we have to face tomorrow.
  I should like to remind the Chief Secretary of what was said on Saturday by the Economist, a newspaper which is generally favourable to his Government.
  Mr. Diamond: In 1964?
  Sir C. Osborne: This was not in 1964 but on Saturday. The right hon. Gentleman should come up to date. The Economist said:
  "No set of figures could describe the hopeless outcome of the three years of Labour government rule more clearly than those showing changes in the use of resources between the second half of 1966, when the squeeze was fully on, and the second half of 1967 when defeat was admitted."
  This is the key to the position.
  The Economist said:
  "Britain's total output over this time rose by no more than 1 per cent."
  Where is the money coming from, I keep asking.
  "But personal consumption went up 4 per cent. and so, too, did public authorities' consumption, while public expenditure went up 13 per cent."
  To anyone used to looking at figures, that obviously cannot go on. If we earn 1 per cent. more and we spend 13 per cent. more, we have to go with our begging bowl borrowing money. Sooner or later, those from whom we borrow want to be repaid.
  The Economist—I put this to the Chief Secretary because I know that he regards these comments seriously—further said:
  "In the fourth quarter of last year, the ordinary trading accounts ran a deficit of £360 million, equivalent of £1,440 million a year…and the total deficit was running at an annual rate close to £1,600 million."
  The position is getting progressively worse.
  This is what I want the House to face. Much as I agree with the right hon. Lady that social expenditure is justified and desirable, where is the money to come from? How can we make the economic machine work better to produce the wealth which the right hon. Lady and I want to distribute among the poorer sections of the community? It is cruel mockery for us to tell the poorer sections of the community that they can have this and that when we are not sure that the economic machine can produce the money to provide what we promise.
  The Economist further said:
  "Mr. Wilson still ducks the issue: there will be 'little to spare', he said on Wednesday"—
  it was quoting the Prime Minister—
  "for increases in living standards in the near future."
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  That is fair enough. It said:
  "He should be honest and say that the living standard of the British workers has to go down."
  It is against that background—
  Mr. Archie Manuel: Will the hon. Member allow me to intervene on that point?
  Sir C. Osborne: All right.
  Mr. Manuel: I appreciate the hon. Member's giving way, but not his scowl. Does he not recognise that what will not go down is the social wage that applies to the poorest and the lower income groups in the community because of the acts to which reference has been made? The social wage will not go down.
  Sir C. Osborne: The social wage must go down if the cost of living goes up. Only this afternoon the Minister of Power came to that Box and said that gas prices would go up on average by 8·7 per cent. Therefore the standard of living to that extent must come down—and if hon. Members opposite think that is a laughing and a grinning matter I can assure them that poor people I represent do not think so.
  I remind the House that this is the biggest Vote on Account on record—£3,244 million. Last year it amounted to £2,880 million, and two years ago to £2,127 million. This is a rake's progress, and it must be stopped or the whole economy will come to a standstill. We are promising our people to spend money that we have not got, and I call that fraudulent.
  I remind hon. Members opposite that this enormous sum represents about £300 per year per family—every family in the whole country—in taxation, or £6 a week. That is the size of the burden which the Chancellor tomorrow will have to put on the shoulders of our people to pay for this Vote on Account, and it is against that that I am protesting. I am convinced that it is this huge uncontrolled expenditure by the Government which is the basic cause of all our economic ills, and until there is some control of Government expenditure we shall never get out of the jam which we are in continuously. This £3,244 million is, as my right hon. Friend said, only part of the total expenditure of the Government, which this year has increased from £9,500

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  million to £10,517 million. There must be some stop to this continual increase in expenditure or I do not know what will happen to our economy.
  The Government from time to time have promised the House and promised their supporters that they would cut Government expenditure. We had an example of that only last week. The Prime Minister sent a letter to his unfortunate candidate in the South Kensington by-election, and in that letter the Prime Minister said:
  "Devaluation, therefore, must be made to work, and the cuts we have already made in Government expenditure…"
  My constituents want to know how expenditure is cut when more money is spent.
  Mr. Boyd-Carpenter: The Labour candidate spent more money by losing his deposit.
  Sir C. Osborne: If the Government promise the people that they will cut Government expenditure and then spend another £1,000 million, the people say, "You are a fraud". The use of this word "cutting" Government expenditure when they go on to spend all this extra money is just nonsense.
  According to The Times, last week the Prime Minister, at one of his Labour Party meetings, said—very wisely—to his supporters:
  "You cannot spend it before it has been earned, and you cannot spend it twice."
  This Vote on Account has not been earned, and we are spending more than twice the money which we are borrowing, which we are obliged to repay one day. That is dishonest, and I protest against it.
  Last week, the Bank of England produced some statistics about our position last year. They show that, as a nation, we were roughly £550 million in the red. We were spending that much more than we were earning. Hon. Gentlemen opposite often twit us, sometimes in good humour and sometimes not, that they inherited a deficit of £800 million in 1964. The figure was about £760 million, of which about £350 million had been exported in one way or another, so that the trading deficit was about £370 million. After two years of Labour freeze and
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  squeeze, our position is a great deal worse today than it was when they took over in 1964. It is against that background that I protest about this vast amount of money being spent so recklessly.
  Last week, the Business Supplement in The Times said:
  "Net liabilities to central monetary institutions rose from £943 million at the end of September to £1,477 million by the end of December. This debt is already a record and it more than wipes out Britain's entire gold and convertible currency reserves."
  In other words, there is not a brass farthing in the kitty. But for my protest last week, this sum would have passed on the nod. We should have lightly passed a Vote on Account of £3,200 million when, as The Times says, we have nothing in the kitty. That is my answer to the right hon. Lady when she pleads for more money to be spent on desirable social matters.
  This Vote represents about one-third of the Government's expected expenditure in the year. The total is £10,000 million, and this is about £3,250 million. Therefore, it must include at least one-third of the deficit which the Bank of England last week said that we had incurred. At best, it means that, in this Vote, we are spending £200 million that we have not earned, and that against the Prime Minister's very good advice to the Labour Party last week that we ought not to spend money until we have earned it.
  In The Times one day last week, the hon. Member for Berwick and East Lothian (Mr. Mackintosh) protested about the saving of what he called the "trivial amount" of £25 million on prescription charges
  "…in comparison with the hundreds of millions handed out in subsidies to industry and loss on the Concorde."
  I agree with him. A sum of £25 million saved on prescription charges is a mere nothing compared with what has been lost in other ways. I should be interested to know how many more items like the Concorde may be hidden in the £3,200 million. How many other pieces of expenditure have been smothered in this one big Vote? We ought to examine it more carefully than we do.
  The hon. Member for Plymouth, Sutton (Dr. David Owen), when we—
  Mr. Cyril Bence: How many Bristol Siddeleys?
  Sir C. Osborne: I will come to that in a moment. [Laughter.] This is not a giggling matter. Tomorrow, when our constituents realise that they have to find this money, it will not be much comfort to them to know that Socialist hon. Members;at giggling about it. It is all right for the hon. Member for Dunbartonshire, East (Mr. Bence), who is not standing again for Parliament. He can afford to do this. His colleagues will have to face the music.
  Mr. Bence: The hon. Gentleman amuses me when he talks about not spending before earning the money. He is a business man and knows very well that if he wants to increase the capital investment of the companies that he controls, the most likely way is to approach some underwriters, to form a public company, and to raise the money by borrowing. Only in that way can he expand. That is the traditional capitalist method of increasing industry: spending borrowed money before earning it.
  Sir C. Osborne: Nothing of the kind. If I issue a prospectus for new capital, that capital becomes part of my organisation. That is part of the productive organisation. This is consumption. It is quite different.
  Mr. Willis Mr. Willis rose—
  Sir C. Osborne: Please let me make my speech.
  Mr. Willis: Is the hon. Gentleman afraid of a Scotsman?
  Sir C. Osborne: I am not afraid of any Scotsman alive.
  Mr. Willis: Surely the hon. Gentleman must be aware of the fact that there is about £10,000 million at present out on hire purchase for consumer goods.
  Sir C. Osborne: What does that prove? I was brought up never to spend money until I had earned and saved it.
  Mr. Willis: That is what keeps industry going.
  Sir C. Osborne: The hon. Member for Plymouth, Sutton (Dr. David Owen), when we were discussing the question of school milk, said:
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  "I feel that today public expenditure is out of control and there is no coherent planning or strategy lying behind it."—[OFFICIAL REPORT, 20th February, 1968; Vol. 759, c. 277.]
  I entirely agree with him. It is wrong that this vast sum should go through Parliament without being properly investigated.
  On the question of school milk, I would point out to the right hon. Lady the Member for Lanarkshire, North that, in order to make this Vote £5 million lighter, the Government, a fortnight ago, said that when a child left a primary school and went to a secondary school it could no longer have free school milk. Does the right hon. Lady agree with that? They have the impertinence to say that there was no longer any nutritional value in milk once a child went to a secondary school. What makes me so angry—and I have written and spoken about it—is that in this Vote there is an increase to the Arts Council of over £500,000, making its vote nearly £8½ million. We are robbing the children of poor working class people of their free school milk to give the Arts Council another £500,000 to provide "Arsenic and Old Lace" for middle-class people who can afford to pay for it. If that is the priority, I am against it and I am surprised that the right hon. Lady has accepted it.
  Miss Herbison: It is not for the hon. Member for Louth (Sir C. Osborne) to decide what my priorities are. I could make another speech about my priorities. I dealt only with the points raised by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter).
  Sir C. Osborne: This is true, but the right hon. Lady made a great plea about spending money on socially desirable causes. I am pointing out that this Vote gives extra money to the Arts Council so that the well-to-do middle class might enjoy opera and ballet at cut prices, while the sons and daughters of working class people are denied free milk in secondary schools. I am sure that the right hon. Lady would not agree with that. Therefore, my criticism is valid.
  Mr. Peter Jay, the Economics Editor of The Times—and he comes from a very good stable across the way—wrote from Paris last week—and I commend

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  what he wrote to hon. Members opposite—as follows:
  "A Budget increase in taxation of £450 to £800 million, or equivalent measures to restrain consumer demand"
  —that means to reduce the standard of living of our people. It is a nice way of putting it without frightening them with the brutal truth—
  "was urged on the British government at this month's meeting of the O.E.C.D.'s key working party No. 3, which is the free world's inner economic Cabinet. A consensus of British creditors favours the upper end of range."
  If that is so, it means that the Chancellor of the Exchequer tomorrow has to take £800 million more from the people because we are recklessly spending money before deciding whether we are getting value for it.
  This Vote on Account would have gone through on the nod but for our protests. Votes on Account ought in future to be examined much more closely, at greater length, earlier in the year, and not left like this. I protest most strongly at the attempt to get this Vote on Account through the House on the nod.
  9.2 p.m.
  Mr. A. Woodburn: The hon. Member for Louth (Sir C. Osborne) very often talks good sense when he is not trying to do a propaganda stunt for his party. As a person who is accustomed to dealing with finance, he does himself less than justice when he deals in the way he has just done with a problem that he purports to examine. He mixes up national expenditure and Government expenditure, and gets quite confused. He is so anxious to prove that public expenditure is wrong that he shuts his eyes to everything else that is going on.
  He is right to say that public expenditure should be examined critically. The Estimates Committee, on which hon. Members of all parties serve, does that in a businesslike way without introducing any party distortion at all. The Public Accounts Committee works in exactly the same way. Only on the Floor of the House do we get this party distortion of the national financial facts.
  It is right to say that, roughly, we divide our national expenditure into three sections: what we consume personally, what is spent for us by the Government,
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  and what is spent in planting the seed corn—providing capital for the future. The hon. Member is quite right in saying that when we are only earning £1 we cannot spend 23s. It turned out when we took office that we were spending £800 million more than we were earning which obviously meant that spending had to be reduced in order to come within our income and production. That is simple economics.
  There were three ways in which that could have been done. We could have stopped capital expenditure on building electricity stations, exploring for gas in the North Sea, making roads and redesigning the railways to give us modern transport. We could have left undone all those things as we had to just after the war. That may be the hon. Gentleman's policy but, if it is, he should say quite definitely that he wants the country to become a backwater. We are failing in this country because every American has about three times as much electricity and power behind his elbows as we have. The hon. Member's party objects to more electricity stations, objects to bringing the country up to date technologically, because that would be public expenditure. If those things were being done by his big capitalist companies, the hon. Gentleman would not have the slightest objection, but because it is done by the public he objects. That is economic nonsense. Whether it is done by the public, by I.C.I. or Unilever, it is still national expenditure. If it is done to develop the country's efficiency it ought to be spent by the Government, if that is the most efficient way of doing it.
  It is true that we could save about £1,000 million of Government expenditure by turning the National Health Service over to private enterprise. That would cut Government expenditure, but it would increase national expenditure because the doctors and the druggists would expect to get more. Because it is run meanly though skilfully people complain about the National Health Service. In New York the other day there was a scavengers' strike and rubbish was heaped up in the streets. That was a saving of public expenditure because the scavengers did not have to be paid. People would have paid pounds to have their rubbish removed in a day. Dollars would have poured in for that purpose.

