Sitting of 1 May 1968

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

    Chemical and Biological Warfare (Vietnam)
    Dr. David Kerrasked the Secretary of State for Defence whether he will now seek to arrange for scientists from his Department to study the use of chemical and biological warfare in Vietnam.
    The Secretary of State for Defence (Mr. Denis Healey): No, Sir.
    Dr. Kerr: Could my right hon. Friend say why not? There is a great deal of work going on at Porton. Would it not be important for him and, through his advisers, all of us, to understand the obscene nature of these experiments, which have more to do with the Nazi experiments in concentration camps than with, say, Marie Curie or Professor Fleming?
    Mr. Healey: I am unclear as to what my hon. Friend meant by that extra-ordinary question. Was he referring to experiments at Porton, or the use of chemical or biological agents in Vietnam? If he is referring to the latter, then, so far as I know, no biological agents have been used by either side. The only chemical agents have been defoliants, and those used in riot control.
    Sir C. Osborne: Would not the hon. Member be serving the cause of peace better if he asked his friends in Vietnam to come to the peace table and talk sensibly to the Americans instead of making allegations like this against them?
    Mr. Speaker: Order. That is wide of the original Question.

    Falkland Islands
    Mr. Biggs-Davisonasked the Secretary of State for Defence what new arrangements have been made for the defence and security of the Falkland Islands and Dependencies.
    Mr. Martenasked the Secretary of State for Defence if he will consider establishing a military airfield in the Falkland Islands; and if he will make a statement.
    Mr. Healey: No change has recently been made in the general arrangements for the defence of the Falkland Islands. Although the Government will continue to keep under review the need for any variation in these arrangements, there is no necessity at present foreseeable for a military airfield.
    Mr. Biggs-Davison: Are the Government determined to defend the Falkland Islands? As an earnest of their resolve to maintain the right of the Falkland Islanders to remain British, will they recommend that Her Majesty should include the Falkland Islands in any Royal visit to that part of the world?
    Mr. Healey: The latter part of the question is not for me. As to Her Majesty's Government's intentions to defend the Falkland Islands, they are exactly the same as those of the previous Administration, and similar arrangements are being made by this Government as were made by the previous Government.
    Mr. Marten: Would not an airfield enable aircraft from an aircraft carrier to land in a crisis as well as being of great civil use? Are the plans for the defence of the Falkland Islands really the same as they were under the previous Administration, or are they less?
    Mr. Healey: Certain adjustments have been made in the plans in the last few years. As I said in my Answer, we keep the problem under review and make any further changes as they become necessary. I can assure the hon. Gentleman that if it were necessary to land aircraft in the Falkland Islands in an emergency this could be done.

    Beira Patrol
    Mr. Biggs-Davisonasked the Secretary of State for Defence whether he will make a statement on the activities of the Beira patrol.
    Mr. Healey: As I said in the House on 8th November last, the patrol has cut off the most direct means of oil supply to Rhodesia, and, as a consequence, the refinery at Umtali remains closed. The activities of the patrol have thus ensured that the Security Council's Resolution of 9th April, 1966, has been successfully carried out.—[Vol. 753, c. 1019–20.]
    Mr. Biggs-Davison: Surely the sanctions, of which this is a part, are entirely ineffective? How many ships have been intercepted and what is the cost to public funds of this futile folly?
    Mr. Healey: The hon. Member will be aware that his hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles) has a Question down for Written Answer about the cost of the operation. On the subject of a number of ships so far intercepted, I would like notice of that. I would assure the hon. Gentleman, whose enthusiasm for carrying out this United Nations' resolution is well known, that since the patrol was set up the interception of ships has been very rarely required.
    Mr. Hooley: Since it is now declared and welcome policy to strengthen sanctions against the Rhodesian régime, would my right hon. Friend consider internationalising the forces maintaining this patrol?
    Mr. Healey: This question is continuously under review, but it is not a decision which Her Majesty's Government can take on their own.
    Mr. Maudling: I hope that I shall be forgiven if this point has been made, but is it the direction to the patrol to fire on any ship which refuses to acknowledge this warning?
    Mr. Healey: The United Nations' resolution, as the right hon. Gentleman will know well, authorises the use of force to stop ships, if that is required. I am not at liberty to give the House a detailed account of the precise operational instructions given to commanders of Her Majesty's ships, but it includes the use of force in certain contingencies.

    Armed Forces (Pay and Allowances)
    Sir Ian Orr-Ewingasked the Secretary of State for Defence whether the setting aside of the Grigg pay review
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    procedure is a temporary or a permanent feature.
    The Minister of Defence for Administration (Mr. G. W. Reynolds): As the hon. Member is aware, Forces' pay has been made the subject of a standing reference to the National Board for Prices and Incomes. The Board can be expected to review Forces' pay not less frequently than under the former procedure.
    Sir Ian Orr-Ewing: Does the Minister realise that through innumerable changes and cuts the morale of our Defence Forces and the recruiting and re-engagement figures are all sadly down? Is it not therefore particularly deplorable that the Government should cheat the Forces of pay increases which they have had every two years in April since 1958?
    Mr. Reynolds: There has been no decision made yet on the pay increase in April. There are Questions later on the Order Paper on that matter. The only cheating of which I know took place about six years ago.
    Mr. Allason: Would the Minister consider improving the situation of officers' pay as that is related to what the Civil Service pay was two years ago, which in turn is related to pay in outside industry two years before that?
    Mr. Reynolds: I am aware of the basis on which the large increase in officers' pay was fixed. I think that I am right in saying that there has been no decision on Civil Service pay since that date. But the Question asked what would happen in future, and I have said that there is a permanent reference to the Prices and Incomes Board, which will look at all these matters.
    Mr. Maudling: On the question of procedure, does the permanent reference mean that in future any initiative for increases in Forces pay will come from the Prices and Incomes Board?
    Mr. Reynolds: It could come from the Board or from the Government.
    Rear-Admiral Morgan Gilesasked the Secretary of State for Defence when he intends to make a statement on Service pay and allowances.
    Mr. Powellasked the Secretary of State for Defence what decision the Government have taken on pay and allowances for the Forces in 1968 to 1970.
    Mr. Ramsdenasked the Secretary of State for Defence when he expects to be able to announce the results of the investigation by the National Board for Prices and Incomes into the pay and allowances of the Services.
    Mr. Arthur Lewisasked the Secretary of State for Defence whether he will give an assurance that he will implement in full the decisions and recommendations of the National Board for Prices and Incomes on its review of Service men's pay and allowances.
    Mr. Reynolds: The National Board for Prices and Incomes is urgently considering the question of Service pay in the light of the criteria set out in the White Paper on Productivity, Prices and Incomes Policy in 1968 and 1969. Their report has not yet been received. Until this report has been considered by the Government, I am not in a position to make any further statement.
    Rear-Admiral Morgan Giles: But is not the Grigg formula, to which the Government are committed, dependent on a comparison with increases in Civil Service salaries and industrial wages? Why is there further delay in awarding Service pay in accordance with these past facts, which must be known to the Government?
    Mr. Reynolds: There is delay because the matter has been referred to the Prices and Incomes Board for it to advise the Government. One has the figures on which one can do the necessary arithmetical calculations concerning soldiers, sailors and airmen. Concerning officers, there has been no Civil Service increase in pay during the two years under discussion.
    Mr. Powell: Would the hon. Gentleman confirm that this is the first time for at least nine years that the Forces have been uncertain at this time of year as to their pay during the coming 12 months? Is he aware of the resentment which the Forces feel at the underhand manner in which the Grigg understanding between themselves and the Government has been abandoned?
    Mr. Reynolds: The answer to the first part of the right hon. Gentleman's supplementary Question is "Yes, Sir". On the second part, as I have said, the
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    matter is still being considered by the Prices and Incomes Board. My officials will be giving further evidence to the Board during the current week, and I am sure that it will report as soon as it can. Stories which have appeared in the newspapers to the effect that the Board has submitted its report to the Government over the last two or three days are absolute moonshine.
    Mr. Ramsden: Would the hon. Gentleman confirm that any determination which may be made will be backdated to 1st April? Would be further confirm that the award, whatever it is, will reflect, as has hitherto been the case and as was the basis of the Grigg formula, the movement in comparable civilian earnings, which were linked for that purpose to the award?
    Mr. Reynolds: The right hon. Gentleman will realise that, as I am awaiting the Board's report, it is impossible for me to make any comment about what will be done with it until we know exactly what it recommends.
    Mr. Maudling: Have the Government asked the Board to advise them whether or not to depart from the Grigg formula?
    Mr. Reynolds: It was the Board which two years ago drew attention to the fact that it was not particularly happy with the Grigg formula.
    Mr. Boyd-Carpenter: Does not the falling off in recruiting in recent weeks add very great urgency to the need for an early and favourable decision by the Government?
    Mr. Reynolds: I am sure that pay is one of the many factors which could reflect adversely on recruiting. In that respect, I agree.
    Sir Ian Orr-Ewing: Does not the hon. Gentleman feel that it is the task of the Government to look after the well-being of the Defence Forces and not that of the Prices and Incomes Boad? It must be the Government's task to ensure that these people are properly and honourably rewarded.
    Mr. Reynolds: I accept that my right hon. Friend and other Ministers in the Ministry of Defence wear two hats: one as the employer and one, in effect, as the trade union general secretary. It is the

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    task of Government to do exactly what the hon. Gentleman has said, but it is equally the responsibility of the Government to await the advice to be tendered to them before taking a decision.

    Territorial Army
    Mr. Tilneyasked the Secretary of State for Defence whether he will give details of his revised plans for the Territorial Army Volunteer Reserve, Category III.
    Mr. Powellasked the Secretary of State for Defence what study he is making of means to retain the Territorial Army Volunteer Reserve, Category III, as an effective force.
    Sir T. Beamishasked the Secretary of State for Defence what progress has been made in talks between the Council for Territorial and Auxiliary Forces Associations and his Department since the decision on 16th January, 1968, that the Territorial and Army Volunteer Reserve III was to be disbanded; and if he will now make a full statement to end the present uncertainty.
    Mr. Reynolds: I have nothing to add at present to what I told the House on 6th March.—[Vol. 760, c. 466–568.]
    Mr. Tilney: But is the Minister aware that a number of volunteers are prepared to go on turning up at drill halls, without the prospect of camp, if only they felt that there was a rôle for a disciplined body of men which could be expanded in case of need in this imperfect world?
    Mr. Reynolds: I am aware that a large number of men are perfectly willing to do exactly what the hon. Gentleman has suggested, but at the moment I have nothing to add to what I said earlier to the House.
    Mr. Powell: As the Government have allowed the units of T. amp; A.V.R. III to be kept in existence for a few months, will they use this opportunity for a genuine study of the way in which this voluntary service could be permanently used in future?
    Mr. Reynolds: I am studying the need for this farce at the present time.
    Sir T. Beamish: Is the hon. Gentleman aware that the Territorials have had to
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    put up with almost three years of Government indecision and humming and hawing and that they are beginning to lose heart? If the Government have had second thoughts about their decision last January to disband the Territorials, why the devil has not Parliament been told?
    Mr. Reynolds: If the hon. and gallant Gentleman would agree to substitute "three months" for "three years" we should be in closer agreement, but at the moment I have nothing to add to what I said on 6th March. I am still looking at the position.
    Mr. Emrys Hughes: Would my hon. Friend say whether coloured people are welcome to the Territorial organisation?
    Mr. Reynolds: I can only say that when visiting Territorial and Army Volunteer Reserve units over the past three or four years I have seen a considerable number of coloured people.
    Mr. Ramsden: Would the hon. Gentleman accept that there is considerable concern in the House and in the country at the Government's failure to make a statement about their present intentions over the Territorial Army? It was told in January that it was to be disbanded. We know that it received fresh information on 1st April by a letter to commands, as a result of which it is not being disbanded; some camps are continuing. It is essential that the Government should tell the country what their intentions are. Why do they not do that?
    Mr. Reynolds: I am fully aware of the concern, with which I have a good deal of sympathy. However, it would be better to wait to see what we want in the Regular Army and what, if anything, it is necessary to retain. I have nothing to add now because I am still looking into these matters.
    Mr. Hugh Fraser: Would the hon. Gentleman look into the very urgent question of pay and allowances for the soldiers attending drills in their own time? This is a scandalous affair. People are patriotically going to drills and spending personal money. No grants are being offered by the Government to those who are doing that until a decision is taken. It must be in the interests of the State to see these activities continued. The Government are behaving in a shocking and scandalous way.
    Mr. Reynolds: I cannot add to what I said on 6th March. I looked at the matter very closely at the time, and cannot accept at present the making of payments for voluntary attendances.
    Sir T. Beamish: In view of the thoroughly unsatisfactory nature of this reply, I give notice that I hope to raise this matter on the Adjournment as soon as possible.
    Mr. Tilneyasked the Secretary of State for Defence how many members of units of the Territorial Army Volunteer Reserve, Category III trained for fighting have in the last year transferred to servicing units of the Territorial Army Volunteer Reserve, Category II.
    Mr. Reynolds: About 285 members of the Territorial and Army Volunteer Reserve, Category III, transferred to the Territorial and Army Volunteer Reserve, Category II, during the year ended 31st March, 1968. It would not be possible to find out, without disproportionate effort, the numbers of those who transferred to servicing units.
    Mr. Tilney: But is the hon. Gentleman aware that many of them come from teeth arms and that some of them transferred to units like the mobile bath unit? Is this the way to defend the country?
    Mr. Reynolds: I assume from what the hon. Gentleman has said that these transfers would have been made on 1st April last year on the reorganisation of the Territorial Army into the T. amp; A.V.R. With its various classes, there were 13,000 completely new recruits to the T. amp; A.V.R. II during the period mentioned in the Question, of which 285 were transferred from T. amp; A.V.R. III.

    Australia and New Zealand
    Sir Ian Orr-Ewingasked the Secretary of State for Defence what proposals Her Majesty's Government have for assisting Australia and New Zealand, in view of the fact that the F111K has been cancelled.
    Mr. Healey: After our withdrawal from Malaysia and Singapore, we should draw upon our general capability based in Europe, including the United Kingdom.
    Sir Ian Orr-Ewing: The right hon. Gentleman has said that our support for New Zealand and Australia must utterly depend on this aircraft. As we are now not to have it, is he not initiating some talks so that we can discuss how we can come to the mutual defence of the Commonwealth countries and fulfil our S.E.A.T.O. obligations without this aircraft?
    Mr. Healey: As so often happens, the hon. Gentleman is quite incorrect in stating what I said. I said that we needed a capability for tactical strike and reconnaissance. We shall have that capability through the Phantom, Canberra and Buccaneer, but lack the exceptional range which would have been offered by the F111 aircraft in this rôle. On the second part of the hon. Gentleman's supplementary question, I think that he is aware that I shall be going with the Commonwealth Secretary to a conference in Kuala Lumpur in June to discuss these matters.
    Mr. Biggs-Davison: Is it the strategic thinking of the right hon. Gentleman that in future the safety or defence of Australia and New Zealand will depend on nuclear weapons?
    Mr. Healey: Of course not.

    B.A.O.R. (Pay and Allowances)
    Rear-Admiral Morgan Gilesasked the Secretary of State for Defence what representations he has received concerning the new rates of local overseas allowance, and the exchange rates for payments to British troops in the British Army of the Rhine; and what reply he has sent.
    The Under-Secretary of State for Defence for the Army (Mr. James Boyden): I have received a small number of letters from hon. Members about the present interim rates of local overseas allowance. The replies have been based on the full statement which my hon. Friend the Minister of Defence for Administration made on this subject in the Defence debate on 5th March. The full review of local overseas allowance which my hon. Friend also announced on 5th March starts today.
    Rear-Admiral Morgan Giles: But as the overseas allowance is intended basically to compensate men in the Forces for serving overseas, why is it that a married

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    sergeant serving in B.A.O.R. is now £3 a week less well off than he was previously?
    Mr. Boyden: I dispute that particular figure, but B.A.O.R. is the first overseas command which is being investigated.
    Mr. Allason: Is the Minister aware that there is a suspicion that the intention of the Government is to have very protracted negotiations over the increases in L.O.A. in view of the fact that it is certain that in this country the cost of living will rise in the coming months?
    Mr. Boyden: It is a suspicion in the hon. Member's mind, nobody else's.

    4·5-inch Naval Guns
    Mr. Wallasked the Secretary of State for Defence whether 4·5-inch naval guns will be adapated for rocket-assisted shells.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. Maurice Foley): There is no such intention at the present moment.
    Mr. Wall: Is it not a fact that experiments in America show that rocket assistance has increased the range by 30 per cent., and are not most of our ships still armed with the 4·5-inch gun?
    Mr. Foley: Development in this field is not yet sufficiently advanced to justify this adaptation. We are following developments elsewhere, and they are constantly under consideration.

    Minelaying
    Mr. Wallasked the Secretary of State for Defence if he will make a statement on the progress of minelaying techniques in the Royal Navy and the Royal Air Force.
    Mr. Foley: It is not the practice to give detailed operational information of this kind.
    Mr. Wall: Can the Minister confirm that the Navy and Royal Air Force air-craft are capable of carrying on a technique for laying mines and that they are fitted to do so?
    Mr. Foley: Yes.

    Royal Navy (Air Support)
    Mr.. Goodhewasked the Secretary of State for Defence what aircraft are to provide the land-based air cover for
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    the Royal Navy when the aircraft carriers are withdrawn from service.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. Merlyn Rees): All operational aircraft of the R.A.F. will be available to provide air support for the fleet. But the Nimrod, Buccaneer, and Phantom are the types most relevant to this task.
    Mr. Goodhew: Is the Minister really satisfied that this will give the long range cover which the Navy expects? Is he not aware that only a few weeks ago his right hon. Friend from that very bench was saying that the Navy would rely on it in future, and now that both aircraft carriers and F111, which was to have replaced TSR2, have disappeared, what is he going to do about it?
    Mr. Rees: There are two factors which the hon. Member should bear in mind. The first is the policy decision to withdraw from the Far East, and the second is that it was never the intention to use carriers for the protection of the Fleet in the Atlantic area. The pull-out from the Far East makes the use of the land-based aircraft for the protection of the Fleet more practicable.
    Captain W. Elliot: Is the hon. Gentleman aware that he is deceiving himself and the country if he tries to put forward the view that air cover for the Fleet is provided by shore-based aircraft?
    Mr. Rees: I would have thought that history showed that in land-locked waters in Europe protection of the Navy by land-based aircraft is very much a possibility. I can assure the hon. and gallant Gentleman that we take advice from Service quarters on this which is available to us as well as that of the hon. Gentleman.

    N.A.T.O. (Defence Discussions)
    Mr. Norwoodasked the Secretary of State for Defence what discussions have taken place with the United States Government about the defence arrangements of the North Atlantic Treaty Organisation countries after 1969.
    Mr. Frank Allaunasked the Secretary of State for Defence if he will make a statement about his discussions

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    with the United States or other Governments, about the defence arrangements of the North Atlantic Treaty Organisation countries after 1969.
    Mr. Healey: The first five-year rolling programme adopted last December will be updated annually; the allies together will make the necessary decisions.
    Mr. Norwood: Is the Minister aware of reports which have appeared in Scandinavia and some other countries that the United States Government are seeking bilateral agreements with individual member countries of N.A.T.O. permitting the immediate use of United States forces in those countries without involving any permanent forces being maintained in them? Have Her Majesty's Government been involved in discussions of this kind? Have they been informed about such discussions, and, if they have, and have acquiesced in them, does this not go back very heavily to the cold war philosophy?
    Mr. Healey: I am not aware of any such reports or any such facts. I think my hon. Friend may be confusing United States action with N.A.T.O. countries and the action of the Soviet Union in buttressing the Warsaw Pact with bilateral agreements with each of those Eastern European countries.
    Mr. Frank Allaun: As N.A.T.O. started talks on balanced mutual force reductions five months ago and no proposals so far have been made, will the Government tell them to get on with it, particularly as we are spending £207 million a year in Germany, plus N.A.T.O. expenses in addition?
    Mr. Healey: As I have made clear on many occasions in this House, the Alliance is very anxious to negotiate with the Warsaw Powers on a reciprocal reduction on both sides of the Iron Curtain. I only wish that there had been more signs that redeployment by the United States, Britain and Belgium had been reciprocated on the Eastern side of the Iron Curtain.

    Royal Navy (Vertical Take-off Aircraft)
    Captain W. Elliotasked the Secretary of State for Defence what study has been made of the operation of vertical
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    take-off aircraft from ships of the Royal Navy; what trials are due to take place; and if he will make a statement.
    Mr. Foley: Trials carried out in H.M.S. "Ark Royal" and in H.M.S. "Bulwark" have shown that the aircraft carriers and the commando ships would be capable of operating vertical take-off aircraft. No further trials are planned.
    Captain Elliot: Has the Minister considered pressing on with these trials in other types of ship? Would he not agree that in future years the Navy will be bereft of its own air cover and that therefore the area in which it operates will be greatly diminished?
    Mr. Foley: The question of air cover from aircraft carriers and from the shore is a matter which has already been answered. The hon. and gallant Member must be aware that proposals to go fully into this whole field would be expensive, would involve setting up a force of aircraft and support facilities. In terms of the rôle of the Navy in Europe, in the Mediterranean largely, this can be met by land-based aircraft.
    Sir Ian Orr-Ewing: Would it not be wise for maximum flexibility in future to carry on with these trials, particularly with converted Tiger class cruisers and also Commando class carriers, because the more we know about this technique the better, and the more flexibility for our Forces?
    Mr. Foley: Trials which have already taken place demonstrate what is possible. What one can say is that they would not be effective for military operation at this stage. Clearly, we are interested, and we shall follow closely this development of V.T.O.L. aircraft.
    Mr. Cronin: In view of the vulnerability of helicopters to attacks from fixed-wing aircraft and the possibility that ships of the Royal Navy will be employed operationally in oceanic rôles, away from land-based cover, will my hon. Friend pursue this matter further?
    Mr. Foley: I think my hon. Friend will find there is a further Question on the Paper relating to this matter.

    Persian Gulf and Singapore
    Mr. Martenasked the Secretary of State for Defence what forces will be stationed in the Persian Gulf and Singapore in April, 1971; and if he will make a statement.
    Mr. Healey: The forces appropriate to the circumstances at that time.
    Mr. Marten: Will the Secretary of State enlarge upon that and tell us whether we shall have proper and effective forces in these two areas till the end of 1971, or will there be a run-down in the defence of that area? What will be the position in April, 1971, which is the last month of the constitutional life of this Government?
    Mr. Healey: The hon. Member may be aware that we are discussing with our Allies in both these areas our proposals for the programme of this run-down. I can assure him that we shall ensure that we always have forces capable of carrying out our obligations as they exist at any given time.
    Mr. Dalyell: Would my right hon. Friend not agree with the proposition that British troops should not prop up regimes which keep their political opponents in prison without trial, and when he goes to Kuala Lumpur will he ask Mr. Lee Kuan Yew a few pertinent questions about his political prisoners who are in gaol without trial?
    Mr. Healey: I do not expect to meet Mr. Lee Kuan Yew in Kuala Lumpur, which is the capital of Malaysia, as he will be in Europe at that time.
    Mr. Maudling: In view of the crucial importance of the Trucial and Oman States for security in the Persian Gulf, will the right hon. Gentleman make some statement as to the future of these areas?
    Mr. Healey: This matter is under consideration, and when I have detailed proposals to give to the House I will communicate them.
    Mr. Dalyell: On a point of order. My reference to Kuala Lumpur was, of course, to the forthcoming conference to which the Defence Secretary referred in a previous Question. I thought this was plain enough.
    Mr. Speaker: That is a point of argument, not a point of order.

    New Combat Aircraft
    Mr. Goodhewasked the Secretary of State for Defence when he hopes to place an order for a prototype of a new advanced combat aircraft to meet the gap left by the cancellation of the TSR2, the F111K and the Anglo-French variable geometry aircraft.
    Mr. Healey: I am not able to make a statement on the project at this stage.
    Mr. Goodhew: But the right hon. Gentleman cut out the core of our aircraft programme operationally and industrially. Is he content to sit on his behind all this time and do nothing about it? Is he aware that much is going on in the aircraft industry already and it merely requires the say-so from him to enable some prototypes to be produced at reasonable cost?
    Mr. Healey: The hon. Gentleman is often a little over-excited on the matter. I am aware of all the factors to which he has referred. The fact that a great deal is going on in the aircraft industry on the matter is largely owing to the policy of Her Majesty's Government and the money which we are giving to the design team at Warton to carry out these studies. I can assure the hon. Gentleman that our consultations with our European allies and our studies inside the Department are now well advanced and the outcome looks favourable.

    Royal Observer Corps
    Mr. Alick Buchanan-Smithasked the Secretary of State for Defence whether any members of the Royal Observer Corps in Scotland will be displaced as a result of the reorganisation of the Corps.
    Mr. Merlyn Rees: As I told the hon. Member in my letter of 19th April, 1968, 107 of the 319 R.O.C. Posts in Scotland are being closed, and distances will prevent all the surplus volunteers being absorbed into the posts which are being retained. Consultations are now in progress with individual volunteers to determine which will be surplus.
    Mr. Buchanan-Smith: I am sure the hon. Gentleman appreciates the value of

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    local voluntary effort in the Royal Observer Corps. Can he give an assurance that every effort will be made to accommodate those who are displaced in neighbouring posts, if possible?
    Mr. Rees: Within operational requirements, I will willingly give that assurance.
    Mr. Ramsden: Is it a fact that in connection with the run-down of the Royal Observer Corps considerable public funds are to be spent on demolishing the substantial concrete structures in which they operate? If this is so, is it really sense?
    Mr. Rees: I would require notice of that question. It is one that has not come my way.

    Aircraft-flights (Nuclear weapons)
    Mr. Frank Allaunasked the Secretary of State for Defence if he will give an assurance that United States aircraft which overfly the United Kingdom carrying hydrogen or atom bombs will be required to obtain prior permission from Her Majesty's Government on each occasion; and if he will inform Parliament each time such permission is granted.
    Mr. Healey: The answer to the first part of the Question is that we receive advance notification of every flight. The answer to the second part is: No.
    Mr. Frank Allaun: Are not the public entitled to know? Despite safeguards, can anyone, including the Minister, give a 100 per cent. guarantee that no nuclear explosion can take place? Would not the best safeguard be to stop the flights altogether?
    Mr. Healey: I can give as good an assurance that no nuclear explosion can take place as it would ever be possible to give under technological circumstances. I can assure my hon. Friend that if it were not for the existence of the Western nuclear deterrent, which depends in part on these flights, the likelihood of a large number of nuclear explosions taking place in a general war would be much increased.

    Naval Helicopters (Mediterranean)
    Mr. Robert Howarthasked the Secretary of State for Defence what protection against land-based aircraft will be afforded to naval helicopters operating
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    from Her Majesty's ships in the Mediterranean after the last carrier has been scrapped.
    The Minister of Defence for Equipment (Mr. John Morris): Weapons being developed for ships are mentioned in the Statement on the 1968 Defence Estimates (Cmnd. 3540, Chapter VI, paragraph 7). These include the Sea Dart medium range surface-to-air guided missile system and a close range self-defence surface-to-air guided weapon to be known as Sea Wolf. Both will improve the parent ship's defensive air umbrella against both missiles and aircraft. Fighter cover for the Fleet's helicopters may also be available from land bases both in the Mediterranean and other parts of the N.A.T.O. area.
    Mr. Howarth: Is my hon. Friend aware that I am not entirely satisfied with that Answer? It seems to me that helicopters will be vulnerable to land-based aircraft when they are out of range of their parent ship. How will these helicopters be protected from land-based aircraft which could shoot them down pretty easily?
    Mr. Morris: I am aware of my hon. Friend's concern. But if he looks at the totality of the picture, over the short distance, protection would be afforded from the Sea Dart of the parent ship, and it is envisaged that helicopters will largely operate within that area of protection. In the longer range, as my hon. Friend has indicated this afternoon and on other occasions, there will be protection from land-based aircraft cover.
    Mr. Wall: Is it not a fact that the Government have made the helicopter the main anti-strike weapon of the Fleet in future, and is not the helicopter extremely vulnerable?
    Mr. Morris: As I indicated, the hon. Gentleman should look at the totality of the picture: the rôle of the helicopter, the rôle of the land-based aircraft, and the rôle of the submarine.

    R.A.F. Air Mobility Forces
    Mr. Robert Howarthasked the Secretary of State for Defence what effect the withdrawal from East of Suez will have on the plans for introducing new aircraft into Royal Air Force air mobility

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    forces; and what effect it will have on the scrapping of older types.
    Mr. Merlyn Rees: The main re-equipment of the Royal Air Force air mobility forces will be complete with the delivery of the last Belfast in the middle of next year. Reductions in the transport force will be effected by withdrawing older aircraft earlier than previously planned.
    Mr. Howarth: Will my hon. Friend confirm that with the proposed withdrawal east of Suez, the Royal Air Force air mobility forces will be considerably larger than we shall need? Is it intended to speed up the removal of the older type of aircraft at present in use?
    Mr. Rees: Certainly the older aircraft will go first, but I ask my hon. Friend to bear in mind the need for transport aircraft for the mobility of forces in Europe, particularly on the flanks.
    Sir A. V. Harvey: If there are any spare transport aircraft available, will he try to give one to the Commander-in-Chief, B.A.O.R., who is now flying around in a propeller-driven aircraft which is 20 years old, when junior Ministers fly around the Continent in jet aircraft?
    Mr. Rees: Commanders-in-Chief in Europe generally fly these old aircraft. I can only say that these jet aircraft for junior Ministers do not apply to some junior Ministers that I know.

    B.A.O.R. (Brigade Transfer)
    Mr. Moyleasked the Secretary of State for Defence whether the transfer of the brigade so earmarked from Germany to the United Kingdom has been completed.
    Mr. Croninasked the Secretary of State for Defence when the transfer of a brigade from Germany to the United Kingdom will be completed.
    Mr. Boyden: The transfer was completed in March.
    Mr. Moyle: Will my hon. Friend agree that this brigade will remain an integral part of the Rhine Army when it is transferred? If so, will he agree that this cannot be regarded as a reduction in land forces in Central Europe? If this is so, why do we need the agreement of
    1098
    our allies before we transfer this or any other brigade from Germany to this country?
    Mr. Boyden: To the first two parts of the Question, Yes, Sir, Yes, Sir. Concerning the third, this is in accordance with international agreements.
    Mr. Cronin: In view of the disturbing trend of political events in Germany recently, can my hon. Friend give an assurance that there will be no further substantial reduction of our influence in Germany by reducing the British forces there?
    Mr. Boyden: My right hon. Friend dealt with that very thoroughly in the defence debate.
    Mr. Ramsden: Is the hon. Gentleman aware that much of the accommodation of this brigade in the North of England, particularly that in or near his own constituency, has been considered substandard for many years? What is being done to improve the standard of accommodation which this brigade has had to accept?
    Mr. Boyden: A lot of improvements are taking place, I can assure the right hon. Gentleman. I am going there tomorrow to see for myself how much further work is necessary.
    Mr. Orme: Is my hon. Friend aware that there is still need for considerable reduction in B.A.O.R. forces and that the money that Britain is spending on these forces can be ill-afforded? Has my hon. Friend anything to say about further withdrawals?
    Mr. Boyden: I am sure that my hon. Friend knows that my right hon. Friend dealt with this very thoroughly in the defence debate not so long ago.

    General Service Medals
    Mr. Maddanasked the Secretary of State for Defence how many general service medals have been awarded, since the institution of this decoration in its present form on 24th December 1962, in the Royal Navy excluding the Royal Marines, the Army and the Royal Air Force, respectively.
    Mr. Reynolds: The number of medals and clasps awarded are as follows:

    Royal Navy (including the Royal Fleet Auxiliary)

    18,530

    Royal Marines

    7,800

    Army

    87,450

    Royal Air Force

    37,750

    Some have still to be issued.
    Mr. Maddan: Does the Minister agree that those figures, taken proportionately to the size of the Forces, show that the Royal Marines have been making an outstanding contribution to the sort of operation which experience has shown the national interest of this country requires? Will he bear it in mind in future Defence Reviews?
    Mr. Reynolds: The figures show that rather more Royal Marines have served in operational areas percentage-wise than members of the other Services. One is well aware of the contribution that the Royal Marines make in service of this nature.

    East of Suez (Withdrawal of Forces)
    Mr. Shinwellasked the Secretary of State for Defence what countries east of Suez have now been consulted on security measures when British Forces are withdrawn.
    Mr. Croninasked the Secretary of State for Defence what progress has been made in his defence discussions with Australia.
    Mr. Healey: As my right hon. Friend the Commonwealth Secretary said yesterday—[Vol. 763, c. 166–7]—we have had some exchanges of view with Australia, New Zealand, Malaysia and Singapore, and in June we will be joining these countries in a conference to consider problems connected with future defence arrangements for the area consequent upon our withdrawal.
    We have explained our intentions to our S.E.A.T.O. partners and, as regards our withdrawal from the Persian Gulf, the consultations envisaged by the Prime Minister in his statement to the House on 16th January have begun.
    Mr. Cronin: In view of the disquiet in Australia about the impending defence arrangements and this rather unstable
    1100
    and very large population in the middle of the Pacific, will my right hon. Friend do everything he can to assuage Australian opinion as to the future defence arrangements?
    Mr. Healey: Of course, the purpose of this conference is to make all the progress we can in establishing alternative security arrangements for the area after our withdrawal, but I am pretty hopeful that we shall make substantial progress in June.
    Mr. Doughty: The right hon. Gentleman will be aware that the views in Australia are very derogatory of this proposal to withdraw from the Pacific and that it would not be possible to make any arrangements unless bases are kept in places like Singapore or elsewhere in the Pacific.
    Mr. Healey: I do not accept that view, and it is certainly not held by the Australian Government, or they would not be joining us at the conference in Malaysia in June, since they wish to discuss with us and our other Commonwealth partners what arrangements can be made for mutual defence in the area when our bases have been finally liquidated.
    Mr. Barnett: Can my right hon. Friend give any indication as to when the Australians might be spending as much on defence as a proportion of their G.N.P. as we are?
    Mr. Healey: Australia is certainly spending a substantially smaller proportion of her G.N.P. on defence than Britain; Mr. Gorton has quite properly indicated his intention to put Australian interests first in this matter, so I do not think that they will complain if we do the same with British interests.
    Mr. Maudling: Since the Government have broken many definite defence obligations to countries in the Gulf, would the right hon. Gentleman put forward at the conference suggestions for alternative ways of making Britain's word good?
    Mr. Healey: First, I cannot accept that we have broken any defence agreements in the Gulf—[HON. MEMBERS: "Oh."]—certainly not. I cannot accept the assumption of the right hon. Gentleman's question, but, of course, in our consultations

    1101
    with the Gulf States and other States interested in the security of the Gulf, our main concern is to ensure that arrangements for stability and peace can be made for the period after our withdrawal.
    Mr. Maudling: If the right hon. Gentleman does not accept my statement about the breaking of obligations, may I refer him to the Prime Minister's answer in which he said that he would list the obligations which the Government had broken?
    Mr. Healey: The right hon. Gentleman knows very well that the Prime Minister gave no such undertaking. He has never said that Britain has broken any obligations, and nor have we done so, in the Gulf.
    Mr. Shinwell: Is my right hon. Friend not aware that the primary obligation in relation to defence east of Suez is based on the ANZUS pact in which we do not share?
    Mr. Healey: Yes, I am well aware that the treaty on which Australia and New Zealand base their security is one of which Britain is not a member, but I must tell the House—I hope that we will not make too many debating points on this—that this Government, and, I believe, the Opposition as well, have often stated their belief that, if Australia or New Zealand were ever under direct attack, we would regard it as our obligation to go to their assistance as they came to ours twice in the past.
    Mr. Shinwellasked the Secretary of State for Defence what is the total cost to Government Departments in the return of members of the Forces and their families from the areas east of Suez in transport accommodation, and other services.
    Mr. Reynolds: The total cost of the withdrawal from east of Suez will depend to a great extent on its phasing and cannot be estimated at present; but, as I hold the House in the defence debate, I hope to give more information about it later this year when detailed planning is further advanced.
    Mr. Shinwell: Is this good enough? When the Government decided to withdraw forces east of Suez by 1970, surely
    1102
    they must have formed an estimate of the total cost? Are we to be left in the dark about this? May it not be that the withdrawal of forces east of Suez will be more costly than retaining the forces there?
    Mr. Reynolds: I can assure my right hon. Friend that, taken over a period of years in the early 1970s, the cost of withdrawal will mean a considerable net saving to the Exchequer, even after allowing for such economic or other aid which may have to be given to the countries from which we withdraw. There was a big cost of withdrawal from B.A.O.R. and Aden, but it was largely on barracks and married quarters in this country, and I am hoping that, in the time scale and subject to the phasing of the withdrawal, there will be little expenditure of that kind this time.
    Sir A. V. Harvey: Will the hon. Gentleman bear in mind that, in Malta, there are good barracks, married quarters, schools and hospitals? Will he discuss this with the Malta Government with a view to making full use of those facilities, where the troops and their families like living, rather than pushing up the cost of homes in this country?
    Mr. Reynolds: As I told my right hon. Friend the Member for Easington (Mr. Shinwell), this time I do not expect, subject to the phasing of the withdrawal, that there will be much necessity for extra barrack or married quarters accommodation.
    Mr. Boyd-Carpenter: In view of the obligations being broken, is not the real answer to this Question, "Thirty pieces of silver"?