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  In our country public expenditure for removing rubbish, providing sewerage and cleaning the streets can be done for 8½d. per week per family. Does the hon. Member know of any private enterprise organisation which would do that? Every family in my country gets clean water for cooking, washing and everything else for 6d. a week. We send bottles of it to America where they pay more than 6d. a bottle for it to be drunk with whisky. If there were no public water supply the hon. Member would find it a difficult job to go out and get pure water from the rivers. He would not then have time to talk such rubbish. People talk about public expenditure as if it had something to do with smallpox; it is quite ridiculous.
  Another way to cut down expenditure, is to cut the services which this House of Commons has decided are services we want, and to cut the number of people who provide those services. At a meeting of farmers I addressed I was asked if the Secretary of State could not get rid of a lot of civil servants. They had been reading some Tory speeches. I said, "That is a good idea." If farmers would stop sending in forms asking for subsidies. We could get rid of a thousand civil servants right away, but if farmers are to be paid subsidies of course we must have people to deal with them." It is no use talking about cutting public expenditure unless we say what we are to cut.
  There may be a lot of waste in expenditure but it is for someone to show the administration anything that is wastful. Then it should be cut out, I agree, but hon. Members should not pick on these things in order to show that something is going wrong. If, however, this public expenditure is necessary, and it is necessary to have capital expenditure to bring the country into the scientific age as quickly as possible, the other place where we can cut is private expenditure and personal consumption. Of course this has to be done. Our Government got into a lot of trouble because they spent too much too soon.
  Sir C. Osborne: That is what I have been saying.
  Mr. Woodburn: If the hon. Member listens he will better understand. When the Government came in they had made promises, as the party opposite had made
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  promises, based on a 6 per cent. increase in production. We never got the 6 per cent. increase in production, but we carried out the programme. The trouble was that that should have come only through a reduction in private expenditure and in personal consumption. We did not ask people to give up their motor cars but to wait for a wee while before buying a second car. That is cutting down private expenditure. The private sector wellbeing has gone up by leaps and bounds, even under this Government. It ought not to have gone up so quickly.
  The Government have tried to get voluntary restraint so that old-age pensioners could receive an increase whilst others went without; but people were not prepared to go without so that old-age pensioners could have an increase. Wages, salaries, dividends and other forms of income rose whilst we were trying to do a public service, with the result that national spending rose and we were spending 23s. and earning £1.
  Sir C. Osborne: That was my complaint. We have been spending 23s. and earning only 20s. That is why I want to cut out the 3s.
  Mr. Woodburn: The hon. Gentleman did not tackle it in that way. When it came to dealing with how it was to be cut out, we heard all the Tory propaganda about the huge scale of Government expenditure, not about matters being conducted in a businesslike manner. I believe that the proper way is not to allow private expenditure to go on increasing at the expense of social essentials. I am not a war-like person, but I believe that it is disgraceful that private people whose personal consumption is increasing are not prepared to part with a penny to provide the men we ask to fight for us with the tools to do the job. The Government of which I was a member decided that never again would we ask men to go into the Army without the proper tools to do the job. We are now subjected to this close scrutiny of public expenditure, with the result that everything has to be pared and the lives of those in the Services are endangered because people insist on having more motor cars, more enjoyment, and greater personal consumption. This is not sensible behaviour.

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  We all know what the Tory Party does when it comes to cutting private expenditure. Whenever the ship is sinking, it is the women and children who go overboard first. This has always been so. Instead of charging people for enjoying themselves, the Tories believe in charging people for being ill. This is a terrible thing, but we also are having to do it, not because we want to, but because the Conservatives have pampered to the hankerings of international financiers by screaming about prescription charges and about Socialist waste in the National Health Service.
  The first task facing the Labour Government is that of getting the country into a state of solvency. They cannot do that if Members seek to foster the campaign of Tory M.P.s who seek to show that Britain is spending its money wastefully. Winston Churchill told America that we were squandering the American loan. No British statesman ever committed a greater act of treachery. That was disgraceful, but hon. Members opposite recently have been conducting themselves in like manner.
  The Leader of the Opposition has been making speeches which have been causing dismay and despondency amongst our friends throughout the world. He has asserted that the Labour Government are bringing Britain to ruin. No one objects to public expenditure being examined, but we want honesty and patriotism when that is being done. Hon. Members opposite should not seek to score party points at the expense of Britain and her solvency. In a time of crisis, such as we had yesterday, hon. Members opposite should forget party propaganda for a little while and do something to help the nation to regain world confidence.
  9.14 p.m.
  Sir Eric Errington: The right hon. Member for East Stirlingshire (Mr. Woodburn) was not justified in claiming a monopoly of honesty and patriotism. That is not the way to approach these great problems.
  I want to make a few points on the Defence (Central) Estimate. The personnel figures for Defence (Central) are set out under that heading in Appendix 1 of the Defence Estimates. The problem is that there has been a certain amount of
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  interchange of Estimates between the Headquarters of Defence (Central) and various headquarters of the Army, Navy and Air Force. This makes it difficult to follow what has happened and what is the real situation regarding expenditure on this topic.
  I was privileged to be a member of an Estimates Committee which reported on the Treasury Control of Establishments in 1964. The right hon. Gentleman spoke of the advantages of the Estimates Committee which ensures that there is not too much party-political discussion on these matters, so I am sure that he will be interested in the recommendation number 6 of that Committee in 1964. It reads:
  "A specific inquiry should be undertaken Into the establishments of the reorganised Ministry of Defence as soon as the transitional period is over but certainly within two years."
  The Treasury's observation thereon was:
  "This recommendation is accepted. The Treasury wish to point out, however, that the increase of 312 in the headquarters staff of the Ministry of Defence referred to in the Committee's report referred only to an increase in part of the staff; that this increase was to some extent offset by reductions in other parts of the headquarters staff; and that the net increase in the total headquarters staff as estimated at that time was 70. They wish to emphasise that within a unified Ministry the headquarters staff must be regarded as a single whole."
  The point I make now is that we have separate debates in regard to the Army, the Navy and the Air Force and we have this separate debate also on the Central defence headquarters. It was said by the Treasury that the total headquarters staff would be reduced by about 300. That being so, it is impossible to find out what the position is because of the changes in the published estimates. The Treasury went on to say that
  "the organisation and establishments of the Ministry of Defence must be under continuous examination. Machinery specifically designed for this purpose is already built into the Ministry and is operating now. This process will not conflict with the specific inquiry recommended by the Committee."
  That was four years ago. When we debated the matter thereafter, the Financial Secretary said:
  "In regard to the specific inquiry recommended by the Committee, we think that it would be premature to put that in hand since the new organisation has been in existence for less than a year, but we intend to hold that

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  inquiry within the two-year period."—[OFFICIAL REPORT, 23rd February, 1965; Vol. 707, c. 289.]
  Has that inquiry been held? If not, when will it be held, or shall we get into the position where Estimates Committees can spend some time discussing these matters and yet nothing is done? It is particularly important that it should be done, because neither my ingenuity nor that of others can find a way of discovering under exactly what Service Vote the particular expenditure and number of people employed is placed. In the Vote on Account little asterisks appear every now and then which refer to a note that:
  "Figures have been adjusted for transfers between Votes for purposes of comparison with 1968–69."
  but that is quite inadequate to trace the number of personnel involved. This is very important, for the number of people concerned is considerable. The Estimates Committee thought it proper that there should be a reduction, a reduction was promised, and since then nothing has happened, so far as I know.
  I should also like to mention the situation concerning the island of the Seychelles in the British Indian Ocean Territory, referred to on page 9 of the Central Defence Estimates. I do not understand what has been happening here. We find that a promise has been made by somebody that £.6½ million will be spent on an air strip that has not been started, but it is denied that it has anything to do with defence. That was the answer I received the other day when I questioned the Commonwealth Affairs Department, and I was also told that the contracts had not yet been concluded. But I see in the Defence Estimate an item of £600,000. Perhaps I was wrong, but I thought that the British Indian Ocean Territory defence project was one of those things that seemed to be good at one time, but turned out not to be good and was dropped completely. In any event, I presume that the Seychelles was not a place that ever could be used for defence purposes. Figures like that require some investigation. It is a peculiar thing that about three Ministries have become involved, and it is almost impossible to get a coherent answer.
  I sought to intervene when the right hon. Lady the Member for Lanarkshire,
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  North (Miss Herbison) was speaking about legal aid and Dr. Savundra. It is very important that it should be realised that there are two kinds of legal aid. With the first, the amount of contribution for civil cases is recommended after application to the Supplementary Benefits Commission. But there is a second kind of legal aid which requires a great deal more consideration to be given to it, and that is the legal aid that is given in criminal cases. In criminal cases the person who receives legal aid probably receives it at the same rate as the prosecution, but that does not apply in civil cases. In civil cases there is a deduction so that something comes back to the legal aid authorities if the case is won.
  The main point I want to make is that we shall frustrate our Estimates Committees' inquiries if the result of a recommendation which on two occasions has been accepted and adopted by the Treasury is not carried through so that we can know the answers.
  9.25 p.m.
  Mr. Cyril Bence: I hope that the hon. Member for Aldershot (Sir E. Errington) will forgive me if I do not follow his argument. He gave a very serious examination to the Estimates, as a member of the Estimates Committee.
  I am drawn to my feet by the extraordinary speech of the hon. Member for Louth (Sir C. Osborne). We all enjoy his speeches, but he seems to me to be symptomatic of what I have always called "The English Disease". I was brought up to understand by business acquaintances that I should aim at the highest domestic personal expenditure and standard of life that I could reach and set out to earn it. Too much in this country today, in the examination of costs, both in private enterprise and in Government Departments, there is the setting of a figure and the assumption that it is the minimum figure that can be accepted, and then we get everybody else to meet that plateau of costs.
  We get this sort of thing in industry. It has probably developed since 1938. When manufacturing associations discover that their industrial costs are rising at a certain rate, instead of using every dynamic they can to increase the efficiency of their plants to cover the cost

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  and to get a profit, they get together and put up the price to the consumer. Over the past 30 years there has been a tremendous lack of drive in all branches of industry and commerce for higher proficiency in plants through new capital equipment or the most efficient use of labour because there has been an easier way out by the inflationary process of putting up the price. This attitude is spreading throughout the country.
  On the Estimates Committee and the Public Accounts Committee we all do our jobs to the best of our ability. We examine expenditure as closely as possible. We examine witnesses. I have never seen party politics brought into the Estimates Committee. I have seen Conservative, Labour and Liberal Members acting objectively, most efficiently and effectively, surveying every £ spent, and they have done their job well. But I have always had a feeling—it was the same in the industrial enterprise I used to be in—that it is much easier to get agreement between bodies to put up the prices of products than to make the intellectual and technical effort to get greater efficiency in production.
  When hon. Members opposite, including the hon. Member for Louth, criticise national expenditure in this form, they are doing their proper job. We are here to examine expenditure and to criticise it if we think that there is any waste, if we think that it is inefficiently planned or if we think that we are not getting value for money. That is the right thing to do. But if we are satisfied as a Committee, if we report to the House that this is a justifiable expenditure, it is our duty politically to tell the people that it is justifiable. All these Estimates have gone through the Committee. It has reported to the House and recommendations have been made to the Department of State. Generally speaking, over the whole field there is general agreement by the Estimates Committee and the Public Accounts Committee except in a few instances.
  Mr. R. Gresham Cooke: But the hon. Gentleman must surely agree that the Estimates which we are discussing cover 166 items and that only about three of them have been through the Estimates Committee.
  Mr. Bence: That may well be so, but, taking it year by year, the Estimates go through the Committee. Of course we cannot do the whole lot in one year but, year by year, we take them all. Departments and their expenditure are examined and usually, when the Committee reports, a large slice of the Estimates has been agreed by the Committee. There has then been detailed criticism here and there but, in general, the House has approved.
  Parliament itself, on both sides, has year after year approved the general level and the rising level of expenditure. Under the last Government the Estimates were criticised objectively on both sides. Hon. Members opposite have made efficient criticisms, quite rightly. But, generally speaking, Parliament has approved the Estimates brought before it. This general approval arises because of the climate in the country that it is easier to put up the price of the product to the consumer, and to put up the price of Government to the consumer in the form of rising taxes, than to create higher efficiency. That is the attitude in the country. To trade unions, trade associations and marketing organisations, it appears much easier to raise the price of the product than to make a serious effort to get higher efficiency. For a long time I have felt this to be one of the grave weaknesses in British industrial life.
  I am glad that the hon. Member for Louth is back in the Chamber. I understand something of his point of view, but I agree that he gets personal consumption expenditure mixed up with expenditure on capital account. They are two different things and perform two different purposes. The Conservative Party over the years have agreed to sponsor capital expenditure—that is, the circulation of money through channels which will increase productive effort and resources—and at the same time to subsidise consumption to the low income groups and all sorts of needy people. So we have, flowing and recirculating in the community, money which goes to subsidise people who cannot get enough by earning and money through productive processes which, we hope, will increase productive efficiency.
  Mr. Geoffrey Hirst: The hon. Gentleman has had a lot of experience

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  in this, as I have. He must know that the Opposition have to raise matters in debates like this on the Estimates as a method of attacking policy.
  Mr. Bence: I agree. The function of the Opposition is to oppose. I think that we did it more effectively than do the Conservative Party, especially our Scottish Members.
  The hon. Member for Louth referred to spending 23s. when we are earning only 20s. He said that we should not spend money until we earn it. He said that we should tell the people that it costs 23s. a head to provide them with educational resources, the police force, pure water supply, defence and so many other things and that we must say, "This is what you have, and you will have to earn it."
  Sir C. Osborne: I was merely quoting the Prime Minister who, at a Labour Party meeting last week said, "You cannot spend it until you have earned it and you cannot spend it twice." It was the Prime Minister who said that.
  Mr. Bence: I was saying that I would prefer the hon. Gentleman to campaign not for cutting expenditure in all the infrastructure down to the 20s. level, but for a greater effort to be made in industry so that we could find the 23s. I want industry not to cut down the quality of the product, but to tell workers and managers to be more efficient so that prices can be maintained while quality is improved. I want more public expenditure and more amenity. I want more art galleries and more social services, but I want a hard-working, industrious, technological community which will enable us to do that. I agree that if those things are not done, we shall be heading for bankruptcy. I do not want the Government to stop spending money on these services. I want the Government to tell industrialists and workers to get cracking, to be more efficient and to employ labour more efficiently, so that all these services will not be a burden.
  9.36 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): As the hon. Member for Worthing (Mr. Higgins) said, this is an unusual occasion. He said that he had researched as far back as 1945 and had not found another occasion on which
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  a Vote on Account had been debated. I am grateful to the Opposition for giving me this opportunity, and I hope to remove many misconceptions about the control over Supply expenditure, the control over public expenditure, and the Government's intentions.
  It is noteworthy that there has not been a debate in all those years, and one should inquire the reason. It is that this has not been regarded as an occasion for challenging any of the Estimates. This is the occasion when the Government ask purely for a payment on account so as to cover the period between the end of their last authority and the start of their next, a period of approximately four months. I do not agree that this is petty cash. To my mind it is substantial expenditure, for which I am responsible.
  I must remind the House that there is every opportunity, on Supply days and other occasions, to examine any and all of the individual Estimates. We are well served by the two Select Committees, one chaired by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) which examines the expenditure which the Government incur, particularly in relation to getting value for money. This is the occasion to look broadly at the situation rather than at any detail. If in the time available I am unable to answer all the detailed questions, I hope that it will be understood that there is ample opportunity for that kind of detailed examination, quite apart from the continuing work done by the Committees.
  It has been complained that this Vote on Account is unusually large. I shall deal with that complaint, because the purpose of the debate is to examine requests for payment in general terms and to ascertain whether the scale of magnitude is reasonable.
  I want to put into context the questions about the size of the Vote. I suggest that the Vote is valuable in terms of the control of expenditure by the House and its Committees and that this is where its value ends. I suggest that we are not serving ourselves well in terms of controlling public expenditure, which is what really matters, by having this kind of a series of cheques drawn by the Government—one's cheques must always be given authority—examined and misleading