    Royal Navy (Ships)
    Mr. Hamlingasked the Secretary of State for Defence whether he will now state Her Majesty's Government's policy regarding the building of small fast, and cheap ships for the Royal Navy; and whether he will make a statement.
    Mr. John Morris: Our broad plans for classes of new naval construction remain as announced in Cmnd. 3357. We are also examining our requirement for the next generation of smaller ships, needed for mine counter-measures and

    1103
    patrol duties, but it is too early to say what our plans will be.
    Mr. Hamling: Is my hon. Friend aware that existing ships in the Royal Navy are very costly and have very sophisticated weapons systems? Surely it would be a better bargain for the taxpayer if we could have smaller and faster ships?
    Mr. Morris: I am sure that my hon. Friend is fully aware of the Government's concern to reduce defence costs. My right hon. Friend spelled this out in the Defence Review and the debate. I can assure my hon. Friend that the new classes of ships which we are developing are aimed at providing the most cost-effective package possible.
    Dame Irene Ward: But can I find out, having now tried to ask three Ministers, who will look after the Merchant Navy when we have completed all our withdrawals? Can we have some more Royal Navy ships so that our Merchant Navy does not have to sail the seas without its proper and adequate protection? It is scandalous that nothing has been done to reassure us about this.
    Mr. Morris: This does not arise on this Question, and I understand that it was answered fully in a previous debate.

    Submarines
    Mr. Hamlingasked the Secretary of State for Defence what studies he has set up on the possibility of building new types of submarine to replace existing types of surface warships.
    Mr. John Morris: As part of our plans for the next generation of Royal Navy warships, announced in Cmnd. 3357, our growing force of Fleet submarines will provide in the 1970's the Fleet's main striking power against enemy surface ships and submarines alike. In these respects, therefore, they will become the capital ships of the future and our studies are geared to this concept.
    Mr. Hamling: Is my hon. Friend not aware that modern navies and techniques call for new ideas in the building of submarines?
    Mr. Morris: I am sure that my hon. Friend would not wish to criticise my right hon. Friend or myself in this respect. This is obviously one of the main con-
    1104
    siderations in the development of the present submarine fleet.
    Dr. Bennett: Can the hon. Gentleman tell the House what total strength of such vessels he expects the Navy to have in the 1970's?
    Mr. Morris: No.

    South-East Asia
    Mr. Moyleasked the Secretary of State for Defence what troops the United Kingdom will have trained, equipped or acclimatised for operations in South-East Asia in support of Australia and New Zealand after 1971.
    Mr. Healey: Troops drawn from our forces in Europe, including the United Kingdom, will be available for operations in the area as, in our judgment, circumstances demand.
    Mr. Moyle: But is my right hon. Friend aware that, in his visit to Australia recently, his right hon. Friend the Commonwealth Secretary was quoted as saying that after 1971 we shall have no troops trained, equipped or acclimatised for operations in that part of the world? Would he care to deny that that is so?
    Mr. Healey: I would require notice of that precise quotation. What I will say is that, as I have said before, we propose to train our Forces regularly outside Europe and in the sort of conditions in which they might then be used. Acclimatisation is, of course, necessary for troops to operate at maximum efficiency in certain conditions, hut, since the rôle of our Forces would be essentially that of reinforcement in such a conflict, I must say that troops, even coming from Australia, New Zealand or the United States, would require some period of acclimatisation before being ready for intensive battle.
    Mr. Doughty: Is the right hon. Gentleman aware that South-East Asia is approximately 10,000 miles from this country, and that it would be impossible to get either troops or equipment, which is much heavier, to these bases in a reasonable time?
    Mr. Healey: No, Sir, that is not so. It would be possible to fly troops out

    1105
    to any where in the area within two or three clays.
    Mr. Alan Lee Williams: Would my right hon. Friend agree to raise this matter of training at the conference in Malaysia in June, to which he referred, to see whether facilities for training could be made available in Australia, New Zealand, or Malaysia?
    Mr. Healey: If it is a question of training for acclimatisation, then surely it should take place in a tropical area. I do not think that New Zealand, for example, would be suitable from that point of view. However, we shall, of course, be discussing this type of problem with our Commonwealth partners at the conference in June.

    Royal Scots Greys
    Mr. G. Campbellasked the Secretary of State for Defence what decision he has taken about the future of the Royal Scots Greys, which is at present the only Scottish cavalry regiment.
    Mr. Boyden: No further decisions on the future of any major Army units have yet been taken. Details of further reductions will be given in a statement on defence policy to be published later this year.
    Mr. Campbell: Since this regiment has an outstanding recruiting record and has shown itself to be a highly efficient armoured unit, besides being the only Scottish one, will the Government give an assurance that the regiment will retain its separate identity and its name?
    Mr. Boyden: These factors will be taken into consideration.
    Mr. Emrys Hughes: What part would the Royal Scots Greys be likely to play in the event of nuclear warfare?
    Mr. Boyden: The regiment has very powerful tanks.
    Mr. Ramsden: Is the hon. Gentleman aware that he has added another one to the already long list of measures which are to be announced in July? Will the Government give an undertaking that the announcement will be made in time for it to be debated by the House before we rise for the Recess?
    Mr. Boyden: The right hon. Gentleman heard my right hon. Friend say precisely that in the defence debate.

    Royal Defence Academy and Shrivenham College of Science
    Mr. Goodhartasked the Secretary of State for Defence when the proposed Royal Defence Academy will be opened.
    Mr. Dalyellasked the Secretary of State for Defence why he is delaying the proposed extensions at Shrivenham College of Science.
    Mr. Healey: I have nothing to add at present to my announcement in the Statement Cmnd. 3540, Chapter III, paragraph 9 on Defence Estimates, 1968.
    Mr. Goodhart: Does the Minister deny the authoritative reports that the opening of the Defence Academy is to be long delayed? At a time when the provision of vital weapons and manpower is being cut back, is it not crazy to economise on the training of young officers?
    Mr. Healey: I do not know if the hon. Gentleman is referring to a report in The Times newspaper as an authoritative report, but it is time that people in this country and outside recognised that The Times is not the voice of Her Majesty's Government; nor is it, I understand, the voice of Her Majesty's Opposition.
    Mr. Dalyell: Has my right hon. Friend any sympathy with the view that the excellent facilities at Shrivenham should be used for civilian as well as military purposes?
    Mr. Healey: I have great sympathy with that view and I believe that my hon. Friend has a later Question on the subject.
    Mr. Dalyellasked the Secretary of State for Defence if he will increase the number of civilian scholars at Shrivenham.
    Mr. Healey: No, Sir.
    Mr. Dalyell: Is my right hon. Friend aware that nowhere in Britain is there such a favourable ratio of students to staff as at Shrivenham? At a time of great shortage, particularly of engineering places, could not the facilities at Shrivenham be made more readily available for civilian scholars?
    Mr. Healey: The reason why we have not made more places available at Shrivenham is because those which we have made available have not been taken up. However, if civilian students wish to enter Shrivenham in sufficient numbers to require an enlargement of the quota, we will certainly consider that.
    Mr. Dalyell: What about giving the matter more publicity?

    Nigeria (Military Transport)
    Mr. Goodhartasked the Secretary of State for Defence what military transport has been used by his Department to facilitate the movement of supplies to the Federal Government of Nigeria since the outbreak of the civil war in 1967.
    Mr. Healey: No Service aircraft or shipping has been used for this purpose. There has been limited use of Service motor vehicles within the United Kingdom for the movement of supplies to docks and airports.
    Mr. Goodhart: Is the Minister aware that there is increasing anxiety in this country about the provision of large quantities of arms for a conflict which appears to be degenerating into a massacre of civilians?
    Mr. Healey: I appreciate the great anxiety which exists on both sides about this tragic conflict in Nigeria. The hon. Gentleman will recognise that my right hon. Friend the Commonwealth Secretary is in touch with many Commonwealth countries and with the Commonwealth Secretariat to see if anything can be done to bring this tragic and unnecessary conflict to an end.
    Mr. Rose: Is my right hon. Friend aware that the continued supply of arms not only detracts from Britain's rôle of mediator in this conflict but leads to a prolongation of the war? Is he aware that these arms are being used mainly to bomb the defenceless civilian population? [HON. MEMBERS: "No."]
    Mr. Healey: With respect to my hon. Friend, the report that bombs have been supplied to the Nigerian Government is untrue and has been repeatedly denied by Her Majesty's Government.

    Convicted Sailors (Bermuda)
    Mr. Russell Kerrasked the Secretary of State for Defence whether he will institute an inquiry into the circumstances which resulted in six of Her Majesty's sailors receiving long prison sentences in Hamilton, Bermuda, recently, for alleged homosexual activity.
    Mr. Foley: As soon as this matter came to light a full inquiry was instituted. The six men were convicted for homosexual offences under the Penal Code of Bermuda. The sentences were imposed by the Supreme Court of Bermuda. I understand that some of the men are likely to appeal against their sentences.
    Mr. Kerr: Is my hon. Friend aware of the widespread sense of outrage in Bermuda and in this country about the severity of these sentences? Will he institute further inquiries to see if something can be done to put the matter right, particularly in view of the recent sexual offences legislation passed in this country?
    Mr. Foley: I do not think that it would be proper for me to comment on sentences legally imposed by one of Her Majesty's judges. Bermuda has its own legislation on this subject. Legal aid is available to those who have been convicted and they can appeal; and I understand that at least half of them have decided to appeal.

    Sennybridge Range (Sheep Graziers)
    Mr. Tudor Watkinsasked the Secretary of State for Defence if he will make a statement on the discussions with the Sennybridge Range sheep graziers about charges; what recommendations the independent valuer has made to him; and what response has been made by the graziers to new proposals.
    Mr. Reynolds: The independent valuers recommendations, which have been discussed with the graziers, confirm that, allowing for military use of Sennybridge, a grazing charge of 7s. 6d. per sheep is fair.
    Mr. Watkins: Would my right hon. Friend explain why this terrific increase of 300 per cent. has not been referred to the Prices and Incomes Board? If he

    1109
    will not refer the matter to the Board, will he allow me to do so?
    Mr. Reynolds: I am satisfied, without advice from the Board on this occasion, that the charge of 7s. 6d. per sheep per year—with the increase from 4s. 6d. to 7s. 6d.—staged over a period of three years is correct. One could legitimately argue for the charge of 7s. 6d. to be made this year, but I think that it is fair to have spread it over three years.
    Mr. Gibson-Watt: Will the right hon. Gentleman look at this matter again in view of the considerable feeling that exists in the area on the subject, as the Question indicates? Does he appreciate that there is a good deal more to this than perhaps meets the eye?
    Mr. Reynolds: I have looked into this matter on several occasions in the last two months. The original proposal came from my advisers, who are experienced in dealing with these matters, To check that proposal and to satisfy the graziers and my hon. Friend, I asked for advice from an impartial and independent valuer. His advice confirmed that of my my officials; and I therefore do not think that it is necessary for me to look into the matter again.

    Sea Bed (Exploration)
    Mr. Dodds-Parkerasked the Secretary of State for Defence if he will give authority to the officers of his Department serving in the United States of America to participate where possible in experimental work concerning living under water and the exploration of the sea bed.
    Mr. Foley: We are already making a modest contribution to United States research work in this field. The hon. Gentleman will appreciate that this work calls for highly skilled and experienced men.
    Mr. Dodds-Parker: In view of the vital importance of this research for the future, will the Minister look into the matter again to see whether extra effort can be put into it?
    Mr. Foley: Yes, Sir.

    Weather Forecasts
    Mr. Gresham Cookeasked the Secretary of State for Defence why the weather forecasts for South-East England on 22nd April when warm and dry was forecast, on 25th April when two further fine days were forecast and on 27th April when rain was forecast to clear by the evening were incorrect; and whether such forecasts are now made by computer or the human mind.
    Mr. Merlyn Rees: Scattered thunderstorms in South-East England were forecast for 22nd April on the previous day, but a trough of low pressure moved faster than expected to produce more widespread outbreaks of rain. The forecast was modified from the early hours of 22nd April onwards, when the day's weather was correctly forecast. On 27th April rain spread more rapidly from the west than had been expected when the outlook was given two days previously.
    The accuracy of forecasts, particularly in the timing of events, inevitably decreases as the period covered is lengthened. The forecast for South-East England for 27th April, as given on 26th and 27th, was correct. Clearance of rain was forecast for other areas but not the South-East. The weather is forecast by human forecasters, who take account of forecast pressure charts produced by the computer.
    Mr. Gresham Cooke: Does this mean that the Government have finally fallen into the trough of low pressure?
    Mr. Rees: Not at all. I suggest that prediction in meteorology is as suspect as prediction in election results.
    Mr. Shinwell: When are the Government going to do something about this? When my hon. Friend refers to human forecasters, does that mean that there are no human beings in the Government capable of dealing with this matter?
    Mr. Rees: I think it has something to do with 13 years of Tory rule.
    Mr. Lubbock: Is the hon. Gentleman aware that if one takes the precise opposite of the forecasts given, one finds that, as with other forecasts made by the Government, one's predictions can be reasonably reliable?
    Mr. Rees: As with Liberal Party policy.
    Mr. Maudling: Will the Minister call to the attention of his colleagues in the Economic Departments his remarks about the fallability of human predictions, particularly in relation to the National Plan?
    Mr. Rees: I am sure that the right hon. Gentleman has great experience of that.

  RAILWAYS

    Unmanned Level Crossings
    Mr. Roseasked the Minister of Transport whether he will make a statement on the findings of the Committee set up to investigate the hazards of unmanned level crossings.
    The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Neil Carmichael): Mr. E. Brian Gibbens, Q.C., with two expert assessors, is holding a formal investigation into the Hixon level-crossing accident and into the general safety of automatic half-barrier protection. Public hearings continued from 26th February to 20th March, with evidence taken from 38 witnesses, and were resumed on 29th April. During the adjournment Mr. Gibbens and his assessors visited France and Holland to look at automatic level-crossings in those countries.
    I cannot say at this stage when the hearings will be completed or when Mr. Gibbens will be able to present his report.
    Mr. Rose: In view of the very great public concern about this matter, will my hon. Friend at least undertake to expedite the report? In the meantime, will he do all in his power to see that similar tragedies cannot possibly occur?
    Mr. Carmichael: The Department is very well aware of the anxiety and the great dangers that the public feel about these crossings, but obviously when such an important and expert inquiry as this has been set up to investigate the matter, we should wait for the views given in the report. We shall, of course, bear in mind what my hon. Friend has said about the importance of this matter.

  IMMIGRANTS, WOLVERHAMPTON (INCIDENT)
  Mr. Winnick: On a point of order, Mr. Speaker. May I seek your guidance on what I consider a very important matter? I should like to know how an incident which occurred yesterday in Wolverhampton, where a group of coloured people were subject to violence and terror because of the colour of their skin, can be raised on the Floor of the House.
  Mr. Speaker: The hon. Member has been in Parliament long enough now to know the various methods. If an hon. Member wishes to raise something which he considers to be of urgent importance he can seek to put a Private Notice Question. If he thinks that this is a matter of urgent public importance he can seek leave under Standing Order No. 9 to raise the matter by moving the Adjournment of the House. He can always raise the matter with a Minister. He can put Questions on the Order Paper. He can also ballot for the Adjournment. He cannot, however, raise the subject under the guise of a point of order.
  Mr. Winnick: Further to that point of order. Obviously, if I did not consider it urgent I would not have raised it, Mr. Speaker.
  Mr. Speaker: Order. I have answered the hon. Member on the question of the point of order, and, indeed, of urgency. He must address me on a point of order.
  Mr. Winnick: I am on a point of order. Further to that point of order. May I ask whether it is possible for a Minister to make a statement on the position and whether the right hon. Member for Wolverhampton, South-West (Mr. Powell) is now proud of himself?
  Mr. Speaker: Order. The hon. Gentleman's second remark was entirely out of order. He must not seek to raise, under the guise of a point of order, a subject for debate. No matter how deeply he may feel, he has his various Parliamentary opportunities.

ORDERS OF THE DAY
  SUPPLY
  [19TH ALLOTTED DAY]

  RISING PRICES
  3.34 p.m.
  Mr. Geoffrey Rippon: I beg to move,
  That this House deplores the failure of Her Majesty's Government's economic policies which have led and will continue to lead to rising prices thereby endangering the standard of living.
  It is appropriate that this debate should take place so soon after, and in the context of, the new Secretary of State for Employment and Productivity's recent seaside excursions. As the Minister who, in her own words, is responsible for the co-ordination of the Government's attack on prices, we look forward to her assault upon her colleagues, and not least upon her successor as Minister of Transport. We certainly accept her assurance that the right hon. Lady is no decoy for the Prime Minister. So far as most of us are concerned, he is a dead duck anyway. The Secretary of State herself is, of course, much more formidable, a sort of modern Boadicea in her own right and when she descended on Margate with her chopper she was infinitely more dangerous.
  What we would like to hear from the right hon. Lady today is how, to adapt her Margate speech, she intends to
  "wage unceasing war on price increases"
  directly attributable to Government policies; how she intends to "expose vigorously" what is happening in Whitehall; and generally to keep what she calls "her eagle eye" on the prices of goods and services supplied by the nationalised industries. I put one simple question to her right at the outset. What price which the Government could influence have they failed to raise?
  The Government are always very willing to thump the table and to attack private industries and undertakings from which they expect cuts, but each new statement they make on prices and incomes moves in like a sort of fog bank to disguise the failure of their own economic policies—the devaluation of the £,
  1114
  rising public expenditure, rising taxation and record interest rates. Those are the root causes of rising prices that have to be met from lower net incomes.
  No amount of price-cutting by manufacturers, although many of them have done a great deal in that direction already, can offset the combination of stagnant production and rising Government demands. There are several sorts of inflation, inflation in times of scarcity where demand exceeds supply, inflation due to the rising costs of primary products in the rest of the world, inflation due to wages exceeding production, but these are not the chief anxieties today. Our main trouble under this Government is that we are suffering from the most dangerous form of inflation of all—that inflation which arises from the disruption of the normal and natural pattern of economic development and growth. It is inflation of this kind, Government-created inflation, that is today sapping the structure of industry, holding back all the time the growth of the economy, undermining confidence in savings and investment and in the future value of money.
  In this situation nothing but further harm can be done by any statutory attempt to fix wages and prices. The late Ernest Bevin would not even attempt it in wartime. It does not make sense, and it is unworkable—the root cause of our economic troubles today is unending—absolutely unending—Government interference. The further imposition of a statutory wages control, which, of course, was pledged to end this year, will only damage still further free selective bargaining and distort our economy still further. Of course, we shall be told that it is only temporary, but the one permanent characteristic of this Government is that they are always in temporary difficulties.
  The late President Kennedy put the issue clearly when he said:
  "The free market is the decentralised regulator of our economic system. The free market is not only a more efficient decision-maker than the wisest central planning body, but, even more important, the free market keeps economic power widely dispersed. It is thus a vital under-pinning of our democratic system."
  The Deputy Leader of the Labour Party understands this. As he said in Doncaster on 19th September, 1965:
  "The moment you start compelling people in the field of industrial relations, in the field of

  1115
  work, or in the field of management and unions you are going well down the road away from democracy."
  His instinct to resign in July, 1966, was probably the right one, and if he had done so then we might be in a healthier position today.
  The real horror of the new Secretary of State's first speeches is their arrogant assumption that it is the Government's business to meet every problem by exerting their own power and authority in a new way. She just announces, as though it were a solution to anything, that she will interfere more often and at an earlier stage.
  The fundamentally wrong approach of the Government and the distorted basis of its policy was clearly manifested in the misleading cases which the Secretary of State brought up at Margate. Not even A. P. Herbert's Mr. Haddock would have thought of litigating about them. Her speech suggested that she had suddenly found great areas where price reductions are possible which had hitherto gone completely unnoticed by anybody else.
  First, petrol. The oil companies have regularly reduced prices. It is the Socialist tax increases which have put up the cost of petrol by ls. 2d. a gallon. No marginal reduction in company prices will obviate the Automobile Association's estimate that the effect of the Budget is to add 8s. a week to the average motorist's costs.
  Then, cars. On the very day that she said that something ought to be done about car prices, her colleague, the Minister of Technology, was about to agree to price increases directly caused by Government policies. Not much co-ordination of the price war there!
  What about two other candidates for investigation, synthetic fibres and refrigerators? Those are in areas of intense international competition, where the manufacturers are engaged all the time in a desperate struggle to offset taxes and to keep prices down to a level where they can compete with the imported products.
  The right hon. Lady then went on to refer to the copper-mining industries, and she expressed her intention to look more closely at the prices for goods where copper is an important raw material, "and perhaps generalise the principle". Had she looked before she spoke, she
  1116
  would have found that it is standard practice, for example, in an electrical plant contract, to have a cost price adjustment clause which automatically reduces the contract price when copper prices go down. Left alone, industry is perfectly capable of striking its own bargain over commodities such as copper, where the price level notoriously fluctuates.
  Then there was a reference to the chemical industry. That is another industry which is in an area of intense competition, where the rise in prices between 1958 and 1967 was 4 per cent. in all, compared with a rise in manufacturing prices generally of 20 per cent. over this period.
  They, apparently, are the worst cases in the private sector which the Minister has so far been able to find on which she is about to wage her "phoney" war. The right hon. Lady then went on to make a great parade of referring to the Prices and Incomes Board cases where recommended prices have been increased by the same percentage as manufacturers' prices. But who in this House can possibly know better than the right hon. Lady that the Government's actions which have raised industrial costs have raised distributors' costs even more, and they will rise still further as a result of her Transport Bill. What about freight charges? Having increased them, what does she now propose to do to reduce them? Surely, of all the Members in this House, she must understand that rising transport costs, for which she is responsible, are reflected in virtually every rising price in the country.
  It is really only the latest Government confidence trick, and a pretty obvious one at that, to say that they will make someone else do something, when the main remedy lies with the Government themselves. So far, all that they have done in the matter of price increases is to appeal to people who, as it were, are suffering from a famine, to vote for nothing but toothpicks.
  What are the facts of the situation? The overall cost of living has risen by over 13 per cent. under this Government. Public expenditure has gone up by over £1,000 million in the current year, and the value of the £ has fallen by 2s. 4d. In answer, the Government just say that this is continued inflation which has to

  1117
  be met by severe fiscal and monetary measures, reduced consumption and statutory control over wages and prices. But ordinary people are no longer impressed by jargon of this sort from the Government. They are not influenced by the tone and the tons of literature which pour out from the abstract school of political economists in the Treasury and elsewhere, who have held the country in their baneful grip for a very long time.
  To the family, the issue is a simple one. Inflation to them raises just the question: will they be able to pay their grocery bills? Will they be able to pay their rent? Will they be able to keep up the cost of the mortgage?
  There are many families in which only one end of the budget ever moves. They are the people on pensions and fixed incomes who rely on them and on their savings. The Minister can say statistically, no more, that wages have marginally risen faster than prices. Even so, it is very significant that in the so-called years of Tory misrule, "the 13 wasted years", real earnings rose three times as fast as they have done under a Labour Government.
  The Secretary of State herself admits that the retail price index is suspect. Index or no index, the housewife does not need to be told that The Grocer has reported about 4,000 price increases since devaluation. It is true, of course, and everyone in this House ought to acknowledge it, that the abolition of resale price maintenance by my hon. Friend the Leader of the Opposition has done much to mitigate the situation and, by stimulating competition, helped to keep prices down.
  But nothing can offset what the Government have done. Increases in prices since October 1964 mean that it would cost the average family over £2 10s. a week more today to buy the same things that they bought in 1964, on the basis of the Ministry of Labour's Family Expenditure Survey.
  Mr. Kenneth Lomas: The hon. Member has quoted the figures from October, 1964, to March, 1968. Perhaps he would bear in mind that, according to the Ministry of Labour Gazette, the figures that we
  1118
  accept, retail prices as a whole have increased by 13·6 per cent. and food prices by 13 per cent., but weekly basic wage rates have increased by no less than 18·4 per cent., and hourly rates by 23·4 per cent. Would he not, therefore, agree that the Government have kept prices down in relation to wages?
  Mr. Rippon: I accept the figures as the hon. Gentleman has given them. I rely on them. I read the Ministry of Labour Gazette almost every night, before I go to bed. It is exactly what I said. Statistically, at the margin, wages have increased more than prices, 18 per cent. against approximately 13 per cent.—14 per cent., but that is not continuing at present.
  I made the point, also, that under a Conservative Government the real level of earnings rose three times as fast as under a Labour Government, that is to say, they rose by 3·5 per cent. per annum compared to under 1 per cent. So I do not think that the hon. Gentleman will find that my figures are in any way inaccurate.
  Grocery bills will fluctuate from season to season and from place to place. The Secretary of State and the hon. Gentleman can read an up-to-date shopping list and survey in today's Daily Sketch. There is no nonsense there about the retail price index. They even cut out luxuries such as cigarettes and even TV licences. They just take an ordinary shopping bag and an ordinary housewife and show, in spite of the improvements that have undoubtedly taken place in manufacturing, merchandising and distributing techniques, that the price for 31 items on a 42 item list have gone up in a way that means spending roughly 2s. 1d. more in every £.
  What of the future? We have been talking only about statistics that apply up to the present. The Secretary of State admits that prices must rise by 3 per cent. as a result of devaluation and another 2 per cent. for recent increases in electricity, gas and so on, together with the tax increases in the Budget. She has not yet committed herself to any figure for increased earnings. Perhaps she might do that this afternoon. But the Financial statement in connection with the Budget made it clear that personal consumption would have to fall by 1 per cent. a year in the next 18 months.

  1119
  In other words, for the first time a Government are deliberately planning for a fall in the standard of living of that order. But that is an optimistic assessment. The National Institute for Economic and Social Research expects a rise in prices of 7½ per cent. this year, and the Selective Employment Tax increase in the autumn will have a further effect in a full year.
  Every single action that the present Government have taken has been calculated to put up prices at every step, because the increased taxes they impose fall first on components, then again on manufacture, again on distribution and again on the retailer. In the end the burden falls on the consumer. Even the British Rail hotels put at the bottom of the bill the increase due to the iniquitous Selective Employment Tax.
  Then there are what might be called the hidden price increases represented by the deteriorating standards of quality and service. Housing standards are being pared to get within the new cost limits. Hotels, restaurants and shops must not only meet the Selective Employment Tax and higher insurance contributions but higher fuel costs and postal and telephone charges, apart from the effects of direct taxation. Inevitably, service suffers.
  Everybody in the House knows from going round the country that the standard and quality of life is being steadily undermined by the Government. Sometimes it is just a reduction in the amount of goods in the packet. The number of matches in a box is steadily reduced. There is a real danger that my right hon. Friend the Member for Kinross and West Perthshire (Sir Alec Douglas-Home) will not be able to do his sums any more. There will not be enough matches, which will be a national disaster because he did them so much better than the Prime Minister or the present Government.
  The Government's folly and mismanagement have had the most appalling consequences in the sphere of housing, land and mortgages. Everybody remembers the Prime Minister's bold declaration that
  "We shall cheapen the cost of housing by our interest rate policy."
  Ever since then housing interest rates and the cost of housing have climbed steadily
  1120
  and steeply. No matter how the Minister of Housing and Local Government may try to fool the public by huffing and puffing about interfering with the statutory rights of local authorities and making them dip into their reserves—assuming that their Socialist predecessors left them with any—the effects of rising costs in housing are utterly remorseless.
  The Report of the Prices and Incomes Board on Increases in Rents of Local Authority Housing said that a survey of local authorities showed that only 4 per cent. reported that the reduction or abolition of rate fund contributions to the housing revenue account was the main cause of rent increases and only 4 per cent. suggested that the increases might be due to a change in or the introduction of a rent rebate scheme. It is only a policy of fair rents for all, which cannot be determined by an arbitrary standard, which is protecting the poorest families at present.
  The really significant factors in rising rents to which the Secretary of State must address herself are the rising costs of house construction and rising interest rates. The average all-in building cost of a local authority house in England and Wales in the year ended 30th September, 1967, was £4,718, an increase of nearly 28 per cent. over 1964. Construction costs, like so many other costs, have been forced up by rising taxation, the Selective Employment Tax, which turns up every time, and the rising cost of materials. Repairs and maintenance costs are also up. So, too, is the price of land—up by 13½ per cent. since 1964 even in the local authority sector, in spite of inadequate compensation on compulsory purchase.
  The effect of high interest rates has been even more devastating. They are now so high that the Prices and Incomes Board reported that they amount to about 50 per cent. of the total of local authority housing costs. There is another factor in this, showing how people are misled by the Government. Many local authorities were induced by the Government's promise of lower long-term interest rates to borrow short-term. They are now absolutely in the knacker's yard, because they are forced to finance their short-term borrowing as it matures at the current high rates of interest. Against this

  1121
  background, the Government's measures to give local authorities marginally higher subsidies or tax-subsidised rates of interest which are not available in the public sector are just a spit into the wind.
  In the private sector the position is much more serious. The average cost of a new house built in the private sector in Great Britain in the last quarter of 1967 was £4,350, and land prices are higher here, partly because of the absence of the element of confiscation on acquisition and perhaps even more because of the damaging effects of the Land Commission Act. It is now revealed that the Land Commission is spending £12 for every £1 it collects. As that Right-wing newspaper, the Sunday Mirror, said on 18th February:
  "The creation of this expensive monument to bureaucracy is one of the few election promises the Labour Party has so far been able to keep. It is a pity."
  The figures I have been quoting are of steep increases in prices before devaluation, before the last swingeing dose of taxation, before the full effect of the Land Commission and the betterment levy, and before the further increase in interest rates on private borrowing and on mortgages. In an article on 23rd December, the Financial Times estimated that as a result of the tremendous financial pressures exerted by the Government on the economy the basic cost of building a three-bedroom house might well show a national average rise of £350 during 1968, of which £200 would be for increased land cost and £60 for increased finance charges and overheads. It is perhaps significant that only £22 would be due to increased cost of labour. Those figures take no account of increased prices after the Budget or the effect of the Transport Bill on haulage charges for building materials.
  Therefore, we face a situation in which a young married couple who seek a mortgage for a new house, in or out of the mortgage option scheme, are very much worse off than they would have been in 1964, and their position is deteriorating every month that passes. For example, in 1964 mortgage repayments on a £3,000 house would have taken a quarter of average industrial earnings. Today they would take more than a third, and—and here is where there the deteriorating standard comes in—at that price today it would be a smaller and inferior house.
  1122
  What of those who have already committed themselves to buying their own home on mortgages? They have been cruelly deceived by the Government. They were led to believe that they might have mortgage interest rates as low as 3 per cent. [An HON. MEMBER: "The right hon. Member for Belper (Mr. George Brown) promised it."] What have they had instead? First, a rise from 6 per cent. to 6¾ per cent., then to 7⅛ per cent., and then to the highest level ever of 7⅝ per cent. This is not the fault of the building societies. The Secretary of State cannot suggest that. Mortgage rates are at a record level because Bank Rate is at its highest level for the longest time for more than a century. Allowing for tax relief, repayments on a £3,000 mortgage repayable over 25 years has gone up by about 10s. a week, and for the ordinary householder that is on top of increased taxes, higher food prices, dearer gas, electricity, coal and petrol—and, yesterday, £1 a ton on coke.
  No wonder building society investors have been saving less and less. In March, the net inflow of savings dropped to a lowest-ever £20 million. In face of galloping inflation, people are not only unable to save more but they are spending what they have, in the belief, which the Government do nothing to dispel, that prices will go on rising faster and faster.
  Everyone agrees that prices are too high and rising. Every housewife and every worker will agree with the Secretary of State about that. They also think that they have the right to complain. But what I cannot understand is how the Government or any member of the Government can have the effrontery to say that they intend to wage a war on prices. To the people, the Government are the enemy. It is the Government upon whom the Secretary of States needs to wage war.
  What does the Secretary of State intend to do about the Prime Minister? He ought to be called upon to explain the case for his Ministerial payroll Vote, the cost of which has gone up by another £22,000 since 4th April to a record £613,000. We have now the most numerous and costly set of Ministers in the world. I will not say necessarily that their salaries give rise to the highest cost in the world, but certainly they are the most over-priced.