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  the House into believing that, by doing that, a real examination of the Government's public expenditure policies is taking place.
  It is because I am anxious for more examination and, as every Treasury Minister must be, for more help in finding alternatives and more constructive criticism to achieve the same objective more cheaply that I shall speak somewhat critically of the Vote on Account, because I am anxious to get a better system and not because the present system rests heavily on my shoulders—far from it.
  I will deal first with the size before referring to the nature of the Vote. It is a large increase compared with last year—10·7 per cent. The figures include certain items previously carried on the Consolidated Fund—there has to be a minimal adjustment for that—but the increase is still 10 per cent., which, at constant prices, is approximately 61 per cent.
  These are large figures. Let us consider why. Certain items stand out immediately and are included because cheques have been drawn. If any hon. Member suggests that one can find out exactly how one has conducted one's affairs over the year in any economic sense by making a list of the cheques drawn, I would say that he has made a great mistake.
  He will distinguish between cheques drawn for current and those for capital expenditure, for payments or repayments of loans, and wonder whether payments to his wife were current or capital expenditure. If she in her turn spent them, that is current expenditure, while if she saved them, it is capital or savings. If she does half and half, it is half and half. I remember a speech by my hon. Friend upstairs about curtains which suggested that he was not always sure about these payments at the end of the year—and which husband is? Until one knows, one cannot know the nature of the expenditure.
  Therefore, this illustrates from everyone's daily experience the simple fact that a series of cheques means very little in economic terms, as the hon. Member for Worthing asked that I should deal with it. A series of cheques added up and called Civil Expenditure, of which the Vote on Account is a payment on account
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  also means very little, but so far as it has any significance, let us deal with the criticism that it is excessively large. It is a large increase and includes this year several items which immediately make nonsense of such an attempt to compare. It includes the investment grants of £214 million, which replace investment allowances, which were deductions from tax revenue. In any economic assessment these are taken into account not a, expenditure but as a deduction from revenue receipts. It includes also £182 million for the rate support grant. These are the increases which we are talking about.
  What has happened there mainly is that instead of the burden of expenditure, of a constant amount of expenditure, being carried by the ratepayer, it has been switched to the taxpayer. But the expenditure itself is unaffected by the switch. However, the Vote on Account shows the increase. There is an increase of £120 million for family allowances, which is to be mainly recovered by the Chancellor of the Exchequer when he addresses us tomorrow, an increase which will be clawed back by the tax system and therefore will represent an increase in taxation.
  Therefore, in those three items alone, I have accounted for half the increase and demonstrated that these are cheques, but they are meaningless and totally irrelevant in comparing one year with another.
  A much smaller item but which illustrates the point is the Post Office Vote for the B.B.C. and television licence fees. If we increase the licence fee, we increase the Post Office's Vote, because whatever comes in by way of licence fee goes out through the Post Office Vote to the B.B.C. Therefore, the larger the licence fee, the greater the income, and the smaller the net demand on resources the larger the supply account in the Votes. It goes precisely contrary to the demand on resources and demonstrates that to have regard to supply is absolutely meaningless in this context.
  Mr. Higgins: I am trying to follow the right hon. Gentleman's argument closely, but if he reads what he has said he will find that it does not make sense. Surely the fact is that if the licence fee increases and the B.B.C. spends more on paying

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  various people and employing more resources, the demand on resources must increase.
  Mr. Diamond: I am sure that the hon. Gentleman will listen carefully. I will repeat what I said. I never said one word about the B.B.C. paying more. That is a separate issue. I said that the transaction here consists of increasing the licence fee. If the licence fee were not increased, the constant cost, whatever it is, of running the B.B.C. would have to be borne out of public expenditure. Assuming no increase in cost at all, the very fact—[interruption.] The hon. Gentleman should not import an element which I am not importing into my argument. I am simply demonstrating that the Post Office Vote carries a transfer to the B.B.C. of the licence collected, and the greater the licence fee, the larger the Vote. Therefore, the Vote does not indicate increased expenditure by the Government at all. It indicates additional income to the Government.
  That is a minor point. The major point which I wanted to make was that part of the expenditure is accounted for already in the three items which I have mentioned.
  Mr. Boyd-Carpenter: Surely the right hon. Gentleman's argument about family allowances is fallacious. There is a true increase in expenditure financed from hypothecated taxation.
  Mr. Diamond: I do not think that the right hon. Gentleman would want to pursue that argument. If he thinks about it, it is not such an increase, but if it comes out of taxation, ergo the additional spending power of some families is matched by the reduced spending power of others. If some families spend more others have less to spend.
  This is a switch and it does not affect the total demand on public resources. I therefore maintain that this increase is meaningless as a comparison. But if the right hon. Gentleman thinks that it is meaningful as a comparison, I have to deal with the question of whether it is out of line with comparisons which ordinarily occur.
  I look immediately to what happened when the right hon. Gentleman's Government were in power and, in addition, to the time when he was Chief Secretary. In the year 1959–60, the payments
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  shown by the Vote on Account increased by 10.8 per cent. One item there was a special item of £100 million of the railway deficit which was transferred to Votes, which had not previously been carried on Votes and is merely another illustration that this is a rather meaningless exercise.
  If the right hon. Gentleman thinks that I should make this comparison, I am saying that if we look back we find an exactly comparable period then. It dropped in the following year, because there were no such odd items, to 5·7 per cent. The right hon. Gentleman was then appointed Chief Secretary and he worked well and fruitfully. In the following year, it rose to 8·2 per cent. under his custodianship. In the year after that, it rose to 9·4 per cent. His custodianship then came to an end.
  Mr. Boyd-Carpenter: No doubt by a slip of the tongue, the right hon. Gentleman attributed to me the office of Chief Secretary in 1959–60, when, I think he will find, the office did not exist. Leaving that aside, does the right hon. Gentleman appreciate that the comparison which he is making is wholly invalid with, on the one hand, a period when there was slack in the economy and it was the proclaimed policy of my right hon. Friend the Member for Barnet (Mr. Maudling) to produce a measure of reflation, and a period such as the present, when the Chancellor of the Exchequer is suggesting that the most rigid economy is needed?
  Mr. Diamond: Having very little time to answer a long debate, I will not attempt to give an answer to the lengthy interruption and speech which has been made yet a second time. The right hon. Gentleman had a full opportunity to make his speech in the first place.
  The point which I am making, and which the right hon. Gentleman has not taken on board, is that one can make the comparison. It shows that there is no difference between the kind of rises which occurred under his custodianship and ours but that the comparison is worthless because it refers merely to a series of cheques and not the function of those cheques or the purpose which they serve.
  I turn now to the more important part and demonstrate why we cannot rely on

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  the Vote on Account and why the House should concern itself with public expenditure and not with Supply expenditure, which is meaningless and which the Press fully understood was meaningless.
  As Press quotations have been given, I will quote only one journalist, Peter Jay, who has been mentioned before and who discussed this matter effectively in The Times. When talking of the Supply expenditure, he said that the figures have no economic or financial significance. He described this in a number of ways and he said:
  "In countless other ways, 'Voted' cash disbursements misstate the true economic and financial impact of public expenditure. Indeed, the whole system of Supply expenditure is a relic of Parliamentary history and bears no relation to the way in which Government spending is planned and controlled in Whitehall."
  He was right.
  If any hon. Member is interested in the House having real control over public expenditure, as it should—which is one of the reasons why we are all Members of Parliament and responsible to our constituents—the way to achieve that measure of control is to recognise that Supply expenditure means very little indeed. It is an element in our control but is an out-of-date one. What we should be turning our attention and our minds to is the control of public expenditure.
  The reasons are obvious to everybody, because Supply expenditure refers only to central Government expenditure and not to the country's expenditure. It refers to only part of central Government expenditure. Other items are included. It takes no account of expenditure like insurance funds, which are enormous, or local authority expenditure, although it takes account of the expenditure of a contribution by the central Government to local authorities in respect of that expenditure. It is a meaningless exercise, and we have at hand a really meaningful approach through public expenditure—which was started by the party opposite when it published its first document on public expenditure following the Plowden Report and set a perfectly good example following the Plowden Report. We have followed that up ourselves.
  The public expenditure figures are turning out as planned, and the cuts have
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  been made, and as a result of cuts having been made we shall be on target in 1969–70, and in 1969–70 we shall be running at a rate of increase in public expenditure of only I per cent. It was slightly above 1 per cent. in the second year during which I was Chief Secretary. We shall be back to that figure of an increase of 1 per cent., and we can then decide in the light of those circumstances what is compatible with the growth of the economy at that stage, having achieved our first exercise. It is not right, therefore, to say either that the cuts have not been achieved, or that public expenditure is out of control—it is exactly on control—or that it is out of relationship with that of the previous Government. The previous Government for the last five years had an increase in public expenditure of a little over 4½ per cent. We shall have an increase in public expenditure in our first five years of slightly less than that average rate of increase in real terms per annum.
  That is what one has to realise, and to realise what is the political content in some of the speeches which have been made. One has to remember the speeches which have been from the other side recommending an increase in this kind or that kind of public expenditure, promoting this and promoting that, and then when we come to the total we find that there is objection to the total. I have often wondered how on earth right hon. and hon. Gentlemen opposite reconciled their criticism of the total of expenditure with their support of all kinds of detailed items of increased expenditure. Of course, one can get popularity for supporting individual items. Then they realise, in relation to tomorrow's events, that that total has to be paid for, and it is the paying for it which hon. Gentlemen opposite, particularly the hon. Gentleman the Member for Louth (Sir C. Osborne), object to. What every sensible society has realised is that what an individual wants mostly is provided by the community. It is much cheaper—[HON. MEMBERS:"NO."]—it is much cheaper to provide schools, for example, for the community, than that every individual should have his or her tutor. It is much cheaper to provide university education, it is much cheaper to provide hospitals and a whole host of services, it is much cheaper to

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  provide roads publicly than privately—as every frontager on a private road knows only too well.
  Sir E. Errington: The right hon. Gentleman was good enough to mention the fact that the Estimates Committee was of some value—
  Mr. Diamond: I have not many minutes.
  Sir E. Errington: I know—but this appears to be the only way in which I can get an answer to my question.
  Mr. Diamond: No. It is not the only way. I will write to the hon. Gentleman to deal with the answer to his question. He asked if the Estimate Committee's Report was being considered. Of course it is being considered. The hon. Gentleman should not feel any anxiety about that.
  The Vote on Account we are considering is not abnormal, and the explanations of it are simple to everybody who has read and understood it. It is a document which does not mean a great deal, and means practically nothing in relation to public expenditure. Public expenditure is under control, it is on target, and it is something of which the House approves as a sensible way of providing the social wage. It is a method of redistribu-tion—
  It being Ten o'clock, Mr. SPEAKER put the Question, pursuant to Standing Order No. 18 (Business of Supply).
  Question agreed to.
  Mr. SPEAKER then proceeded, pursuant to Standing Order No. 18 (Business of Supply), to put forthwith for each financial year the Question, That the total amount outstanding for that year be granted out of the Consolidated Fund for the purposes defined in the related Votes.

  CIVIL ESTIMATES AND DEFENCE (CENTRAL) ESTIMATE, 1968–69 (VOTE ON ACCOUNT)

    DEFENCE ESTIMATES, 1968–69
    Question,
    That a sum, not exceeding £366,190,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges for the Defence Services for the year ending on the 31st day of March 1969, of which notice has been given in pursuance of Standing Order No. 18(9).
    put and agreed to.

  CIVIL AND DEFENCE SUPPLEMENTARY ESTIMATES, 1967–68
  Question,
  That a further Supplementary sum, not exceeding £101,152,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on the 31st day of March 1968 for expenditure on Civil and Defence Services, of which notice has been given in pursuance of Standing Order No. 18(9),
  put and agreed to.

  CIVIL AND DEFENCE ESTIMATES (EXCESSES), 1966–67
  Question,
  That a sum, not exceeding £3,310,539 10s. 4d. be granted to Her Majesty out of the Consolidated Fund, to make good excesses for certain grants for Civil and Defence Services for the year ended the 31st day of March 1967, of which notice has been given in pursuance of Standing Order No. 18(9),
  put and agreed to.
  Bill ordered to be brought in upon the Resolutions by the Chairman of Ways and Means, the Chancellor of the Exchequer, and Mr. Harold Lever.

  CONSOLIDATED FUND (No. 2)
  Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31st March, 1967, 1968 and 1969, presented accordingly, and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 97.]