  1123
  What about the new Minister of Power, who now sits on his golden bed of nationalised nails? Can be explain how we are to cut prices when domestic electricity is up by 13 per cent., gas is up by 13 per cent. and coke went up by £1 per ton only yesterday. How can the Minister of Housing and Local Government cut down the cost of rents and mortgages, and can the Postmaster-General tell us how much faster a 5d. letter will go than a 4d. one, and how much productivity will be improved by higher telephone charges and yellow telephone kiosks?
  Nor should we leave out of the dock the Home Secretary, who has authorised about 40 rises in licences and other fees from 1st April. What sort of war is he waging on prices when he raises the cost of a public music and dancing licence by 1,900 per cent. from 5s. to £5? How can the President of the Board of Trade justify a 1,100 per cent. increase in the cost of registering companies' annual balance sheets, even if it is admitted that the unpopularity of the Government justifies raising the licence for a gunpowder store from 5s. to £2 5s.? How does the Secretary of State for Economic Affairs justify either the D.E.A. or himself?
  Finally, there is the Chancellor of the Exchequer. What contribution is he making to the war on prices? There is no magic in his Budget. With the economy virtually stagnant and Government expenditure up by over £1,000 million, of course taxation goes up by the same amount. When the other Mr. Wilson robbed a train of £1 million, he and his confederates went to prison. When they escaped, no one said that it was a bold, courageous act by people who left themselves with no alternative.
  Nothing has contributed more to rising prices in the last three and a half years than the actions of this Government who, having promised that there would be no general increase in taxation during the lifetime of the present Parliament, have so far raised it by over £2,200 million a year. The main reason is that, out of every extra £ of increased production, 15s. has gone on spending in the public sector.
  I want, finally, to refer to an Answer that my hon. Friend the Member for
  1124
  Harrow, Central (Mr. Grant) elicited from the Chief Secretary of the Treasury. It was the devastating admission that, between 1964 and 1967, while the gross national product rose by 5½ per cent. and consumer expenditure rose by the same amount, public authorities' current expenditure on goods and services rose by 12 per cent. In the same period, which is even more startling, public investment rose by 26 per cent. while private sector investment actually fell by 1 per cent.
  In a sentence, that is why the country is in dead trouble today. We are suffering from a Government who demand sacrifices from every section of the community, except themselves. We are in a situation where the country can depend on only one fact. As long as this Government are in office, we will go on paying and they will go on spending.
  4.4 p.m.
  The First Secretary of State and Secretary of State for Employment and Productivity (Mrs. Barbara Castle): The Motion on the Order Paper today is couched in economic terms. We were promised an attack upon the Government's economic policies. All that we have had from the right hon. and learned Member for Hexham (Mr. Rippon) is the rather sweeping statement that we have interfered with the normal and natural pattern of growth, which, presumably, took place under the Conservatives.
  To hear him and others of his right hon. and hon. Friends, one would assume that their economic policy had ended in a triumphant success instead of with the biggest overseas deficit in our history. Listening to them, one would wonder why the country turned its back on their Eldorado in 1964. One would wonder why the slogan, "You never had it so good", did not work that time. The answer is that the country realised that right hon. and hon. Gentlemen opposite had produced no solution to the country's economic problems and that it was time that someone else found an answer instead.
  It is not often that we have a very profound economic analysis from right hon. and hon. Gentlemen opposite. When we do, it is usually an inaccurate one. In reading the debate which took place on 21st March on the Budget Statement, I was very interested to read the remarks

  1125
  of the right hon. Member for Mitcham (Mr. R. Carr), who was supposed to be elaborating the Conservative Party's alternative to the prices and incomes policy. He summed up the whole Conservative successful alternative in the following words:
  "…unit labour costs in manufacturing industry in Britain rose by 2 per cent. only between 1958 and 1964 when we were in power".—[OFFICIAL REPORT, 21st March, 1968; Vol. 761, c. 635.]
  That is a complete distortion of the facts. The right hon. Gentleman made a big impact on the House with that statement and, if it were true, it would have been a remarkable achievement. If it had been true, right hon. and hon. Gentlemen opposite would never have left office. However, it is not true. Under the Conservatives, unit labour costs in that period rose by five times as much as the right hon. Gentleman said. In fact, they rose by 10 per cent. If he had quoted accurately from the O.E.C.D. Observer, as he was claiming, he would have made that clear to the House.
  I will be more honest with the House than right hon. and hon. Gentlemen opposite have ever been. I admit that labour costs per unit have risen during the last three years under the Labour Government. But what matters is not the average figure of the increase in labour unit costs. What matters is how those unit costs have fluctuated from year to year, from what causes and with what consequences.
  If we study the years 1958 to 1964 and see what happened to wages, prices, production and, therefore, unit costs, as well as employment and the balance of payments during that period, we find that Conservative Governments never solved the problem of maintaining full employment, keeping unit costs stable and securing a healthy balance of payments.
  The spending spree and the "Never had it so good" slogan on which they won the 1959 Election led, in the following year, to a balance of payments deficit of £450 million and rising unit labour cost which, in 1961, rose not by even an average of 2 per cent., but by 6 per cent.
  Sir Cyril Osborne: Would the hon. Lady admit that last year's deficit on balance was £540 million?
  Mrs. Castle: I have told the hon. Gentleman that I am admitting all the true comparisons. Perhaps he will allow me to develop my argument.
  Faced with this, the Tories, in that year, took the economic measures of which we all know—including the pay pause—and painfully brought down unit labour costs by holding down wages; but when they relaxed again in preparation for the General Election in 1964 the race towards catastrophe in the balance of payments became a galloping one and the deficit rose to the astronomical figure of £774 million.
  One of the problems of the Labour Government, thanks to hon. Gentlemen opposite, has been that our starting point was that deficit. We knew that the only hope of increasing the standard of living of our own people while bringing this deficit down substantially was to find an alternative to the traditional deflationary policies; and that was why we launched the prices and incomes policy. Hon. Gentlemen opposite are now indulging in a great deal of amusement at the expense of that policy. I would like to know exactly where they stand on it, because they have contradicted themselves more than once. To say that the trouble lies in Government interference with what happens to wages, after what they did during their period of office, is really a most belated reply.
  Mr. Rippon: Does the right hon. Lady deny what I said, that under the Conservative Government real earnings rose by over 3 per cent. per annum while under the Labour Government they have risen by well under 1 per cent.?
  Mrs. Castle: No, I do not accept that for a moment and I will prove it to the House; because otherwise we cannot have a meaningful discussion about the cost of living.
  Hon. Gentlemen opposite were not successful in holding it down. The right hon. and learned Gentleman the Member for Hexham had his anxieties during his period of office about rising housing and construction costs, as reference to the records will truly show. We in this House can bandy talk across the Chamber, but we shall not begin to face up to a solution of the cost of living problem unless we can explain the facts objectively

  1127
  and analytically. One of the inescapable truths about our prices and incomes policy in the first 18 months was that it was far more successful on the prices side than it was on the wages side. [An HON. MEMBER: "Why?"] The hon. Gentleman is at least not denying the fact. That is point No. 1.
  There was a rise in wages. In the 15 months to July, 1966 the hourly wage rates rose at an annual rate of 7½ per cent. Wage and salary earnings rose by 6¾ per cent. and the retail price index at an annual rate of 3¼ per cent., a massive advance in real wages at a time when we were still struggling, and struggling successfully, to bring down that astronomical inherited deficit. The prices and incomes policy did succeed and it was because of that success, with wages galloping ahead of prices in a situation where this country was in chronic overseas debt, that we were compelled to introduce the incomes standstill and follow it with the period of severe restraint.
  Since then the gap between wages and prices has narrowed, but wages are still well ahead. If we take the whole period from July, 1966 to February, 1968, hourly wage rates have been rising at an annual rate of 5½ per cent. earnings at 5¼ per cent. and prices by 3 per cent. So if the hon. Gentleman wants to compare prices and wages under Labour and Conservative policies the picture is very different from the way he has painted it, because between April, 1965 and January, 1968 the retail price index rose by 8·6 per cent. while hourly wage rates rose by 18·6 per cent.
  During the corresponding period April, 1961 to January, 1964 prices rose by 8·8 per cent—not 8·6 per cent.—and hourly wage rates by 12·9 per cent.
  Mr. Cranley Onslow: Can the right hon. Lady tell us why, if what she is saying is remotely true, the £ in our pocket is not worth more?
  Mrs. Castle: The pounds in our pocket were devalued during every year of the Conservative Government, and hon. Gentlemen know that perfectly well. The reason for the success in holding prices down was the effectiveness of the prices side of the prices and incomes policy. Let us take a more specific field, the trend in food prices when the Conservatives were
  1128
  in office, compared with now; and I am comparing like with like, the last quarter in one year with the last quarter of the previous year. The increases in food prices were: between 1961 and 1962, 2·6 per cent.; between 1962 and 1963, 3 per cent.; and between 1963 and 1964, 4·6 per cent.
  In short, food prices were not only rising each year under the Conservatives, but the increase was accelerated. [HON. MEMBERS: "Deal with today."] It is relevant, because I will now give hon. Gentlemen the comparable figures since Labour came to power. Between 1964 and 1965, food prices rose by 2·9 per cent.; between 1965 and 1966, they rose by 3·6 per cent.; and between 1966 and 1967, they rose by only 1·8 per cent. Of course, hon. Gentlemen opposite do not want to believe it, for it would invalidate their whole argument. I repeat that food prices in the last quarter of 1967 were 1·8 per cent. higher than in the last quarter of 1966, a smaller amount than in any of the preceding five years. These are the facts.
  We have had a fusillade of figures from the right hon. and learned Gentleman of what he claimed were the facts and, therefore, hon. Gentlemen opposite must take the comparable and corresponding figures from this side. We know, of course, that the real answer to this whole problem, the real way in which we can begin to get stability in real wages and in the cost of living is by solving, if and when we are able to do so, the basic problem of expanding our production on the foundations of stable and competitive unit labour costs. That is really the test and it is as a result of measures we have had to take under the prices and incomes policy that our unit labour costs have now fallen and are competitive, to a degree not reached under the Conservatives, with those of countries with whom our exports are competing in world markets.
  The improvements which we are bringing about have come too late to enable us to avoid devaluation and its inevitable cost increases. If we devalue, to make ourselves more competitive internationally, the way we do it means that the prices of our exports fall, while the level of our import prices rises.—[Interruption.]
  Mr. Deputy Speaker (Sir Eric Fletcher): I hope that the House will enable the Minister to be heard.
  Mr. Rippon: Does the right hon. Lady simply agree that the £ in her pocket is now worth a great deal less than it was before devaluation?
  Mrs. Castle: I repeat, the £ in our pockets was continually decreased in value under the Conservative Government. I repeat that at the end of their period of office, the Conservatives left the country with economic problems facing it. They left the country with the after-math of a spending spree which the country had not earned. The task that this Government have had to undertake has been by the control of the relationship between prices and production, to enable us to reach a stable basis upon which we can advance.
  It is no part of my case, nor has it been any part of the case that I have made in the country, or am making with the trade unions, to deny that devaluation inevitably brings its difficulties. It brings the difficulties of an increase in the cost of our imported raw materials, and an increase therefore in the prices we pay. I accept—and hon. Gentlemen opposite will find it in the speeches which they have derided—that in the coming year we face increases that we have not had to face up to now.
  In the coming year we face a 3 per cent. increase in prices due to devaluation, a 2 per cent. increase due to the rise in nationalised industry prices, and in the Budget tax. This is inevitably our starting point. [Laughter.] The only way out of this, and hon. Gentlemen may laugh, is to concentrate on bringing home to the people that we can only afford an expansion of incomes if that is earned by increased production and productivity.
  Sir Gerald Nabarro: What the right hon. Lady says is unexceptional. Would she explain to the House why, for example, in the coal mining industry, which has increased its productivity during the last 12 months by more than any other industry, the rewards to the consuming public is that coke prices are to be increased by a record amount of 20s. per ton?
  Mrs. Castle: The hon. Gentleman knows that the increase was examined by the Prices and Incomes Board. Nationalised industry price increases are subject to scrutiny as closely as any other. The
  1130
  hon. Gentleman is merely putting in another form the problem we face in tackling our basic costs. Hon. Gentlemen opposite did not solve the problem, but they go on pretending to the country that they did. The facts and the evidence are irrefutable.
  Through the medium of the prices and incomes policy we are engaged in drumming home to the people that if we want to keep prices down, and this is the starting point, then we have to match all increases in income by increased productivity. We have to hammer this lesson home to our people and, equally, we have to satisfy them that someone else is not getting away with increases in incomes that have not been earned, that the manufacturer is not getting away with unnecessary price increases, nor the retailer getting away with the bonus, the windfall, of an increased margin because the fruits of his percentage margin rise when devaluation pushes up manufacturers' recommended prices.
  There is absolutely no hope of convincing the working people of the essential fairness of the incomes policy unless we have a rigorous prices policy as well. That is what I am doing, and that is what hon. Gentlemen opposite have been gibing at. This is what we have successfully prosecuted, as I showed in the case of food prices, through the procedure for the close watch, the early warning procedure and everything else.
  The only way in which we can get away with this incomes and productivity policy is to make it clear that we do not intend to tolerate unnecessary price increases. The right hon. and learned Member for Hexham misquoted me, with typical Conservative inaccuracy. I did not say that I would make war on price increases. I say that that is impossible. What I shall make war on is the unnecessary price increase. This is the message that I gave to the country at the week-end, and which I repeat to this House. This is why the Government, in our new Prices and Incomes Bill, will be taking the extended power over the prices front.
  This is why we shall extend the prices stand-still, where it is justified, to 12 months, just as we are to do with wage increases. This is why we are taking power in the Bill to enforce price reductions where, for example, prices of imported raw materials have fallen, where

  1131
  industries are making great technical advances, due in part to the increasing scale of production, or where profits of certain firms are rising. Hon. Gentlemen opposite gibe at me for that.
  An industrialist said that I was a silly woman, making a silly political speech. The newspapers this morning are full of the very developments for which I was asking, full of the examples of what I was claiming would be possible. Today, more than 40 manufacturers of cosmetics and toiletries have decided to abandon retail price maintenance. [Interruption.] As a result, everyone expects that the prices of lipstick and face cream and hon. Gentlemen's shaving lotion will come down. All this is despite the increase in Purchase Tax in the Budget. Why will they come down in price? The Times this morning said that beauty products carry high profit margins and there was plenty of room for price cuts by the larger groups.
  Are hon. Gentlemen opposite sneering now? This is exactly one of the criteria which we spelled out in the White Paper, on the basis of which we say price reductions should take place. There is a massive break-through on the detergent front as well, with the ending of the five-year agreement struck by Unilever and Procter and Gamble in 1963. The two firms are now free to introduce cut price offers. On what they have called their heavy duty laundry category detergents, Unilever has blazed the trail by knocking 8d. or 9d. off the prices of some of the large packets of its goods. For five years these companies pledged themselves not to use price competition as a form of promotion of their goods, and now they have agreed that they can.
  Will anybody tell me that this would have happened had it not been for the work of the Monopolies Commission and the Prices and Incomes Board? And this is on top of the agreement to keep certain brands at lower prices, following the Monopolies Commission Report and the pressure brought to bear on them by my right hon. Friend the President of the Board of Trade. The ball has started rolling now; let us see if we can push it into other courts.
  Take the cases in which the prices of imported raw materials have fallen despite devaluation. We all know that the
  1132
  price of copper was £815 a ton in February: this week it was £474 a ton. British Insulated Callender Cables last week cut its prices for general wire and cables by an average of 12 per cent. This is what it has to do with prices and incomes. This shows what other firms can do. As wire and cables are used in many other firms and industries, the decrease in prices should be reflected widely and it will be the object of the Prices and Incomes Board and of my Department to see that it is. I welcome prompt action such as that taken by B.I.C. Cables and I intend to ensure that other manufacturers pass on in lower prices any decreases in the prices of raw materials, and to make sure that these decreases are passed right down to the consumer.
  Petrol has been mentioned, also. A review is going on at this moment of the surcharge made by oil companies as a result of the Middle East crisis last summer. This surcharge covers not only petrol, but all the main products. While I recognise that basic petrol prices have been falling over the years, leaving aside the taxation, of which we are all well aware, I still hope that the outcome of the review will be a reduction in the present level of the surcharge.
  One area which needs a great deal more looking at is that of retail markets. The Prices and Incomes Board has come to the conclusion that there is no reason for an increase in distributors' cash margins when manufacturers increase their recommended prices as a result of devaluation. Departments have already started to take this up with the manufacturers of price-recommended goods and with the main organisations representing the distributors. There are a number of areas in which, on the face of it, retail margins already appear to be very large and where there might well be a case for protection of the interest of consumers, even after allowing for the effects of devaluation. We are actively considering a number of references to the Prices and Incomes Board and I hope to be able to announce the first of these in the very near future.
  Reference has been made to the retail price index. I have not suggested for a moment that the index is infallible. We all know that the index is compiled with the help of a very expert advisory committee, including the trade unions. I have

  1133
  said that I want to satisfy myself that it bears an exact relation to the facts. I think that people believe that larger price increases than the index shows have taken place because the incidence of individual prices may hit hard in a particular case and give an impression of a general inflation of prices which in fact has not taken place.
  Outstandingly, this happened in the housing field and, of the increase in the retail price index of 3·6 points since the middle of 1966 increasing housing cost has been responsible for not less than 1·1 points. There is no doubt that housing costs are hitting people very heavily and it is for this reason that the Government referred certain rent increases to the Prices and Incomes Board, which has now issued its invaluable Report.
  Sir Harmar Nicholls: It has not solved anything.
  Mrs. Castle: The hon. Gentleman says that it has not solved anything, but in the lives of individuals it has.
  Sir Harmar Nicholls: Will the right hon. Lady give way?
  Mrs. Castle: No, I will not; I have give way a lot already.
  The Report found that rent increases should be so phased that they averaged not more than 7s. 6d. a week in any year except in the most exceptional circumstances, and my right hon. Friend the Minister of Housing has already told Parliament that the Government accept the Report. But we have gone further than that and have fixed an absolute ceiling——
  Sir Harmar Nicholls: Will the right hon. Lady give way?
  Mrs. Castle: I am very sorry, but I have given way a great deal and I do not want to take too much time. No doubt the hon. Gentleman can catch the Speaker's eye. If not, it is his misfortune, not the House's.
  The Government have gone further than that by fixing an absolute ceiling on any rent increase of 10s., and we shall be legislating for that in the Prices and Incomes Bill. Hon. Gentlemen have said that this will have no effect, but of the 22 authorities——
  Mrs. Anne Kerr Mrs. Anne Kerr (Rochester and Chatham) rose——
  Mrs. Castle: I will give way because I believe in fair play and I have not yet given way to anyone from my own side.
  Mrs. Anne Kerr: Has my right hon. Friend the remotest idea when we shall have legislation on council house rents, about which I am very much concerned, as I feel sure are many other hon. Members on this side?
  Mrs. Castle: The legislation for the powers I have mentioned will be contained in the Prices and Incomes Bill, which, I hope, will have my hon. Friend's support.
  Of the 22 local authorities whose rent increase the Board examined, 17 had increases in train higher than that figure of 7s. 6d.—some dramatically higher. I was delighted to see in the papers the other day that the rent increase of 15s. a week proposed for 3,000 Walsall tenants—and this is one of the authorities whose increases were examined by the Board—may be halved as a result of the recommendations of the Prices and Incomes Board and the Government's announcement of its enforcement plans.
  Let us take the situation in the Greater London area. I was rather surprised that the right hon. Gentleman did not refer to that, because the G.L.C.'s proposals were mentioned. The main features of these were that average rents would have increased by about 70 per cent. over the three years up to 1970–71, with average increases at each stage of between 11s. 6d. and 9s. 3d. Individual rents would have gone up by more or less than this, with maximum increases in some cases of over £1 a week. The reason for this, of course, is partly the rising housing costs, but there is also the abolition of the rate fund contribution of £4·2 million which the G.L.C. would otherwise have made in the period up to 1970–71. One of the reasons is the cancellation of that contribution, starting with the cancellation of £1·2 million this year.
  In the case of the G.L.C., the Board specifically rejected the Council's case for basing its rents on fair rents in the private sector, and made it clear that it thought that, in the present situation of prices and incomes policy, rate contributions should continue.
  On both grounds, therefore, the Board's Report comes down firmly against the G.L.C.'s proposals, and my

  1135
  right hon. Friend the Minister of Housing and Local Government has asked the Council to review the proposed increases. [AN HON. MEMBER: "Who will pay? The ratepayer?"] The House knows that this Government have made a bigger contribution to reducing the rate burden than the Conservatives even talked about.
  This is the basis on which we shall prosecute the prices and incomes policy. I repeat that the Conservatives did not avert a rising cost of living when they were in power. They did not avert economic crisis after economic crisis, culminating in the severest crisis of 1964. We on this side of the House are tackling the cause of high prices at its roots, because we are tackling the problem of what is needed to stimulate and develop productivity.
  This is the purpose and inspiration of our incomes policy. There is no ground on which we can ask the workers to accept that policy except by the utmost vigilance in the prices field—on rents, retail margins, raw materials and profit margins, all these things on which the surveillance of the Prices and Incomes Board has shown that action can be taken. The Government will take the necessary powers to ensure that action is carried through.
  4.42 p.m.
  Sir Cyril Osborne: With all the Christian charity in the world, I am compelled to say that the Minister's speech was a great disappointment, not only to those of us on this side of the House but also to her own supporters. She did not even begin to touch the fringe of the problem, and the look on the faces of her supporters was the best index of the disappointment which they felt at her failure.
  May I say this in defence of the right hon. Lady. Before she spoke, I felt very sorry for her, because I believed that the Prime Minister had given her an impossible job to do. In my opinion, no one can prevent prices from rising. The right hon. Lady must fail, as those who held the office before her failed, for the simple reason that the greatest ingredient in prices is wages, and if wages rise, other things being equal, prices must rise. Since the trade unions will not allow the right hon. Lady to keep down wages, she can-
  1136
  not and nor can anyone else, keep down prices.
  Mrs. Anne Kerr: What about dividends?
  Sir C. Osborne: If the hon. Lady will be kind enough to listen, I will explain, even to her dull mind, about dividends.
  I propose to repeat what the Financial Secretary to the Treasury said the other night—and if the hon. Lady will not believe him, she will have it from me; she has asked for it. No one in a free society, whatever party may be in power, can prevent prices from rising. Prices rise or fall according to the normal operation of the law of supply and demand. It is a quite simple concept that if the supply of goods and services is greater than the immediate demand, prices will fall. If the supply of goods and services is smaller than the immediate demand, prices will rise. Our problem is to increase the supply of goods and services until it exceeds the immediate demand. It would be possible for the right hon. Lady to do the job which the Prime Minister has set her only if she had dictatorial powers and turned the country into a concentration camp; and nobody really wants that.
  I remind hon. Members of the basic problems underlying our difficulties. The Government admit that in 1967 we spent £540 million more than we earned. I am not comparing like with like; that gets us nowhere. I am merely stating the facts. Therefore, we lived to that extent—£540 million—above our income. In 1968, our problem is to produce £540 million more in wealth than we did last year without charging ourselves any more for producing it—that is, by keeping incomes stable and not charging ourselves more for producing that extra wealth—because that is the only way in which we shall get ourselves out of debt.
  But, in addition to the extra £540 million which we must earn, we must be prepared to repay the debts which the Government have incurred since 1965 and which must be repaid—[Interruption.] I should be grateful if I could have the right hon. Lady's attention. It would be courteous to the House—[HON. MEMBERS: "Get on with it."] I will get on with it in my own time. Before some hon. Members became Members,

  1137
  certain courtesies were observed. They are not observed now.
  Mr. Albert Murray: It is a pity that the hon. Gentleman did not observe them when my right hon. Friend was speaking.
  Sir C. Osborne: I did. I listened attentively and carefully to what the right hon. Lady said. I am trying to reply to it, and I should be obliged if she would listen.
  In addition to the £540 million which we overspent last year, we must repay during the next three years nearly another £1,000 million which we borrowed. According to Government figures, since 1965 we borrowed in loans which have not yet been repaid £798 million from the foreign bankers. But—and this is one of the tragedies—devaluation has increased the cost of those loans, so that we must repay £929 million on the £798 million which we borrowed. Devaluation on this one item alone will cost our country no less than £131 million. During the next three years, we must earn about £240 million a year over and above what we are spending in addition to the £540 million which we overspent last year in order to honour our debts to the men overseas who came to our aid.
  This is the size of the problem which faces us. It is nothing to do with party politics. This is the economic problem facing any party in power. This year, we must repay £43 million to the Swiss Bank consortium. Next year, we must repay £104 million to the B.I.S. in 1970, we must repay £583 million to the I.M.F., 20 per cent. more than we borrowed from it because, unhappily, devaluation was forced on us. One of the mockeries of the present age is that it is said that devaluation is an opportunity. It was a terrible tragedy, humiliation and defeat for us. We are now having to pay the price.
  We must earn in the coming years about £1,000 million a year more than we are earning now, and not spend a penny more in earning it or we shall default on our loans. I cannot think that anyone would want to default.
  Mrs. Anne Kerr: The point I was trying to make was that the hon. Gentleman was referring only to wages and prices, not to dividends. He has not, I think, answered my point on that.
  Sir C. Osborne: If the hon. Lady will be patient I promise here I will deal with the problem even to her satisfaction. I will give her the facts which the Financial Secretary gave in the House when he was summing up in the debate on the Finance Bill, and they, I should think, would be accepted by the hon. Lady as accurate, as they come from her own Government.
  The problem before the right hon. Lady is this. She somehow has got to get the nation, in its working capacity, to produce this £1,000 million per year more, without spending any more at all; or to accept a reduction in our standard of living by £1,000 million a year. That is the problem. We either earn that £1,000 million extra or we cut our standard of living by that £1,000 million. For my part, I want to see our country increase its national income so that we do not have to cut our standard of living. I am certain that hon. Members on both sides would like to see that solution.
  Where the Government have failed, where the right hon. Lady has failed, where she failed at the seaside only two days ago, is to convince trade unionists of the brutal stark facts which the Treasury, at least, knows to be true, and till the Government can get their own supporters to accept these facts the problem will never be solved. The trade unions are opposing the Government's very mild—I believe it to be very mild—prices and incomes policy.
  I supported a prices and incomes policy when Sir Stafford Cripps advocated it 20 years ago. But for his death I think that the nation would have had a prices and incomes policy and we would all have learned a great deal from it. I supported it when my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) proposed it, and I think that had he not been sacked by the then Prime Minister, and he had succeeded, we would not be in the same difficulties as those in which we are today.
  I believe that, whoever is in power, some form of incomes and prices policy is inevitable. I think that a sterner one than the Government are proposing will be inevitable. The right hon. Lady's problem is to get the trade unions to believe this simple truth and the stumbling

  1139
  block of her friends in the trade union world is that they believe that somehow they have a divine right to an increase in wages every year, whether they earn those increases or not. If our national production does not warrant paying those extra wages they believe that they have a divine right to get, then prices rise, and it is only in so far as the right hon. Lady can convince her trade union allies of these basic facts that she will succeed, and if she fails her policy will fail as well.
  I deal with the question by the hon. Lady the Member for Rochester and Chatham (Mrs. Anne Kerr). She asked: why cannot increased wages be paid out of profits, out of dividends, and not cause a cost of living increase? A fair question. The Financial Secretary to the Treasury answered that the other night. This is what he said:
  "The wages and salaries bill last year was £21,342 million. The gross ordinary dividends"—
  for 1967—
  "were £1,610 million…"—[OFFICIAL REPORT, 24th April, 1968; Vol. 763, c. 398.]
  First of all, 42½ per cent. has to be paid in Corporation and Profits Tax and—at a very rough estimate—I would say 30 per cent. then has to be paid in Income Tax and Surtax, but before we reach that, out of that £1,610 million there has to be paid, from those dividends, money for pension funds, insurance funds, unit trust funds, which go back to the workers, and other funds, and the net amount which goes to the ordinary shareholder in net dividends must be about one-quarter, that is, about £400 million at the outside. Now, £400 million net dividend income per year in ordinary dividend is a fleabite as compared with £21,342 million paid in wages and salaries.
  Indeed, if the whole were confiscated and given out in wages it would make an infinitesimal difference to the wage earners. Am I answering the question which the hon. Lady put? Can the increase in wages be paid out of dividends? The answer is, no. I hope that if she will not accept what I say she will read what the Financial Secretary to the Treasury had to say.
  Mrs. Anne Kerr: I did not suggest they should be paid out in that way. I simply drew the hon. Member's attention to the
  1140
  fact that he had omitted to mention dividends whereas he had mentioned prices and wages.
  Sir C. Osborne: I thought the hon. Lady was complaining that the increase in wages or the increase in the cost of living really could be paid out of ordinary dividends which the "greedy" shareholders themselves get. At least, I hope I have proved that that is not possible.
  There is another figure of which I would remind the House and the right hon. Lady. I accept the difficulties she has to face, and this is where I think the poor girl must fail, and I do not think she can succeed. Over the last five years, the Financial Secretary said, the increase in wages and salaries amounted to £5,331 million. The increase in wages in the last five years is three times the total gross amount paid in ordinary dividends. If the net amount paid in ordinary dividends were taken—which is the true basis of comparison—it must be 20 times as much. So that the hon. Lady will see that what I call the redistribution of the national income, the soaking of the rich, would not solve this very difficult problem which the right hon. Lady has to face. Her problem is to convince her allies in the trade union movement of the real problem facing her Government and the country.
  During her speech the right hon. Lady said that wages have gone up much more than prices, and I asked her why, and she did not answer. I will tell her why. Because her predecessor, the former Foreign Secretary, the right hon. Member for Belper (Mr. George Brown), from that Box, claimed that he got the employer's support for his national plan, and Frank Cousins, standing just below the Gangway, said he would never give it his support. Prices were kept down because the Government had the support, largely, of the employers, and wages went up because the Government failed to get the support of their own allies in the trade union movement. This is the tragedy which faces the right hon. Lady. I do not know how, with all the best will in the world, she will overcome it. I will give three examples where I think the Government are failing the nation and their supporters. First, when the Chancellor of the Exchequer met the Trades

  1141
  Union Congress about six weeks ago he was retorted in The Times as saying to the trade union leaders that unless they accepted the prices and incomes policy there would be 1,500,000 unemployed in the country. It was wise to warn them of the dangers facing the nation. I put a Question to him about this, but he denies saying it. He was frightened of the stark facts which he had given being reported in the House.
  Secondly, in July, 1966, the Prime Minister met the Trades Union Congress and he told the trade union leaders more brutally the truth. He said that there could be 2 million unemployed if the prices and incomes policy were not accepted. I asked the Prime Minister about this last week and he wriggled out of it by saying that he did not mean in this country alone; it would only be so if there was a catastrophic fall in business throughout the whole world. He was blaming it on the Americans, the Japanese and the Germans.
  Thirdly, the Government and their allies are guilty of a lack of moral courage. George Woodcock, the leader of the trade union movement, said two months ago that when it came to the crunch the Government would give way. I accuse the Government of not compelling their nominal supporters to accept the truth of what the Treasury keeps telling the House.
  The question is often asked: what would you Tories do; what is your answer to the problem? I cannot speak for my Front Bench. I can only speak as a permanent back bencher. There is only one remedy to our very serious problem. Everybody in industry—management, owner and worker alike—must work harder, longer and more efficiently for no more wages, salaries, profits, rents or dividends. That is the only solution to our problem.
  We have to produce more and flood the market with extra goods. My word, that would bring prices down quickly. Prices will not be brought down by legislation. It is by flooding the market with goods of high quality and at low prices that we will get prices down, and that will only come about if we work longer, harder and more efficiently.
  I appreciate the enormous difficulty of the right hon. lady's task. The Prime
  1142
  Minister should not have put it on the shoulders of a lady. The two men who held office before failed and the Prime Minister himself has ratted on it. It has defeated the right hon. Lady's three predecessors. Why she should carry the blame for others, I do not know. This is sex warfare carried to the nth degree. She knows it. Her experience of two days with the trade unions must show her that she cannot succeed.
  Our only salvation lies in a greater willingness by everybody to work. There are far too many, both in the West End and in the East End, who are not ashamed of eating the bread of idleness. In every class of society far too many people are prepared to live on other people's earnings and to shuffle and sponge their way through life. This is what is facing us. It is a horrible problem and I do not think that the right hon. Lady can cure it.
  The present welfare services need drastic overhauling. There are far too many people sponging on the welfare services. The abuses will have to be cut out. It is utter madness to give in welfare payments nearly as much for a person being idle as he can earn by working for a full week. Why should men work when, by going on the welfare services, they can get as much by being idle? This is something which both parties ought to investigate. Those who can but will not work one day soon should be allowed to starve.
  The incompetent employers—my friends, though I hope not many of my personal friends—should be made to fear the bankruptcy court, just as the idle worker should be made to fear the sack. This is the only way to get the spur of efficiency into our economy. We shall not get the required industrial efficiency with an unreformed Welfare State. The whole system requires overhauling.
  The awful part is that while the trade union movement honestly believes that it has a right to increased wages every year, the right hon. Lady is batting on a sticky wicket. She has an impossible task before her.
  I would remind her of what someone, for whom I had the highest regard, said to his party and to the country 20 years

  1143
  ago. Speaking in this House, Sir Stafford Cripps said:
  "We cannot afford increases in wage levels or shorter hours unless they increase production per man year."—[OFFICIAL REPORT, 10th March, 1947; Vol. 434, c. 994.]
  This is what the right hon. Lady should have said at the conference.
  To the Trades Union Congress at Margate, on 7th September, 1948, Sir Stafford Cripps said:
  "There is only one way by which, with a given volume of employment, we can increase our real standard of living, and that is by each of us producing more. There is no other answer."
  This is a fine message, as it were, from the grave.
  At a special meeting of the Labour Party at Workington on 9th January, 1949—and this is the core of what ought to be said to the trade union movement today—Sir Stafford Cripps said:
  "You must be patient, and you must not ask for, or expect, any further advances in social standards or wage levels until we have been able to increase productivity in industries"—
  not a promise that productivity will be increased, but that they can only have increases after the increase in productivity has been achieved—
  "so as to make more goods available either by domestic supply or importation."
  Finally, in the debate on devaluation on 27th September, 1949—and I pass this last shot on to both sides, because if we were in power tomorrow we would face the same problems, and I sometimes think that we would be as incompetent in dealing with them——
  Mr. William Hannan: The hon. Member for Louth (Sir C. Osborne) has been quoting Sir Stafford Cripps in 1949. What was the hon. Gentleman's attitude to Sir Stafford Cripps? Was he not then deriding the remarks which he is now eulogising? Will the hon. Gentleman explain those remarks in the context of Mr. Harold Macmillan's speech, "You have never had it so good."?
  Sir C. Osborne: If the hon. Member knew the facts he would not ask the question, because it is on record. He asked what my attitude was to Sir Stafford Cripps in 1947, 1948 and 1949. One day Sir Stafford Cripps was attacked by
  1144
  "feather-bedding" Evans and I defended Sir Stafford. I defended him because I thought that he was a man of great moral stature and high idealism. If the hon. Member wants to read some of the finest of Cripps' writings, I beg of him to get his superb booklet "Towards a Christian Democracy". I supported Sir Stafford Cripps and I even got into trouble with my own party for doing so.
  My final quotation is this. Sir Stafford Cripps said in the House on 27th September, 1949:
  "Any worker, by hand or brain, who goes slow or is absentee, or demands more money for no more output, is, in fact, doing his best to put up his own household bills and to put somebody—quite possibly himself—out of a job."—[OFFICIAL REPORT, 27th September, 1949; Vol. 468, c. 31.]
  That is true today. If the Government could only get their allies in the trade union movement to believe the words of Sir Stafford Cripps they could save the country. It is because I do not think that the right hon. Lady can succeed where her predecessors in this Government have failed that I believe the Motion on the Order Paper is worthy of support.
  5.12 p.m.
  Mr. W. S. Hilton: We have had two speeches from the Opposition Benches—one from the right hon. and learned Member for Hexham (Mr. Rippon) and one from the hon. Member for Louth (Sir C. Osborne) which have been notable from the point of view that they both contradicted each other on the basis of their approach. The right hon. and learned Member for Hexham insinuated that the Government are betraying the workers of this country in the present economic situation, whereas the other hon. Gentleman is saying that the workers are betraying the Government. They will have to sort out their paradoxes.
  What I would say to my right hon. Friend the Secretary of State, who is not here at the moment, is that she is facing one of the most difficult tasks that any Minister of this Government has at the present time in trying to hold prices. It is an impossible task she has been given. I believe that devaluation and the recent Budget will inevitably lead to an increase in prices and that this is something which cannot be avoided, as the hon. Member for Louth has said.