  INCOME TAX (NON-RESIDENTS)
  10.4 p.m.
  The Financial Secretary to the Treasury (Mr. Harold Lever): I beg to move,
  That the Non-Residents' Transitional Relief from Income Tax on Dividends (Extension of Period) Order 1968, a draft of which was laid before this House on 4th March, be approved.
  I ought to say a word or two in explanation, as I know that there is an avid interest in the details of these proposals, especially among right hon. and hon. Gentlemen opposite.
  In essence, they are simple. When we changed over, by a decision of the House, from the old Income Tax system to the Corporation Tax in 1965, it became necessary to deal with the Double Taxation Agreements which we have with about 60 different countries.
  Our then existing Double Taxation Agreements were apt for the previous Income Tax system but needed amendment to cope with the additional arrangements made in the 1965 Act. Sections 31 and 32 of the Finance Act, 1966, contained provisions to cover certain questions, the first, what are now familiarly called "mirror image" dividends, and the second, tax on interest and royalties paid and received by residents of countries with whom we have Double Taxation Agreements.
  It has not been possible to renegotiate all the 60 agreements—I think there are 60—covering this area. In the meantime, Sections 31 and 32 of the 1966 Act provide that there should be interim provisions which continue in force broadly the arrangements of the old tax system, adapted to give interim relief, while the new one and the Orders relating to it for double taxation are renegotiated. This section needs to be extended by one year to give further time for the renegotiation of these treaties. In all, ten of these double taxation treaties have been negotiate so far. Some have been ratified. Some have not yet been ratified. It is obviously quite a slow process and we provide in these Orders for another twelve months for these double taxation agreements to reach their conclusion and to be ratified. It seems to make sense. It is required for the fair treatment of people regarding dividends, interest and royalties. Therefore, I hope that the House will see fit to approve this interim
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  Measure arising from the change in our taxation laws in 1965.
  10.7 p.m.
  Mr. Michael Alison: Very briefly, will the Financial Secretary elaborate a little more for my benefit, if for no one else's. I am a comparative novice in this subject, but I nevertheless want to gain further enlightenment.
  The Financial Secretary referred to 60 possible renegatiated double taxation agreements. Could he explain the relationship between the figure of 60 and the agreement referred to in Schedule 9 to the 1966 Act? Are those the agreements to which the transitional arrangements apply or are they simply the first 10 of the 60 to which he referred earlier, and are we, therefore, to expect a continuation of this sort of reduction of the outstanding figure?
  I want to go into a little more detail for the purposes of clarification, because this will be the third year in which these transitional provisions are to apply. They applied in 1966–67 and 1967–68 by reference to the 1966 Finance Act, and they are now to be extended in 1968–69. It therefore looks as though these so-called transitional arrangements will never end up in a state of permanency or definitive agreements so that transitional arrangements will no longer be necessary.
  I do not press the Financial Secretary necessarily to end transitional arrangements and finalise the procedure of renewing the transitional powers in a definitive series of permanent agreements, because I am under the impression—no doubt he will correct me if I am wrong—that in many ways we could be better off with the continuation of these transitional provisions without a definitive agreement of the kind, for example, that we got in the double taxation agreement with the United States, to which, therefore, transitional procedures no longer apply. We may be better off under these transitional procedures than under the final definitive double taxation agreements as renegotiated following on the introduction of Corporation Tax and so on.
  Mr. Speaker: We cannot go into final definitive agreements, which the hon. Gentleman either wants or does not want, on this Motion.
  Mr. Alison: I merely make that point. I hope that the Financial Secretary will tell us whether it is his purpose to perpetuate the situation of transitional procedures, whether he is pressing all the time to secure definitive final agreements or whether he rather likes to hold on to these transitional powers which he has.
  It seems, for example, that Section 32—the special facilities given for disallowing these interests or making it possible to set off these interests and royalty payments against profits earned—is a provision which applies in those favoured cases whether or not a definitive double taxation agreement has been negotiated. There seems, therefore, in many ways no incentive built into the Act, particularly in Section 32, to reach definitive agreements with a second or third Power, because the special concession applies, as far as I can see, whether or not there is a renegotiated double taxation agreement.
  I hope that the Financial Secretary will be able to tell us, by reference, for example, to the results of the American Double Taxation Agreement, which seems to result unquestionably in a less favourable position vis-à-vis the Revenue than that which existed before—and my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), discussing the original Agreement with the United States—
  Mr. Speaker: Order. I hope that the hon. Gentleman will take note of what the Chair says. We are discussing simply whether or not this relief shall be extended for one year.
  Mr. Alison: I apologise if I am straying from the point, Mr. Speaker. I hope that the Financial Secretary will be able to tell us whether it is his policy to go on maintaining a state of limbo with a number of Powers, and operate on the basis of transitional arrangements, for which this is the third year, or whether he really intends to draw this ultimately to a conclusion by a greater zeal in finalising permanent arrangements with foreign Powers. This is a matter of some concern, Mr. Speaker—
  Mr. Speaker: I hope that the hon. Gentleman understands. I am not concerned with whether it is a matter of
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  concern, but with whether it is a matter that can be brought within the purview of this debate.
  Mr. Alison: Yes, I appreciate that, Mr. Speaker. I am trying to ascertain from the Financial Secretary whether the powers he seeks under the Orders are likely to crop up regularly in the future or whether we have here a sort of diminishing situation, one which will face us decreasingly in the future, because he will negotiate specific arrangements which will make such Orders unnecessary. It is a matter of concern, because in many ways these arrangements could be more advantageous to the Revenue than the procedure which might result in transitional Orders no longer being necessary.
  10.3 p.m.
  Mr. Lever: With the leave of the House, I will answer briefly, and with Ministerial detailed attention to the rules of order, the points raised by the hon. Member for Barkston Ash (Mr. Alison).
  The hon. Gentleman asked whether the Order applies to the 10—or, I think, the 13—Agreements so far negotiated, or to the 60 potential agreements. The answer is that it applies to the whole 60 agreements. When the Agreements have been not merely renegotiated but ratified by everyone concerned, we will bring the system to an end.
  The hon. Gentleman says that the continuation of the existing system of temporary interim relief is in some cases more attractive to the British Revenue than will be the new negotiated agreements. That is no argument for keeping in existence an interim system which would not be acceptable indefinitely to other countries which, I assume, can make the arithmetical calculations which the hon. Gentleman has made and, if he is right, may come to the same conclusion as he has, in which case they would press on us to renegotiate the Agreements. The sensible thing is to bring all the Agreements up to date. We are doing that as fast as we can, and that is all that the Order does.
  Much as I should like to, I am not able to engage in debate on the consequences of the Anglo-American Double Taxation Agreement, although I have

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  debated with the hon. Member for Wan-stead and Woodford (Mr. Patrick Jenkin) on that subject. The simple object of this Order is to preserve in force the relief granted to taxpayers. This is the Revenue in its generous aspect.—[Laughter.]—I do not say that the Revenue is always to be seen in this aspect. The object of the Order is to continue in force the relief temporarily required until we have renegotiated the double taxation agreements which the 1965 Act makes it specially necessary should be brought up-to-date.
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  I hope that that reply will satisfy the hon. Gentleman, and that the House will think fit to give the extension we seek.
  Question put and agreed to.
  Resolved,
  That the Non-Residents' Transitional Relief from Income Tax on Dividends (Extension of Period) Order 1968, a draft of which was laid before this House on 4th March, be approved.
  Transitional Relief for Interest and Royalties paid to Non-Residents (Extension of Period) Order 1968, [draft laid before the House 4th March], approved.—[Mr. Harold Lever.]

  POLICE PENSIONS (REGULATIONS)
  10.15 p.m.
  The Under-Secretary of State for the Home Department (Mr. Dick Taverne): I beg to move,
  That the Police Pensions (Amendment) Regulations 1968, a draft of which was laid before this House on 22nd February, be approved.
  This and the following Order make some minor amendments to the Police Pensions Regulations 1966 and I should like to give hon. Members a brief explanation of each of the changes.
  First, the amendments contained in Part I are concerned with the administration of the pension arrangements for policemen who serve temporarily overseas. I want to stress that they do not affect in any way the pension rights of these officers or their dependants. The policemen concerned are those who leave their police forces in this country to serve for a time overseas. In the past, a number of officers served in this way in police corps set up under the Police (Overseas Service) Act 1945. More recently, service overseas has been under arrangements governed by the Overseas Service Act 1958.
  During their overseas service officers continue to be subject to the police pension scheme in all respects, and responsibility for their pension position over that period, up to the present time, has fallen to be undertaken by the particular Secretary of State under whose aegis they serve. For reasons of administration it is desirable for these pensions functions, at present being performed by different Departments, to be transferred, for the most part, to my right hon. Friend the Minister of Overseas Development, and some provision to enable this to be done was made in Section 12 of the Superannuation (Miscellaneous Provisions) Act 1967. The amendments contained in part of the Regulations, which I now introduce, follow upon the Act of 1967 and make the changes in the Police Pensions Regulations which are necessary before my right hon. Friend can assume these functions.
  Part II of the Regulations contains three separate amendments. The first of
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  these, Regulation 3, makes provision for a larger gratuity to be paid in certain cases to widows or to children of policemen. At the present time the Regulations provide that when a policeman dies from injuries received from an attack or while effecting an arrest or preventing an escape his widow or his children shall receive, in addition to a pension, a gratuity amounting to twice the maximum pay of a constable in the force in which the policeman served. As the pay of a constable in the Metropolitan and in the City of London police forces is £50 a year higher than in other police forces, there is a difference in the amount of gratuities which may be paid in these distressing cases. This amendment provides that in future in all cases the gratuity will be assessed on the same basis, that is twice the maximum pay of a constable in the metropolitan police whether or not the policeman was a member of that force. Currently the gratuity would amount to rather over £2,500.
  The next two following amendments are both concerned with preserving the pension position and the continuing application of the pension scheme in relation to former and serving policemen of police areas which are absorbed into other police areas in certain circumstances. The pensions regulations already provide, in Regulation 97, for preservation of rights and the continued application of the scheme in most cases of alteration of police areas, but these amendments provide for kinds of cases which are not at present specifically covered.
  Regulation 4 makes the necessary provision in relation to all former members and serving members of the River Tyne police force in the event of the dissolution of this force by a harbour reorganisation scheme under the Harbours Act 1964. Regulation 5, which is a rather technical amendment, makes provision for cases where the whole of an existing county or county borough police area is included in a new county or county borough police area by reason of an order made under the Local Government Act 1958.
  I now come to Part III. Regulations 6 and 8 of this Part will slightly reduce the complexity of the main Regulations because they revoke certain provisions

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  which at this date have no application. These provisions governed the payment of allowances to children of police officers who died before 5th July, 1948. I should perhaps explain that the reason why separate provision existed for the payment of awards by reference to this date is because that was the date when the police pension scheme was incorporated for the first time in Regulations; previously the scheme had been contained in the Police Pensions Act 1921. That date, 5th July, 1948, was also the day on which the National Insurance Scheme came into operation, which leads me to the amendment in Regulation 7. National Insurance benefits are not payable to some children of deceased policemen because their fathers could not complete the necessary contributions. Therefore, since 5th July, 1948, the Regulations have given police authorities discretion to increase the allowances of these children up to amounts which are related to certain National Insurance benefits for which they did not qualify.
  When the amounts of these benefits are changed it is the practice to make related changes in the amounts which the police authorities can pay. Hon. Members will be aware that, from 9th April, National Insurance benefits for children become payable at different rates in accordance with the Family Allowances and National Insurance Act, 1967. The amendment in Regulation 7 makes related adjustments, as appropriate, in the amount payable under the Police Pensions Scheme, but no adjustments are made which would reduce payments already being received by children.
  Finally, the House should know that the Police Council for Great Britain has been consulted about all the amendments in these Regulations and agree that they should be made.
  10.21 p.m.
  Mr. Bernard Braine: The Under-Secretary knows that, for some time, I have been consultant to the senior police officers' associations—the Superintendents' Association of England and Wales and the Scottish Superintendents' Association—which I am sure will warmly welcome these Regulations, especially Regulation 3, which comes appropriately so soon after
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  the shocking incidents in which large numbers of police officers sustained injuries—several of them serious injuries—in the line of duty. As regards Regulation 4, most senior police officers welcome amalgamations, which make for greater police efficiency, more effective use of manpower, more uniformity in conditions of service and easier exchanges of personnel.
  But there is one matter in respect of pension arrangements which is greatly resented by senior officers and is wholly contrary to the public interest. This is the practice in the Metropolitan Police of requiring the compulsory retirement of fully fit superintendents at the age of 55, compared with a retiring age elsewhere of 60. This practice was condemned by the Oaksey Committee in 1948, by the Estimates Committee in 1957, by the Royal Commission, and in the Select Committee's Report on the police which we debated in February last year. The outcome, of course, is that many a fit superintendent does not wait until he is 55 but goes earlier. Why should he wait, since at 55—
  Mr. Speaker: Order. I do not think that that is the Regulations which we are discussing.
  Mr. Braine: I am emboldened to raise this since Regulation 5 refers to the combination of police areas which accompanies amalgamations. In the case, for example, of the Essex Constabulary, the Romford police area was merged with the Metropolitan Police, and this created the extraordinary anomaly that superintendents transferred from Essex can go on to the age of 60, whereas those in the Metropolitan Force must retire at 55. Indeed, many Metropolitan Police officers are going much earlier to ensure that they get employment. This is an anomaly and an injustice which has been condemned twice by Estimates Committees, and by the Royal Commission, and by the Oaksey Report.
  I wish merely to draw the Minister's attention to the matter and to emphasise to him the disastrous effect which this practice is having on the retention of experienced senior officers at a time when the crime rate and the shortage of police manpower require that experienced men should be retained. I have been in correspondence with the—
  Mr. Speaker: Order. We cannot discuss the general question of the age of retirement of police officers except, as the hon. Gentleman pointed out, with reference to Regulation 5 and the position of an officer who would be damaged by the combining of two police forces.
  Mr. Braine: This is the whole point, Mr. Speaker. Regulation 5 amends Regulation 97 of the principal Regulations, which deals with alterations in police areas and the bringing together in one force, one authority and one fund, the fund being the source from which pensions are paid. I wish to draw the Minister's attention to the fact that, certainly in the case of forces affected by amalgamation with the Metropolitan Police Force, there exists the extraordinary anomaly that one could have two officers of the same rank, one with hi.; terms of service protected and able to remain until he is 60, the other being precluded from so doing and having to retire compulsorily at 55.
  In fact, as I have said, because of the general employment position, many officers are retiring before they reach the age of 55. The result over the five years up to January last year—the latest figures I have—has been that, at a time of increasing crime, 27 out of 35 chief superintendents and 131 out of 144 superintendents left the service before reaching the age of compulsory retirement. This is a terrible wastage. It is manifest stupidity to put a fit man on pension five years earlier than is done elsewhere in the country—this is the point, Mr. Speaker—and to pay another man to do his job. The Select Committee on Estimates in 1957–58 said of this appalling practice:
  "It is financially indefensible to pay one mart to do a job and to pay another suitable man for not doing it."
  I make no apology for raising this matter tonight because, although I do not expect the hon. and learned Gentleman to give an answer here and now, I want him to take the message back to the new Home Secretary, who, we all know, cares deeply about the police, their efficiency and their morale. I want him to do something about it. Previous Home Secretaries have refused to tackle the problem. I hope the present one will look at it anew.
  10.27 a.m.
  Mr. Charles Doughty: I have a point to raise on Regulation 4. I speak for the Port of London Authority police, whom I have the honour to represent in this House, in an honorary capacity. The River Tyne police are, apparently, to be brought into some local force. If, or when, the new Transport Bill, which also covers docks and harbours, is ever passed by the House and comes into force, will the Port of London Authority police, at present a private body, have the advantages, if they be such, of the Tyne police force and have the benefit of the pension to which they would be entitled under this Regulation, or will they be excluded from it? I should be hopelessly out of order if I were to discuss the merits of nationalising our docks and harbours but—
  Mr. Speaker: Order. With respect to the hon. and learned Gentleman, I do not see how we can discuss the fate of the Port of London Authority police on a Regulation covering the River Tyne police.
  Mr. Doughty: I respectfully agree, Mr. Speaker, but I want to know whether this Regulation would apply to the body which is my concern. We are discussing the Regulation and those to whom it applies. I am asking the Minister whether, if changes were to take place in their status, it would apply to the Port of London Authority police. It is a matter which he must face in the near future, and I suggest that no time is better than the present.
  10.30 p.m.
  Sir David Renton: The introduction of the Regulations is felicitously timed, coming as it does on the day after the demonstrations in Grosvenor Square, a day when tributes to the police have been paid in the House. It is a reminder of the interest Parliament takes in the welfare of the police and their families, and shows the interest the Home Office takes, which would have been even greater on many occasions in the past had it had the means.
  The reasons for the Regulations have been carefully explained by the hon. and learned Gentleman. Although at first sight some of them did not seem so