  1145
  When the Chancellor made his Budget speech he made it quite clear that of the £923 million he was going to take out of the economy the major part was going to be in indirect taxation, which has always the most immediate effect on prices. There is no doubt, therefore, that the Chancellor's whole strategy depends on prices being increased to take a certain sum of money out of the economy. The ironical fact that faces my right hon. Friend the Secretary of State is this. If she were to succeed in her objective of stabilising prices, she would automatically kill the objective of the Chancellor who has budgeted for price increases.
  I nevertheless have sympathy with the aims of the Budget. I realise, as the hon. Member for Louth has been pointing out, that to some extent we have to cream off certain amounts of purchasing power if we are to achieve an equitable balance of payments. Having expressed that sympathy with part of the Budget's objectives, I cannot express complete sympathy with the Budget for certain parts of it seem to me to be inequitable, in that it asks the workers for sacrifice to help the economy but does not achieve complete justice between all sections in asking for that sacrifice. I do not want to go into all these aspects of the Budget—the debate is not about the Budget—but I do want to deal with those parts of it which will involve rising prices.
  I hope that my right hon. Friend the Secretary of State will accept that the greatest blow to this concept that there should be equity in sacrifice is the recent 50 per cent. increase in the Selective Employment Tax that the Chancellor saw fit to impose in order to raise a considerable sum of money. I have not been in the House as long as some of the hon. Members here, but if ever there were a worse tax than the Selective Employment Tax introduced into the House I have not read about it. And if it is not the worst tax that has ever been introduced, it is the most anomaly ridden tax that has been introduced in recent years.
  Sir G. Nabarro: Come over here.
  Mr. Hilton: I think the hon. Gentleman for Worcestershire, South (Sir G. Nabarro) will not be making that statement when he hears the latter part of my speech.
  1146
  In September the Selective Employment Tax is going to be increased to 37s. 6d. for every male employee. This increase is happening only a short time after the distributive trades, the construction industry, and others who have to bear this impost, have tried to cope with the first 25s. imposed in the 1967 Budget and meet the urgent economies that it demands on their organisations. What will happen when they are faced in September with another increase? It is bound to have a most direct affect on prices. This is the one tax which is bound to lead to an increase in prices in shops already facing problems from the initial tax.
  I am a Co-operative Member of Parliament. I declare this vested interest. Unlike the vested interests of some of the hon. Members opposite, it is not an interest that I hold individually with a few people in making private profit; it is an interest I hold with 13 million other people throughout the country who support the Co-operative movement because we believe it is the finest form of social democracy that there is. It is also one of the greatest protections against rising prices that the ordinary working man and woman can have. The increase in Selective Employment Tax is going to affect us very greatly in trying to hold down prices for the membership of our societies. Some might say that this affects retail distribution in general, so why do I make a special case for the Co-operative movement? I do so, because there is a special case for the Co-operative movement. No retail organisation in this country provides the same range of services as the Co-operative movement to its members. No other organisation will take care of them from the cradle to the grave.
  Sir G. Nabarro: Rubbish.
  Mr. Hilton: The hon. Member for Worcestershire, South (Sir G. Nabarro) is saying "rubbish". If he wishes to interrupt me on this point and explain why it is rubbish perhaps he will do so.
  Sir G. Nabarro: I do not wish to interrupt the hon. Gentleman the Member for Bethnal Green (Mr. Hilton) unduly, because I hope to catch your eye, Mr. Deputy Speaker, later on. All I expostulated in exasperation with the hon. Member is that it is rubbish that he arrogates to the Co-ops—the most incompetent of

  1147
  all distributors in Britain—care for its members from the "cradle to the grave". They are least able to speak on behalf of commercial enterprise.
  Mr. Hilton: I asked what other retail organisation will supply all these commodities, professional services and funeral services, often with a greater content of social service than profit-making motive? He did not deal with that point. Can the hon. Gentleman name any other? He has his chance now to name any other retail organisation which does this.
  Sir G. Nabarro: I must not try to fragment the hon. Gentleman's speech. I hope to catch your eye later, Mr. Deputy Speaker, and I will deal with the matter then exhaustively and devastatingly.
  Mr. Hilton: The House can see an evasion in that reply. The hon. Gentleman is a peculiar person. He speaks for the Worcestershire miners on one occasion, for the Right-wing Tories on another and is the darling of the dockers at the moment. To meet this kind of situation we should have a special bench here for him, not a cross-bench as they have in the other place but one which faces all ways to suit his chameleon-like personality.
  I continue with claim that this is the kind of service which the Co-operative Movement gives and we are prepared for example, to enter the country districts to meet the needs of people even at a loss, so this is the first special point I make in favour of the movement.
  The second is this. The Co-operative movement cannot dodge or evade taxation which is levied in this way as other organisations can. In our movement all staff are employees, and a tax on employees, like the Selective Employment Tax, has to be paid for all of them. We employ opticians, chemists, butchers, greengrocers and others to give a whole range of services and we pay this tax for every one of these people. But in the same towns and villages where we have co-operative societies we have also private chemists, private opticians and private greengrocers who are self-employed and do not have to pay the tax——
  Sir C. Osborne: Surely it is an unfair use of the English language to say that
  1148
  they "dodge" taxation, when the law of the land does not impose taxation upon them. Surely the hon. Gentleman should withdraw that word.
  Mr. Hilton: I did not say that these people dodge taxation: I said that the Co-operative movement could not evade taxation. What I would like to know is whether these private traders, who are self-employed, are going to keep their prices down by the 37s. 6d. margin per person by which they are better off than the Co-operative movement? Will the Secretary of State keep an eye on them to ensure that they do not cream off the extra 37s. 6d. in profit margins while we have to pay it in taxation?
  This is why I say that the Co-operative movement is a special case. I have no hesitation in declaring my vested interest in saying that it is a special case because of the services which it provides. One thing about the House which has struck me is that the Opposition never miss an opportunity to try to achieve financial reductions, taxation reductions or concessions for private industry, but immediately start howling when we defend our own democratic organisations.
  We are on this side because we believe in social democracy and our Ministers should pay greater attention of the special nature of socially-owned organisations. Have any Government in the past ever asked the Co-operative movement to try to hold down prices to assist at a time of economic stringency? They have certainly done so, and we have always responded. Therefore, I say to my right hon. Friend that, while I know that the Selective Employment Tax will go through because it is Government policy, it is a bad tax. It was levied on a standard industrial classification which has no real relevance to the social necessity or purpose of any business.
  I would ask hon. Members in all parts of the House: is it right that, in a development area, a factory producing one-armed bandits or other gambling machines will have a refund of Selective Employment Tax, a 7s. 6d. premium, and the Regional Employment Premium, for doing what I do not regard as a socially necessary job, whereas all distributive organisations in the same area will be taxed to make this payment to that factory? The Co-operative movement

  1149
  has consistently supported the Government and, in return, I would ask that my right hon. Friends should now begin to look at the anomalies in the standard industrial classification to see whether, for distribution as a whole, they can make some reasonable alterations to help reduce the impost upon us.
  I now come to the part of my speech which the hon. Member for Worcestershire, South will not greatly admire. This Government have taken measures which I have criticised, but I know full well that the only reason that they have had to do so is because of the gross political incompetence of the Government which this country had until 1964. They were not only incompetent by British political standards: they were the most grossly incompetent Government in all Europe.
  I realise that many figures have been bandied about by the right hon. and learned Member for Hexham without a single indication of their source. In giving my figures I first refer to the United Nations Organisation publication, "Factors in Economic Growth in Europe during the 1950s". This is the period for which the Tories were responsible in Government. The United Nations Organisation publication states that this country had the lowest growth in gross domestic product of any country reviewed during that time: it was right at the bottom of the table. We also had the second lowest rate of investment in industry. The Government of so-called business men managed during those 10 years to get this country into such a state that we had also the lowest record of labour productivity of any country in Europe, including Southern Ireland.
  Therefore, the £800 million deficit which we faced in 1964 was the symptom of a diseased economy and not the complete story. If I hold my Front Bench responsible for any mistakes which they have made while in power, it is for not realising the serious state of the economy they inherited and for not taking urgent measures very much earlier than they did.
  Given the situation we inherited, what has been the achievement of Labour as compared with the Conservative Government? We have been in power three full years, from October, 1964, to October, 1967. What is our record com-
  1150
  pared with the three previous years under a Conservative Administration, when they looked at their achievements with a nearnarcissustic complex, as if they were achieving the best results ever attained in this country.
  I will give relevant figures from the Monthly Digest of Statistics and figures of earnings from the Ministry of Labour Gazette, if any hon. Member wants to go and check sources. I used to be research officer for a federal union organisation and in compiling wage cases these are the figures which I would use.
  Sir C. Osborne: Before the hon. Member goes—
  Mr. Hilton: I am not going but the hon. Gentleman may interject if he wishes.
  Sir C. Osborne: Before he gives those figures, then, would he bring them into line with what he has just said? First of all, the deficit in 1964 was not £800 million but about £760 million, of which overseas investments, which were going to bring us income, represented over £300 million, so the real deficit was about £350 million. The Government admit that their deficit last year was £540 million, after three years of great sacrifice, so the position last year was worse than in 1964. Would the hon. Gentleman deal with that?
  Mr. Hilton: I can understand the reason for that interjection and the quibble over figures. The hon. Gentleman knows what is coming and is trying to delay it for as long as possible. The right hon. and learned Member for Hexham in his speech said that he was concerned about the future, and accused my right hon. Friend of using contemporary figures. But I noticed he did not deal with statistics relating to the period before 1964. Now, I know the right hon. and learned Member for Hexham. I knew him when he was an efficient Minister of Public Building and Works. I therefore know that he has enough intelligence to quote figures if they can be used to his advantage. He did not use the figures I shall quote, because they are to his party's disadvantage. According to the Index of Retail Prices, in the last three years of Conservative rule—from October, 1961, to October, 1964—retail

  1151
  prices went up by 9·1 per cent. As an ex-trade union officer, I know the important facts are not those represented by the movement in retail prices alone—although the economists might be worried about them—but the way in which the incomes of my members moved in relation to price increases.
  For example, if retail prices increase by 10 per cent. tomorrow but incomes increase by 50 per cent, few people would grumble. Taking price increases against increased earnings during the last three years of Tory rule, what happened? Prices went up by 9·1 per cent. and hourly earnings went up by 17·2 per cent. in the same period. Thus, under a Conservative Administration, we had a surplus of hourly earnings over the rise in the cost of living in those three years of 8·2 per cent. That is the record of hon. Gentlemen opposite and it is on that basis that they are apparently castigating our record.
  Sir C. Osborne: Really!
  Mr. Hilton: That is the record which you and your colleagues achieved. I know that you do not like to hear these things——
  Mr. Deputy Speaker: Order. The hon. Gentleman must address his remarks to the Chair.
  Mr. Hilton: I apologise, Mr. Deputy Speaker. Your face is much more attractive than the faces on the benches opposite that I would not wish to associate you with them.
  Sir C. Osborne: The hon. Gentleman is making a good market place speech.
  Mr. Hilton: Whether or not the hon. Member for Louth likes to hear these things, he is going to have to listen. Not one of his hon. Friends has attempted to rise to contradict what I have been saying. Considering the mess left by successive Conservative Administrations, it is important to note that between October, 1964, and October, 1967—under three years of Socialist rule—retail prices went up by 10·9 per cent. and hourly earnings went up by 23·4 per cent. This gives a surplus of earnings over the rise in the cost of living of 12·5 per cent. as against the Tory's 8·2 per cent. Despite those figures hon. Gentlemen opposite have the
  1152
  cheek to table a censure Motion apparently because we have managed to better their efforts by only 50 per cent.! Although I am not a gambling man, if any hon. Gentleman opposite can show that the statistics I have quoted do not reveal the true position, I will give £10 to any charity he wishes to name. This is therefore the Labour Government's record in a period in which it has been difficult because of extreme economic difficulties.
  I have had to criticise the Government because of taxation which I believe will affect the cost of living. I have done that not only on behalf of the Co-operative movement but on behalf of the others who suffer the anomalies of S.E.T. Considering the economic difficulties which have faced us, however, we have had a fine record and my criticisms have been made in the hope that amendments to this tax can be considered in the interests of equity. If we do this we can continue to show to the people of Britain that, irrespective of the economic difficulties we may have to face, we can always do a lot better in Government than the Conservatives.
  5.34 p.m.
  Sir Gerald Nabarro: I suppose that it would be a Parliamentary courtesy for me to congratulate the right hon. Lady the Minister for her maiden speech as Secretary of State for Employment and Productivity. I do so only as a Parliamentary courtesy. The content of her speech was unimpressive, unconvincing, flatulent and flabby.
  Mr. Charles Pannell: Vulgar as ever.
  Sir G. Nabarro: I am not sure whether the right hon. Member for Leeds, West (Mr. C. Pannell), who entered the Chamber less than two minutes ago, in bawling "Vulgar as ever", means to address his comments to the Chair or to me. In any event, he is a judge of vulgarity.
  Mr. Pannell: I am looking at it. Your people last Thursday said you were vulgar.
  Mr. Deputy Speaker: Order. I urge the right hon. Gentleman not to make interruptions from a sedentary position.
  Sir G. Nabarro: As always, I am grateful for your protection, Mr. Deputy Speaker.
  As I was saying, the right hon. Lady's speech was unimpressive and unconvincing, for if everything is so wonderful with our economic position today, I question why it is necessary for her to devote her utmost energies endeavouring to convince the trade unions that they should accept an absolute wage and salary freeze—[Interruption.]—subject only to a maximum increase in the forthcoming year of perhaps 3½ per cent., whereas inflation is rampant and continuous. Not only the unions remain utterly unconvinced. The entire electorate feels the same. Not in my life-time——
  Mr. Murray: One-hundred-and-fifty years.
  Sir G. Nabarro: —have there been a crop of by-election results like the recent results.
  You reprimanded the right hon. Member for Leeds, West, Mr. Deputy Speaker, for his sedentary vulgarity. Perhaps it could be repeated to the hon. Member for Gravesend (Mr. Murray) who never achieves anything more than bawling abuse from a sedentary position. Never in my lifetime, or in the hon. Gentleman's lifetime, has there been a swing of opinion at by-elections comparable to the swing in the recent by-elections. The party opposite suffered the loss of what were formerly regarded as utterly safe Labour seats, such as Dudley and Stourbridge.
  Sir C. Osborne: Very big majorities indeed.
  Sir G. Nabarro: My hon. Friend the Member for Louth (Sir C. Osborne) knows about potatoes in Lincolnshire. I know about industry, trade and commerce in Worcestershire. I have been around these parts for nearly a quarter-of-a-century. I spoke at the eve-of-the-poll meeting at the Dudley by-election. A splendid time was had by all, except that no Labour candidate held a meeting. He dare not. He would have been lynched—[Interruption.]—metaphorically speaking.
  Mr. Hilton Mr. Hilton rose——
  Mr. Alex Eadie Mr. Alex Eadie (Midlothian) rose——
  Sir G. Nabarro: The hon. Gentleman should not be impulsive. I will give way shortly.
  At that eve-of-the-poll meeting about 1,000 electors of Dudley crowded into the hall and another 1,000 were turned away because they could not gain admission. The majority of the electors told the story the following day. I thought that the Conservatives might get a majority of 2,000 or so, but in fact we got a majority of 11,000, a swing of considerable dimensions away from the previous Labour majority of 10,000, a turnover of 21,000 votes. Never in my lifetime has there been a by-election result like that.
  It is fair to mention that the quality of the candidature—my hon. Friend the Member for Dudley (Mr. Donald Williams)—no doubt influenced the result, but it was overwhelmingly the dissatisfaction of the electorate with the economic and financial policies of the Labour Government that caused that massive turnover in votes. I am delighted to see my newly elected hon. Friend the Member for Acton (Mr. Kenneth Baker) in his place. In his constituency the swing was not quite as large, though impressive. Worcestershire people are more perceptive than Londoners. They are not so likely to be bamboozled by the policies of Her Majesty's Government.
  Mr. Cyril Bence: It was in Dudley that people put pigs on the wall to listen to the German brass bands.
  Sir G. Nabarro: I do not want to put the pigs on the wall. I can read the truth for myself in the by-election figures.
  The right hon. Lady tells us that her economic and financial policies are splendid and that she has the absolute confidence of the electorate. Then why is she bending over backwards to convince the trade unions of the validity of her policies, and secondly, why are the electorate in all parts of Britain so utterly dissatisfied with the performance of the Labour Government?
  Mr. Hilton: I am sorry to interrupt the hon. Member when he is reading his autobiography, but he said that he found my speech unconvincing. I made a sporting offer——
  Sir G. Nabarro: Will the hon. Member allow me to interrupt him? I want to put him right. I did not refer to the hon. Member. I have not mentioned Bethnal Green yet. I am referring to the speech of the right hon. Lady and I have done so throughout my speech. When I come to the hon. Member and refer to Bethnal Green, perhaps he will allow me to end the paragraph, resume my seat, and give way to him, but I have not yet given way to him.
  Mr. Eadie Mr. Eadie rose——
  Sir G. Nabarro: No. The hon. Member has just come in. When I turn to coal miners later in my speech I will give way to him.
  Mr. Eadie: Afraid to give way.
  Mr. Hilton: May I complete my point? If my speech was unconvincing, as it might well be, can the hon. Member for Worcestershire, South say now that the figures I have quoted are wrong and that he disagrees with them? Or is he prepared to accept my wager and check the figures?
  Sir G. Nabarro: When I have made progress with my speech I might refer to the hon. Member for Bethnal Green (Mr. Hilton). I have not done so yet. When I refer to him I will give way. Likewise, when I talk about coal miners I will give way to the hon. Member for Midlothian (Mr. Eadie).
  Mr. Eadie: I have been here when the hon. Member has not been here.
  Sir G. Nabarro: I am not giving way yet. The cause of the profound dissatisfaction with the policies of Her Majesty's Government is overwhelmingly that the electorate dislike so much the rampant and continuous inflation we have been suffering in the last 12 months. This springs from three important factors. It springs, first, from devaluation of sterling on 18th November last. It springs, secondly, from a huge additional load of taxation imposed in the Budget, £700 million in the present year. It springs, thirdly, from the failure of the Labour Government to increase production on any substantial scale. I shall deal with these three major issues.
  To listen to the right hon. Lady talk of devaluation one might assume that it
  1156
  was an act of calculated statesmanship on the part of the Prime Minister. On the contrary, let us all be perfectly clear; the devaluation of sterling was a calamity that was forced on the Prime Minister by the incompetent handling of the finances of our country by his own Administration. Would he have devalued sterling had we not been in a condition of financial extremity? I put that question to him. The answer I believe is, no, he would not have devalued sterling. He did so because he was forced to do so. He knew far better as a good economist—in academic theory alone.
  He knew full well what would be the consequences flowing from devaluation of sterling in the form of increased and increasing prices in the ensuing year. He had lived through it all before. My hon. Friend the Member for Louth (Sir C. Osborne) referred to Sir Stafford Cripps in adulatory terms, an adulation I do not share. [An HON. MEMBER: "He was a good bloke."] I quite agree that he was a good bloke but I do not share the adulation of my hon. Friend. Sir Stafford devalued sterling, after denying nine times that he would devalue, in the fall of 1949. It took another 12 to 18 months before the full spate of inflation descended upon our nation.
  It was in April, 1951, that three members of his Government deserted. The present Prime Minister first, the late Mr. Aneurin Bevan second, Mr. John Freeman, our Ambassador in Washington, third, gave up their Ministerial portfolios and retired to the back benches in April, 1951, in the full spate of inflation following devaluation 18 months earlier. The same thing will happen again. In the course of 1968 and 1969 we will suffer the same vicious inflation following devaluation of sterling. It is quite inescapable—nothing can be done to avert it now—as we suffered 18 years ago in 1950 and 1951.
  The second issue I put to the House a moment ago, the effects of the increase of £700 million in taxes in the Budget announced on 19th March by the Chancellor of the Exchequer, is probably even more serious. I shall give way happily to the hon. Member for Bethnal Green, for the early part of his speech in my humble judgment was extremely sound. That is why to the hon. Member—loyal

  1157
  Co-operative Member as he is, and I respect him for it—I said sotto voce, "Come over here". Sotto voce I said it to him for he was spelling out precisely the arguments of my hon. and right hon. Friends during the last two years about Selective Employment Tax.
  When a Government put on a tax of that kind it adds at once to the retail price of goods in the shops. Very often shopkeepers work on a margin as small as 7½ per cent. They cannot possibly absorb an impost of the size of the Selective Employment Tax. It goes on the mark up. It increases retail prices. I respect hon. Members who are Co-operative Members. I know them all, my old friend the Parliamentary Secretary, the hon. Member for Jarrow (Mr. Fernyhough) is a loyal Co-operative. I remember eight of them sitting in a line on the Government benches and my taunting them during the Budget debates after Selective Employment Tax was introduced.
  I predicted that all these difficulties would arise from S.E.T. I invited any one of them to go into the Lobby with me against the Government. Not one of them did so. They thought me too un-wholesome to walk with, in a political sense. Clean and delectable as I am in all fiscal matters, they thought me too unwholesome to be associated with. One or two abstained. What the hon. Member for Bethnal Green pronounced this afternoon is undoubtedly true. The whole of the additional Selective Employment Tax is going on prices.
  He, rather like me, has not been able to find a place on the Finance Bill Committee. I am sure he shares my sentiments about what I have said. I am glad that he is nodding assent to what I have said.
  Mr. Hilton: No. The hon. Gentleman's speech was sending me to sleep.
  Sir G. Nabarro: He shares my sentiments about it. It is that Committee's loss that we are not there to advance these lucid fiscal views. But the hon. Gentleman will have his chance later. I have here the Division list for the Second Reading of the Finance Bill on 24th April, when there were two Divisions. I believe that the hon. Member for Bethnal Green in his lay apparel is "Hilton
  1158
  W.S.". I see that he voted for the Finance Bill and the increase in Selective Employment Tax.
  The hon. Gentleman should do what I did when I do not like things that my party does—cross the Floor and vote against it, not be whipped into the Lobby by the Patronage Secretary. The hon. Member challenging the number of votes on my part against the Tory Party on Finance Bills should read the history of 1951 to 1964. Nobody can match it. Due to the fiscal improprieties of my own Front Bench—not my right hon. and learned Friend the Member for Hexham (Mr. Rippon) or my hon. Friend the Member for Finchley (Mrs. Thatcher), but the Chancellor of the Exchequer of the day—I frequently voted against them on Purchase Tax, Income Tax, Schedule A Income Tax, Surtax, and a whole variety of taxes. That is the proper behaviour of a Member on a relatively minor issue, during the Committee stage of the Finance Bill. It is his prerogative to vote against his own party if he wants to in Committee.
  I say to the right hon. Lady today that the inflationary effect of the Budget is not confined to Selective Employment Tax and the extra sum of money that it will raise. Taxes in general have been raised by £700 million and within 12 months the whole of that sum will go on prices. That is the way it works in present conditions in our society. If taxes are raised by £700 million an approximately commensurate sum is added to the aggregation of retail prices. No political party can escape that. All tax additions are highly inflationary.
  The combination of the effects of devaluation and of the penal and swingeing increases in taxes in the Budget will create the most dreadful inflation during the coming year. That is why the Shadow Cabinet has chosen its words impeccably and irreproachably, and I praise it for that. It did not look to the past alone but says,
  …policies which have led and will continue to lead to rising prices thereby endangering the standard of living."
  I emphasise the words "will continue to lead", for I believe that the worst of the inflation is still to come.
  The third issue to which I alluded was production and productivity. I am sorry that the hon. Member for Midlothian

  1159
  (Mr. Eadie) has temporarily left the Chamber, but I am delighted as always to see the hon. Member for Derbyshire, South—or is it North or West?——
  Mr. Thomas Swain: The hon. Gentleman has a terrible memory.
  Sir G. Nabarro: I do not remember which point of the compass it is.
  Mr. Swain: It is North, South, East and West.
  Sir G. Nabarro: All right—NorthEast or South-West, the hon. Gentleman who is the chairman of the mining group in the Labour Party. I talked about production and productivity for a moment, and I want to say something about the coal mines. Coal miners have increased productivity in Britain in the past 12 months more than any other group of workers. The assessed increase is between 13 and 14 per cent. If the policies of the Government are to be correctly applied all productive workers in the mines should have a commensurate increase in their remuneration.
  That is the first point. The second, which flows from it, is that the consumers of coal and coal products should benefit by reduced prices, if the right hon. Lady is called in judgment, as a result of that big increase in productivity and production. This big increase has been building up over the past 12 months, and sensational it is too. As the greatest friend of the coal miners in the House, I warmly congratulate them on their achievement. It is a pity that that message of congratulation did not come from the right hon. Lady. It is left to a Tory to do it for her. True friend of the miners——
  Mr. Bence: And the dockers.
  Sir G. Nabarro: Certainly. Of all organised labour. That is why I am pleading the case I am pleading today. But what has happened to the consumers who should reap the benefit of this increased production and productivity?
  Mr. Swain Mr. Swain rose——
  Sir G. Nabarro: I shall give way at the end of my paragraph.
  1160
  We were told yesterday in a pregnant Press announcement—pregnant because it does not become effective until 1st October—that the price of domestic and industrial coke is to be raised by the National Coal Board by the biggest single margin in one leap, since nationalisation 21 years ago. Industrial and domestic coke is to go up by 20s. a ton on 1st October. Moreover, Phurnacite ovoids are to be increased by 15s. a ton, and other premium fuels by up to 15s. a ton. Nobody can do without fuel. We are largely a coal-based fuel economy. It is no good the hon. Gentleman nodding dissent.
  Mr. Bence: I am not nodding dissent.
  Sir G. Nabarro: The hon. Gentleman should keep a closer control over his facial movements. I interpreted them as nodding dissent.
  We are largely a coal-based fuel economy——
  Mr. Swain: I must again remind the hon. Gentleman that he has a memory as short as the hairs on a fish's nose. Did he read in conjunction with the Press statement on the price of coke that the price of domestic coal is going down by 25s. a ton as and from this week? Is not that a substantial decrease?
  An Hon. Member: That is at summer prices.
  Mr. Bence: It is still a decrease.
  Sir G. Nabarro: If I may be allowed to intervene, the contribution of the hon. Gentleman is valueless because a large part of Britain is covered today by smoke-controlled areas where one cannot burn bituminous coal. Smokeless fuels must be burned, and one of these is coke. Those in such areas who are dependent on coke will have to pay 20s. a ton more, and it is no good people arguing with me about this. That is the fact.
  We are largely a coal-based fuel economy. The price of solid fuels is rising sharply, and in my part of the Midlands—the West Midlands, which include Worcestershire—we are singularly badly placed because the solid fuel price increase comes on top of a 3s. in the pound increase for electricity, the biggest in the country, and a 2s. in the pound increase in gas prices. So we now have

  1161
  a big increase in coal prices, in coke prices, in electricity prices and in gas prices. Moreover, to make matters far worse, the Government increase the duty on petrol and oil, thus further penalising people who drive motor cars or heat their homes with domestic fuel oil.
  One way or another, the principal culprit in the increase in fuel prices is none other than Her Majesty's Government. I hope that nobody on the other side of the House will say, "Oh, yes, but a Minister of Power does not control fuel prices". Does he not? We now have a situation whereby the Prices and Incomes Board has to sanctify and approve price increases by nationalised industries. Perhaps, when the Parliamentary Secretary replies to this debate, he will confirm that the Board has so sanctified and approved the 20s. per ton increase in coke prices from 1st October. I want to learn of his approval for that, and his blessing for this increase, for there again, as with the increase in petrol and oil prices, the Government by themselves are the principal culprits in putting up the cost of heating, the cost of lighting and the cost of cooking in our homes, all of which bear particularly harshly upon elderly people.
  I have one word to add about the behaviour of the nationalised industries in this situation. The Steel Board has published a dismal account of its proceedings both yesterday and today. At a time when the utmost economy ought to be practised by every commercial enterprise in Britain, what does the British Steel Corporation do? It abandons its London offices to which it was committed a year ago, costing a modest rental of £275,000 a year, and substitutes office premises in Grosvenor Square, W.1, costing £700,000 a year. What a splendid example of economy in the conduct of public affairs, especially at a time when the Corporation is losing money heavily week by week.
  Therefore, the fourth cause of inflation is the policy of nationalisation. Before steel was nationalised, more than 90 per cent. of the industry operated at a substantial trading and commercial profit. Only 10 per cent., or less, of the industry operated at a loss. That 10 per cent. or less was Richard Thomas and Baldwins in South Wales. Today, now
  1162
  that the whole industry is nationalised, the whole industry operates at a loss.
  Small wonder that the electorate have seen through the bamboozling of Socialist election promises during the last three to four years. First, they have seen through the financial disaster and mismanagement which culminated in devaluation of sterling. Second, they have seen through the inadequacies of the policies of nationalisation. Third, they have realised painfully the huge holes burned in their individual pockets by the Socialist policies of progressive increases in every form of direct and indirect taxation. Fourth, they have manifested these inadequacies of Socialist policies by registering their utmost disapproval in the ballot box.
  Mercifully, there is no recovery for the Labour Party. It is only a matter of time before the heads roll. Charitable chap though I am, I am not sorry for the right hon. Lady the Secretary of State for Employment and Productivity. She has an impossible task. She is trying to apply Socialist policies which manifestly are unworkable. The only end to this dismal story will be the break up of the Government. The sooner it comes the earlier will be the salvation of my country.
  6.6 p.m.
  Dr. Shirley Sumerskill: It is quite clear that the views of hon. Members opposite about a prices policy are as varied, numerous and vague as they are about an incomes policy. They seem to demonstrate a purely negative and rather pessimistic attitude to the problem. This Government does at least have a positive policy towards prices which, to a certain extent, has been misunderstood on both sides of the House. The Government have never claimed to be able to stop all price increases. They have claimed to try to stop unreasonable or unjustifiable price increases.
  Prices and the level of prices are at the heart of the country's present economic difficulties, so they have become of interest not only to the housewife but to every politician and every person. If the right hon. Lady cannot win the battle of the prices she will not win the battle of the wages policy, and economically all will be lost.
  We have yet to hear from hon. Members opposite whether or not they support

  1163
  the Prices and Incomes Board and the work that it is doing. If they do support it, then they should be magnanimous enough to admit it. What is their own record with regard to a prices policy? When they were in power the Conservatives allowed retail prices to rise by 40 per cent., that is to say, by 8s. in the £. They looked on while this happened, as if it was unpleasant but unavoidable, and seemed to have no discernible policy. It was almost a policy of masterly inactivity. Perhaps they found it exciting, as Lord Thorneycroft in his speech in another place described it as exciting to live on the edge of bankruptcy.
  Yet now that same party is indignant, reprimanding and outraged about rising prices under this Government. They claim that we should not have allowed any prices to rise. Do they accept that some price increases are justifiable? Do they accept that some price increases are reasonable? We have had no clear indication of their views on price increases, whether they think that some price increases are justifiable, and what they would do to prevent unreasonable increases.
  It is to the credit of the Government that they are the first to take serious steps to deal with the problem. They are, at least, making an effort to bring about a constructive policy to deal with what is a longstanding problem. We are not ashamed of interfering with prices. The right hon. and learned Member for Hexham (Mr. Rippon) used the word "interfering" as if it were something that the Government should not do. On the contrary, it is the Government's intention to interfere with prices and see that they only rise if they are reasonable increases.
  As for the accusation in the Motion that our standard of living is endangered, I think that that is a completely false assumption. The standard of living is difficult to measure, but, if it is measured in figures relating to consumer expenditure, it is shown strikingly that throughout the last ten years, in spite of rising prices under Conservative and Labour Governments, the standard of living of people in Britain has gradually and steadily improved. I reject the charge from the right hon. and learned Member
  1164
  for Hexham that the Government are "planning" to lower the standard of living.
  The great theme which should run through the debate is that wage rates are rising faster than prices, as everyone has agreed. We cannot consider prices without considering wages, incomes, productivity and dividends. They are all inter-related and must be considered together.
  Between October 1964 and January 1968, which is a large part of the time that the Labour Government have been in power, retail prices covering all items have risen by 12½7 per cent. which is an increase of just over 2s. 6d. in the £. In the same period, weekly wage rates rose by 17½7 per cent., which is about 3s. 6d. in the £. It is totally misleading for Conservatives in this House and in the country to give the impression that the Government are freezing all wages and, at the same time, allowing prices to soar unchecked. Statistics are always dull and extremely difficult to put over to the general public but, if the Government's prices policy is to succeed, it is necessary and important for the country to have faith in it and for the truth of the position to be explained.
  I want to deal for a moment with food prices. Hon. Members will have attended or read the report of the Adjournment debate on food prices which took place on 11th March. In spite of the revealing figures given by my hon. Friend the Member for Huddersfield, West (Mr. Lomas) on that occasion, I am surprised that right hon. and hon. Gentlemen opposite saw fit to put down this Motion. Anyone who has read the debate will surely feel convinced of the Government's case. I will not go into the figures now. Suffice it to say that a great deal of misleading information has been published about the extent and number of price increases.
  The success of the Government's prices policy is far greater than is generally realised, and perhaps my right hon. Friend said too little in her opening speech about the numbers of price increases which have been prevented and the number of prices which have even been lowered. Quite rightly, she stressed the enormity of the task which the Government face. We hear so much about the difficulties of a wages policy,

  1165
  but it is quite clear to most people that the difficulties of a prices policy are even greater.
  No trade unionist or man in the street will accept a severe wages policy unless it can be shown that there is also in operation a successful prices policy to go with it. Perhaps the greatest misunderstanding arises over food prices, because these are extremely hard to keep steady. Climatic conditions and seasonal factors cause enormous variations in food prices. The North of the country tends to have far lower prices than the South. Obviously in an area where fruit and vegetables are plentiful, prices will be lower than in another area. Even in my own part of the country, one can find variations in the same town and even in the same market place, with higher prices at one end of a street than at the other. In the minds of people there is concern about price variations, and they find those even harder to understand and tolerate than price rises. I ask my right hon. Fr end to deal with price variations all over the country, as they are part of the problem of price increases.
  The Government have never claimed to avoid all price increases, but I ask them to give special attention to variations in price of the same commodity. I hope that the Government will make it clear that it is totally false and a gross exaggeration of the facts to say that everything is going up these days.
  I have two suggestions to make to the Minister. First, I would suggest the setting up of regional prices boards. I know that they would involve more civil servants, but, as I have just pointed out, price increases and variations concern specific areas of the country, and it would be convenient administratively to deal with prices according to regions such as the South-West, Yorkshire, Wales, and so on. At the same time, they would relieve the National Board for Prices and Incomes of an enormous amount of work. We are told that it has been inundated with complaints about prices and that, in the last couple of months, it has received more price complaints than it did in the whole of the previous year. It may be that regional prices boards would do something to explain to the public the cause of price variations and rises and the differences between the North of the country 2nd the South. It is clear that
  1166
  almost every commodity is cheaper in the North than it is in the South.
  As for regional price indices, the Index of Prices was never understood by the ordinary housewife. I welcome the initiative of the Ministry of Labour in publishing average prices and price ranges of about 80 items of food at regular intervals and, most important, in language which the ordinary housewife can understand.
  There are some advocates of a prices policy who are so determined that it should operate fairly and efficiently that they would support the type of statutory price freeze which existed during the war. However, most people would oppose that completely. It would be quite impossible to operate without a large number of civil servants and snoopers and all the atmosphere of restriction which we experienced during the war. It would prevent healthy competition between shops and would be difficult to implement as we do not have the system of rationing which made it easier to operate in the war. Quite apart from that, there are thousands of perfectly justifiable increases and price adjustments taking place up and down the country every day which obviously cannot be avoided.
  Ideally, price stability must be operated on a voluntary basis in the same way that, ideally, we would want an incomes policy to operate and succeed on a voluntary basis. It is regrettable that a minority of unscrupulous shopkeepers, restaurant owners, wholesalers and firms have imposed unreasonable general price increases using such excuses as devaluation, the Budget and the Selective Employment Tax. At the same time I welcome the example set by the Government in its rather belated decision at the end of last year to refer all the price increases proposed by nationalised industries to the Prices Board. This was a great step forward and an example to private enterprise. Human nature being what it is, a price rise is a good reason for a grumble but a price cut usually passes unnoticed.
  What can the general public do in this battle on prices? It is quite clear they are more price conscious today than ever before. There has been an overwhelming response to the Government's request that individual shoppers should

  1167
  report what they consider to be unjustifiable price increases. There is no apathy or lack of concern amongst the general public about prices today. Every hon. Member will have received many inquiries from his constituents about a whole range of items ranging from the cheap to the expensive. I myself have referred for investigation the price of a cup of tea in a British Railways canteen and the price of sandwiches and buns at a transport cafe.
  It is the principle that is involved, rather than the halfpennies and pennies. But this voluntary co-operation from the public is extremely desirable and to be welcomed; and it is, in fact, essential if this prices and incomes policy is to succeed. But it is not only the housewife who has been vigilant. In my own constituency the trades council has set itself up as watchdog to seek out and report for possible investigation unreasonable price increases in the town. The same type of activity should be undertaken all over the country by women's organisations, chambers of commerce and particularly consumer protection associations. This could be a new and extremely important function for consumer protection associations to undertake, considering price as well as quality. Shops charging unreasonable prices would then be avoided in favour of those which do not, as their reputation became known in the town.
  It is the unwary shopper who always gets caught. Publicity, propaganda and education at a local level will make the public aware of the problem of prices and the wage packet, and this is just as important as Government action. I believe the public do realise, contrary to what an hon. Gentleman opposite has said, that the Government are on their side on this matter and are not against them, and that the Government are simply asking for the co-operation of the public in a joint policy. There used to be a phrase "the customer is always right". That seems to be dying out now, but it would be a good idea if the customer occasionally thought she was right and became more inquisitive, belligerent and suspicious and was not afraid to complain and question if she thought a price was too high, in the same way as she will certainly complain and question if she
  1168
  feels that the quality of an article is deficient.
  In spite of what we have heard today from hon. Members opposite, the Government have a really impressive array of price reviewing machinery which the Conservative Government did not seek to institute. Apart from the Prices and Incomes Board, the early warning system and the Monopolies Commission ensure that key price increases can be checked. For example, in 1966 the Report of the Monopolies Commission caused a price to be not only stabilised but reduced. This was the case with Kodak, who were obliged to cut the prices of their colour film by an average of as much as 20 per cent. This was as a direct result of the report of the Commission. The Prices and Incomes Board has either stabilised or lowered the prices of an impressive series of commodities. I will give the House only three.
  One, a very important one, was that the price of the Daily Mirror was held down for nearly six months. Proposed increases in television rental charges have been prevented by the Board, and the price of flour was held well below the maximum asked for by the trade. I have mentioned only three of a very long list, but more important than these individual items is the certain fact that the threat of investigation by the Prices and Incomes Board is encouraging businessmen everywhere to hold down their prices. The Board can show that where one price rise may be justified another can be exorbitant.
  I would urge the Government, in their prices policy, to give special and continued attention to those sections of the community who are particularly severely affected by any price rise, however small it might be. I refer particularly to retirement pensioners and those on fixed incomes. They do not benefit from any increase in wage rates, and there is an urgent need for retirement pensions to be geared to the cost of living and the average wage; otherwise these people are left behind when there are even justifiable price increases.
  I deplore the pessimistic and unconstructive tone of the speeches which we have heard from hon. Gentlemen opposite, not to mention their inconsistency and lack of a positive Conservative policy. We still have to hear from

  1169
  some hon. Member opposite what is the Conservative policy for stabilising prices and in connection with the wages policy. The next year will be a real testing time for this prices policy. If we are prepared to put up with some price rises and to forgo an increase in personal consumption, then by the end of 1968 we should begin to enjoy the full benefits of devaluation, which include more stable prices; and, unlike the hon. Gentleman the Member for Louth (Sir C. Osborne) I believe that the right hon. Lady can and will succeed with this policy.
  6.28 p.m.
  Captain Walter Elliot: I hope before I finish to give the hon. Lady the Member for Halifax (Dr. Summerskill) what I believe to be a constructive suggestion for dealing with this problem. I must confess that I have found this debate unusually confusing and, with respect to the hon. Lady, I do not think her speech made the pricing policy of the Government any clearer. I really shudder to think what conclusions the nation as a whole can draw from this debate and the statements from the Government. We have had many debates in this House on the subject of rising prices and as we all know—and it is not entirely a coincidence—they take place about this time of the year; and in my experience, which is not of very many years, the whole House is united in bewailing the fact that prices are rising. But the hon. Lady the Member for Halifax, made the remark—I believe I took it correctly—that if her friend the right hon. Lady speaking from the Front Bench cannot win the battle of prices, all is lost.
  Listening to the Minister, it seemed in the early part of her speech, when she was chiding this side of the House, that she was trying to argue that wages were still moving ahead of prices under the Socialist Government. It crossed my mind, as am sure it crossed the minds of other hon. Members, that if this was so, how were we to make room for exports? The fact is that prices are rising and although the Government may not welcome this loudly, this is what they want. We understand that they may have to make friendly noises to the effect that they should not go too high, that some prices should even be reduced. But
  1170
  it is the case that by deliberate acts of policy the Government are raising prices.
  If prices have not gone up by the Measures which have already been taken, then they would have gone up as a result of other measures. The way hon. Members opposite talk I really have a feeling that they are convincing themselves that this is not the case. It most certainly is. It is being done deliberately, through the tax mechanism, quite apart from the effects of devaluation. It is done, and this again is part of Government policy, which we understand, so that there will be a transfer of resources from public and private consumption to exports. We all agree with the aim. Where I part company is with the method employed to achieve it.
  I do not think that it will work. Higher taxes have certainly not curbed Government expenditure. It has greatly increased. Anyone who had experience, as I have in earlier days, of a Government spending Department, can imagine the rubbing of hands in all those Departments at the prospect of £900 million more coming in for Government expenditure this year. It will not curb public expenditure, and I do not believe, working through the tax mechanism as the Government are, that they will succeed in curbing private expenditure sufficiently, if at all.
  Providing one's income or resources is not suddenly cut off—whether they be in the form of salary or savings—it is an extremely difficult matter to reduce one's standard of living. People will adjust their savings rather than their living standards under the Government's policy. We have today and have had for many years, a crisis of over-consumption. Governments, and this Government in particular, because heavy government expenditure is embedded in Socialist doctrine, are the greatest consumers of all. It is ironic that we have reached this position as a direct result of policies which put an end to the slumps of pre-war years when the problem was under-consumption. We know the solution to the problem—vast increases in Government expenditure which puts money into pockets of the people, social services which insulate us from the fear of unemployment and hard times.
  People feel free to spend. At the same time we have persuasive advertising to

  1171
  encourage us to buy, and through hire purchase, and other financial devices, credit has become available to every man, woman and teenager. One solution is to cut Government expenditure and restyle social services to help those in need, without featherbedding the whole nation. This is an extremely difficult thing to do. It is almost impossible for a Socialist Government and would be very difficult for a Tory Government. In the first place people are paying for their social benefits and will want them. I believe that they should get them. Any reorientation of the social services will thus take time, and we want the change quickly.
  There is another solution which I would like to put forward. The Government are trying to cut consumption through the tax mechanism. Every hon. Member opposite had better recognise that, under whatever heading it goes. To increase savings would produce the same result, and would have a much better effect. The mass of the population who each year spend their earnings to the hilt can and must be persuaded to change their habits. In the past people have saved instead of spending because they wished to provide for the future.
  That motive has been weakened, but I believe it to be still strong. We have to sell thrift, to the people, with all the techniques of mass advertising so effective today, and backed by positive tax incentives. In America, Germany and Japan worthwhile tax incentives are given and the population saves on average 10 per cent. of their earnings—2s. in the £.
  It is difficult for a backbencher to get accurate figures on this, and I would not want to be dogmatic, but the figures that I have been given suggest that since 1964 higher taxes have cut personal savings from 1s. in the £ to 10d. If one looks at the National Savings figures in 1964, the net saving was £357 million. These are not the only figures of saving, of course, in 1966 they were minus £30 million and in 1966–67 they improved to £74·6 million. I very much doubt whether they will do this in 1968–69. These figures certainly suggest that higher taxation leads to reduced savings.
  In an article in the Financial Times of 28th November, 1967, Mr. Wincott said:
  "In the U.S. employee savings schemes are common, but they do involve tax concessions to employers (as well as employees) on their
  1172
  contributions. In Western Germany, the efforts to encourage savings have been so successful that they are now something of an embarrassment to the Government.
  "There, there is not only a limited exemption from income-tax for incomes additional to those arising from one's regular earned income, which encourages extra earnings efforts. There are premiums of 20 or 25 per cent. (depending on the type of savings) paid on savings, provided these are immobilised for five years. (There are limits on the amounts of savings qualifying, so that the benefits mainly go to the small saver.)—"
  which is what we want
  "…the response has been so great that cost to the Government has risen from"—
  and then the figures are given.
  That is one way, but I would like to give another. I would like to see the income from savings made tax free for everyone over 60 or 65. Will the Minister examine that? How much would it cost? How much would it bring in in savings? How widely should it be drawn? I said everyone over the age of 60 or 65.
  I cannot go into categories, but I really believe a scheme such as that would be worth examining. But it will need more than a fireside chat from the Prime Minister to change our spending and savings habits. First we have got to give these real incentives. Secondly, we have got to sell the idea, using the power of our mass media of communication to the full and all the persuasiveness of modern advertising technique. One has only to consider the budgets for advertising of great firms such as Unilever to see what can be done, and compare them with the puny efforts which are used for putting over the case for savings. Once we start the people saving we can say goodbye to rising prices and to constantly rising taxation, and I believe that it will create the attitudes to work, productivity and spending which we need so desperately in this country today.
  6.42 p.m.
  Mr. Alfred Morris: May I refer briefly to two speeches made earlier in the debate. The hon. Gentleman the Member for Worcestershire, South (Sir G. Nabarro) tells a very good story, sometimes even an amusing story. Would that his speech had been delivered as sotto voce as his whispered intervention during the speech of my hon. Friend the Member for Bethnal Green (Mr. Hilton). I must not refer

  1173
  at too great length to what the hon. Gentleman said because he has now left the Chamber, and at least he was not as condescending or as slighting to my right hon. Friend as was the hon. Gentleman the Member for Louth (Sir C. Osborne), who felt that this portfolio was far too difficult to be entrusted to any woman. Never was there a more inexcusable example of male prejudice in a speech delivered in this House.
  As Minister of Transport my right hon. Friend was both controversial and tough. She had to suffer the constant criticisms of Aims of Industry and the Conservative Central Office, but she had the pleasure of being vindicated by events. The breathalyser was but one example of a policy which she pursued against unpopularity and which is now recognised by the great majority of people to have been an important step forward. I wish my right hon. Friend well in her new responsibilities and I believe she has every prospect of being a great success in her new office. She certainly did not say, as the hon. Member for Worcestershire, South implied, that all was well and idyllic in the present situation. I think she realises that this is a very difficult portfolio indeed and one which will call for all the skills and all the talents which she has already manifested as a Minister in the present Government.
  Now we are often told in this House that it is utterly meaningless to discuss incomes in isolation from prices. But it is also meaningless to discuss prices in isolation from incomes. This is appreciated by hon. Gentlemen opposite, as it is by my hon. Friends on this side of the House. So why is it that the party opposite, which is not very well represented in this debate——
  Mr. Frederic Harris: You are not doing so well either.
  Mr. Morris: This is a Motion of censure by the Opposition against the present Government, and, if I may say so, it is being pursued with remarkable little energy and enthusiasm. But why is it that the party opposite have sought to table a Motion of censure "deploring rising prices"? Is it that the Opposition want to see the Prices and Incomes Bill
  1174
  brought forward as quickly as possible? Is it that they want to see the powers to enforce price reductions as soon as possible? I would have thought that anyone who deplored price increases would welcome the provisions which we expect in the Bill for enforcing price reductions.
  I was very pleased to see in the White Paper, Cmnd. 3590, the strict criteria for price increases in paragraph 16, and also the new criteria for price reductions. Paragraph 17 says that:
  "The need in the present economic circumstances to increase price competitiveness makes even more necessary efforts by all concerned in determining prices to reduce prices wherever possible. During the next two years increased productivity and efficiency should make some price reductions possible and should help to keep other prices stable."
  I notice also that Appendix II to the White Paper deals with the guidelines for productivity agreements of the National Board for Prices and Incomes. It says about salary and wage negotiations that:
  "The undertaking should be ready to show clear benefits to the consumer through a contribution to stable prices."
  Thus there will be a place for the consumer at the negotiating table. I believe that in their approach to all the very difficult questions of prices and incomes policy thoughtful people will welcome the emphasis on the need to pay some regard to the consumer in salary and wage negotiations.
  For my part, I do not think that the Opposition brought this Motion forward in order to hasten the day when there will be statutory enforcement of price reductions. Nor do I think that they will depart in any way from the statement that was made by Sir Stephen Brown, writing for the Confederation of British Industry to every Member of this House on 5th April, when he said:
  "A proposal to which we are wholly opposed is the intention to take powers to require reductions in existing prices."
  Perhaps the hon. Lady, when she comes to reply to this debate, will say clearly—because I think the electorate want from their public representatives the clearest possible statements of their intentions—whether, speaking on behalf of the Opposition, she shares the view of the C.B.I.
  Captain W. Elliot: Can I ask——
  Mr. Morris: I am not certain that the hon. Lady heard the quotation, so I will repeat it.
  "A proposal to which we are wholly opposed is the intention to take powers to require reductions in existing prices."
  Does the Opposition agree with the C.B.I. or does it agree with the Government that there will be cases, in consequence of higher productivity and my right hon. Friend's intention, for consumers to share in its benefits?
  Captain Elliot: Does the hon. Gentleman recognise and support the Government's policy, which is to raise prices and reduce internal consumption in order to export more?
  Mr. Morris: The hon. and gallant Gentleman had his opportunity to speak. I shall be referring to what I think about the effects of recent increases in indirect taxation. And perhaps he will allow me to emphasise the point that it is rather surprising that I should be helping to keep the debate going by speaking at length in reply to a censure Motion by the Opposition. You cannot put another question in reply to my question. I am asking whether you support the policy of the C.B.I. or the policy of the Government.
  Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Gentleman must use the traditional form of address.
  Mr. Morris: But we are still faced with the problem of what is the Motion about? And in my view, Mr. Deputy Speaker, it is about party propaganda and party tactics in the worst possible sense. Any hon. Member who has read the Adjournment debate on prices, which was initiated by my hon. Friend the Member for Huddersfield, West (Mr. Lomas), knows that there were many inaccuracies in the case put by the right hon. and learned Member for Hexham (Mr. Rippon). It is tempting to reply in similar terms to hon. Members opposite who have made their propaganda speeches.
  The Opposition are against any sort of incomes policy—at least, the right hon. Member for Bexley (Mr. Heath) is against it, but not perhaps the right hon. Member for Barnet (Mr. Maudling). May we, therefore, be told during this debate what is the Opposition's policy
  1176
  on prices and incomes? The Opposition are critical of the Budget. I have criticised the Budget in parts, particularly the very severe increase in Selective Employment Tax, but the Opposition criticise S.E.T. without suggesting any alternative. My criticisms of S.E.T. oblige me to say that I should have much preferred to increase direct taxation by 4d. rather than increase S.E.T. by 50 per cent. I have argued in previous debates that those who think direct taxation is wholly bad and indirect taxation is wholly good should defend their argument much more than they have so far been required to do in this House. The person who spends all of his income on food, shelter and clothing—the necessities of life—suffers very greatly from a policy which is biased in favour of indirect taxation. But, of course, the person who spends only a small percentage of his or her income on the necessities of life will prefer indirect taxation to direct taxation.
  The arguments against severe increases in indirect taxation have gone very much by default. As I have said before, I believe that S.E.T. is unduly discriminatory against retailing organisations. Why, for example, is there need to discriminate against the Co-operative movement and other retailers oven the selling of electrical appliances? The nationalised industry, which retails these appliances, does not pay S.E.T. while the Co-operative Movement and other retailers do. I am not a critic of the nationalised industries. The hon. Member for Worcestershire, South paid a warm tribute to the National Coal Board. And I am sure that the nationalised electricity supply industry does not need this discrimination in its favour in the selling of electrical appliances.
  Nor is the Standard Industrial Classification a proper instrument for deciding who should pay a tax of this kind. I hope profoundly that the Government will not await the outcome of the Reddaway Inquiry to remedy anomalies which all of us recognise. Some people see the Reddaway Inquiry as a delaying tactic. But I am sure that a very useful report will ensue. I do, however, hope that the opportunity will be taken in the Finance Bill to introduce Amendments removing at least some of the worst anomalies of this much criticised

  1177
  tax. When the Opposition attack S.E.T. they sometimes omit to say that some of them passionately want to see a tax imposed on value added. May I say to consumers that the introduction of a tax on value added by any future Conservative Government could make the S.E.T. look like an act of consumer protection.
  The Opposition say that they would reduce taxes and spend more on defence. They would also cut Government spending but do not indicate where the axe will fall. I hope that they will be forthcoming and explain their policy much more than they have done so far.
  There were murmured references and some muted heckling about rents and rates during the speech of my right hon. Friend. It may be that forthcoming political events outside the House are the reason why this Motion has been tabled. But this Government, more than any previous Government, have held down rents and rates by their policies.
  When addressing his party's local government conference in Birmingham on 29th March, the right hon. Member for Altrincham and Sale (Mr. Barber), speaking as the Chairman of the Conservative Party, argued that the
  "Conservative-controlled local authorities had found themselves faced with the task of mitigating at the local level the harsh facts of incompetent Labour Government".
  Among the harsh facts which it was alleged they had faced were "swingeing cuts in public expenditure". As if that were not enough humbug from a Conservative spokesman whose Parliamentary colleagues have been literally howling and shrieking for bigger and better cuts in public expenditure, the right hon. Gentleman went on to say that
  "what the British people want in politics is honesty and truth".
  In the city in which the right hon. Gentleman gave his address—and this has a very big effect on the payment of rates—public expenditure by the Government in the form of total Exchequer grant, on both capital and revenue account, went up from £21,091,847 in 1963–64 to £28,635,918 in 1966–67. Thus, there was an increase in public expenditure out of taxation of more than £7·5 million during the first three years of the Labour Government. In terms of percentage increase, Leeds, Manchester, Not-
  1178
  tingham, Bradford, Cardiff, Newcastle-upon-Tyne and Southampton fared even better than Birmingham. For the 20 largest county boroughs in England and Wales, the increase over the three years was £50 million. So there is not really much sign of "swingeing cuts in public expenditure" affecting local authorities.
  My principal concern is with the city of Manchester. I have recently been comparing the treatment of its ratepayers by the present Government and their Conservative predecessor. Manchester's share of the extra £50 million in total Exchequer grants was £4 million. In rate support grants and their former equivalents, the following payments were made by the present Government and the last Conservative Government. In 1961–62, £8,406,673 was paid to Manchester; in 1962–63, it was £9,116,782; in 1963–64, £11,275,168; in 1965–66, £12,906,508; in 1966–67, £13,724,029; and in 1967–68, £14,626,447 (estimate). The estimate of rate support grants payable to the city for 1967–68 includes the new "domestic element" of £220,995, which is expected to increase to more than £680,000 during the present year.
  This element, as many hon. Members know, represents the cost in Manchester of a scheme initiated by Labour's Local Government (Finance) Act, 1966, under which all household ratepayers are now charged a lower poundage than other ratepayers. The effect of the scheme in Manchester, as elsewhere, was that householder's rates were reduced by 5d. last year. They will be reduced by 10d. this year, 1s. 3d. the following year, and so on. This is price-cutting by the Labour Government in what is for many people a particularly sensitive field.
  It may not have been one of the harsh facts with which, according to the right hon. Gentleman the Member for Altrincham and Sale, local Conservatives have had to deal. But the scheme does make complete nonsense of this Motion and of the claim that local Conservatives alone have held down rates. Domestic de-rating has been a most important form of price stabilisation carried through by the present Government. Also it supports the view that the Government have been much kinder to the electorate as rate-payers than as taxpayers—particularly as indirect taxpayers—and that if there had been less Government help for local

  1179
  authorities, there would have been less need to incur the odium of reintroducing prescription charges and of deferring the raising of the school leaving age.
  In addition to general domestic de-rating on an annually increasing scale, and making it much easier for owner-occupiers to pay rates by monthly instalments, there is also the Labour Government's rate rebate scheme for the relief of individual ratepayers on low incomes. Manchester paid out £187,350 in rate rebates during 1966–67. The Government met 75 per cent. of the cost, and the average rebate received by the individual recipient in Manchester was £17 5s. 7d., which was available to him to spend on other things. Taking into account the improvements in the scheme which were announced by the Prime Minister in January, it is expected that the number of rebates will rise substantially during this year.
  The Conservative Government's one and only essay in individual rate relief was written into Section 5 of the pre-election Rating (Interim Relief) Act, 1964. My inquiries show that the total of grants paid under this Section of the Act to individual Manchester ratepayers suffering hardship was £480 in 1964–65; £374 in 1965–66; and £207 in 1966–67. Even some of the right hon. Gentleman's audience in Birmingham might agree that facts rarely come harsher than these.
  Yet there is one more fact which ought to be mentioned about individual rate relief. Whereas the Labour Government were prepared to pay 75 per cent. of £187,350, their Conservative predecessors had agreed to pay only 50 per cent. of £207. Individual ratepayers in such hard-pressed local communities as Bournemouth and Broadstairs may have welcomed Section 5 of the 1964 Act, but there was little more than peanuts, not to say potato crisps, for the relief of individual ratepayers in cities like Manchester.
  Nor are domestic derating and individual rate relief the only fields in which the present Government put their predecessors to shame. There is also the important field of housing and, in particular, housing finance. As a housing priority area, Manchester's house building programme is now limited only by capacity to build. In 1967–68, the housing sub-
  1180
  sidies paid to Manchester were £1,744,004, or almost twice as generous as those allowed by the Conservative Government in 1961–62, when the figure was £927,808. The difference in approach in this field is fully borne out by the following comparison of housing subsidies paid during the last three years of Conservative Government and the first three years of Labour Government. Between 1961 and 1964, £3,055,203 was paid to Manchester in housing subsidies; from 1965 to 1968, the figure was £4,703,475.
  But while the Labour Government have been steadily increasing housing subsidies, the Conservative majority at Manchester's Town Hall have frozen the rate subsidy at the amount which was being paid when they took control of the city last May. This is why I would ask the party opposite not to lecture the Government; instead, hon. Members opposite should be lecturing their colleagues on the local authorities who have frozen rate support for housing revenue accounts.
  I am told again and again by Manchester people that they will rigorously fight any increase in council house rents, which are, for so many people, one of the most important prices of all. They argue that if the Government can increase by £1,700,000 the amount they pay in housing subsidies over a period of three years, the local authorities should not be allowed to freeze the rate support to the housing revenue account. Rate support to the housing revenue account is not, of course, a subsidy for council house tenants to bring down their rents. It is in respect of town planning and includes financial help for the clearing of sites. Council house tenants alone should not be held responsible for town planning. So I would emphasise to hon. and right hon. Members opposite that instead of lecturing the Government they should be lecturing their supporters in the town halls of this country, asking them to change their policies in this very important field, than which there is no more sensitive question in the whole range of prices.
  I must tell the hon. Lady the Member for Finchley (Mrs. Thatcher), more in despair, that her colleagues in Manchester have slowed down slum clearance, cut back the building of new homes and

  1181
  stopped the city's clean air programme. Other achievements which mark the end of their first year of control include a cut in spending on street cleansing, a lowering of maintenance standards in Manchester's schools and, to save a few thousand pounds, the ending of a scheme under which elderly and disabled men and women were given small amounts of tobacco or sweets in the city's welfare homes. After the massive help they received from the Government to keep rates down, that is the contribution they have made.
  This is why I suggest that, instead of arguing here in an almost empty House of Commons a much-heralded censure Motion against the Government, the party opposite should be arguing for more humanity where it counts—in the localities. I feel very much that what people want more than anything else is equity. Our politics, the politics of Labour Government, must be about nothing if they are not about equity. I believe we must do more to inform people of what has been done by this Government to hold prices down. We must argue more than we have done about the basic inconsistencies in the speeches which are made against us. We must do more to explain such facts as those brought forward by my hon. Friends in this debate and in a recent debate by my hon. Friend the Member for Huddersfield, West (Mr. Lomas), because people are too often misled by those who are more interested in propaganda than in the facts of our present situation.
  7.10 p.m.
  Mr. Tom Boardman: I will not try to follow the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris), because I got lost in the maze of figures that appear in the document from which he was reading and in that I lost the logic of his argument. I want to take up one point in reply to what he said about the Conservative Party appearing to be going for consumer protection. I hope I have it right.
  Mr. Alfred Morris: The hon. Gentleman has got it wrong.
  Mr. Boardman: The hon. Gentleman tells me that I have it wrong. However, I remind him that he made no mention
  1182
  of the Resale Price Maintenance Act, which has done more to bring about a competitive society in the retail trade and bring prices down than anything that has ever been done by a Labour Government at any time.
  Mr. Morris: I was arguing that the White Paper, Cmnd. 3590, is wise in saying that there is a place for the interests of the consumer when salaries and wages are being negotiated. This is a new and important proposition.
  Mr. Boardman: I am sorry, but I did not follow the hon. Gentleman's argument.
  I will switch from that and deal with one section of the community which is most severely hit by rising prices. I refer to the elderly. I was surprised and disappointed that the right hon. Lady made no reference of any kind to the elderly. She talked a lot about wages going ahead of prices and the gap that this provided, but there was no reference to the elderly. Apart from a passing reference by the hon. Member for Halifax (Dr. Summerskill), nothing has been said by any hon. Member on the other side of the House about this section of the community. I would remind hon. Members opposite of the hardship caused by rising prices to the 150,000 people whose average age is over 85 and who get no insured pension. The House and the nation will recall that that was the group of people for whom the Conservative Party tried to get justice.
  My hon. Friend the Member for Worthing (Mr. Higgins) brought forward a Bill in February this year to try to get justice for those 150,000 people who were deprived of any insured pension by seeing that they got the same contribution, not coming from the stamp, but from the general fund of taxation, that goes to retirement pensioners. The House will recall that the Government used their majority on that occasion to defeat the Bill. It will also be remembered that in the last Parliament the device that was used by the Labour Government to prevent a similar Bill put forward by my hon. Friend the Member for Abingdon (Mr. Neave) coming before the House.
  Mr. Lomas: Will the hon. Gentleman concede that the House and the nation will also recall that from 1951 to 1964

  1183
  the party opposite did nothing about these people, and that by the measures we have introduced to improve their living standards we have done more than they ever contemplated?
  Mr. Boardman: I recall all the arguments which were put forward which were answered one by one from this side in February. We are speaking of a dwindling section of the community with an average age of 85. In the last Parliament the Labour Government used a device to prevent a Bill coming before the House and they used their majority in February last to defeat it.
  I move to another section of the elderly, the public services and Armed Forces. They were promised parity of pensions. That promise has not been implemented. The people concerned are the Government's own employees. They have not had the 17 per cent. increase in wages, or whatever the figures are which have been quoted. They were promised parity of pensions and they have been deprived of it.
  I include in this group those living on fixed incomes, those who have retired and invested their savings and are living on the income from them or on private pensions and find that with rising prices their dream of a comfortable retirement has been turned into a nightmare of existing. Those people have not been mentioned. We have not heard one word about them.
  I turn now to the section of the elderly which is wholly or mainly dependent upon State pension. I accept that in statistical terms it can be shown that pensions have risen faster than prices during the last 16 years. But the trouble, as the Minister knows, is that no one believes it, least of all the pensioners. They did not believe it during our 13 years and they do not believe it now. We all know from travelling around our constituencies that, in true terms of purchasing power, the older folk are worse off than they have ever been. One knows, too, that the commodities which have gone up in price have been those to which they have been most vulnerable. Food prices are one of the biggest increase. Now coke, gas and electricity has gone up in price. As my hon. Friend the
  1184
  Member for Worcestershire, South (Sir G. Nabarro) said earlier, in a smokeless zone—as my constituency is becoming such a zone, where these fuels must be used—one finds that the price rises of coke, gas and electricity have been higher than the rises in the Index of Retail Prices. One wonders whether the Index of Retail Prices is a correct guide for the cost of living of the elderly. I ask the Government to look at that aspect, because I challenge whether it can be so when one sees the hardship that is caused.
  I am sure that hon. Members have found in their constituencies as I have in mine, old souls sitting wrapped in blankets in front of unlit gas fires because they are afraid of the gas bill in this year of 1968. They also sit without the light on because they are afraid of the electricity bill. They see and have seen their savings eroded. It becomes even more painful and hard on the older old folks because those over 70 have probably got through all their savings and every price rise fills them with fear about how they can see their days through. These are the people to whom I am referring about whom no reference has been made by the right hon. Lady.
  It may be said in reply—but I hope it will not—that retirement pensions were raised in October, 1967. I hope that is not given as any answer. I do expect an answer. If this is raised I would remind the Minister that that rise I well remember, because it happened to coincide with the by-election which returned me to this House. Polling day for that by-election was about a week after the first payment of the increased pension. It was then said freely by responsible members of the Government that the pension increase was to give those pensioners a substantial rise, as it was, and that they would be able to maintain the increase which they had achieved over the rise in prices. Nothing was said about the rise in the pension being because the Government were going to devalue a month later. Indeed, the Government denied the possibility. Nothing was said about the increased pension being given so that they would have it to meet the rising prices resulting from the stiffest Budget of all time which would come five months later.
  I hope that the Minister will not, in reply, suggest that the pension increase

  1185
  made in October, 1967, was to cover the rising prices which have since occurred. If so, no one will believe it. We must remember that the Prime Minister, on the 18th January, in his Budget statement, said there was no intention to increase the retirement pension, at any rate until the autumn of 1969—two years ahead. These retirement pension arrangements have to absorb not only the rising prices which have occurred since November, but the rising prices that are going on, galloping ahead, until Autumn 1969, without any hope of an increase. Can that be just or right? If the Minister's answer is "We are going to increase the supplementary pension this autumn," I would reply that only about one million of the elderly are drawing supplementary pensions and this will leave a vast number who are not helped by it. Secondly, by next autumn they will have suffered a year of these rising prices and the hardship which is involved. I trust some better answer than that can be given.
  I had hoped, on a different occasion, to which I will refer in a moment that it would be possible to put forward some suggestions for dealing with these problems. I do not suggest that the problem of the elderly should be met by an increase in the total of Government spending. The proportion of Government spending on the welfare services is as high as it possibly can be at the moment. There should be an alteration of priorities. I believe, as my hon. Friend the Member for Louth (Sir C. Osborne) said, that we have got our priorities quite wrong. We must encourage those who are able to provide for themselves and their families to do so and concentrate public monies on those who are not able to provide for themselves. In that category I include the elderly, and particularly the older of the elderly. Our theme must be independence and not dependence, and this is where we must change our priorities. I am not advocating that there should be an increase in the total amount expended on the Welfare State, but that priorities should be adjusted and the industrial growth of this country that we should thus secure—and will not secure under this Government—would itself generate further resources to put these people ahead and keep them in parity with the rising prices.
  1186
  The sectors of the public to which I have referred have various things in common. They are each now having to do without something. They come under different income brackets; I have referred to those who are on retirement pension, those on supplementary benefits, those who are retired, some perhaps with quite reasonable fixed incomes. In each case, the rising prices are causing them to do without something each month which they had the month before, and they will have to do with less and less as each month passes. This is what I mean by a decline in the standard of living.
  These people have something else in common: they do not demonstrate; they do not march down Whitehall; they do not have trade unions; they do not threaten strikes and go-slows unless their demands are met. Is that why they are ignored? Is that why the right hon. Lady felt it unneccessary to make any reference to them?
  They have one other thing in common: they have no power to increase their income. They are dependent on what they have, whether it is a fixed pension, a private pension or the savings from investments in War Loan, or whatever it may be. They have no power to increase that income; they cannot get a 3½ per cent. increase by extra productivity; they cannot work overtime. They are completely dependent on what is coming in and on controlled prices to ensure that their budget is balanced.
  Until this week I believed the problems of these old folk, to whom I have referred, was one about which the Labour Party cared as much as we do on this side of the House. I thought their failure to provide for them was due to their incompetence. As a result of what happened on Monday I know differently. The Front Bench of the Government then adopted tactics—a deliberate filibuster—in order to prevent any discussion on a Motion which stood in my name, calling the attetion of the House to the declining living standards of the elderly. It was a contemptible act which showed complete disregard for the elderly. The nation will take note of what was done. The only conclusion one could draw from this deliberate filibuster is that the Labour Party do not care. They do not care to have those problems discussed.