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  welcome, one feels obliged to accept the explanations he has given.
  Part I concerns the transfer of functions to the Minister of Overseas Development. Bearing in mind the somewhat tough attitude the Ministry of Overseas Development has had towards gratuities, pensions and emoluments of expatriate officers, I hope that it will be as sympathetic towards the police officers whose functions are to be its responsibility as the Home Office has always tried to be.
  My hon. Friend the Member for Essex, South-East (Mr. Braine) was right to point out the anomaly concerning chief superintendents and superintendents, which is not so much created as intensified by Regulation 5.
  With regard to Part III, it seemed unfortunate on the face of it that children whose fathers die after 9th April were to get less by way of discretionary payments, but bearing in mind that the other provisions to which the hon. and learned Gentleman referred enable increases to be made over the present provisions, I feel that, with whatever reluctance it may be, we must accept the position as he stated it and as put forward in the Regulations.
  As always, the Regulations are complicated. At last, after a long period which I remember very well, there was consolidation. The position became unsatisfactory because consolidation became so complex by being delayed so long. I hope that consolidations in the future will be more frequent than in the past.
  Mr. Taverne: With the leave of the House, perhaps I may make some comments on the points made.
  I do not intend any disrespect to chief superintendents, superintendents or the hon. Member for Essex, South-East (Mr. Braine) when I say that the hon. Gentleman will realise that the subject he raised does not really arise directly out of the Regulations. I shall certainly draw the attention of my right hon. Friend to his remarks. As he pointed out, this is a subject which he has discussed with previous Home Secretaries.
  Regulation 4 refers to Tyne Police and Tyne Police only. The River Tyne police force is subject to the Police Pen
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  sions Act and Regulations, whereas the Port of London Police are not. Therefore, we cannot deal with the latter in any event.
  I appreciate the remarks made by the right hon. and learned Member for Huntingdonshire (Sir D. Renton). I am sure that my right hon. Friend the Minister of Overseas Development will apply the police pensions schemes as sympathetically as the Home Office tries to apply the Police Regulations.
  I sympathise with the right hon. and learned Gentleman entirely on the need for consolidation. The last consolidations were in 1966. We cannot have consolidations every other year—and I know that he did not suggest that—but we are certainly aware of the unwieldy nature of a succession of amendments brought before the House involving infinite cross-references. The usual course in the past of providing consolidated regulations after about four years will be followed in the future.
  Question put and agreed to.
  Resolved,
  That the Police Pensions (Amendment) Regulations 1968, a draft of which was laid before this House on 22nd February, be approved.

  THAMES VALLEY POLICE (AMALGAMATION)
  10.35 p.m.
  Mr. John Hay: I beg to move,
  That the Thames Valley Police (Amalgamation) Order 1968, a draft of which was laid before this House on 14th February, be not made.
  When I have finished the House may be disabused of the idea which may be in the minds of certain hon. Members that the tale that I have to recount is one concerning a squabble between local authorities about money. Money, it is true, is the basis of the trouble that has arisen over the Thames Valley Police (Amalgamation) Order, but I hope that when I have finished the House will believe that there is a very serious issue of principle involved. That is why my hon. Friends and I and certain hon. Gentlemen opposite have chosen to move the Motion to annul the Regulations.
  The story begins in 1966 when, on 18th October, the Home Secretary gave

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  notice of a proposal to make a compulsory amalgamation scheme under Section 21 of the Police Act, 1964. This sought to amalgamate the police forces of the Counties of Berkshire, Buckinghamshire and Oxfordshire, the City of Oxford and the County Borough of Reading. When the notice had been circulated, all these authorities lodged objections, and, following the procedure laid down by the Statute, the Home Secretary ordered a public inquiry to be held, which lasted some six days at the end of April, 1967.
  During the course of the inquiry two main objections were taken. The first was whether or not it was wise to have what was called a five-forces amalgamation or a four-forces amalgamation. This turned around the desire of the County of Buckingham to be excluded from the new authority. The second main issue discussed was that of representation—the number of seats that the individual authorities should have on the new combined police authority. Only on one day, the very last day of the inquiry, was the important subject of finance discussed.
  On 5th July last the inspector's report was published and laid before this House. It is interesting to note in passing that the Government did not seek, as they were obliged by Statute to do, to lay a draft Order at the same time. I make no point about that apart from referring to it as I go along. The inspector's report contained a number of recommendations. The first was clearly in favour of a five-forces amalgamation. He considered at length the argument of Buckinghamshire that that county should be excluded from the new authority and rejected it, and that is no part of the discussion that I wish to raise tonight. Secondly, he came to certain conclusions and gave certain advice to the Home Secretary about the number of seats that each authority should have on the new combined police authority, and that, again, I do not wish to discuss now.
  But on the matter of finance—it is contained in paragraph 45 of his report—the inspector came down clearly in favour of what is called in the jargon a higher rate product basis of contributions by the individual component authorities. This is a basis which has been adopted in most of the earlier police amalgamation schemes. I make the point that the inspector in his report said nothing what
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  ever about any transitional provisions—no special relief to be given over the first few years to change the basis, which he suggested should be permanent. This was completely consistent with the policy of the Home Office because it is in favour of uniformity of police rate over the areas of a number of authorities which are combined and against the idea of differentials. One has only to look at Paragraph 3(d) of the Inspector's Report where the Home Office's own proposals were set out in detail. Such a policy is necessary because the whole basis of a combined police authority, as similarly the case with many other combined authorities covering a number of former smaller authorities, is to secure, first, uniformity of service, and, secondly, uniformity of charging.
  In the case of the Thames Valley area, such a policy was extremely necessary because, if one takes for the year 1966–67 the police rate based upon an actual penny rate product, one finds that, in the County of Buckinghamshire, the rate is 6·7d. whereas, in the County of Oxfordshire, part of which I have the honour to represent, it is 11d. The reason for this attitude is given by the Inspector in paragraph 45 of his Report. He says the reason for the disparity is that Buckinghamshire has enjoyed a comparatively low police rate because of its high rateable value per head of the population. So, for that reason he recommended the higher rate product basis, and, when the arrangements are permanent, he estimated, in a table in that paragraph, that there would be a figure of 7·18d. uniformly throughout the area of the authority and no differential. I understand that the figures based on the latest estimates for 1968–69 will give a figure of about 9d.
  Because of events which have taken place since the inquiry—most of them behind the scenes and not in the light of day—the present Order contains a number of transitional financial provisions, and these are mostly, although not wholly, in favour of Buckinghamshire. The provisions of Schedule 3 are highly complicated and much to be recommended as reading for those who find it difficult to go to sleep at night. I will not try to explain them in detail. I will tell the effect in terms of cash.
  The effect of these transitional arrangements is to create a police rate for

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  Buckinghamshire of 8·4d. and for Oxfordshire of 10·2d. The House will compare these figures with those I mentioned—6·7d. for Buckinghamshire and 11d. for Oxfordshire at the moment. For the first three years therefore there would be a differential.
  The Government are always, or have been up to now, against differentials. My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton), my hon. Friend the Member for Banbury (Mr. Marten), and possibly some others, will recall a debate in 1966 on the Local Government Act, when we urged that in regard to the change of grant structure, some transitional provisions should be included to temper the wind for those authorities who were going to lose very heavily. The Joint Parliamentary Secretary to the Ministry of Housing and Local Government said:
  "The question is whether, when we give very substantial advantages to some local authorities, we should have a transitional arrangement protecting the others from any possibility of their grant falling. Put like that, it would be a difficult pr position to defend…Therefore our answer to the narrow point on why we do not have transitional arrangements is the purely practical point that they are not easy to work."—[OFFICIAL REPORT, 20th October, 1966; Vol. 733, c. 461–2.]
  But in this case, despite their own contention in the scheme they put for inquiry to the Inspector, the Government have come down in favour of a transitional arrangement which is extremely unfair. There is the obvious question of whether there have been any precedents for differentials of this kind. At the inquiry, the Home Office witnesses said clearly and gave evidence to the effect that there were no precedents in compulsory amalgamation schemes for imposing differentials. That is so. The only extant example which I have been able to trace is the Hampshire-Southampton amalgamation some time ago when a differential was created in the financial structure. But in that case it was based upon the fact that the Hampshire force had a low strength and therefore the differential was biased against Hampshire for that very reason. In this case the Buckinghamshire force has a low strength and, under this Order, it is to get the special aid. The Home Office appears to have no
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  consistency in this respect and in this instance there is no case for any differential.
  It may be asked why, if that is the case, the Inspector did not recommend a differential and how it comes about that, after hearing evidence over some six or more days, the Inspector did not recommend a differential such as is proposed in the Order. This is an extremely intriguing situation. The transcript of evidence, which is a lengthy document which I would not attempt to bring into the House, let alone quote, has only three references of substance which I have been able to find to the subject of a differential.
  First, some remarks were made by the Assistant County Treasurer of Berkshire, not Buckinghamshire which has been able to obtain this differential aid, but Berkshire. Secondly, there was what I can only describe as an appeal ad misericordiam by counsel appearing for the County of Buckinghamshire when he urged the Inspector to remember the grievous financial plight of his authority. Then there is a most illuminating situation which I must quote to the House when the Inspector asked about his ability to incorporate something concerning differentials. The Inspector was Mr. Mars-Jones, Q.C., and he asked counsel appearing for the Home Office:
  "I thought there was some right of appeal. What is the position? If the transitional provisions can be agreed well and good, if they can't be agreed the Home Secretary gives an Order, if anyone is dissatisfied with that Order they have a right of appeal—to whom?"
  Counsel for the Home Office then said:
  "I can't answer that off the cuff, but by the time this witness is finished I hope to be in a position to answer that."
  Quite a few minutes must have passed before we find on page 66 of the transcript of the final day, by which time, I presume, counsel had been able to obtain instructions—and I ask the hon. and learned Gentleman to note this carefully—counsel for the Home Office made this reply:
  "It might perhaps be useful if I indicated very briefly what the procedure normally is in this context. What the Home Secretary envisages being the usual procedure is that if the amalgamation were approved in principle he would then invite the authorities in the usual way to get together and agree on these internal arrangements relating to finance, to provide for such things as transitional provisions relating to capital expenditure."

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  nothing about reviewing, I notice—
  "and similar considerations of that kind. Of course if they were able to agree that would then be put in the order as it stands. If they were not able to agree the Home Secretary would of course consult the authorities about what he had in mind to resolve the difficulties attendant on their inability to agree this it would finally go in the order and from that there is no appeal under the Act".
  Those were the only three references of substance to this matter of transitional relief and I do not believe that they were sufficient to found a claim by Buckinghamshire to have this special aid. There was no evidence and there was no argument and certainly—and this is the important point—no case was put by Buckinghamshire which has obtained this additional relief and no opportunity was given to the other authorities to say what they thought about it.
  Mr. Neil Marten: My hon. Friend has said that it was merely a few minutes after the Inspector asked what the form was that the reply was given. Reading the transcript, however, I think that it must have been quite a long time. Does my hon. Friend think that in that time, counsel for the Home Office had time to get in touch with the Home Office and receive instructions from the Department about this important point?
  Mr. Hay: The pages go from 59, where the Inspector put the question, to 66, where Mr. Layfield, Q.C., gave the answer. Each page is a foolscap page, double spacing, of type. I should think that in all probability he had several minutes, if not perhaps longer.
  Mr. John Hall: Is not my hon. Friend aware that after considerable pressure from Buckinghamshire, the matter was referred back to Mr. Mars-Jones, the Home Office Inspector, who made it quite clear that there was a misunderstanding. Had there not been a misunderstanding—I quote his words—
  Mr. Speaker: Order. I hope that we shall not have quotations in an intervention.
  Mr. Hay: I am obliged, Mr. Speaker, because I am hoping to make that quotation. I am well aware of what my 'ion. Friend says. This is the crux of the argument, because it is what has been dole behind the scenes by Buckingham
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  shire and the Home Office that is the ground of our complaint tonight.
  After the report was laid, there is no doubt that considerable pressure was put upon the Home Office by Buckinghamshire, which argued that as the Inspector in his report had said nothing about any transitional relief to that county, he must have been misled. The Home Office then wrote him on 8th January and asked whether he thought that he had been misled. It was not, therefore, surprising—I will not go into the correspondence in detail, although I could; it would take up a great deal of time—that after a couple of days' reflection, the Inspector came back and said, "Yes, of course, I was misled".
  I defy anyone, however, to read the evidence, as I have done, and, in particular, the quotations which I have given, the question which was put by the Inspector to counsel for the Home Office and the reply which he then gave, and come to the conclusion that anyone could have been misled. No one could have been misled in the circumstances.
  It is difficult to understand how the Inspector, having been asked whether he was misled, could have said other than that he thought perhaps he had been misled. I find it very difficult to understand how he could have come to the decision at which he arrived without proper evidence, because no authority at the inquiry other than Berkshire gave evidence on this subject.
  Reading the correspondence, which the Under-Secretary of State obviously has done, and which, I have no doubt, my hon. Friend the Member for Wycombe (Mr. John Hall) has done, one is bound to say that although these were not judicial proceedings, the attitude shown by the Inspector was not exactly a judicial attitude.
  If I sue a man for damages and lose my case, can I write to the judge and say, "You may have been misled by something that my opponents' counsel said. If you had had evidence before you on such and such a point, how would you have decided?" I know what sort of reply I would have got, if, indeed, I received any reply at all. That was exactly what happened here. The Home Office, at the behest of Buckinghamshire, wrote to the Inspector, without

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  telling any of the other local authorities that it was doing it, and asked him, "If you had had evidence before you about this and that subject, how would you have decided it?"
  The Under-Secretary of State for the Home Department (Mr. Dick Taverne): In what letter does the hon. Member find any suggestion for saying that?
  Mr. Hay: It is all here. I am sure that the Under-Secretary has read the letter at length. It is very clear indeed that if one reads the letter, it was being said to him, "You have had no evidence before you on this matter. Will you please say what your decision would have been had you had that evidence?" Of course, they have wrapped it up nicely. They have used all sorts of pleasant phrases and given him a perfect way out.
  Mr. Taverne: Will the hon. Member refer to the particular part of the letter?
  Mr. Hay: In that case, at the cost of taking time, I had better read what it says.
  "The merits",
  said the Home Office to the Inspector,
  "of having some form of transitional relief for Buckinghamshire were discussed before you to some extent"—
  that is an understatement—
  "and counsel representing Buckinghamshire specifically asked you when you come to report to bear that matter in mind."
  Is this the evidence on which the Inspector was to report on the question of transition relief? The letter went on:
  "Mr. Layfield's subsequent statement, which Buckinghamshire now claim is misleading, was made in answer to your earlier question about a right of appeal against financial provisions and was not intended to suggest that the Home Secretary would not welcome any recommendation one might wish to make on the issue of transitional relief to Buckinghamshire from the full burden of contributing to the cost of the combined police authority."
  That is my answer to the hon. and learned Gentleman. That is the letter which was written. They were asking him quite clearly—it stands out a mile from the phrases in which this has been wrapped up—"You must tell us what you would have decided if you had had the full evidence before you", and this is the crux of the matter.
  Mr. Marten: Quite extraordinary.
  Mr. Hay: If in fact the Inspector was misled, everybody was misled in this matter, and this alone would be reason for taking this Order back.
  Having got this correspondence in its hand, the Home Office wrote to the council on 17th January last asking for its observations by 1st February. The Home Office gave the council a little over a fortnight in which to consider this entirely new matter which had suddenly come to light and which the Home Office had kept very quiet about up to then. This was the first the other authorities knew. There had been no kind of communication between the Home Office and them on this matter. This came at a time when those authorities were engrossed in the job of finalising their estimates for the coming financial year, in making their rates, and, of course, in that process, they had taken account of what would be expected to be the basis of finance for this new police authority. This was all rendered invalid overnight by this sudden decision of the Home Office to change the rules half way through the game.
  I can speak only for Oxfordshire—no doubt, the hon. Member for Reading (Mr. John Lee) and the hon. Member for Oxford (Mr. Luard) will speak for their authorities—but Oxfordshire County Council replied protesting on 13th February. The Home Office rejected the objection the following day.
  The effect upon Oxfordshire is simple to state. The ratepayers in my county will have to find in this coming financial year some £54,000 more than they were expecting to find for this new police authority. Over the next three years it will amount to between £100,000 and £150,000 more. It destroys the whole basis of the draft Order so far as finance is concerned. I cannot imagine anybody can think this will make for a very happy partnership in this new authority. Buckinghamshire, with its higher rateable value per head of population, will be subsidised by Oxfordshire and will get a better police force into the bargain.
  That is the story. What can we now do? I am moving that the Order be not made. I realise that within a few days, on 1st April, this new authority

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  starts business. I would suggest to the hon. and learned Gentleman that in the light of the whole of this story the simplest and best and cleanest thing he can do—because I am quite sure he cannot be happy about what has been done behind the backs of everybody else—is to say that the inquiry will be reopened on this one single point.
  It would not take much time; it could be done in half a day; it need not be expensive; it would not be necessary to have Q.C.s left, right and centre. I have no doubt that the other authorities—certainly Oxfordshire—would be perfectly willing to abide by the considered view of the Inspector when he has had a chance of hearing their case. I would ask the hon. and learned Gentleman to tell us he is willing to reopen the inquiry on this very limited point. It not, there are other courses they may have to take; there is another body to which they can go; but I hope that, on reflection, the hon. and learned Gentleman will say that this need not be done, and that he will have an inquiry on this one point.
  Mr. Speaker: May I remind the House that this debate, subject to one proviso, will terminate at half-past eleven.
  11.0 p.m.
  Mr. John Lee: I rise to support the hon. Gentleman the Member for Henley (Mr. Hay). I think that hon. Members on both sides of the House should he grateful for the amount of work that he has obviously done on this matter.
  I am bound to tell the Under-Secretary that he has stirred up somewhat of a hornets' nest, because this is one of the rare occasions on which he has not only united hon. Members across the parties, but he has succeeded in uniting the two sides of the Reading Corporation in vehement opposition to his proposals.
  For the reasons explained by the hon. Member for Henley, it is true to say that most of us are profoundly dissatisfied with the way in which this inquiry has been handled. It is well known that inquiries of this kind are conducted with a greater degree of informality than an ordinary law suit or a criminal trial. To some extent this is accepted, but when, after all the evidence has been tendered and a conclusion has been drawn, a matter
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  which was not really in contest in the inquiry becomes radically altered because of an informal exchange between one of the interested parties and the boss of the inquirer, because this is what it amounts to, one is bound to say that the Home Office in this matter has at best been tactless and at worst been downright improper.
  The Under-Secretary really must reconsider the matter. It is not only the Oxfordshire County Council whose position is altered in this way. The Reading Corporation, as a result of the ex post facto insertion of these financial provisions, finds itself £14,000 worse off. All this without reference to any of the interested parties in Reading. It is not surprising that I read correspondence from the Town Clerk of the Reading Corporation saying that the Under-Secretary was met with vehement opposition in his office the other day of a kind which he is unlikely to experience very often, and certainly not the tenor of opposition he is accustomed to receiving from normally sedate members of a local authority. I do not want to labour the point. I think the hon. Member for Henley has covered it very well.
  The hon. Member for Henley said that if we reopened the inquiry on this one matter that would be sufficient. But there is another matter which is a cause of dissatisfaction peculiar to Reading which again produced a great deal of correspondence. It is the question of the alienation payments concerned with Reading police station. I will give the history very briefly. The position is that the present Reading police station was bought in 1908 from the old university college—now the University of Reading—for the modest sum of £13,000. That is the net amount. However, as it was bought on a loan, the figure is somewhat higher. The important point is that this was in the pre-police grant days, but the period of the loan repayment straddled the period since the 1918–19 financial year, which was the first year in which a police grant became payable. Because of this, and because of the fact that there have been certain adaptations and improvements to the police station since the period in which grants have been payable from the Home Office, it is now demanding an economic payment for the capital value of the site and the

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  building which was bought so many years ago.
  It is most extraordinary that a Government department should think that because it gave a grant—no doubt a very modest one—years and years ago, this should give it a kind of equitable lien on the property. This is a very valuable site, and the local authority may well have to pay a very large sum indeed, if the matter is pressed to a conclusion.
  The local authority, with considerable forbearance, was prepared quite willingly to pay 50 per cent. of the cost, based on the fact that a Circular in 1946 laid down this kind of provision in the case of the alienation of property of this kind. Even so, I still find it difficult to understand why the Home Office should be demanding anything at all, bearing in mind how modest were the sums involved and how very much this is a matter of water under the bridge.
  I understand from the latest correspondence that on this matter, at least, the Home Office has not closed its mind. I hope that that is the case, and I hope, too, that the Department will reopen its mind on the major matters of substance which the hon. Gentleman the Member for Henley raised.
  In the earlier debates on police pensions I heard the hon. Gentleman the Member for Essex, South-East (Mr. Braine) express enthusiasm for amalgamations. I do not entirely share his enthusiasm in this case. This amalgamation will land us with the fourth largest police authority area in the United Kingdom. It is a large and awkwardly shaped area and, I would have thought, not particularly manageable having regard to the alignment of communications. I accept that larger units are necessary, but why on earth could not this arrangement have waited until the local government Royal Commission had done its job? As it is, we may have to go through the whole business again. It would have been far better to have reconstituted the local authority boundaries and then to have decided any questions of the reallocation of portfolios.
  11.7 p.m.
  Mr. John Hall: I should like to preface my remarks by congratulating my hon. Friend the Member for
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  Henley (Mr. Hay) on the way he moved his Motion. I hope that if ever I have to appear in court and plead guilty, he will be able to defend me—
  Mr. Hay: For a suitable fee, I should be happy to do so.
  Mr. Hall: I should like first to deal with the amounts involved. Listening to my hon. Friend, one got the impression that Oxfordshire would suffer a great deal from the proposed change, but let us look at the figures for the five constituent authorities separately, before they became part of the police authority. In the financial year 1967–68, the police expenditure for the Oxfordshire County Council was £483,685. Under tie transitional arrangements it will pay an estimated £467,500—a reduction. The same thing applies to Reading. In 1967–68, the borough's net expenditure was £289,770; its total estimated expenditure in the combined police authority, apportioned according to the transitional financial provisions, will be £283,337—again, a reduction. That position applies throughout Oxfordshire.
  On the other hand, expenditure on police in Buckinghamshire in 1967–68 was £878,110. Under the original proposal, before the adjustments were made, the county would have had to pay £1,181,000 and under the transitional proposals the amount will be £1,111,981—a very considerable increase in both cases over the amount spent by the county as an independent authority.
  I agree with the hon. Member for Reading (Mr. John Lee) that it was perhaps a little too early to reorganise the police in this way, and that we might have waited until the Royal Commission had made its recommendations about new local government boundaries. Buckinghamshire was very reluctant to become a member of the new authority. It has had, for a long time, a very efficient police force, to which considerable tribute was paid by Mr. Mars-Jones, who conducted the Home Office inquiry.
  My hon. Friend the Member for Henley referred to the way in which discussions had been going on behind the backs of other county councils with the Home Office. Perhaps I may refresh his mind as to what actually happened. Mr. Mars-Jones's report contained a recommendation to adopt what is called the