  1187
  As I have already said, the elderly do not have trade unions, they do not subscribe to political levies; there is no one to put forward their case apart from their Member of Parliament. When an hon. Member of Parliament had the good fortune to succeed in the Ballot and proposed to move a Private Members' Motion on behalf of the elderly—which should be close to the hearts of all Members of the House—it was quite despicable to see the House use this device to prevent it being discussed. This will not be forgotten any more than the nation forgets the treatment given to the Bill sponsored by my hon. Friend the Member for Abingdon.
  We must not forget that those of whom I am speaking, the old, are people who, in the main, have lived through two world wars, have worked hard and brought up families without any State assistance, and the peak of their earning power was at a time when wages were low and they had difficulty in saving. It is due to them that we enjoy so many of the benefits we have today. They deserve better of us and they certainly are not getting it under a Labour Government.
  7.28 p.m.
  Mr. Albert Murray: I am sorry that the hon. Member for Worcestershire, South (Sir G. Nabarro) is not with us at the moment, because I should like to congratulate him on a great acting performance. We see this performance regularly. After the last few weeks, the only rôle we could not cast him for is Othello. He may be compared to many goods to be bought in our shops: he is well advertised and beautifully packaged, but when opened, the packet is half empty and what is left is not of much value.
  We have not had constructive suggestions from the Opposition about keeping the cost of living and prices down. Nobody would have believed that this was the party that had to cajole, persuade and bully its Members on resale price maintenance, during their term of office. They did not have a clear majority then—they had to get their Members into the Lobby by hook or by crook to do what they have been suggesting we ought to be doing today—to keep prices down.
  After the speech of the hon. Member for Leicester, South-West (Mr. Tom
  1188
  Boardman), anyone would think that prices had not increased under the Tories and that the old-age pensioners had a wonderful time. Perhaps I can quote some facts, which I am sure will not come amiss. If he is sincere, as I believe, about the plight of the old, he will be aware that the price of bacon rose from 3s. 1d. a pound in 1951 to 5s. 1d. in 1964. The price of cheese rose from 1s. 2d. a pound in 1951 to 3s. 3d. in 1964, margarine from 7d. to 11d. and tea—old people like their cup of tea, perhaps, more than young people—from 3s. 4d. to 6s. 4d.
  The problem with the Conservative Party is that they just do not know where they are when in opposition. They have given us no constructive policy today for keeping prices down. During our period of office, we have at least tried to make the lot of some old people easier. I do not know what the Opposition expected after three years of Labour Government. They seemed to expect us to fulfil all our election pledges in the first year, as well as dealing with most of the problems which they left behind after 13 years.
  Of course there is sympathy for those who cannot draw National Insurance payments, but for 13 years these people were neglected—and the same is true of the Bill of the hon. Member for Abingdon (Mr. Neave). Also, during these three years, we have introduced rate rebate schemes, which give some assistance to those on low incomes and ensure that those below the limit get some help.
  No one would deny that there have been price increases in the last three years and I do not doubt that this will go on, but there is a certain mythology about these increases. Anyone who reads the News of the World—6 million people buy it every week and, as a former print worker myself, I am not sorry—will know that it did a price check in the last week of January. It sent someone out to buy 36 items, which the paper revealed on 20th January had cost just under £4, or 3½d. more than in November. But the interesting fact is that they cost 1s. 10½d. less than in May, 1967. One thing which we must ask the housewife is to shop around more—[Laughter.]—the right hon. and learned Member for Hexham (Mr. Rippon) may well laugh, but I will quote some facts for him——
  Mr. Rippon: If the hon. Gentleman would look at today's survey in the Daily Sketch, which is bang up to date, he would see a very different story.
  Mr. Murray: There are differences in these matters. The Observer did a similar survey on 35 items and found that the prices of them had gone down in February and March. Margaret Stone, who did this survey, shops at Victor Value. A member of the co-operative society in Salford found from his own survey in Salford that he could get 34 of those 35 items for more than 10s. less. So the lesson is, shop at the Co-op.—[An HON. MEMBER: "And get the divi."]—As one of my hon. Friends says, they can also get the "divi".
  The Observer this month shows that prices are now up, but most of those increases are on seasonal items. My hon. Friend the Member for Erith and Cray-ford (Mr. Wellbeloved) will know that one of the largest increases for the housewife is in the price of meat—and for the unique reason that there has been a ban on imported beef, and we will hope to see that price go down in the next few weeks. But there is a lesson in this—of making the housewife more perceptive.
  What can the Government do about the housewife and her shopping? The First Secretary of State could help. She could talk to some manufacturers. By a strange coincidence, I have with me these packages—[HON. MEMBERS: "Oh."]—This is perfectly in order: I have checked. I have some of the packets and advertisements with which housewives are tempted. The managing director or chairman of, I think, Unilever said that the housewife likes to be titillated by advertising promotion. What the First Secretary should do is ask some manufacturers to have a moratorium on some of their promotions and large advertising compaigns in the coming year.
  For instance, I have this cornflakes packet, the name of which I will not mention, which shows that, if one enters a competition, one can win 100 Hoover kitchens, each worth £250. Someone must pay for this and I am certain that the cost is not coming from the manufacturer's profits. If one buys a certain type of cat food—I do not eat it myself—one can win one of 20,000 "lucky horoscope"
  1190
  games. Or one can go in for a competition run by a margarine firm's "lucky wheel" competition—rather like choosing the leader of the Tory Party—and win £17,500 in cash.
  Manufacturers should be trying to cut prices at this time. I am sure that many of the housewives in my constituency would be happier with 1d. or 2d. off than with this catering for a small minority of consumers with various promotional and advertising gimmicks.
  But what is even worse is the gimmick of a coffee manufacturer—who again shall be nameless. If one buys their coffee and sends in a certain number of vouchers, one can get free eggs for breakfast to the value of 3s. What is wrong with this is that I am buying this brand of coffee and getting my eggs cheaper, but those who are not buying it are not getting their eggs cheaper.
  This is also true of another product, a slimming loaf—which I do not use—which offers a voucher worth 6d. when one buys a particular brand of meat extract. Again, the person who does not buy this slimming loaf does not get the value of that "tanner" off in the shops.
  During this time of restraint, the First Secretary should be trying to talk to manufacturers about the possibilities of their cutting prices on some of these goods. The Government had a great opportunity when the Monopolies Commission and the N.B.P.I. found against the detergent manufacturers, saying that detergents were 40 per cent. over-priced. The Government should have stuck firm. Instead, the Government did a deal with the firm and two new brands were introduced. In his annual report issued last week, the chairman of the company said that these brands were not going too well and that they had secured only 20 per cent. of the market. I would have thought that that percentage of the market was very good. Certainly hon. Gentlemen opposite will be glad if they get that percentage of the nation's votes in 1970 or 1971.
  The Government should have held fast because I do not believe that these products have been advertised in the same way as the other leading brands have been publicised. That may be why they are not securing a bigger share of the market. In any event, I do not believe that one brand of detergent is very dif-

  1191
  ferent from another or that when only two large organisations such as Unilever and Procter and Gamble are holding the British market for these products, the housewife can get as fair a deal as she should be getting.
  The Government should also take more note of the ideas of the Consumers Association and Consumer Council. They have recommended the establishment of consumer centres throughout the country and the Consumer Council considers that for about £2 million a year it could man a large number of these centres and advise consumers on whether or not they are getting a fair deal. Although we usually refer to housewives as being the most important consumers—and no doubt they are—we must remember other buyers like bachelors and widowers who may be old age pensioners. They, too, must be protected and the establishment of consumer centres might be of great help in this context.
  The Consumer Council performs an important function with its magazine Which?, but that has a circulation of only about 430,000. It is claimed to have a pass-on readership of eight times that figure, which means that about 4 million people read it. I am worried because the vast majority of that 4 million readership are middle-class people in what are called the A and B groups. The harassed housewife who must dash to the shops, cook lunch for her children coming home from school and prepare dinner at night does not have time to sit down and read Which?. As the majority of housewives cannot be informed by this means of the best buys of the week, the establishment of consumer centres would be of great assistance.
  We have heard a great deal from manufacturers about their not being able to do much more to help. I suggest that they stop making political contributions to the Tory Party and pass on the money to the housewife. The Guest Keen and Nettlefold organisation is providing about £38,000 to the Conservative Party. I suggest that a penny off the price of a dozen screws would be more beneficial to the economy. The Rugby Portland Cement Company will provide £15,000 to the coffers of the Tory Party to fight the "wicked Socialists". I read that an organisation called British Vita, a newly floated group to produce flexible foam,
  1192
  intends to make a political contribution to the Conservatives.
  Mr. Rippon: Hear, hear.
  Mr. Murray: I am glad of the right hon. and learned Gentleman's support. He might be interested to know that the chairman of the newly floated company, Mr. Norman Grimshaw, is reported to have stated that he intends to make a political contribution to ensure that there is a virile Opposition to the present Government. I do not think that British Vita will get its money's worth. The firm would be better off reducing the price of its flexible foam products, and that goes for the other companies to which I referred.
  Many hon. Members have been greatly disturbed by the increase in building society interest rates. I have tabled a Question for 7th May on this issue. I suggest that these rates should be frozen at 7⅛ per cent., the figure which remains in operation until 1st May. The Building Societies Association, which represents 320 building societies, expressed distress at the situation, announced the increased rates and then held a wake at the Dorchester Hotel. It must have been distressed or it would have staged it at Claridge's. Here we see a large organisation, representing a great number of building societies, pleading poverty, announcing increased rates and then going to the Dorchester for a nosh-up. In this day and age, it strikes me as odd that such an organisation should be allowed to splurge our money in this way. I say "our" because I should declare my interest in that I will be paying the additional money on my mortgage.
  The building societies should start making some economies. There are 635 building societies in Britain, which shows that there is ample room for more efficiency and some amalgamations. The building society which granted my mortgage has spent a considerable time trying to find £5 of mine which appears to have gone astray. I should mention that the firm uses computers. One can imagine the duplication that goes on when we have 635 building societies. The Building Societies Association courteously wrote to me after I tabled a Question on this subject. I urged them to become more efficient, to pay their way and not to just announce increased rates of interest.

  1193
  In his Budget speech the Chancellor mentioned that there is likely to be a 1 per cent. fall in the standard of living in the coming year. That may be true. However, if that 1 per cent. fall is to mean one less motor car in a hundred—particularly if it happens to be a Renault, Citroen or Volkswagen—not many of my hon. Friends will be terribly distressed. We fear that the 1 per cent. fall will mean one less meal in a hundred families who, at any rate, are not enjoying the standard of living of the majority. The Government must concentrate on this problem and protect the poorer sections of the community.
  The Government have gone some way along this path in referring 22 councils to the Prices and Incomes Board on the question of rents. This is a start. In the last year or two we have seen, under a Labour Government, some councils and particularly Conservative-controlled authorities, considering this to be open season for council house rent increases. Stabilising the position at an average of 7s. 6d. per week per year is Government action to be welcomed.
  The Government have a great responsibility. They must be able to persuade the unions and manufacturers and at the same time live with the voice of gloom from the benches opposite. The hon. Member for Louth (Sir C. Osborne) is only one example of that voice of gloom. That hon. Gentleman has been making gloomy speeches not only during the last three years of Socialist rule but for many years before that.
  Several hon. Members opposite, including the hon. Member for Worcestershire, South have made unkind remarks about my right hon. Friend the Minister responsible for employment and productivity. If the trade unions see that this Government mean business, that the Government are prepared to put their foot down against unreasonable price increases and investigate some things which need investigating, if we show we are willing to fight price rises where we consider them unreasonable, my right hon. Friend will get the support of the trade unions. As she said, this period can be a starting point not merely for improving the standard of living of our people, but for allowing us as a nation to play our part
  1194
  in world affairs as an economically viable unit.
  7.51 p.m.
  Mr. Ian Lloyd: I hope that the hon. Member for Gravesend (Mr. Murray) will not mind if I do not follow him far in the serious aspects of his speech. I was delighted by many of the amusing aspects. I want to refer to three points which he made.
  I am sure that hon. Members on both sides of the House will support the line he took about consumer protection organisations, particularly the magazine Which? We all agree that it serves an extremely constructive purpose, as does its fellow magazine whose name I forget for the moment. While we are all in favour of Which?, we are not in favour of witchcraft and some of the economic measures taken by the Government in recent years appear to come more from the arena of witchcraft than from the studious rationality of that magazine.
  A second point the hon. Member made was that representatives of the building society movement showed a lack of appreciation of present difficulties by holding their meeting at the Dorchester Hotel. I do not hold shares in the Dorchester Hotel directly or indirectly and I do not mind where building society representatives meet, but it is strange to argue that serious people talking about serious business should not meet in a place where all the necessary facilities can be provided. This, no doubt, is true of all large hotels. Does the hon. Member expect them to meet on the concourse of King's Cross Station, or some similar place? If he thought seriously about the matter, I am sure that he would not press that point very far.
  One of the most serious points that the hon. Member made was his reference to imported motor cars. Of all countries we probably are the most vulnerable to this very dangerous type of argument because we are dependent on a great variety of export markets and upon people not adopting a narrow nationalistic view when they buy motor cars. It is most important that when we purchase motor cars, or any other form of major equipment for industrial or consumer purposes, we should purchase the product on its merits, because we ask the rest of the world to do that in respect of our products.
  Mr. Murray: What I tried to say was that if there is to be a fall of 1 per cent. in the standard of living as suggested by the Chancellor, then if a comparison is to be made we would prefer the standard to fall in the purchase of motor cars from wherever they come rather than in a decent standard of living for the people.
  Mr. Lloyd: So long as the hon. Member was not seeking to discriminate on the grounds I have mentioned, I accept that entirely.
  I had not intended to speak in this debate, but I was prompted to do so by the speech of the First Secretary of State, who, alas, has just left her place on the Front Bench. Some of the things she said this afternoon led me to conclude that there was a certain weariness pervading the Government Front Bench. It seems that the Government are tired—some of the leading members of the Government are tired. I am reminded of the charming story of a little lift boy who spent his day operating a lift. A visiting American tourist got into the lift and noticed the pale little chap of 14 or 15. She asked him, "Young man, are you tired?" He said "Yes, Ma'am." She said "Do you get tired going up?" He replied "No Ma'am." She asked "Do you get tired going down?" He replied, "No, ma'am." She asked "What makes you tired?" The boy replied, "I get tired answering questions."
  It seems that the Government are tired of answering questions, because questions are becoming very pertinent and probing and they are leading to a situation in which the Government find is extremely difficult to answer. The Government are presiding over an economy where things go up and things go down and always the wrong things go up and the wrong things go down. Undoubtedly the Government find themselves in exactly the same position as the little boy in the lift.
  Again, this afternoon the Secretary of State, following the example of prominent Ministers, gave us what I suppose she regarded as a statistical display. Again and again she used with apparent precision to one place of decimals economic magnitudes which could be used only within limits of plus or minus 5 per cent. This is a fundamental point. I have raised it before and I need to do so again. If the House and the country
  1196
  are asked to draw most important conclusions about variations of ·1 per cent., ·5 per cent. or even 1 per cent., a serious obligation rests on Ministers who repeatedly use these figures to make plain to the House and the country that this degree of precision inheres in them. Again and again we get figures given to us, but no one says that the statistical degree of error is plus or minus 1 per cent. Therefore, we are entitled to argue for that degree of precision. I challenge the First Secretary and other Ministers to give us the statistical limit of error. Otherwise, how can we rely on their presentation of a case?
  I turn to the wholly misleading criteria of unemployment which seems to dominate the Government's thinking. Here again, if we are to draw useful and constructive conclusions about the economy, we must not look at obsolete criteria. I have not the time to develop the case in detail, but the existing stress on crude unemployment figures used throughout prices and incomes debates and discussions is virtually meaningless. We are concerned with a ratio. It is the ratio of output with a high probability of sale to those employed people—I would give a triple qualification—who are effectively, necessarily and indispensably employed in their occupations. I resisted that dreadful phrase, "wholly, necessarily and exclusively", but it has the same sort of aura about it and could be used in this connection with more justification.
  If we were able—as I think we must become able, although it may take a long time—to look at the employed population in industry and agriculture and the Services and to define them by this criteria, it seems we would find that our existing measure of employment was largely statistical and beneath this confusing and misleading statistical surface there is probably an order of magnitude of something like 10 per cent. to 20 per cent. of the so-called employed population who do not fall within the definition.
  It can be argued that if one talks in this way one is not thinking of the human consequences and the economic consequences. I do not think that charge can be sustained because in the Welfare State in which there is an alternative income—I have come across extraordinary examples recently of young

  1197
  people drawing from the whole range of social benefits social incomes far better than they derive in employment—our great concern about that aspect of unemployment can be overdone, and possibly is seriously overdone. Nevertheless, we are not entitled to be less concerned about the social aspect of unemployment, because there are very few people who genuinely enjoy being paid, whether a large or small sum, to do nothing. The very few who do enjoy being paid to do nothing throughout their lifetime are probably a special category of the unemployed with whom one would have to deal in any society on a different basis. We must not overlook this aspect, because it is fundamentally important.
  I now turn to the question of prices. Here the First Secretary showed a most astonishing naivety. She chose to start with the example of copper, a metal in which there is a most volatile market, volatile for very good reasons. I think that it was the late Mr. Bernard Baruch who, under interrogation by a Senate committee, was asked what he was and replied quite unashamedly, "I am a speculator". The committee asked him to define what that meant and he said, "Someone who tries intelligently to anticipate the future". That may be his particular definition, but it applies to everyone dealing in copper, because copper mines are situated in odd parts of the world where odd things happen. Therefore, it is necessary in that industry intelligently to anticipate the future, and we have a highly-developed Metal Exchange in London at which the price of copper is determined.
  But the copper-using industry, which is the important industry here, is far more afraid of its competition from the aluminium industry than of the First Secretary and anything she might do. Everything I have read about the copper-using industry suggests that the real spur of competition comes from aluminium and various other alternative sources. Copper is an example of something the Government can satisfactorily leave to the world competitive situation, and they need not worry very much about its price.
  Then the right hon. Lady spoke of oil. What an astonishing example! It is the supreme example of the efficiency of
  1198
  private enterprise in offsetting rising costs in a major consumption article practically throughout the world over a long period—virtually since oil has been used. If one takes the real cost of petroleum, it is probably one the most stable commodities. The only thing that has rendered its price unstable is the taxation imposed by Governments. Of all the examples—and there are 10,000 or 15,000 commodities in use in this country—I should have thought that petroleum was one of the last which should engage the right hon. Lady's attention.
  Why not deliberately harness the force of competition? We have seen many other fields in which prices are brought down where competition and enterprise are given free rein and production is not inhibited by a great variety of State restrictions and legislation.
  I turn very briefly to another point which the right hon. Lady raised. She accused the Opposition of a certain degree of inprecision of economic thought. After listening to her this afternoon, I should have thought that she was the last person to make such a charge. But let us accept her premise. Let us ask her to deal, as I think she should, with a much more serious argument, I am the first to admit that it is not mine, but it deserves to be given wider publicity than it may have had. It is one which has been set out in great detail in documents available to hon. Members on both sides of the House and is found in Professor Paish's article on the economy in the April Lloyds Bank Review.
  Even if our views are worthless—and I do not accept that premise—there are a number of arguments in that article which the Government should answer. The first concerns unit labour costs, a question which was stressed by the First Secretary. In the article Professor Paish points out that by itself this criterion is quite insignificant. The important question is the ratio of the growth of employment and output to the margin of unused productive potential. As I understand it, this is the key factor in the article. It is a most powerful argument. Does the right hon. Lady accept it? If not, what can she put in its place? Can she advise the House why she does not accept it? Even if the Opposition in their economically inarticulate state cannot understand this sort of thing, there are

  1199
  many in the country who would like to understand and to know the right hon. Lady's arguments.
  Another question powerfully dealt with by Professor Paish is that of economic growth, which is constantly bandied about in the House. He takes a long perspective; it is a significant aspect of the article that in the graphs given General Elections are not very evident anywhere. It is the record of Government action in the post-war world about which he is talking, and it is really a non-political argument. He argues that our record is not absolutely bad throughout the post-war period. I accept that. Second, he says that when we make comparisons—particularly with Europe, but not only with Europe—they are unfavourable to us primarily because after the Second World War Europe contained a large number of technologically backward areas, particularly agricultural, from which a large movement of labour could take place to the more technologically advanced areas. We should take this much more into consideration when discussing the problems of the British economy, because growth is bandied about here with very little sense of perspective or of the important surrounding arguments which must be taken into consideration.
  I now come briefly to the question of incomes policy. I hope that the right hon. Lady will not mind if I transpose the metaphor somewhat. Here it seems to me that she is putting her shirt on it. We should not want her to lose it, certainly not in public here. But there is a serious danger that she may find herself emulating a mixture of Lady Godiva and the Emperor who lost his clothes. I do not ask the House necessarily to accept my arguments, which, in the view of hon. Members on both sides, may not be as authorititative in any way as those of Professor Paish, but to accept those set out by him with great force and conviction in the article to which I referred. He says:
  "If the effects of an 'incomes policy', even when imposed under the most favourable conditions, are likely to be only temporary, when imposed in continuing conditions of extreme full employment it is unlikely to enjoy even this limited success.…In such conditions, it is doubtful if they could be prevented, even
  1200
  by penal legislation, from using methods which would increase their labour costs"—
  he is referring to employers—
  "in order to attract and retain the labour they urgently needed. Even if standard wage rates were effectively controlled, there are innumerable methods of giving higher remuneration, in cash and in kind: guaranteed overtime; up-grading; revised piece-rates; merit payments; bonus or incentive schemes; profit-sharing; pension schemes or other fringe benefits; even improved canteen or other amenities. All are means of bidding up the price of labour, so that the gap between the standard rate and the actual remuneration paid widens continuously."
  What do the Government think about this argument? Do they believe that it can be refuted, that it is a lot of nonsense? If so, will they produce the arguments and the statistics to show this?
  Finally, it seems to me that Prof. Paish put his finger right on the heart of the matter when he referred to the output, profits, savings and investment cycle and argued that we need give attention to the whole cycle. This is the cycle which produces wealth and enables Governments to solve their problems. It seems to me that when considering it the Government look only at the output and investment end, and prefer to ignore the question of profits and savings, the two key factors in the middle. This is precisely what we need. We need higher profits. The Government take about 75 per cent. of them anyway, but the private sector needs at least the 25 per cent. which it is allowed to retain. We need higher profits and savings. We do not want to hamstring a part of this cycle if we are to make serious progress towards the solution of our national problems.
  8.10 p.m.
  Mr. Kenneth Lomas: The hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd) covered a fairly wide area, but I fail to detect in what he has said anything that is directly related to the Motion that we are debating and which has been put forward as a Motion of censure by hon. and right hon. Gentlemen opposite. It is interesting to note that the great onslaught that we were expecting from the Conservative benches today has attracted only 3 per cent. of the Conservative Members in the House. This is most regrettable. One would have thought that they would be here trying to prove

  1201
  the accusations which they make in putting the Motion on the Order Paper.
  I am glad to speak after my hon. Friend the Member for Gravesend (Mr. Murray). It is always a pleasure to read what he has to say. It is an even greater privilege to see him make his speech. He has almost converted me to the idea that television should be installed very quickly in the House. It was a devastating performance and an illustration of what can be done with visual aids.
  I want to refer to the Motion before the House, and to enlarge on the comments that I made in an Adjournment debate on 11th March. My statements on that occasion could well be brought up to date and used to answer many of the accusations that have been made by hon. Members on the other side of the House and some statements which have been made from time to time from this side of the House on the effort, or lack of effort, by the Government to control prices.
  I want to look at the facts. I take as my bible, or certainly as my book of authority, the Ministry of Labour Gazette, which is the book that trade unionists on this side and industrialists on the other side have long used. It is recognised in this House as accurate, and it can be quoted with conviction.
  During the period a Labour Government have been in power, from October, 1964, to the latest available date, which is March, 1968, retail prices as a whole have risen by 13·6 per cent., about 2s. 8½d. in the £, and the price of food has risen by just over 13 per cent. or 2s. 7d. in the £. It is no use merely to talk about rising prices unless prices are related to wages. During the period from October, 1964, until March, 1968, the weekly wage rate has increased by 18·4 per cent., 3s. 8d. in the £, and hourly rates by 23·4 per cent. or 4s. 8d. in the £.
  It can hardly be argued from those figures that a Labour Government have kept wages down while allowing prices to rise. This is the trouble. We have not done so, and that is precisely why the Government are now in the position of having once more to introduce prices and incomes legislation in order to make their policies effective.
  1202
  The Opposition cannot have it both ways. One cannot, on the one hand, say that the prices and incomes policy of the Government has failed and then go on to say that the Government have failed to control prices.
  If it is argued that we were electioneering between 1964 and 1966, it is well to look at the figures from the time the Labour Government came to power, in April of 1966, to the present day, bearing in mind that this period includes the period of standstill and the period of severe restraint. Between April, 1966, and March, 1968, the retail price index has gone up by 5·7 per cent., 1s. ld. in the £, and food prices have gone up by 5·9 per cent., 1s. 2d. in the £. Weekly wage rates from April, 1966, to March, 1968, have risen by 9·9 per cent., almost 2s. in the £, and the hourly rate has gone up by 10·4 per cent., just over 2s. in the £. And I repeat that this was during the period of standstill and severe restraint. During the last two years wages have risen by almost twice as much as prices.
  If the Opposition accuse the Government of failure to control prices, let us look at the comparative figures to see what happened in the last two years of the Conservative administration, from October, 1962, to October, 1964. During those two years retail prices rose by 6·4 per cent., 1s. 3d. in the £, and food prices rose by 7·4 per cent., 1s. 6d. in the £. The weekly wage rate rose by 8·3 per cent., slightly over 1s. 7d., and the hourly rates rose by 8·9 per cent., 1s. 9d. in the £.
  Let us, therefore, compare like with like. A comparison of the last two years of the Labour Government with the last two years of the Conservative administration shows that all prices rose more under the Tories than they have risen under the Labour administration, whilst wages have risen more in the two years since April, 1966, than in the last two years under the Conservative administration.
  A comparison of the figures shows that during the last 2 years of Conservative administration all prices rose by 2d. in the £ more, food by 4d. in the £ more than under Labour in its last 2 years. In the same comparative period weekly wage rates rose by 5d. less and hourly rates by 3d. less. It ill behoves hon. or right

  1203
  hon. Members of this House to accuse the Government of not taking effective action on prices and of not allowing wages to increase. I do not see how they can possibly press the Motion which is before the House tonight on any facts and figures they can produce.
  Some of my hon. Friends on this side of the House should ask themselves on whose side are the trade unions. The trade union movement should be on the side of the Government who are doing all they can to ensure not only that prices are held down, but that wages of the lower-paid workers are allowed to increase beyond the accepted norm, in the interests of social justice. This seems to me right and proper.
  Let me give you some more facts. There is nothing like facts for refuting a Conservative argument, because they do not like facts. If one is in possession of the facts, one can always say that these are the facts. I do not want any airy-fairy nonsense or political brouhaha; I want answers to the facts. During the last 12 or 13 months, from March, 1967, to March, 1968, half way through the period of severe restraint, prices rose by 8d. in the £, food by 9d. in the £; weekly wage rates rose by 1s. 6d. in the £ and hourly rates rose by a similar amount.
  Since devaluation, from November of last year to March of this year, all prices went up by something like 3½d. in the £ weekly, and food, I grant, did go up by 8d. in the £, but hourly rates went up by 2½ to 3 per cent., 6d. or 7d. in the £. Those, then, are the facts of life. The sooner that they are digested and understood, the better it will be.
  It was said on a memorable occasion: "I can only give you the facts. Only God can give you the intelligence to understand them." I hope that it will be realised that the Government are doing all that they can to control the movement of both wages and prices.
  There have been criticisms of the way in which the Retail Prices Index has been compiled, and I suppose that they would be fair criticisms under any Government. However, hon. Gentlemen opposite were prepared to use those figures, and so were industrialists, and trade unions. Taken on a broad basis, the way in which the index is compiled is a fair enough indication, when one considers the tremendous
  1204
  amount of work which goes into the compilation of the index for almost every item. The weighting system changes every year, but it is worked out that, out of the average family budget, about 6s. in every £ goes on food, 2s. 6d. goes on drink and tobacco, a shade over 2s. 6d. goes on housing, fuel, light and transport take just over 4s., clothing and household goods take 2s. 6d., and the rest goes on miscellaneous items.
  The way in which food prices are compiled gives a fair indication of what it is all about. There are 200 offices throughout the country sending out officers on the same day every month to five different types of shop to buy the same articles. They are able to get a relative increase in any price or in any reduction in price.
  It is interesting to point out that Professor Alan Day, writing in The Observer early in March in an article on the Retail Price Index, said:
  "Almost certainly the Retail Price Index over-estimates the amount by which prices have risen."
  In many cases, it is possible to buy goods below the recommended price. If one shops round, it is possible to get them cheaper. However, I am prepared to accept the figures published in the Ministry of Labour Gazette.
  What we have to understand is that we as a nation cannot continue to spend more than we earn. That is why we have to have legislation to ensure that our cost factor is competitive in the world's markets.
  It is often said and has been said again today that the pensioner is the person who has felt the draught under this Government. However, since October, 1964, we have given the pensioner a 33⅓ per cent. increase. It was quite wrong for an hon. Member opposite to say that only a million pensioners are on supplementary allowances. I invite hon. Members to check at their own local offices of the Ministry of Social Security to find out how many pensioners are now drawing supplementary allowances. Huddersfield is a fairly representative borough, and, in my constituency, the figure is as high as 70 or 75 per cent.
  We are helping these people in many other ways, and trying to introduce a note of social justice into our society which

  1205
  was badly lacking before this Government was elected in 1964. In addition, we are trying to assist the lower-paid worker and the person living on a fixed income by allowances of one kind or another. By the rate support grant, we have made sure that rates have been kept fairly stable, and I object strenuously to Conservative-controlled councils cashing in on it for the May elections and saying that they did it. If it had not been for this Government, rates would have gone up tremendously. The rent and rate rebate schemes are designed to assist people in the lower income groups, and we have introduced all these measures because we on this side of the House believe in social justice and consider that something along these lines should be done.
  On 11th March, I raised the possibility of a special index for pensioners. Replying to the debate, my hon. Friend the Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said:
  "As to the question of publishing regional prices and prices particularly affecting special groups like pensioners, my right hon. Friends have asked the Cost of Living Advisory Committee to examine whether more information should be collected and published on these matters."—[OFFICIAL REPORT, 11th March, 1968; Vol. 760, c. 1149.]
  Certainly it is not a closed book, and I hope that the Department is looking at them to see if we can have a special index of prices compiled with the interests of pensioners at heart. It is something which must be done.
  The right hon. and learned Member for Hexham (Mr. Rippon) and a number of his hon. Friends have referred again and again to the statements made in the Press attributed to The Grocer magazine about the tremendous number of increases which have occurred. It is time that that was knocked on the head once and for all.
  The Grocer performs a job for the trade, and it does it very well. No one argues about that. But it is entirely misleading to the housewife and the general public. What it does is to cite every single increase of every article of every size and shape. In a letter which I received from The Grocer when I took the matter up with it, I was told:
  "The figure, since devaluation, was 2,500 by February, and this has been arrived at by counting all brands, varieties and sizes as separate items."
  1206
  In the Adjournment debate on 11th March, I illustrated how it is possible to show an altogether artificial number of increases by this method. I used the example of peas to make my point. Two different types are produced. There are garden peas and processed peas, and they come in five sizes. If the price of peas goes up, there are immediate increases on 10 commodities. If that figure is multiplied by the number of manufacturers, one can see it reflected in The Grocer by as many as 70, 80 or 90 increases at a time. Therefore, it is quite misleading.
  Hon. Members might be interested to know that, when the price of Bronco toilet paper went up, it was reflected in The Grocer as 16 increases since, apparently, there are different colours, twin packs and so on. Every single one is shown as a separate increase. Again, taking the price of pickles, because of the number of manufacturers, different types and flavours, one can easily show increases on well over 100 items.
  When The Grocer reported recently that 118 items had gone up, I was surprised to find on investigation that, among other items, they included imported cheeses. I discovered that there are two firms who import Continental cheeses, and that some of the increases related to goat cheese wrapped in chestnut leaves, cheese in a classic pyramid shape, or log-shaped cheese. It is ridiculous to suggest that such items are on the shopping list of the average housewife. How silly can one get?
  That is why the arguments advanced by hon. Gentlemen opposite who happen to read the national Press or pick up information given by The Grocer is entirely misleading. I hope we are not going to have any more of this nonsense, because it certainly does not reflect the situation; and I would much rather rely on the Ministry of Labour Gazette than on the columns of the Daily Express or even the Daily Sketch which have been quoted today.
  It really boils down to the fact that this Government have taken action on prices and everything else, but we have to come to terms with reality and so have the Opposition. It is no use hon. Gentlemen opposite "Hear, hearing" or doing things like that when by their own Front Bench spokesman they have shown

  1207
  that they would make the cost of living greater by spending more money on defence and other items, and by reducing the social services and thereby putting a greater burden on the ordinary lower paid worker in the country. It is no use hon. Gentlemen opposite shaking their heads, because that has been said time and time again from the other side of the House and they have recorded in the Division Lobbies their view that they would spend more on defence and less on the social services. If we are to spend less on the social services, then, whether we like it or not, it means an increase in the cost of living for the lower paid worker and there is no answer to that.
  Nor is there any answer from the other side as to where they would make the cuts they are always telling the Government to make—no answer at all. Is it to be in education, housing or the roads? Of course not, because that is not electorally popular. But every single time we have brought forward an economy in defence hon. Gentlemen opposite have opposed us on the floor of the House and in the Division Lobbies, and that is something about which the country should know. Theirs are crocodile tears for the lower paid workers and the pensioners and they cut no ice when people look at what has been happening under this Government to help people in need.
  Captain W. Elliot: Would the hon. Gentleman not agree that during our period in office expenditure on social services and on other things, too, went up enormously and we still brought taxation down, because the gross national product went up? The trouble with this Government is that production has been stagnant for the last three-and-a-half years.
  Mr. Lomas: I accept wholeheartedly the point that expenditure on the social services will rise under any Government and it did rise under the Conservative Administration. But I am saying that under our administration expenditure on the social services has risen at a far greater rate. Those services have been given to people who have been in more deserving cases, and we have sought out people whom those on the outside ignored. When the right hon. Lady the Member for Lanark (Miss Herbison) was Minister for Social Security she went out of her way to try to find people who had
  1208
  been neglected for so long by the other side.
  Again, it is true that production was rising in given years, but there was a stop-go cycle and we are now trying to get out of this particular mess; for never let us forget and never let it be forgotten that because of the electioneering tactics of the party opposite we not only inherited a terrible mess but also had to restore confidence in this country in the eyes of the world because of the piled up deficit that was left behind. Therefore, we started not from scratch but from minus. We began to build up the Ministry of Technology and other Departments which are now paying off, and we are now finding the benefits of that particular policy.
  What has to be fully understood is that we as a country are fighting for our very economic survival and if we do not win this battle it is not a question of politics but a question of Britain as a nation going to the wall. We really have to get that sunk in. We also believe we are working to change society. We are working to get a better kind of society. But in moving from a capitalist or mixed economy there is inevitably bound to be a transitional period of hardship and upheaval. We have tried to cushion the effects of that upheaval and hardship by such things as redundancy payments, earnings related benefits and other provisions. But we want this change because we on this side believe that the old system was one based on the law of supply and demand, a system under which the weak went to the wall, a system based on a free-for-all, where the militants got their own way and to hell with everybody else. We will not accept that system.
  We do not accept that system, we want one based on social justice. I do not want our nation to drift. I want our people to know where they are going, to have a sense of purpose. I hope that this will be understood and that it will be recognised that what we are doing through our prices and incomes policy is in the long term interests of the country and the people. This Government have not always been right. They have made mistakes and will no doubt make mistakes again.
  May I offer one word of advice to them and say that they must recognise