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  "adjusted penny rate product basis" for transitional relief. Buckinghamshire County Council drew attention in its observations to the Home Office, to this on 1st September. The Home Office replied that the Home Secretary did not consider that there was sufficient justification for this and the discussion went backward and forward until it was pointed out that Mr. Mars-Jones had been rather misled by Mr. Layfield, counsel for the Home Office, during the inquiry. As a result, the Home Office referred back to Mr. Mars-Jones. I quote his words:
  "Having refreshed my memory from these documents, I am satisfied that as a result of Mr. Layfield's statement…I took the view that there was no point in making a recommendation one way or the other on the question of transitional relief. Had I not come to that conclusion, I would have been minded to recommend that transitional arrangements should be made to cover a period of three years to prevent the full burden falling upon the ratepayers of Buckinghamshire immediately. The only specific transitional arrangement suggested was, as I recollect, that put forward by Mr. White…"
  Mr. Hay: I do not dispute at all that this is what Mr. Mars-Jones said, but the whole point is that there was no evidence given of transitional arrangements. If there had been no one would have complained. We complain that this deal was done behind the scenes with no evidence of any opportunity for further investigation or cross-examination.
  Mr. Hall: One of the issues argued before the inquiry, I understand, was the question of expenses of the amalgamated authorities. My hon. Friend has quoted only three minor extracts from the proceedings which refer to transitional arrangements, but Buckinghamshire County Council contends that the apportionment should be on a population basis, or failing that, half on the adjusted penny rate product basis and half on a population basis. There was a suggestion which asked for an apportionment on a transitional basis which would have lessened the very considerable burden to be borne by Buckinghamshire.
  Even with the present transitional arrangements proposed, the additional cost to Buckinghamshire will be in the order of nearly £300,000. If this Prayer were to succeed, and I devoutly hope that it will not, the cost to Buckinghamshire over the next three years would be
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  about £164,500. That is a considerable amount to ask a county council to bear when asking it to lose its independence and to become part of a larger police authority. The county council did not want to do so and felt that it would be extremely unfair to be called upon to bear such a considerable burden which is far greater than that of the other five constituent parts of the new authority.
  I hope the Minister will come to the conclusion that the Prayer should be rejected.
  11.13 p.m.
  The Under Secretary of State to the Home Department (Mr. Dick Taverne): I apologise for getting up now when perhaps one or two other hon. Members wish to speak, but—
  Sir David Renton: On a point of order, Mr. Speaker. I think this matter lies to some extent in your hands. I invite your attention to the fact that other hon. Members who have a constituency interest wish to speak. I had hoped to intervene briefly before the Under-Secretary was called.
  Mr. Speaker: The right hon. and learned Gentleman should know that Mr. Speaker is aware of all the circumstances which he is trying to call to my attention.
  Mr. Taverne: I apologise to the right hon. and learned Gentleman, among others, but there are important questions here, since some fairly strong allegations of malpractice have been made and it is important that the House should have these facts in considering the Prayer.
  The hon. Member for Henley (Mr. Hay) said that the Government were always against differentials and quoted the Joint Parliamentary Secretary to the Ministry of Housing and Local Government when he rejected transitional arrangements in a debate in 1966. But the circumstances about which my hon. Friend was speaking were quite different, having been created by the Local Government Act of 1966, relating to the country as a whole, and transitional arrangements would have upset the whole system.
  The grant system is flexible and, if necessary, adjustments may be secured for future years by making changes in the weightings used in the distribution

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  formula, but there had been no general agreement among local authority associations that transitional arrangements should be introduced and past experience had been that such arrangements either did not work or did not work easily.
  Quite a different position applies here, because these transitional arrangements relate to purely local adjustments which would affect only part of the country. They are perfectly simple and easy to put into effect and follow the recommendations of the Inspector and are not inconsistent with the transitional arrangements adopted voluntarily in other amalgamation schemes. Therefore, the hon. Gentleman was comparing like with unlike.
  Mr. Hay: I am sorry, but I did quote the case of Hampshire and Southampton, where transitional arrangements were made diametrically opposite to those which we are discussing.
  Mr. Taverne: Similar transitional arrangements have been made. Transitional arrangements are perfectly easy to insert in an amalgamation order. Sometimes they are voluntary, but in this case they were not.
  But the main issue is whether they should have been inserted at all when they did not appear in Mr. Mars-Jones' Report, which was brought before the House as soon as possible in July. The Scheme was also laid as soon afterwards as possible, so that the House would have as long as possible to consider it.
  It was after Mr. Mars-Jones had reported that Buckinghamshire raised the question of whether or not the Inspector had been misled. Contrary to what has been suggested, this is not a dispute between the Home Office and particular authorities. We would have been quite happy without transitional arrangements and we are happy with them. This is essentially a dispute between Buckinghamshire, and, possibly, Berkshire, on the one hand and the other constituent authorities on the other.
  But an allegation was made that the Inspector had been misled through a misunderstanding arising from the final remarks of counsel for the Home Office at the inquiry. The simple issue was, had Mr. Mars-Jones been misled? What
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  happened on that last day is of crucial importance and I refer the House to it carefully. The issue of transitional provisions came up both in evidence and argument, first in the cross-examination of the Home Office witness, Mr. Goringe, on page 38 of the transcript. He was asked, if it was felt that the higher rate product would be unfair to Buckinghamshire
  "…it would be possible to soften the blow, would it not, by transitional arrangements over two years? A. That would be possible, yes."
  It was then raised by the Treasurer of Berkshire County Council in his evidence in chief on page 48, and what he says is quite clear:
  "It would be reasonable for Bucks to enjoy a transitional period of say three to five years to ease the transition from low police rates to normal police rates"—
  and went on to say what the possible transitional arrangement would be. It was clearly stated in evidence in chief from Mr. White. It was then raised in cross-examination of Mr. White by counsel on behalf of Buckinghamshire. That comes at page 52. Thus, it had been raised in cross-examination of the Home Office witness, it was raised in examination in chief of one of the witnesses, Mr. White, and then it was raised again in cross-examination of that witness.
  The first closing speech before Mr. Mars-Jones was by counsel for Buckinghamshire, and he raised the question specifically. This is page 59. He referred to the evidence given on behalf of Berkshire and said:
  "One is thankful for small mercies. At any rate, it will hold off the evil day when Bucks has to bear this full burden at least for four or five years. I readily seize, if I may, on any provision of that nature which will prevent the full burden falling on the ratepayers of Buckinghamshire immediately, and I ask you, when you come to report, to bear that matter in mind."
  Thus, it was raised in evidence and it was raised in argument during the final speeches. Not a single representative for the other authorities commented on it, as they could have done, the matter having been raised in evidence.
  Mr. Marten: There was no evidence produced on it. Is the hon. and learned Gentleman aware that the County of Oxford did not call its treasurer? There

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  was no evidence, so how could Mr. Mars-Jones have come to any sensible conclusion without evidence? Will the Under-Secretary of State answer that?
  Mr. Taverne: Mr. White suggested a scheme in his evidence. After all, the Inspector has to decide on a scheme. Mr. White suggested in evidence a scheme whereby the blow might be softened. The point was raised several times in chief and in cross-examination, and it was raised in the final speech. It was open to representatives for Oxford, for Reading or anyone else to counter the point and say that it would be manifestly unjust for such a scheme to be made.
  At that stage, nothing more had been said before Mr. Mars-Jones. The issue had been squarely raised. The suggestion had been made that he should consider transitional arrangements. Then came the final speech by counsel for the Home Office, after opportunity had been given but had not been seized by the representatives of the other authorities. Remarks were made which, it was suggested, misled Mr. Mars-Jones. We were not in a position to say whether or not Mr. Mars-Jones had been misled. It was not something on which anyone could form a view, save the Inspector himself. It was eminently reasonable, once the issue had been raised, that our course would be to ask the Inspector, referring to the final stages of the hearing and asking him to refresh his mind.
  We did not say, as the hon. Member for Henley suggested, "If there had been evidence, what would you have found?" We simply reminded him of what took place and of the final remarks of counsel, the suggestion being that, perhaps, there had been a misunderstanding, and we asked, in effect, "Were you misled?" In the final paragraph of our letter to him, the Permanent Under-Secretary at the Home Office said:
  "The Home Secretary would not for one moment wish to press you to make any recommendation which you did not feel able to make".
  That seems eminently fair. If we had not written, we should have been open to far more telling criticism, the criticism that there was an allegation that we had been misled and that we had not even asked the only person who was in a position to say whether we had been misled.
  Mr. Hay: If that was the view of the Home Office, why in the name of goodness did it not tell the other authorities? Why only Buckinghamshire?
  Mr. Taverne: The Home Office did not tell Buckinghamshire. Buckinghamshire raised the question, and the only person who could tell whether or not he had been misled was the Inspector. This is not a matter which we can argue at great length.
  Mr. Evan Luard: Would it not have been more normal in the circumstances either for the Home Office to consult all the authorities first and ask for their comments, all that being transmitted to the Inspector, or, alternatively, to ask the Inspector for his view on the matter and then to transmit that to the other authorities, giving them a chance to express their views?
  Mr. Taverne: If it had been a question of raising evidence which was not before the Inspector at the hearing, if it had been a question of new argument being developed which was not put to the Inspector at the hearing, then it would have been right to ask the other authorities to put arguments one way or the other. In fact, the question was whether the Inspector was misled, or whether he was misled at a stage when all the evidence had been heard, when all the arguments had been heard, and when there was nothing left for him but to make up his mind.
  I regret that this took place so late in the day. If there had been a chance of a further delay, and if that had been acceptable, one would have accepted it. The fact remains that on this occasion we had very good co-operation from all the parties concerned. I pay tribute to them, even though they feel bitter about the course which events have taken. At that stage, so late in the day, when the Chief Constable had been designated and when the arrangements were more or less completed, it would have been quite intolerable for the Order to have been further postponed. There was no injustice in the case. There would have been a gross injustice if we had not asked the Inspector whether he had been misled. In the circumstances, I do not accept the criticism which has been made against us. I think that we acted fairly and in

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  the only way that we could. We must have sympathy with the authorities concerned that this Amendment to the draft was made late in the day, but it was late in the day we saw that no agreement was being reached about the transitional arrangements and that the allegation of the Inspector being misled was raised.
  My hon. Friend the Member for Reading (Mr. John Lee) said that there was violent opposition when I saw the representatives concerned, but not a single point has been made which in any way suggests that the procedure followed was incorrect. The entire case of the hon. Member for Henley rests on matters not having been raised at the hearing when in fact they were raised.
  My hon. Friend the Member for Reading asked about the Reading police station. Whether a police station was built before or after 1919, when police grants became payable, the principle applied is that when the Home Office assumes a financial responsibility for half the cost of a service, including outstanding liabilities, the Exchequer acquires a similar interest in the assets. When police property is sold or appropriated to other municipal purposes, the proceeds or value must be credited to the police fund and brought to credit in the authority's claim for police grant. This principle is widely applied, and it has been applied throughout this Order.
  In the absence of an amalgamation, when the police eventually ceased to use a police station, such as Reading police station, the Home Office would require its value brought to credit in the police grant claim, and that is provided for in the Police Grants Order, 1966. The arrangements made in the Amalgamation Order will have the same effect. The payment made to the combined police authority would be brought to credit in their grant claim and the Exchequer would benefit to the extent of 50 per cent. That is the general principle which is being applied and, on the present basis, that is the principle which is being applied to Reading police station.
  I cannot go further into the reasons behind the amalgamation, a point which was raised by my hon. Friend the Member for Reading and the hon. Member for Wycombe (Mr. John Hall). These reasons are to be found in the Mars-Jones
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  Report. It will be agreed that he conducted the hearing very fairly. The subsequent amendments which were made were amendments which Mr. Mars-Jones recommended on the basis of the evidence and the arguments which he heard.
  Sir D. Renton: I must register a very strong complaint. The first thing to complain about is that the Government have so over-loaded the day's programme of business that it was obvious from the outset that we should not have adequate time for discussion of the Order.
  Second, I must complain—and I hope that the hon. and learned Gentleman will take this to heart, and will not take it amiss—of his really—
  It being half-past Eleven o'clock, Mr. SPEAKER, being of opinion that, owing to the lateness of the hour at which consideration of the Motion was entered upon, the time for debate had not been adequate, interrupted the Business, and the debate stood adjourned till Tomorrow, pursuant to Standing Order No. 100 (Statutory Instruments, &c., (procedure)).

  THAMES VALLEY POLICE (AMALGAMATION)

    WELSH GRAND COMMITTEE
    Order read for resuming adjourned debate on Question [7th March],
    That for the remainder of the present Session the following paragraphs shall have effect:

    (1) There shall be a Standing Committee to be known as the Welsh Grand Committee to consider such specified matters relating exclusively to Wales and Monmouthshire as may be referred to them and to consist of all Members sitting for constituencies in Wales and Monmouthshire, together with not more than Five other Members to be nominated by the Committee of Selection, who shall have power from time to time to discharge the Members so nominated by them and to appoint others in substitution for those discharged.

    (2) A Motion may be made by a Minister of the Crown at the commencement of Public Business, to be decided without amendment or debate, to the effect that a specified matter or matters relating exclusively to Wales and Monmouthshire be referred to the Welsh Grand Committee for their consideration.

    (3) If such a Motion be agreed to, the Welsh Grand Committee shall consider the matter or matters to them referred on not more than Four days in the Session, and shall report only that they have considered the said matter or matters.—[Mrs. Eirene White.]

    Question again proposed.
    Question put and agreed to.

    WATER RESOURCES BILL
    Order for Second Reading read.
    Motion made, and Question put pursuant to Standing Order No. 60A (Second Reading Committees), That the Bill be now read a Second time.
    Question agreed to.
    Bill accordingly read a Second time.
    Bill committed to a Standing Committee, pursuant to Standing Order No. 40 (Committal of Bills).

  YOUNG WIDOWS (PENSIONS)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ioan L. Evans.]
  11.31 p.m.
  Mr. Edwin Brooks: The House is now beyond the eleventh hour before the Budget, and I am conscious that any debate which bears upon financial hazards—in this case those of the so-called young widow, the woman who is bereaved before she reaches her 50th birthday—may well be subsumed in the wider financial hazards of which we shall soon be effectively reminded.
  I am nevertheless grateful for this brief and inevitably inadequate opportunity to draw attention to the problems faced by such young widows. From personal acquaintance with constituents who have been thrust into the predicament of what we may perhaps call premature widowhood, I have come to see such women as not only casualties of the Welfare State but casualties all too readily forgotten and unsung by reason of their very isolation and loneliness.
  This is not the occasion to discuss the wider problems of widowhood, problems of adjustment familiar to the woman who in losing her husband loses treasured links both of family and friend. Severed from her spouse, her life filled with bleak regrets and empty years ahead, the widow is vulnerable to the polite embarrassment of a society which dislikes reminders of death. Particularly if her children have grown up and left her, she can so easily come to feel unwanted, unnecessary and even futile.
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  It is against this general background that I should like to focus attention on the contemporary problem of the young widow's mite. I realise that the practice of the House prohibits in an Adjournment debate such as this any reference to matters requiring legislative remedy. But I trust that I shall be permitted to summarise the present position of the young widow following bereavement, for only with such a preface can I develop my criticisms of some of the administrative weaknesses to which my constituents have drawn my attention.
  If a woman is over 50 when widowed, and assuming that her husband has paid the necessary contributions, she receives £4 per week pension and is relieved from buying further stamps. If she was married before 5th July, 1948, and her husband was insured, she will receive 30s. weekly, no matter what her age.
  It will be recalled that one of the first acts of the incoming Labour Government of 1964 was to treble this pension from the previous—and, I think we would all recognise, miserable—level of 10s. weekly. However, this 30s. pension remains taxable, and the widow continues to pay insurance contributions until she qualifies for an old-age pension at the age of 60. Where her husband had been a contributor, the widow is allowed to count his contributions in order to average 50 per year since 1948 to get the full pension. But if the husband did not contribute under the pre-1948 scheme she does not receive the 30s. pension.
  If a woman is under 50 and has no dependent children and does not qualify for the 30s. pension under the criteria I have just mentioned, she gets no pension until the age of 60. Furthermore, to qualify for full pension she must buy stamps until she is 60 whether she works or not. Should the under-50 widow have dependent children, she draws a widowed mother's pension as long as she has a child under 19 and at school or university or apprenticed, but if such children marry, die, are fully employed or take up a residential apprenticeship upon leaving school, the widowed mother's pension is withdrawn and she gets either 30s. or nothing at all as appropriate.
  Once again the significance of the 50th birthday is revealed in such a case, since if the widow is over 50, even by one day,

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  when the last child ceases to be dependent her widowed mother's pension will be replaced by a widow's pension and she will not have to pay any further contributions. However, if she remarries, legally or effectively, she stands to lose her widow's pension, and also loses the advantage of counting her former husband's contributions towards her own pension even though she continues to make her own contributions. This might mean that if the woman's second husband has insufficient contributions she would not receive a full widow's pension in the event of his death. If her second husband dies before she has been married to him for three years, unless she remarried within three years of her first husband's death, she will not receive a widow's pension, even if on this occasion she has passed the over-50 test—
  Mr. Speaker: Order. The hon. Gentleman is setting out the present law. He cannot on this Adjournment debate change the present law. He must come to administrative complaints.
  Mr. Brooks: I appreciate that, Mr. Speaker. My difficulty is that without giving at least some brief summary of the present situation it is very difficult in this case to explain the predicament to which I want to draw attention in terms of employment opportunities. But I shall come quickly to the essence of my case.
  Perhaps just one point is worth stressing, that if the man should retire at the age of 65 the wife would receive a supplementary pension no matter what her age, but if her retired husband then dies before her 50th birthday she loses her old-age pension, gets nothing and must pay stamps until she is 60.
  The point of all this is that the woman faced with this dilemma has necessarily to find employment if she is to sustain herself, and this is particularly relevant to the criticisms which I shall come to in the field of industrial training and rehabilitation. Should a widow, for example, wish to train in some Government subsidised category—teaching, for example—her training grant is reduced by the amount of her widow's pension, whether 30s. or £4. The same deduction is liable should she fall ill while working, and her sickness benefit is correspondingly reduced.
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  These are the features of the predicament of the widow under our complicated rules. I am bound to say that as these and other facts were clarified for me by various constituents I became increasingly disturbed not only at what the facts seemed to reveal but at my former ignorance of them. I am satisfied from discussions that I was not the only Member of Parliament ignorant of the true position, and if this is not entirely surprising in view of the complications and anomalies involved it seems probable that many people are ignorant of the hazards faced by the widow, and particularly by the under-50 widow.
  It is true that the present Government, by extending from three to six months the period following the husband's death when his widow is entitled to the initial resettlement allowance, have eased the transition problems of adjustments to new and completely fresh employment, but I am sure that many under-50 widows are surprised and dismayed at their subsequent predicament when their pension ceases altogether. I therefore suggest—and this surely requires no legislation—that a comprehensive leaflet should be prepared for wide distribution explaining the potential position of the under-50 widow. Many husbands, recognising the dangers to which their wives may be exposed in certain circumstances due to their untimely death, might well wish to make provision by private insurance or under their own occupational schemes. Were it not out of order, I would suggest that some husbands might wish to pay rather more—it need not be much—to safeguard their wives under the State pension scheme.
  My hon. Friend should make a wider research to clarify the facts. On 3rd July, in my efforts to get more accurate information, I put a variety of Questions to the then Minister. I asked her, for example, what were the average earnings of those widows between 50 and 60 and in employment who did not qualify for pension due to the under-50 rule. The information was, and to the best of my knowledge still is, not obtainable. The same answer came to Questions on the proportion of under-50 widows who had subsequently remarried—not entirely irrelevant, I would have thought, for actuarial calculations—the proportion who died before reaching the age of 60

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  and the numbers who failed to qualify for full pension at 60 because they never paid an adequate number of contributions,
  But the ignorance of the Ministry of Social Security, my hon. Friend will be glad to know, is reproduced in the Ministry of Labour, which had no information on the number of young widows who are classified as unemployed. Yet this sort of information is surely vital if we are to check on the contention of the Ministry of Social Security. I quote from a letter to me from my hon. Friend as long ago as 24th May, 1966. This was to the effect that the under-50 age condition:
  "…relates generally to a widow's ability to re-establish herself in the employment field at the time of widowhood, and is therefore applied at the date of the husband's death, and not at arty later date."
  But if we do not even know what sort of jobs can be taken by women—some, by definition, as old as 49 before they have to start looking for employment—and do not even know how many succeed in getting any sort of job at all, such Ministerial reasoning is incapable of rational justification.
  What we can surely anticipate, however, are major difficulties for many such women, many without training except as housewives, approaching an age when illness must be more common and liable to deter employers, and having to adjust to the shock of the death of the husband, who may have spent 30 years as companion and protector. The chance of such middle aged women remarrying are statistically slight, since I understand that only 3 per cent. of all those widowed between the ages of 20 and 55 marry again. The other 97 per cent. have no alternative—and particularly those with no pension entitlement until 60—but to keep looking for work until the retirement age.
  I therefore asked the Ministry of Labour what redeployment and resettlement schemes existed for the under-50 widows, but the answer gave little hint of these special yet obvious difficulties. It is simply not good enough to say as I was told:
  "Opportunities for training, under both Government-sponsored schemes and arrangements made by industrial training boards, are open to suitable women widowed under the age of 50, as they are to other suitable people."
  Just as Plowden recognised that certain areas are, in an educational sense, at risk
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  and deserving of priority treatment, so there are certain people—and a bereaved woman in her late forties, say, is surely among them—who equally deserve special help and encouragement.
  The dimensions of the problem are hard to ascertain and the numbers involved in any one area may be quite small, but over the country as a whole it mounts up. Last July, I was informed that there are 40,000 widows under 60 in Britain who qualify for no pension because their husbands died, or the children ceased to to be dependent on them, before they reached the age of 50 and that a further 75,000 such widows qualify for the basic widow's pension of 30s. a week. Following my Questions last July, I was encouraged to think that progress might be made on a study of the employment opportunities available to these thousands of women, but on 23rd October my right hon. Friend contented herself with saying that she was still considering proposals for such an investigation.
  It is about time that we had a little of the famous white heat applied, particularly at a time when shake-outs and rationalisation are likely to complicate still further the job opportunities of these more elderly young widows in what may become an increasingly buyers' market for labour. The point has to be made that, for many women seeking employment in their late forties and fifties, special difficulties arise because of the menopause, difficulties which can affect their mental resilience and willingness to adjust to what may be a wholly strange and even humiliating way of life.
  Even without this temporary problem, the widow bereaved after a lifetime of happy marriage is as deserving of special help and perhaps protected employment as the disabled worker in a Remploy factory. One of my constituents recently wrote to me:
  "I lost my husband five months before my 50th birthday…he had paid national insurance contributions all the years he was employed in a well-known concern for 43 years. We had been married for 29 years…never having had to go out to work, and considering the fact that my husband was on shift work, which made it impossible for me to have a job, my health is suffering, and my doctor will not allow me to be employed…My pension only amounts to 30s. a week, until I am 60. if I live to see it."

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  I am aware that the procedural limitations of an Adjournment debate have prohibited my tackling the case for an urgent reform of the law relating to pension entitlement, but I should be grateful if my hon. Friend would at least promise that an urgent review of employment prospects and difficulties for the under-50 widow is to be embarked on forthwith. Without such a study, I fail to see how the long promised major review of social security can take adequate account of the specific problems faced by the woman alone in our society.
  11.46 p.m.
  The Joint Parliamentary Secretary to the Ministry of Social Security (Mr. Norman Pentland): I should like to compliment my hon. Friend the Member for Bebington (Mr. Brooks) on the attention which over the past year or so he has given to this aspect of social security and for the sincere way in which he has deployed his case this evening on behalf of these widows. I also want to thank him for the opportunity which he has given me to explain the range of considerations to which we have to pay attention when looking at the question of what insurance cover is needed for widows.
  My hon. Friend has drawn attention to the discontent caused by the age-50 rule which limits the award of widow's pension to widows who do not have dependent children. This is a matter which is very much in our minds and I will say something about it later. However, at this stage it would be useful to remind this House of the provision currently made for widows.
  Widow's allowance is paid to most widows, however young or recently married, for the first 26 weeks of widowhood when they are adjusting to their new situation. To this allowance is added an earnings related benefit, the widow's supplementary allowance, if the husband's earnings were £450 or more in the relevant tax year. Allowances for any children are also paid. The Government have not only increased the rate of widow's allowance and provided for the earnings related supplementary allowance, but have also doubled the period for which this initial benefit is paid, increasing it from 13 to 26 weeks. Under these arrangements the maximum total allow
  212
  ance as payable to a childless widow would amount to £13 7s. a week. These allowances go to young as well as older widows.
  I turn next to the provision made for widows left with children. These widows will ordinarily qualify for a widowed mother's allowance. This again is paid irrespective of the widowed mother's age, or the duration of her marriage. When the children have grown up, if the widow is then more than 50 and three years have passed since the date of the marriage, widowed mother's allowance is normally followed by the long-term widow's pension. The widow's pension is, of course, the benefit paid after the widow's allowance period to the widow who is aged 50 or more at her husband's death if there are no dependent children and the marriage has lasted for at least three years.
  My hon. Friend's concern has been with the remaining widows, those who do not qualify for a long-term widow's pension under the scheme, because they are under the age of 50 with no children when the husband dies, or because they are under the age of 50 when the widowed mother's allowance ceases, usually because their children have grown up.
  Special provisions protect the last group of widows, those without long-term widow's pension, if, when their previous widow's benefit ends, they are sick or unemployed and seeking work. These widows can qualify immediately for full unemployment benefit or sickness benefit regardless of their own contribution records.
  The cover given by these provisions has not, perhaps, been emphasised sufficiently in the past, and I feel that hon. Members have not appreciated as fully as they might that the widow who, in these circumstances, claims benefit because she is incapable of work or is unable to obtain work will receive the standard rate of benefit of £4 10s. a week. She may be better off than the widow who is entitled to a pension but whose pension is received by her at a reduced rate because of a deficiency in her late husband's contribution record.
  In brief, the existing provisions provide a much improved resettlement benefit for virtually all widows under the age of 60; a long-term widow's benefit for about

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  three-quarters of women widowed under the age of 60 and, finally, give protection to the remaining one-quarter if they are sick or unemployed and unable to find work when their earlier benefit ceases.
  It can be fairly claimed that the existing provisions achieve the National Insurance objective of providing a flat-rate benefit in circumstances where income from earnings has been interrupted. We recognise, however, that the sharp cut-out provision at the age of 50 causes some women narrowly to miss qualifying for a widow's pension; and requiring them to contribute to the scheme for their retirement pensions causes considerable dissatisfaction, as my hon. Friend has said.
  The claim is sometimes made that the interruption of a woman's employment history due to marriage and raising a family, reduces her earning capacity when widowhood compels her to return to employment. It is often suggested to us that the answer to this is to devise a sliding scale. This would be a new concept as a basis for benefit in the existing National Insurance scheme. Apart from the fact that there would still be dissatisfaction at the bottom end of the scale, complex issues have to be faced as to whether the scale should be related to age or to length of marriage, or both, and there are also questions about paying or crediting contributions.
  The principle underlying a sliding scale raises similar issues in other sectors. Such a change would amount to a new approach to benefit and, as such, could have far-reaching consequences. A departure of this sort could not be lightly undertaken by the Government.
  My hon. Friend referred to training allowances, and I know that he will appreciate that this is a matter for my right hon. Friend the Minister of Labour Similarly, a variety of Government Departments are involved in questions concerning the overlap of widow's benefit and training and other allowances and, no doubt, my hon. Friend's comments will be drawn to their attention.
  My hon. Friend also mentioned the question of research into the financial conditions experienced by young widows and their employment prospects. As my hon. Friend has said, in reply to his
  214
  Questions on this subject, we have said that proposals for such an investigation are being considered, and I regret that I cannot go further than that tonight. The Government's studies for the future of social security provision cover a wide field and we have to settle priorities in making the best use of the available resources.
  Having said that, however, I emphasise once again—and this was said in answer to my hon. Friend's Questions, which he has pursued so diligently—that we are very much aware of the problems of young widows. They are not being overlooked by the Government. Any provision for the younger widow must obviously, however, be such that it can be integrated with the new structure which the Government are developing. If we are to avoid waste of effort we have to phase our activity very carefully indeed. But this is a matter which we have very much in mind.
  I feel that the picture presented by the existing arrangements is reassuring. The great majority of widows under 60 receive long-term benefits, and the younger widow who is sick or unemployed is helped. As opportunity has presented itself to this Government we have made those improvements which seemed to us the most needed—the lengthening of the widows' allowance period, the introduction of earnings-related supplement which I mentioned earlier, and the abolition of the earnings rule. Widows, particularly those with children, have fully shared the general increases in rates of benefits made by this Government. We are also pressing ahead with the work of examining the other aspects of benefit for widowhood in the context of our plans for reshaping the whole of the National Insurance scheme. I hope I have said enough to show my hon. Friend that the question of National Insurance benefit for the widow under 50 is not a problem which can be quickly and simply solved, because there are a number of considerations which the Government have to take fully into account in the course of their studies of this problem.
  Question put and agreed to.
  Adjourned accordingly at four minutes to Twelve o'clock.

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