  1209
  that when there is a problem of rising prices which cannot be avoided, like the electricity charges last year, then they should use the mechanism that they have established—the Prices and Incomes Board. Let the Board have a look at it and report back so that we can all see what it is about. We must not make the mistake that we made 12 months ago, when the question of increasing rents was raised. We were told repeatedly, on both sides of the House, that this was not a matter in which the Government could intervene. Then, when pressure mounted, the Government intervened and sent the matter to the Prices and Incomes Board, and we got a very good report. The Government must anticipate the feelings of the ordinary people and use the Board where it can, not for their own sake, but to make it clear to the nation that the matter has been fully investigated and the Government know exactly where they are going.
  The Government had a very tough and difficult 18 months initially with such a low majority and the uncertainty of not knowing for how long they would last. This, coupled with the inherited deficit, made matters tougher. But they have shown by their attitude, policies and fairness in the last three years, they are intent on changing Britain into something better. They have shown that they are trying to introduce policies designed to ensure that not only the strong men of the trade union movement or anywhere else who get wage increases, but that the lower-paid worker and those on fixed incomes receive a fair share of the increasing national wealth. That policy is laid down in the White Paper to which my right hon. Friend referred, dealing with the criteria for prices and incomes increases. If these are applied and understood and recognised as attempts to get the country out of our economic mess, make it solvent again, we can thus create a basis upon which to build a society which will make this nation a better country for all.
  8.38 p.m.
  Mr. Kenneth Baker: I thought it would be interesting to you, Mr. Speaker, and to hon. Members to have a fresh and immediate view from the hustings of what is thought there about this issue. In the recent by-election at Acton the main issue, without a shadow
  1210
  of a doubt, was the cost of living. This was rather surprising because during that by-election we had many stirring, exciting and some slightly absurd events. There was the weekend gold crisis, the resignation of the Foreign Secretary, and the Deputy Leader of the Labour Party, and there was also the Budget.
  All those events provided only the back-cloth. Right at the front of the stage was the issue of the cost of living and rising prices. This is not surprising because since this Government has been in power the purchasing power of the pound has fallen from 20s. in 1964 to about 17s. 6d. today. I do not need to tell hon. Members this—they have only to look at their postbags to know its truth. This is one issue on which we all constantly receive letters. I had one this morning from a constituent who wrote:
  "I have had a light lunch, along with my fellow workmates"—
  this was obviously written at the place where he had it—
  "at the Cafe in the Park, Acton"—
  It is known as that
  "I found today that tea has gone up from 4d. to 6d., and cheese rolls from 8d. to 10d. There are several other items but I have only mentioned these for they are my usual lunch."
  He goes on to say:
  "After all, the Cafe in the Park, Acton, is not classy. It is an ordinary place for myself, my workmates and my children."
  I know that hon. Members on all sides of the House get letters like this every day, but it is no good my telling this constituent to look at the Prices and Incomes White Paper which was published last week, because he might tell me to do with that what he would have told me to do with the previous White Paper on Prices and Incomes, for he is concerned only with the fact that the price of bread has gone up, the price of cheese has gone up, the price of tea has gone up, his electricity bill has gone up, his gas bill has gone up and his fares have gone up.
  During this debate many Members opposite have asked what we on this side of the House would do about it. They have said, quite legitimately, "What would the Conservatives do?" May I suggest two lines of action. First, I think it is up to the Government to put their own house in order. This Government were elected in 1964 on a

  1211
  series of promises made by the present Prime Minister according to which he was going to bring in firm government. At the time he made great play with how much more effective his slide rule was going to be than the box of matches of the then Prime Minister. But what have we seen of the slide rule? What we have had so far is all slide and no rule.
  In col. 177 of yesterday's HANSARD is published the fact that over the past three-and-a-half years prices in the nationalised industries have increased by 20 per cent. and prices of fuel and light have increased by 21 per cent. And this does not include, as far as I can see, the quite scandalous increase which many of my constituents are going to have to pay in London Transport fares—an increase of some 14 per cent. I think it was disgraceful for the Government to give approval to the Prices and Incomes Report.
  The hon. Member for Huddersfield, West (Mr. Lomas) said that it would be sensible for the Government to refer intended price increases to the Prices and Incomes Board. I go along with him. But what a shabby report that was. In effect it said to London Transport: "You are the most inefficient public undertaking we have looked at; you have not done the basic market research; you do not know who you are carrying; you do not know where you are carrying them; you have no idea whatever what is the purpose of their journey. In spite of this, you are so inefficient that we are going to approve this price increase of 14 per cent, and then you will become efficient." This is not the way to run a public undertaking and it is something of which we as Members of Parliament should be deeply ashamed.
  The second thing we on this side of the House would do to try to stabilise prices is to bring more competition into British industry. I will give hon. Members opposite a direct example of how competition can bring down prices. Members are probably aware that at the time of devaluation the Observer newspaper bought what was called "the Observer shopping basket". It was bought on the Sunday before devaluation and it has been bought, I believe, every Sunday since. At the end of January the increase in the price of this shopping
  1212
  basket was about 7½ per cent. What was interesting was that during February and March the increase fell, and was only 2½ per cent. What was the reason? It was not the fact that there were seasonal reductions in the prices of food. It was the fact that at the end of January, beginning of February, Victor Value decided to undercut all their competitors, to stop issuing pink trading stamps and to reduce prices. This started a price war which every major grocer had to get in on, and as a result the consumer benefited. That is a direct example of what competition can do.
  To refer very briefly to something that happened in this House yesterday, a direct example of what we should not be doing is passing the Restrictive Trade Practices Bill. The President of the Board of Trade stood at the Dispatch Box yesterday and defended Clause 1, which is a limitation of competition, and I think that was a deplorable thing to do.
  Finally, I come to the new policy and the new Minister looking after prices and incomes. I suppose that all Members received the paper which I received in my mail today, the "Occult Gazette". I could not help feeling when I read the headlines and a bit of the copy that this was an extraordinary example of clairvoyance. It seemed to pre-report what the right hon. Lady said today. The headline was:
  "Cosmic consciousness as the Divine Awakening of the Norm".
  It goes on to say:
  "As the morning sun rose in all its radiant Glory, the world, blind to truth",
  as the right hon. Lady reminded us many times today,
  "trembled as those early Rays interpenetrated the unfolding earth. For Merope"—
  and here is the right hon. Lady—
  "had opened up the glory of the 'eighth' and set the Norm alight".
  That is what the Government are trying to do. It is as fatuous as that.
  I ask the right hon. Lady and her fellow Ministers to try to distinguish between the declarations of intent about keeping prices stable, with which we all agree, and the outcome, which has always been increases in prices. There is a real distinction of words here, and I beg the Ministers on the Treasury Bench

  1213
  to bear that in mind. It is a distinction which I could not help recalling a few days ago when I was trying to teach my young daughter of 2½ years, who is just learning to speak, that I am a Member of Parliament. I explained it to her half a dozen times. She then said, "Daddy, you are not an M.P.—you are a man". It is very difficult to explain to someone with such slender intelligence that these two statuses are not necessarily incompatible. However, the intentions of Ministers and the effects of their acts seem to be incompatible.
  Every hon. Member believes in the stability of prices, but it is no good making pious declarations about it. The Government must, first, put their house in order, and, secondly, let competition really shake up industry. Until they do these two things, there will be no successful outcome for their incomes policy.
  8.47 p.m.
  Mr. George Wallace: My hon. Friend the Member for Gravesend (Mr. Murray) gave the House some startling examples of sales promotion gimmicks related to his general case on retail prices. There is no doubt that such gimmicks attract the public. Indeed, I would go further and say that they hypnotise the public.
  This debate seems to have been related purely to retail prices. This is natural enough, because the housewife is affected by retail prices, and every politician says that he has the housewife in mind, remembering that his wife is normally the family's "Chancellor of the Exchequer" There is, however, another field to which greater attention should be paid and in which practical action can be taken to reduce prices. I refer to the wholesale field—bulk purchasing and bulk selling, particularly of food.
  We are very much an importing nation, particularly of foodstuffs. Incidentally, we could produce more ourselves individually and collectively, and I would say in passing that it is a great pity that there is an obvious decline in the number of allotment gardens where a great deal of self-help could be carried out on behalf of the family by the family.
  I am not against the primary importer. He does a magnificent job in procuring
  1214
  supplies and getting them to this country for distribution. But I am against the speculation which has taken place and is taking place, particularly when supplies of foodstuffs are short. I would say to the hon. Gentleman the Member for Acton (Mr. Kenneth Baker) that this is a field where competition puts up prices. I would give for example, but not in detail, shipments from overseas.
  They change hands frequently before ships dock. Very frequently indeed, with meat and many other foodstuffs, documents, pieces of paper, are sold from hand to hand, each purchaser taking a small margin but not making a single practical contribution to distribution. This, particularly when goods are in short supply, puts up prices. A farthing on a pound of meat each time a document changes hands, and it may change hands seven or eight times, as I have seen myself in my previous career, has the effect of putting up prices. This, I think, is wrong.
  This is a field where definite, positive action can be taken and where inquiry ought to be made as soon as possible. This is in no sense an interference with private enterprise or the private trader. This action would be against speculators, and the speculations which are so frequently carried out and which are against the public interest, the interest of the primary importer who brings in the goods, and of the wholesaler in this country who puts them to the point of distribution. I mentioned this some time ago to the Chancellor of the Exchequer; it is a point I have made before. This sort of thing is going on, and I do ask that some investigation be made in the field of the wholesale meat trade, and trade in similar goods, such as butter and provisions, where, I think, by cutting down the speculation which takes place, and which serves no useful purpose, we could make a definite, positive reduction in prices, without too much drastic action or interference with private trade.
  8.52 p.m.
  Mr. David Lane: I do not want to be unchivalrous, but I must say of the right hon. Lady's speech earlier today that if her elegance is so far unpunctured by her bed of nails, so also—alas!—is her complacency.

  1215
  I am glad to have a brief moment to express some of the feelings of my constituents about the problem of rising prices. I want to quote a few sentences from a letter I had from an old lady in my constituency last week. It ends with this pathetic appeal:
  "Life is very hard and miserable at the moment. I know I am not the only one in this trouble as it always the ones who have tried to save that have to pay the heaviest. Can you help at all to find some way to carry on, hoping for better times?"
  Such are the feelings of our constituents. We are all conscious of their feelings of despair and resentment, and yet in the face of all this the Government still seem to be protesting their own innocence and blaming everybody else.
  Our Motion deplores the failure of the Government's economic policies. I do not want at this late stage of the debate to go into details of their failures, the failure of their priorities, the failure of confidence, the failure to control Government expenditure, the failure to arrest the growth of prices in the nationalised industries. I have had only today fresh evidence of this from the Council of Iron-foundry Associations, which are now suffering from an increase in coke prices of nearly 20 per cent. in the last three years. There are also the failure to encourage savings, the failure of resolution, and the failure to maintain the parity of sterling.
  But let me touch for a moment on just two of the constructive points which I wanted to make. One is that the Government are appealing to the country for sacrifice, for restraint. May we even at this late stage ask the Government to set some example themselves? When they publish the Prices and Incomes Bill will they not seize the opportunity they have already missed twice in the last six months to announce a reduction for a period of 18 months in Ministerial salaries?
  The second point I want to touch on is the importance of the public sector—the fuel industries in particular. I have the greatest respect for the Parliamentary Secretary, who I understand will reply. I know that he will not misunderstand when I regret the absence of the Minister of Power. We thought that he would be here. I am sorry, too, that the hon. Member for Derbyshire, North-East (Mr. Swain) has now left the Chamber, be-
  1216
  cause he would support our plea that, with a new Minister of Power and a new Leader of the House, we might at last have a chance of debating the White Paper on Fuel Policy. Nothing is more important for tackling the problem of prices at the roots than the prices of the nationalised fuel industries. As regards coal, I beg the new Minister of Power to stand firm for the policy of the White Paper and to keep up the momentum towards a lean, efficient and low-cost coal industry, which I am certain has a prosperous future if it adjusts itself quickly to the new circumstances.
  Concerning electricity and gas, on the latest figures that we have the total investment programme of the nationalised fuel industries will be running at the rate of about £1,000 million a year for the next ten years or more. Surely in all this there is still room for some economy which, indirectly, will have the effect of stabilising prices.
  I respect the Minister of Power. I am sorry that he is not here. He has been released from his bed of nails, and I hope that he will go to his work in a new spirit of divine discontent with the price performance of the nationalised industries under his control. I believe that in his new office he can do as much as any individual Member of the Government to tackle the price problem at the roots—that is in the nationalised fuel industries. If he does this, he may still salvage something from the present wreck of Government policies and give some new hope to the old lady in my constituency and to many others like her.
  8.58 p.m.
  Mrs. Margaret Thatcher: A number of hon. Members have referred to the fact that this has not been one of the most fully attended debates that we have had on this subject. The reason for that is that two main Committees are sitting upstairs—one fighting rising prices in the shape of the Transport Bill and the other fighting through the Finance Bill. Many hon. Members here would like to have taken part in those proceedings and many hon. Members on the Finance Bill Committee would undoubtedly like to be here, but the system we are operating does not allow us to take part in both.
  Some hon. Members have, once again, gone back to the deficit which occurred

  1217
  in 1964 and the then economic situation. Some have criticised the figures we have used. I will try to answer their criticisms, and all the figures which I shall use will be those produced from Government sources. If one wants to fight the Government it is not necessary to produce special figures; their own are perfectly good enough. One has only to read them.
  The argument has been that there was a deficit of over £700 million in 1964. The actual revised figure was £776 million. That is made up in two parts: one of the current account deficit and the other of the capital account deficit. The current account deficit was £402 million. I want to deal with that first, because, as many hon. Members know, the significant thing is the trading or current account deficit. The capital account deficit is represented by shares and investments overseas and, in fact, is not a deficit; it is represented by assets which regularly bring in a source of income to this nation, from which this Government benefit.
  I will deal with the current account deficit and its history. Let us see how it compares, and how the whole record of the Tory Government compares, with Labour over those years.
  It has been necessary to invoke the help of the Library. I am taking the figures from the United Kingdom Balance of Payments Summary 1967. I have gone back to an older one for the 1951 figures, which are sometimes compiled on a different basis. Every figure I am using has its source of origin in one Government Department or another. Let us look back over the whole period to try to get the position into perspective.
  In 1951 the current balance deficit we inherited was £419 million, that is to say, £17 million greater than was inherited by hon. Members opposite. We dealt with it and I will show how in a moment.
  In 1952 we turned that deficit into a balance of £163 million—a very rapid changeover during a very short time. During that period we stayed in credit with a balance of £145 million in 1953, a balance of £117 million in 1954; in 1955 we went into deficit to the tune of £155 million but we were back in credit in 1956 with £208 million. We were in credit in 1957, £233 million; in credit in
  1218
  1958, £347 million. These are substantial credits. We were again in credit in 1959 to the tune of £149 million; there was a deficit in 1960 of £258 million, but we were back in credit again within the year, and there was in 1961 a credit of £5 million. In 1962 there was a credit of £127 million; in 1963 a credit of £116 million; in 1964 a deficit of £402 million.
  That was the record and since then under Labour a deficit in 1965 of £110 million; a deficit in 1966 of £59 million and—then the biggest of all time—a deficit in 1967 of £514 million.
  There are one or two conclusions to be drawn from this. When we inherited a problem we used it as an opportunity and challenge, and not as a source of grumbling. We went from a deficit of £419 million to a balance of £163 million in one year. That is an improvement of £582 million in 12 months. If this Government had done that in 1964 we could have been back in balance very quickly by about 1966. But they did not; they have repeated deficits.
  Note that we never, during our time in office, had two consecutive years in deficit on current account. One of the more difficult problems now is that, under a Labour Government, there have been three consecutive years in deficit on current account.
  There is a third point, taking figures once again from Government sources, that the £402 million deficit which I have referred to was a deficit on paper because, if one looks at the increased value of stocks and work in progress, one finds that that more than equals the deficit. In 1964 the value of the physical increase in stocks and work in progress was £649 million. It had increased by £421 million over the preceding year. There was the deficit—in warehouses bulging with goods and raw materials. There is many a housewife who would say in time of rising prices or danger of rising prices "Stock is better than money".
  So it was only a paper deficit represented by goods in the warehouses and work in progress. When one looks at Government figures again, one finds that the value of those stocks went down in 1965 and in 1966. But, of course, if one imports a lot of stocks in one year, one does not need to import them the next year: they are used up, so the balance

  1219
  improves. In the following year, stocks again went down.
  But there is one significant fact. Although our deficit was accounted for by bulging warehouses of raw materials and work in progress, that is not true of the greatest of all deficits which we have this year. The deficit this year on current account is £514 million and if one turns from that to the value of physical increase in stocks and work in progress, one finds that it is nothing like that. According to the Government's figures in the preliminary estimates of national income and balance of payments, the value of stocks and work in progress this year is £68 million. So the £514 million is a true deficit.
  I turn now to the capital, deficit, which was represented by assets overseas, for which this Government have had very many occasions to be thankful. The capital deficit was £374 million. A short time after, the Prime Minister was boasting in New York of the nation's assets of £11,000 million, of which that capital deficit was a part. But even if one considers it from the worst angle, that that capital deficit was not represented by assets, it was more than covered, from the nation's viewpoint, by the Government dollar portfolio holdings, which came into the reserves later—cashed by this Government, never by us—in two lots, one of £316 million and the second of £160 million at the old value.
  So let us look at Government figures—not mine—to see what the situation was. There were stocks in the warehouses to the tune of over £600 million. There were securities to cover any deficit, quite apart from the reserves. There were investments stacked high overseas, bringing this Government an annual income of £890 million a year. Looked at as a business—stocks full, collateral to meet any deficit, investment good and bringing in an income—this was a great opportunity for expansion, and it was a tragedy that it was not taken.
  That is the kind of situation with which hon. Members were left. We could and would have dealt with it as we dealt with it in 1951 and we could have been back in balance by 1966 and expanding again—but not under this Government.
  1220
  We were also challenged on some of the figures about which——
  Mr. Hilton: I realise that the hon. Lady is trying to be sincere in the case, but should it not be stated, for the record, that, in 1951, when the Conservative Government were elected, the great change was that the Korean war finished and world prices turned in favour of this country as against what we had to face?
  Mrs. Thatcher: Whatever happened, we dealt with it and this Government did not, as the hon. Gentleman knows. Also, in dealing with it, we built up a tremendous amount of overseas assets which the last Government could not during the 1945–51 period. I do not complain about that, but, during our period, we did build up those assets and this Government benefit from them every day that they are in office.
  We were also challenged about the standards of living under the two Governments. Again, I will take not figures which I have extracted from any documents but figures which my hon. Friend the Member for Louth (Sir C. Osborne) extracted from the Chief Secretary. My hon. Friend has had a knack for many years of extracting significant figures and this was one of them.
  At the beginning of April my hon. Friend asked for the crucial figure in deciding the standard of living; that is, the figure of personal disposable income at constant prices—what the money left in one's pocket will buy after one has paid taxes and National Insurance contributions. It is the figure which the Chancellor of the Exchequer left out of his forecasts, probably because he dare not include it. Although the right hon. Gentleman left it out for future years, my hon. Friend was able to get the figures for past years. My hon. Friend
  "…asked the Chancellor of the Exchequer what has been the average annual increase in prsonal disposable incomes at constant prices for the years 1952–64, inclusive"—
  when we were in office—
  "and 1965–67, inclusive…"
  The Answer given by the Chief Secretary was that during our period in office, 1952–64, the
  "…average annual increase in personal disposable income at constant prices…was 3¾ per cent. and from 1965–67 was just over 1½ per cent."—[OFFICIAL REPORT, 2nd April, 1968; Vol. 762, c. 158.]

  1221
  That Answer was given by the Chief Secretary and if any juggling of figures was done, he was responsible.
  I come to other matters which have been raised in the debate. We have had almost two sides to the general argument. Hon. Gentlemen opposite have been saying that food prices have not risen as much as the retail prices index, while my hon. Friends have been saying that fuel prices, which are the other big component, have risen a great deal more. The significant factor is that food prices are in the hands of private enterprise—and those prices have not risen as much—while fuel prices are in the hands of the nationalised industries—and these prices have risen far more. This makes one thankful that the retail distribution trade has not been nationalised. If it had been we would all be paying far more for our food at the Co-op.
  Had the right hon. Lady the Minister been speaking from this Front Bench, she would have made a great deal about the rising costs of fuel because she, like all hon. Members, would have been expressing anxiety about the effects of these rising prices on people who have less to spend, those who are ill and must stay at home and the elderly. If one must stay at home, one uses more fuel. In this position she would be urging me, if I were Minister, to have a special retail price index for the elderly, with pensions geared to it. I am sure that she is well appraised of this point. The fact is that fuel prices are continually rising more than other prices and that this is entirely due to the public sector policy.
  Let us consider some of the separate industries and increases in prices that have occurred. First, coal. This increased in price in 1966 by £80 million in all. It is not possible to split up that sum, because that £80 million was designed to cover both present and future deficits of the National Coal Board.
  What has happened since then? Only yesterday an increase in the price of coke was announced and we learn that it is to go up by 20s. a ton. The right hon. Lady said that this had been referred to the Prices and Incomes Board. I ask her to check that because no reference has been made to the matter having been referred. The only coke increases referred to the Board were those about
  1222
  gas coke, and those increases were referred and allowed. As far as I know, no price increases for coke made by the N.C.B. have been referred to the Board. [HON. MEMBERS: "Answer."] I trust that the right hon. Lady will clear this matter up. [HON. MEMBERS: "Answer."] Subject to her correction, that is the position. [Interruption.] I trust that the Parliamentary Secretary will answer this point when he replies.
  The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley)The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley) indicated assent.
  Mrs. Thatcher: The saving grace of the right hon. Lady's Department is that she has a marvellous Parliamentary Secretary who has done a lot of donkey work and who should have been promoted. I must occasionally say something nice about the hon. Gentleman, because he and I have argued the toss on prices and incomes Orders on many occasions. I suspect that the matter was never referred to the Prices and Incomes Board and that this is another example of a nationalised industry's prices not being subjected to the same disciplines as proposed private enterprise increases. It is especially important because not only does the increase fall on the consumer but it also falls on iron foundries, which are very big users of coke. This makes a direct increase in their prime costs. They have had to take increases in costs of coke in February, 1965, of 14s. 6d. a ton, in April, 1966, of 15s. a ton, and this one of 20s. a ton.
  I am sorry that the Minister of Power is not here. [HON. MEMBERS: "Where is he?"] In his reply to a letter from the ironfounders he did not say anything about this being referred to the Prices and Incomes Board. He said:
  "I am sorry to have to disappoint you, but the Board's case—"
  that is the National Coal Board—
  "for the 20s. a ton increase on 1st May is so pressing that it would not be appropriate for me to suggest that the Board should reconsider the modifications you put forward."
  The right hon. Lady said that she thought it had been referred; therefore, she thought that it ought to have been referred. If now she finds it has not been referred, I ask her to tell her Parliamentary Secretary to let us know later in this debate whether she will now refer it to the Prices and Incomes Board.

  1223
  For gas the average increase is 8·7 per cent. When I asked the former Minister of Power the prices within the average he knew all the time, because this was in the Report published that afternoon, but he would not tell a full House from the Dispatch Box. Later it transpired that within the average there was as much as 13½ per cent. for Wales and 11 per cent. for the south-eastern area. These increases have yet to take their real effect. People will not feel the full effect until next winter. These are further increases yet to come into operation.
  Everyone knows about electricity price increases. My bill is up. It came with a nice little apologetic note, but that does not alter the fact that it is up by 15 per cent., 3s. in the £. This was another increase which was not referred to the Prices and Incomes Board. It is another case of the public sector not being referred to the disciplines in the same manner as the private sector is. The right hon. Lady was a member of the Cabinet which agreed that that increase should not be referred.
  An increase that was referred was that of the Electricity Generating Board's prices. When the Generating Board increase was referred the Prices and Incomes Board did not allow prices to go up by as much as the Generating Board wanted. The conclusion one could draw is that, had the electricity increase been referred, the Board would not allow it to go up by as much. Perhaps once again the Government were afraid to refer to the Board.
  There have been other increases in the nationalised sector which have still to take effect. There are the increases in postal charges and telephone charges, which are to come on 1st October. There is quite a batch of increases stacked up to take effect in the autumn and at the onset of winter. It is interesting to note that when the Board examined those increases it uncovered an astonishing situation. It said:
  "The Post Office have made proposals for certain tariff increases, but, as we have explained, these are largely based on a costing system which does not provide the appropriate data."
  How astonishing! You put up a case for increases, but you cannot support it
  1224
  with properly analysed figures. This happens to Ministers in any Department, but I hope that when the Postmaster-General saw that some one blew his top and sorted the industry out. It is absolutely scandalous that people should have gone to the Board without making a proper case and without having a system so that they could make a proper case for the increase they were asking for.
  Those are some of the price increases which have come from the public sector, over which the Government have direct price control. I come for a short time to increases in transport costs. These partly arise from the Transport Bill, but also very much from the Budget. The increases imposed on road users in the last Budget were absolutely terrific. Perhaps I could give one or two figures. Commercial vehicle licence duty for the four-ton lorry——
  Mr. J. J. Mendelson: Before the hon. Lady leaves the last batch of price increases, I want to tell her that she is producing a purely propaganda speech—[HON. MEMBERS: "Oh."]—and she knows it. It was the last Conservative Administration which laid down that the electricity Boards must make ends meet on new investment and must charge the consumer the full price to make new investment possible. The hon. Lady is making a cheap propaganda case, and she knows it, even if other hon. Members opposite do not.
  Mrs. Thatcher: Tell the housewife paying a 3s. in the £ increase that I am making a cheap propaganda speech.—[Interruption.]—The hon. Gentleman knows that one of the reasons why prices have gone up is that investment was too great for the demand—and the reason for that—and it is a problem with which the Minister is grappling now—is that the Electricity Council considered that it must take into account the forecasts of the National Plan. That was pure propaganda and not fact at all.
  I have many figures about increased transport costs, but let me give quickly just the fuel tax increases under different Governments—[Interruption.]
  Sir Robert Cary: On a point of order, Mr. Deputy Speaker. Can you give your protection

  1225
  to my hon. Friend against the continuous intervention of the hon. Gentleman opposite?
  Mr. Deputy Speaker (Sir Eric Fletcher): I must ask the hon. Member for Penistone (Mr. Mendelson) to restrain himself.
  Mrs. Thatcher: That is very kind of you, Mr. Deputy Speaker, but I can cope with him.
  The Labour Government of 1945 to 1951 increased petrol tax by 1s. 1½d. in those six years. In our 13 years in office we increased it by only 10½d. In the Labour Government's next four years it has gone up by 1s. 2d. If the tax had not gone up the price of petrol would have been down, because the basic price has fallen. It is one of those cases where when private industry manages to reduce prices the Government cancel out the reductions by slapping on a bigger tax. It is like the small cartoon in tonight's Evening News, which shows a grocer telling a lady,
  "This is our old '2d. off' brand that Mrs. Castle as Transport Minister helped to put 4d. on."
  There have been price increases after price increases which have been Government-induced. This led the present Minister of Power to make one of his very good speeches when he was not Minister of Power but was what the First Secretary is now, but not quite. His speech to the Industrial Society is reported both in The Times and in the Daily Mail—perhaps I had better quote from The Times. The headline is "Standard of living 'must fall'", and he said:
  "There is bound to be a drop in the standard, and if anybody in this country thinks he is going to have the same standard as in the past, we shall never get anywhere."
  That, of course, is directly reflected in our Motion. I had some sympathy with him when he came out in one of his flashes of engaging candour later on in his speech and said:
  "It was time everybody forgot about election promises. 'I would never have another election manifesto if I had my way'."
  Of course he would not, because the entire Socialist election manifesto was vote for them, and everything would come to those who voted for them. In fact, the situation has been quite different.
  1226
  The problem of rising prices has been with us for a long time. I am the first to agree to that. We could not completely control rising prices. [Interruption.] Of course, we could not. The retail price index went up during our period of office, but the crucial figure was the one which my hon. Friend extracted from the First Secretary.
  Several reports have been issued on how to deal with rising prices. There was in 1961 a report to the Council for European Economic Co-operation, which recommended several things which came into being in our time. The two last points are the ones to which I wish to direct the attention of the House, and I would advise the House to wait until I have finished the complete paragraph. The report recommended:
  "a 'wages policy' that would give some guidance to the trade unions and collective business organisations in their wage bargaining. This recommendation is not supported by all the economists in the group, and the majority which is in favour emphasises that it does not support wage control. All in the group favour a policy for wages in the public sector of the economy."
  There we are, a voluntary incomes policy, which is the Conservative policy which got us back into balance when we were in difficulties.
  The report also recommended:
  "More competition, both domestic and foreign, in order to dilute the power of business to administer prices."
  That is the answer. The prices which hon. Members opposite have quoted as being held, or as not rising as much as others, have been prices which have been subject to competition. The prices which have risen most in the nationalised sector have been those which have never been subjected to the discipline of competition.
  The nation has gone on a very big spending spree. It remembers that in the 18 months after the last devaluation in 1951, the cost of living rose by a very considerable amount, the largest increase of all, nearly 13 per cent.
  We have had nearly all the Socialist formula before. We have had higher taxes before. This led to rising prices. The Socialist Government have taxed the people, raised the prices, pegged the wages and penalised the pace-makers. All that has not led to a solution. It has led to devaluation and the biggest trading deficit we have ever had.

  1227
  I have said that no Government have yet solved the problem of how to keep down rising prices, but hon. Members will remember that the dialogue about rising prices used to be carried out in the context of three things. The question was how to have all three, full employment, stable prices, and a free society. For a long time it was thought that a small amount of inflation was the price one had to pay for the other two. But look at the position under this Government. We have not got full employment. In fact, we have 2 per cent. unemployment practically built into the bricks. We have not got stable prices, and we have not got a free society, but another dose of compulsion, and that is why we condemn the Government tonight.
  9.30 p.m.
  The Joint Parliamentary Secretary to the Ministry of Labour (Mr. Roy Hattersley): There was one short passage in the speech that we have just heard from the hon. Member for Finchley (Mrs. Thatcher) which seemed so eminently reasonable that I want to absolve her from the first criticism which must be levied against every other hon. Member who has contributed to the debate from the benches opposite. That is the persistent dilemma, belief and delusion that, somehow, there can be found a painless solution to our economic difficulties. That belief characterised much of their——
  Sir C. Osborne Sir C. Osborne rose——
  Hon. Members: Sit down.
  Mr. Hattersley: That sort of optimism characterised much of their economic policy during their years in office and, if they had not chosen to delude themselves and the public in that way, we should not have faced many of the problems that we do today.
  Sir C. Osborne Sir C. Osborne rose——
  Hon. Members: Sit down.
  Mr. Rippon: Why does the hon. Gentleman refuse to give way to my hon. Friend the Member for Louth (Sir C. Osborne), who is a very senior Member of this House? My hon. Friend said the exact opposite of what the Parliamentary Secretary attributes to him.
  Mr. Hattersley: I refuse to give way to the hon. Gentleman because I have been on my feet for about fifteen seconds, and I intend to deal with his contribution as well as that of the right hon. and learned Member for Hexham (Mr. Rippon) before 10 o'clock.
  I believe that that sort of optimism is the optimism which has caused very many of the nation's troubles, and it is against the basic fallacy of that optimism that we must consider the criticisms made of the Government today.
  The fundamental criticisms come under three heads. The first is that the prices that have increased have been, substantially, prices in the public sector. The second is that many price increases are the direct result of budgetary policy. The third is that many price increases are directly attributable to devaluation. I want to deal with those three points in turn, but, before I do that, I want to put the charge which is implicit in the Motion in something like perspective.
  No one pretends that there have not been substantial price increases, but it is equally obvious, or should be, that those increases have been nothing like as great as has been implied, or suggested, or, I must say, pretended during a large part of the afternoon.
  My right hon. Friend gave figures for increases in the Retail Prices Index for the period between April, 1965 and January, 1968, which is a period beginning with the effective operation of prices and incomes policy. Because the figures given were a reasonable selection ending in January of last year, some right hon. and hon. Gentlemen opposite rather disingenuously demanded that they should be extended to take account of what they believed to be increases in the Retail Prices Index in the last three months. In their own words, they demanded that the figures should be "brought up to date."
  I am very happy to do that. Taking the three years from April, 1965, and the beginnings of an effective prices and incomes policy to March of this year, which is the month for which the last figures are available, the increase in the Retail Prices Index was a little more than 9 per cent. Taking the three years under the party opposite which are directly comparable, April, 1961, to March, 1964, the increase in the Retail Prices Index

  1229
  was a little more than 9 per cent. [HON. MEMBERS: "Oh."] In terms of literal accuracy, it must be said that the Conservative Party's record in those three years is about 0·4 per cent. better than that of the present Government. The difference between us is 1 in 1,000 per year, and it is that difference that the hon. Member for Worcestershire, South (Sir G. Nabarro) described in his florid way as "continuous and unremitting inflation"——
  Sir G. Nabarro: "Rampant", not "unremitting."
  Mr. Hattersley: If 1 in 1,000 seems rampant rather than unremitting to the hon. Gentleman, I am sure that it will seem equally inappropriate to my hon. Friends.
  There has been such an attempt to dress up the history of price increases during the last three years that the right hon. and learned Gentleman the Member for Hexham even brought out a chestnut which I had thought was to hoary even for him. I refer, of course to The Grocer. He told us about The Grocer and that it is a publication of the retail trade. But he managed to mention, perhaps casually, perhaps hoping that though he mentioned the figure it would not be reported tomorrow, that according to The Grocer, more than 2,000 prices had risen in the immediate past. We have to remind him and the House that while, as my hon. Friend the Member for Huddersfield, West (Mr. Lomas) said that publication does an admirable job for the trade, it is one on which no one should rely for a judgment as to whether or not prices in this country are rising.
  Having heard that reference from the right hon. and learned Gentleman, I took the opportunity to consult the most recent edition of that journal, published on 27th April, which was heralded in some newspapers, and on the front page of some of them, as demonstrating that 120 commodities had gone up in price during the last week. In fact, of those 120 commodities 20 are dog foods of different brands and sizes. [An HON. MEMBER: "Have you got your licence?"] If the hon. Gentleman will concentrate very hard he will find that the next category to which I draw attention gives him scope for an equally weak joke, because 20 groups of bottled sauces are included
  1230
  in the total of 120. I had considered not presenting those two facts to the House because I knew they were fruit for the weakest sense of humour, but clearly I misjudged or overestimated the mood of some hon. Members this evening. Clearly, prices have not risen in the way that has been suggested this evening and at the speed which was suggested during the afternoon. [An HON. MEMBER: "Wait another six months."] The hon. Gentleman says we should wait six months. Perhaps that is advice he should have given to the Shadow Cabinet before this Motion was put down. They have asked us to consider price rises up to today, and price rises up to today are no greater than they were during three comparable years of Conservative rule in this country in the early 1960s.
  I want now to turn to the three areas of major criticism which have been levelled against the Government. There is the fact that the Budget itself increased prices. Of course the Budget increased prices. My right hon. Friend the Chancellor of the Exchequer said during the Budget debate that the net result of the Budget on the economy was to be an increase of between 1 and 1½ per cent. in retail prices. [An HON. MEMBER: "£500 million."] This was not the first Budget that has increased prices by 1 per cent. It is the first one where a Chancellor of the Exchequer has made an estimate and the first one for which figures have been available and presented to the House. But without that estimate and without that prophecy I am prepared to gamble substantial sums that an analysis of the Budget of June, 1961, will show an increase in retail prices of 1 per cent. or more; and to suggest that this is a deplorable thing during the extraordinary economic circumstances in which we find ourselves is, I believe, the height of irresponsibility.
  We have heard this afternoon of the Selective Employment Tax, which it was said, was bound to be a major contribution towards price increases. There are many hon. Gentlemen opposite who approach near-frenzy when S.E.T. is mentioned. Notwithstanding that, I hope that they will consider the real implications of S.E.T. and read again a statement made on the effects of the tax on the Retail Prices Index by my right hon. Friend the Chancellor during the Budget debate.

  1231
  On that occasion, he made the position absolutely clear. He said that the direct effect of S.E.T. on services to the consumer was below 0·1 per cent. He also said that if one assumed, as one reasonably must, that the alternative to S.E.T. was not no tax at all but an alternative tax, and if one assumed that the tax was applied according to the criteria of the Shadow Chancellor, who urged this Government to apply indirect rather than direct taxation, then the alternative in terms of Purchase Tax, which would raise an equivalent amount of money, would certainly increase the Retail Prices Index by five times as much as S.E.T.
  Mr. James Dance: Surely the debate is about the excessive Government expenditure at present? Will the hon. Gentleman deal with this?
  Mr. Hattersley: I will certainly turn to Government expenditure. Are the Opposition saying that the prices of the national fuel industries should not have been increased in terms of increasing costs to the consumer but by Government subsidies? I hope that the hon. Gentleman will get up then and say on which side of the argument he stands.
  For the time being, I want to concentrate on one other point to do with S.E.T. which has been the subject of much criticism. There has been criticism of two sorts. One sort has been from my hon. Friends, who offered alternatives, and said that they certainly turned their backs on the crude criticism of S.E.T. which did not offer to put anything in its place. I want to refer the House to the benefits of S.E.T. on building, and to remind it that, while in crude terms it can be said, and has been said, that S.E.T. has increased building costs by 3 per cent., it has done something else too. It has produced a condition in the industry in which it is producing more with a smaller labour force. I have no doubt at all that the added efficiencies that S.E.T. has brought in terms of labour reduction has more than compensated for the increase in price.
  Sir C. Osborne: It is perfectly true that labour is being used more economically, but this results in increased unemployment. This is another problem that the Government have to face.
  Mr. Hattersley: I do not disagree with a word of that, but I am sure that the hon. Gentleman agrees that it is no solution to any problem for an industry to use labour wastefully. The point that he and I are united on is that it is an obligation on this and any Government to encourage industries to use labour with the maximum amount of efficiency. That process has been accelerated in the building industry because of S.E.T.
  I turn now to price increases in the public sector, which clearly had to be and were a major part of the arguments of hon. Gentlemen opposite, and particularly of the hon. Lady the Member for Finchley. She will know that after the major increase in electricity prices it was the decision of the Prime Minister that every major increase in the public sector, or potential major increase, should be referred to the Prices and Incomes Board. It is not unimportant to consider what the net effects of those increases which have been referred to the Board have been on the Retail Prices Index.
  Those references made since the declaration was given by the Prime Minister, amount to an increase of over 0·4 per cent. on the Retail Prices Index. On the averages household income of £22 10s. the increase that those most recent prices produce is 1s. 9d. out of £22 10s. If one adds to those references and those increases the earlier increase because of changes in the electricity tariff, the increase in the Retail Prices Index is about 0·7 per cent. I am not suggesting for one moment that we ought to minimise the importance of these increases or pretend that they do not fall heavily on some sections of the community. It may well be, indeed almost certainly is, that on the old and the lower-income groups they fall more heavily than on the population at large. That is why my right hon. Friend and her predecessor have examined the Retail Prices Index to make some sort of assessment of how the old, the pensioners and the lower-income groups fare during particular times.
  What the hon. Lady opposite must understand is that these increases were imposed by the boards and agreed by the Government after submission to the National Board for Prices and Incomes because the Government had two alternatives, alternatives which were clearly set out by the then Chancellor of the

  1233
  Exchequer and which I believe the House understood and the majority of the House thought had been rightly chosen.
  The first alternative was to increase prices to the consumer. The second was to increase the direct subsidy from Government funds. I do not believe that any responsible Member of this House thinks for one moment that we chose the wrong alternative. More than that, I believe that every Member of this House must agree that our decision, linked with our reference to the N.B.P.I., to have an efficiency audit of the nationalised industries, looking for a way in which future increases could be postponed or avoided, was a fundamental step in the right direction. It was this Government that decided to run the efficiency audits of the nationalised industries, not hon. Gentlemen opposite, although no one would believe it listening to some of the speakers this afternoon.
  Sir G. Nabarro: I asked the hon. Gentleman a specific question about the announcement yesterday that industrial and domestic coke prices are to go up by 20s. a ton on 1st October. He has given two alternatives, but he has neglected to observe the third alternative. Why should not the National Coal Board, with the huge investment already made in it, increase its efficiency and its production so as to avoid this sharp increase to the consumer?
  Mr. Hattersley: Let me go on to the coke prices, since the hon. Gentleman has raised that point. I think that the question he put this afternoon was why, since the National Coal Board is an area of expanding production and productivity, that should not be reflected in some measure in prices to the consumer. In terms of a reduction in coal prices, it has been, but coke is not simply coal—it is coal which has been through a manufacturing process, and it was necessary for the Board, if it was to remain a viable producer of coke and continue to produce it for a home market stimulated by progressive Governments in their drive for smokeless fuel, to re-equip and put in capital equipment. The only way that could be brought about was by increased prices to the consumer or by an increased subsidy by the Government. I believe, and I must tell the hon. Gentleman that I am sure that this would be the view of
  1234
  all reasonable people who examined the proposition, that to do that through increased prices to the consumer is eminently in the national interest, as opposed to the alternative, of a renewed and extended Exchequer subsidy.
  Two points ought to be understood as regards increases in public prices. First, these are prices which have not been increased for a substantial time. Of all the prices submitted to the Prices and Incomes Board as possibilities for increases, the one which had been raised most recently had been increased two years ago, and some had not been raised for seven years. If that pattern had been reproduced in the private as well as in the public sector, not even the Opposition would have been able to debate increasing prices this afternoon.
  Secondly, within the terms of the recommendation of the National Board for Prices and Incomes, my right hon. Friend the Minister of Power made absolutely sure that the application of these two rates to individual householders was so geared and organised that they would not fall unduly harshly on any single consumer.
  The other point to which I must draw the attention of the House regarding price increases as a result of Government intervention is the constant reference, not least by the hon. Lady herself, to increases which, quoting as her source the cartoonist of the Evening Standard—or perhaps it was the Evening News, equally reliable as regards economic judgments—she claims have flowed from the Transport Bill of my right hon. Friend. Perhaps she would like, in the name of accuracy, to remind the cartoonist and the newspaper that that Bill is not yet law, and the old lady whose drawing appears on page 14 should be reminded that whatever increases are flowing at this moment are not flowing from the Transport Bill—the same Bill which is keeping her hon. Friends from the debate tonight.
  Finally, in terms of the public area, I turn to devaluation. We always acknowledged that devaluation would result in increased prices in the home market. But I want to make it absolutely clear that the hon. and gallant Member for Carshalton (Captain W. Elliot) is totally wrong when he says that a fundamental part of our strategy in the post-devaluation situation is to ensure that prices so increase at home

  1235
  that domestic consumers are unable to purchase goods which we would prefer to go to foreign markets. One of our obligations in the post-devaluation situation is to make sure that domestically produced goods are competitive not only abroad but at home, and that the British consumer chooses to buy cheaper things made in Great Britain rather than abroad and imported across the exchanges.
  To say that the general strategy of the Government is so to increase prices at home that the domestic consumer is unable to spend is a gross over-simplification of the position. We are so determined that unnecessary price increases at home should cease, that we have decided to continue, and indeed to extend, the price vetting mechanism outlined in previous White Papers. The House will know very well that the Government have received enormous co-operation from the C.B.I. There are rules which place a responsibility on people, before they effect an increase in the price of commodities of one sort or another, to notify the proposed increase to the appropriate Department. Those commodities cover almost 45 per cent. of the Retail Prices Index.
  Most consumers, producers and retailers are anxious to co-operate with the Government in the early warning system. They are so anxious and willing to co-operate that up to now it has not been necessary to take statutory powers. But we have been able, and hope to continue to be able, to operate the early warning system on the voluntary basis which characterises it at this moment.
  The object of the early warning system is to make sure that when a potential price rise is notified to us the appropriate Department can investigate the reasons given for it and do its best to make sure that it does not happen. My hon. Friend the Member for Halifax (Dr. Summerskill) told the House of some most important price increases which were prevented from taking place because of the operation of the early warning system and the intervention of the Government. I give only four examples: bread, brewing, chocolate and cement. All these things are fundamentally important to the economy. The price of all of them would be greater were it not for the early
  1236
  warning system and the intervention of the Government.
  Several Hon. Members Several Hon. Members rose——
  Mr. Hattersley: It would be difficult to argue that I have been ungenerous in giving way, and in the six minutes which remain I must make two outstanding important points.
  The first outstanding point is the extraordinary absence from many speeches by hon. Members opposite of any reference to the special provision which the Government have made in these times of admittedly rising prices for the lower income groups and the people in special need. It is particularly surprising in the case of the hon. Lady the Member for Finchley. She forgot to mention, no doubt, that in 1964 the retirement pension was £3 7s. 6d. for a single person or £5 9s. for a married couple and that it is now £4 10s. or £7 6s. She forgot to mention, no doubt, that the purchasing power of the pension is now 18 per cent. greater than it was then. Not only is it 18 per cent. greater than it was then, but it is 14 per cent. greater than it has ever been.
  Anyone who cares to examine those two figures—18 per cent. greater than in 1964 and 14 per cent. greater than the peak in 1963—will conclude that during the last 18 months of the Conservative Government the purchasing power of the pension fell. I cannot believe that the hon. Lady forgot that, because she was serving in the Ministry at that time.
  Our attitude in times of rising prices has been fundamentally different from hers and from that of her party. We have gone out of our way to protect the lower income groups. We have protected them by increased family allowances, which include a second increase in family allowances, operative as a result of a special promise made at the time of devaluation. I have no doubt at all that when we consider the two alternatives of about 9 per cent. increases in that party's three years, and our record of about 9 per cent. over three years, with our special concession and protection for the lower income groups, that we see indeed the philosophic differences which divide that party opposite from this.
  Finally, I turn to housing. I turn to two aspects of housing. The first is the

  1237
  reference to the Prices and Incomes Board of local authority rents, and the simple fact that, as a result of that reference, and as a result of our intervention, at least 17 major housing authorities in this country, which would in the next two or three months have been charging very substantially increased rents, will now be telling their tenants that because of Government intervention the rents are not going up as much as they intended.
  Mr. Rippon Mr. Rippon rose——
  Mr. Hattersley: No, I cannot give way.
  Finally, I say something specifically to the right hon. and learned Gentleman. At one point during his speech he asked us to consider the constant problems faced by housing revenue accounts because of the increased prices of house building. He knows very well that year after year for two decades housing authorities have come into increasing financial embarrassment for one simple reason. Not only do the new houses which they build cost more from year to year, but also the old houses, the pre-war houses which were built cheaply and subsidised, are forming a smaller and smaller percentage of the total housing stock.
  Sir G. Nabarro: Interest rates.
  Mr. Hattersley: The right hon. Gentleman knows the real reason why local authorities are in housing difficulties. The
  reason why he knows this is that when in 1963, as a young and angry chairman of a major housing committee, I wanted to tell the Minister of Public Building and Works of the difficulties confronting housing committees, the right hon. and learned Gentleman came to Sheffield to tell me that my conclusions about interest rates and my conclusions about differences with Whitehall were wrong and that the basic problem was that fewer and fewer old houses were forming the subsidised part of the total housing revenue account. This is a point he omitted to mention during his critique this afternoon of housing policy, a point which, I think, demonstrates that although his performance was a bravura performance it was a bogus performance, a performance which was supposed to make his party cheer, a performance which produced so much enthusiasm in the party opposite that at the high water mark of this debate, at 7.55 this evening, there were three Members of the Opposition here to take part in the debate on this censure Motion, a Motion which I hope my hon. and right hon. Friends will dismiss with the contempt which it deserves.
  Question put:—
  That this House deplores the failure of Her Majesty's Government's economic policies which have led and will continue to lead to rising prices thereby endangering the standard of living.
  The House divided: Ayes 242, Noes 313.

  Division No. 128.]

  AYES

  [10.0 p.m.

  Alison, Michael (Barkston Ash)

  Burden, F. A.

  Elliot, Capt. Walter (Carshalton)

  Allason, James (Hemel Hempstead)

  Campbell, Gordon

  Errington, Sir Eric

  Astor, John

  Carr, Rt. Hn. Robert

  Ewing, Mrs. Winifred

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

  Cary, Sir Robert

  Farr, John

  Awdry, Daniel

  Channon, H. P. G.

  Fisher, Nigel

  Baker, Kenneth (Acton)

  Chichester-Clark, R.

  Fletcher-Cooke, Charles

  Balniel, Lord

  Clark, Henry

  Fortescue, Tim

  Batsford, Brian

  Clegg, Walter

  Foster, Sir John

  Beamish, Col. Sir Tufton

  Cooke, Robert

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

  Bell, Ronald

  Cooper-Key, Sir Neill

  Galbraith, Hon. T. G.

  Bennett, Dr. Reginald (Gos. & Fhm)

  Cordle, John

  Gibson-Watt, David

  Berry, Hn. Anthony

  Corfield, F. V.

  Giles, Rear-Adm. Morgan

  Bessell, Peter

  Costain, A. P.

  Gilmour, Ian (Norfolk, C.)

  Biggs-Davison, John

  Craddock, Sir Beresford (Spelthorne)

  Gilmour, Sir John (Fife, E.)

  Birch, Rt. Hn. Nigel

  Crosthwaite-Eyre, Sir Oliver

  Glover, Sir Douglas

  Black, Sir Cyril

  Crouch, David

  Glyn, Sir Richard

  Boardman, Tom

  Crowder, F. P.

  Godber, Rt. Hn. J. B.

  Body, Richard

  Cunningham, Sir Knox

  Goodhart, Philip

  Boyd-Carpenter, Rt. Hn. John

  Currie, G. B. H.

  Goodhew, Victor

  Boyle, Rt. Hn. Sir Edward

  Dalkeith, Earl of

  Cower, Raymond

  Braine, Bernard

  Dance, James

  Grant, Anthony

  Brewis, John

  d'Avigdor-Goldsmid, Sir Henry

  Grant-Ferris, R.

  Brinton, Sir Tatton

  Dean, Paul (Somerset, N.)

  Gresham Cooke, R.

  Bromley-Davenport, Lt.-col. Sir Walter

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

  Grieve, Percy

  Brown, Sir Edward (Bath)

  Digby, Simon Wingfield

  Griffiths, Eldon (Bury St. Edmunds)

  Bruce-Gardyne, J.

  Doughty, Charles

  Grimond, Rt. Hn. J.

  Bryan, Paul

  Douglas-Home, Rt. Hn. Sir Alec

  Gurden, Harold

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

  Drayson, G. B.

  Hall, John (Wycombe)

  Buck, Antony (Colchester)

  du Cann, Rt. Hn. Edward

  Hall-Davis, A. G. F.

  Bullus, Sir Eric

  Eden, Sir John

  Hamilton, Lord (Fermanagh)

  Hamilton, Michael (Salisbury)

  Maginnis, John E.

  Royle, Anthony

  Harris, Frederic (Croydon, N.W.)

  Marples, Rt. Hn. Ernest

  Russell, Sir Ronald

  Harrison, Brian (Maldon)

  Marten, Neil

  St. John-Stevas, Norman

  Harrison, Col. Sir Harwood (Eye)

  Maude, Angus

  Sandys, Rt. Hn. D.

  Harvey, Sir Arthur Vere

  Maudling, Rt. Hn. Reginald

  Scott, Nicholas

  Harvie Anderson, Miss

  Mawby, Ray

  Scott-Hopkins, James

  Hastings, Stephen

  Maxwell-Hyslop, R. J.

  Sharples, Richard

  Hawkins, Paul

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

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

  Heald, Rt. Hn. Sir Lionel

  Mills, Peter (Torrington)

  Silvester, Frederick

  Higgins, Terence L.

  Mills, Stratton (Belfast, N.)

  Sinclair, Sir George

  Hiley, Joseph

  Miscampbell, Norman

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

  Hill, J. E. B.

  Mitchell, David (Basingstoke)

  Smith, John (London & W'minster)

  Hirst, Geoffrey

  Monro, Hector

  Speed, Keith

  Hogg, Rt. Hn. Quintin

  Montgomery, Fergus

  Stainton, Keith

  Holland, Philip

  Morgan, Geraint (Denbigh)

  Steel, David (Roxburgh)

  Hooson, Emlyn

  Morrison, Charles (Devizes)

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

  Hordern, Peter

  Mott-Radclyffe, Sir Charles

  Tapsell, Peter

  Hornby, Richard

  Munro-Lucas-Tooth, Sir Hugh

  Taylor, Sir Charles (Eastbourne)

  Howell, David (Guildford)

  Murton, Oscar

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

  Hunt, John

  Nabarro, Sir Gerald

  Taylor, Frank (Moss Side)

  Hutchison, Michael Clark

  Neave, Airey

  Teeling, Sir William

  Iremonger, T. L.

  Nicholls, Sir Harmar

  Temple, John M.

  Irvine, Bryant Godman (Rye)

  Noble, Rt. Hn. Michael

  Thatcher, Mrs. Margaret

  Jenkin, Patrick (Woodford)

  Nott, John

  Tilney, John

  Jennings, J. C. (Burton)

  Onslow, Cranley

  Turton, Rt. Hn. R. H.

  Johnson Smith, G. (E. Grinstead)

  Orr, Capt. L. P. S.

  van Straubenzee, W. R.

  Johnston, Russell (Inverness)

  Orr-Ewing, Sir Ian

  Vaughan-Morgan, Rt. Hn. Sir John

  Jones, Arthur (Northants, S.)

  Osborn, John (Hallam)

  Vickers, Dame Joan

  Jopling, Michael

  Osborne, Sir Cyril (Louth)

  Wainwright, Richard (Colne Valley)

  Kaberry, Sir Donald

  Page, Graham (Crosby)

  Walker, Peter (Worcester)

  Kerby, Capt. Henry

  Page, John (Harrow, W.)

  Walker-Smith, Rt. Hn. Sir Derek

  Kershaw, Anthony

  Pearson, Sir Frank (Clitheroe)

  Wall, Patrick

  King, Evelyn (Dorset, S.)

  Peel, John

  Walters, Dennis

  Kitson, Timothy

  Percival, Ian

  Ward, Dame Irene

  Knight, Mrs. Jill

  Peyton, John

  Weatherill, Bernard

  Lambton, Viscount

  Pike, Miss Mervyn

  Webster, David

  Lancaster, Col. C. G.

  Pink, R. Bonner

  Wells, John (Maidstone)

  Lane, David

  Pounder, Rafton

  Whitelaw, Rt. Hn. William

  Langford-Holt, Sir John

  Powell, Rt. Hn. J. Enoch

  Williams, Donald (Dudley)

  Legge-Bourke, Sir Harry

  Price, David (Eastleigh)

  Wills, Sir Gerald (Bridgwater)

  Lewis, Kenneth (Rutland)

  Pym, Francis

  Wilson, Geoffrey (Truro)

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

  Quennell, Miss J. M.

  Winstanley, Dr. M. P.

  Longden, Gilbert

  Ramsden, Rt. Hn. James

  Wolrige-Gordon, Patrick

  Loveys, W. H.

  Rawlinson, Rt. Hn. Sir Peter

  Wood, Rt. Hn. Richard

  Lubbock, Eric

  Rees-Davies, W. R.

  Woodnutt, Mark

  McAdden, Sir Stephen

  Renton, Rt. Hn. Sir David

  Worsley, Marcus

  MacArthur, Ian

  Rhys Williams, Sir Brandon

  Wright, Esmond

  Mackenzie, Alasdair (Ross & Crom'ty)

  Ridley, Hn. Nicholas

  Wylie, N. R.

  Maclean, Sir Fitzroy

  Ridsdale, Julian

  Macleod, Rt. Hn. Iain

  Rippon, Rt. Hn. Geoffrey

  TELLERS FOR THE AYES:

  McMaster, Stanley

  Rodgers, Sir John (Sevenoaks)

  Mr. Jasper More and

  Maddan, Martin

  Rossi, Hugh (Hornsey)

  Mr. Reginald Eyre.

  NOES

  Abse, Leo

  Bradley, Tom

  Darling, Rt. Hn. George

  Albu, Austen

  Bray, Dr. Jeremy

  Davidson, Arthur (Accrington)

  Allaun, Frank (Salford, E.)

  Brooks, Edwin

  Davies, Dr. Ernest (Stretford)

  Alldritt, Walter

  Broughton, Dr. A. D. D.

  Davies, G. Elfed (Rhondda, E.)

  Allen, Scholefield

  Brown, Rt. Hn. George (Belper)

  Davies, Ednyfed Hudson (Conway)

  Archer, Peter

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

  Davies, Harold (Leek)

  Armstrong, Ernest

  Brown, Bob (N'c'tle-upon-Tyne, W.)

  Davies, Ifor (Gower)

  Atkins, Ronald (Preston, N.)

  Buchan, Norman

  de Freitas, Rt. Hn. Sir Geoffrey

  Atkinson, Norman (Tottenham)

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

  Delargy, Hugh

  Bacon, Rt. Hn. Alice

  Butler, Herbert (Hackney, C.)

  Dell, Edmund

  Bagier, Gordon A. T.

  Butler, Mrs. Joyce (Wood Green)

  Dempsey, James

  Barnes, Michael

  Callaghan, Rt. Hn. James

  Dewar, Donald

  Barnett, Joel

  Cant, R. B.

  Diamond, Rt. Hn. John

  Baxter, William

  Carmichael, Neil

  Dickens, James

  Beaney, Alan

  Carter-Jones, Lewis

  Dobson, Ray

  Bellenger, Rt. Hn. F. J.

  Castle, Rt. Hn. Barbara

  Doig, Peter

  Bence, Cyril

  Chapman, Donald

  Driberg, Tom

  Benn, Rt. Hn. Anthony Wedgwood

  Coe, Denis

  Dunn, James A.

  Bennett, James (C'gow, Bridgeton)

  Coleman, Donald

  Dunnett, Jack

  Bidwell, Sydney

  Concannon, J. D.

  Dunwoody, Mrs. Gwyneth (Exeter)

  Binns, John

  Conlan, Bernard

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

  Bishop, E. S.

  Corbert, Mrs. Freda

  Eadie, Alex

  Blackburn, F.

  Craddock, George (Bradford, S.)

  Edwards, William (Merioneth)

  Blenkinsop, Arthur

  Crawshaw, Richard

  Ellis, John

  Boardman, H. (Leigh)

  Cronin, John

  English, Michael

  Booth, Albert

  Crosland, Rt. Hn. Anthony

  Ennals, David

  Bottomley, Rt. Hn. Arthur

  Crossman, Rt. Hn. Richard

  Ensor, David

  Boyden, James

  Cullen, Mrs. Alice

  Evans, Albert (Islington, S.W.)

  Braddock, Mrs. E. M.

  Dalyell, Tam

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

  1240

  1241

  Faulds, Andrew

  Lever, Harold (Cheetham)

  Probert, Arthur

  Fernyhough, E.

  Lever, L. M. (Ardwick)

  Pursey, Cmdr. Harry

  Finch, Harold

  Lewis, Arthur (W. Ham, N.)

  Randall, Harry

  Fitch, Alan (Wigan)

  Lewis, Ron (Carlisle)

  Rankin, John

  Fletcher, Raymond (Ilkeston)

  Lomas, Kenneth

  Rees, Merlyn

  Fletcher, Ted (Darlington)

  Loughlin, Charles

  Reynolds, G. W.

  Foley, Maurice

  Lyon, Alexander W. (York)

  Rhodes, Geoffrey

  Foot, Rt. Hn. Sir Dingle (Ipswich)

  Lyons, Edward (Bradford, E.)

  Roberts, Albert (Normanton)

  Foot, Michael (Ebbw Vale)

  Mabon, Dr. J. Dickson

  Roberts, Goronwy (Caernarvon)

  Ford, Ben

  McCann, John

  Roberts, Gwilym (Bedfordshire, S.)

  Forrester, John

  MacColl, James

  Robertson, John (Paisley)

  Fowler, Gerry

  MacDermot, Niall

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

  Fraser, John (Norwood)

  Macdonald, A. H.

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

  Freeson, Reginald

  McGuire, Michael

  Rodgers, William (Stockton)

  Galpern, Sir Myer

  Mackenzie, Gregor (Rutherglen)

  Roebuck, Roy

  Gardner, Tony

  Mackie, John

  Rogers, George (Kensington, N.)

  Garrett, W. E.

  Mackintosh, John P.

  Rose, Paul

  Ginsburg, David

  Maclennan, Robert

  Ross, Rt. Hn. William

  Gordon Walker, Rt. Hn. P. C.

  MacMillan, Malcolm (Western Isles)

  Rowlands, E. (Cardiff, N.)

  Gray, Dr. Hugh (Yarmouth)

  McMillan, Tom (Glasgow, C.)

  Ryan, John

  Greenwood, Fit. Hn. Anthony

  McNamara, J. Kevin

  Shaw, Arnold (Ilford, S.)

  Gregory, Arnold

  MacPherson, Malcolm

  Sheldon, Robert

  Grey, Charles (Durham)

  Mahon, Peter (Preston, S.)

  Shinwell, Rt. Hn. E.

  Griffiths, David (Rother Valley)

  Mahon, Simon (Bootle)

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

  Griffiths, Rt. Hn. James (LlanellY)

  Mallalieu, E. L. (Brigg)

  Short, Mrs. Renée (W'hampton, N. E.)

  Griffiths, Will (Exchange)

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

  Silkin, Rt. Hn. John (Deptford)

  Gunter, Rt. Hn. R. J.

  Manuel, Archie

  Silkin, Hn. S. C. (Dulwich)

  Hamilton, James (Bothwell)

  Mapp, Charles

  Silverman, Julius (Aston)

  Hamling, William

  Marks, Kenneth

  Skeffington, Arthur

  Hannan, William

  Marquand, David

  Slater, Joseph

  Harper, Joseph

  Marsh, Rt. Hn. Richard

  Small, William

  Harrison, Walter (Wakefield)

  Mason, Rt. Hn. Roy

  Snow, Julian

  Haseldine, Norman

  Maxwell, Robert

  Spriggs, Leslie

  Hattersley, Roy

  Mayhew, Christopher

  Steele, Thomas (Dunbartonshire, W.)

  Hazell, Bert

  Mellish, Rt. Hn. Robert

  Stonehouse, John

  Healey, Rt. Hn. Denis

  Mendelson, J. J.

  Strauss, Rt. Hn. G. R.

  Henig, Stanley

  Mikardo, Ian

  Summerskill, Hn. Dr. Shirley

  Herbison, Rt. Hn. Margaret

  Millan, Bruce

  Swain, Thomas

  Hilton, W. S.

  Miller, Dr. M. S.

  Swingler, Stephen

  Hooley, Frank

  Molloy, William

  Symonds, J. B.

  Horner, John

  Moonman, Eric

  Taverne, Dick

  Houghton, Rt. Hn. Douglas

  Morgan, Elystan (Cardiganshire)

  Thomas, George (Cardiff, W.)

  Howarth, Harry (Wellingborough)

  Morris, Alfred (Wythenshawe)

  Thomson, Rt. Hn. George

  Howarth, Robert (Bolton, E.)

  Morris, Charles R. (Openshaw)

  Thornton, Ernest

  Howie, W.

  Morris, John (Aberavon)

  Tinn, James

  Hoy, James

  Moyle, Roland

  Tomney, Frank

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Murray, Albert

  Varley, Eric G.

  Hughes, Emrys (Ayrshire, S.)

  Neal, Harold

  Wainwright, Edwin (Dearne Valley)

  Hughes, Hector (Aberdeen, N.)

  Newens, Stan

  Walden, Brian (All Saints)

  Hughes, Roy (Newport)

  Norwood, Christopher

  Walker, Harold (Doncaster)

  Hunter, Adam

  Oakes, Gordon

  Wallace, George

  Hynd, John

  Ogden, Eric

  Watkins, David (Consett)

  Irvine, Sir Arthur

  O'Malley, Brian

  Watkins, Tudor (Brecon & Radnor)

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

  Oram, Albert E.

  Weitzman, David

  Jackson, Peter M. (High Peak)

  Orbach, Maurice

  Wellbeloved, James

  Janner, Sir Barnett

  Orme, Stanley

  Whitaker, Ben

  Jay, Rt. Hn. Douglas

  Oswald, Thomas

  Whitlock, William

  Jeger, George (Goole)

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

  Wilkins, W. A.

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

  Owen Will (Morpeth)

  Willey, Rt. Hn. Frederick

  Jenkins, Hugh (Putney)

  Page, Derek (King's Lynn)

  Williams, Alan (Swansea, W.)

  Jenkins, Rt. Hn. Roy (Stechford)

  Paget, R. T.

  Williams, Alan Lee (Hornchurch)

  Johnson, Carol (Lewisham, S.)

  Palmer, Arthur

  Williams, Clifford (Abertillery)

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

  Pannell, Rt. Hn. Charles

  Williams, Mrs. Shirley (Hitchin)

  Jones, Dan (Burnley)

  Park, Trevor

  Williams, W. T. (Warrington)

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

  Parker, John (Dagenham)

  Willis, Rt. Hn. George

  Jones, J. Idwal (Wrexham)

  Parkin, Ben (Paddington, N.)

  Wilson, Rt. Hn. Harold (Huyton)

  Jones, T. Alec (Rhondda, West)

  Parkyn, Brian (Bedford)

  Wilson, William (Coventry, S.)

  Kelley, Richard

  Pavitt Laurence

  Winnick, David

  Kenyon, Clifford

  Pearson, Arthur (Pontypridd)

  Woodburn, Rt. Hn. A.

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

  Peart, Rt. Hn. Fred

  Woof, Robert

  Kerr, Dr. David (W'worth Central)

  Pentland, Norman

  Wyatt, Woodrow

  Kerr, Russell (Feltham)

  Perry, Ernest G. (Battersea, S.)

  Yates, Victor

  Lawson, George

  Perry, George H. (Nottingham, S.)

  Leadbitter, Ted

  Prentice, Rt. Hn. R. E.

  TELLERS FOR THE NOES:

  Ledger, Ron

  Price, Christopher (Perry Barr)

  Mr. Harry Gourley and

  Lee, Rt. Hn. Frederick (Newton)

  Price, Thomas (Westhoughton)

  Mr. Neil McBride.

  Lee, John (Reading)

  Price, William (Rugby)

ULSTER TELEVISION MAGAZINE (CLOSURE)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gourlay.]
10.13 p.m.
Mr. Rafton Pounder: I wish to raise the subject of the impending closure of the Ulster Television magazine, T.V. Post. This is a forced closure, as a direct consequence of the decision of the Independent Television Authority to replace regional programme journals with a national magazine.
The compulsory elimination of the six regional television magazines and their substitution with a national programme guide, in my view, comes within the broad terms of Section 22(5) of the 1964 Television Act, which allows the Postmaster-General to require the I.T.A. to give him
"…information…with respect to the financial transactions and engagements of the Authority."
and therefore cannot be by-passed under the umbrella that the production of a programme journal lies within the scope of the day-to-day business of providing television services.
But, apart from this, there is also the employment aspect of the publication of a regional programme journal to be considered. The intention to eliminate regional television publications will clearly have serious consequences for the printers of the T.V. Post in Ulster, and arbitrarily to close down a profitable undertaking employing 40 people would seem to be wholly contrary to the aim of encouraging employment opportunities in the regions, which the Government have repeatedly stressed.
The centralisation envisaged in the new national programme journal will result in further redundancies in Belfast. It is tragic that at a time when strenuous efforts are being made to provide additional employment in the development areas, such as Northern Ireland, the jobs of 40 journalists, printers and distribution workers should be arbitrarily terminated.
Both the National Union of Journalists and the printing unions in Ulster are
1244
justifiably concerned about this possible turn of events——
Mr. Speaker: Order. I am sure that the hon. Gentleman knows that he must come to the question of Ministerial responsibility. I understand that the Minister's responsibility is that the report must include details of these activities.
Mr. Pounder: I was just coming to that, Mr. Speaker, but I was trying to outline the broad background to the present situation.
Alternative opportunties for the employment of these 40 people are very limited. Referring to Section 16 of the 1964 Act, those engaged in the publication of T.V. Post are employed by a publishing company which is jointly owned by Ulster Television and Century Newspapers. These 40 people are, in a sense, therefore, employed by the Northern Ireland programme contractor, in which case there is direct Ministerial responsibility under Section 16 of the 1964 Act regarding their conditions of employment.
It is worthy of note in this context that it has been a condition of the granting of licences to the new television companies that those employees who have been displaced by virtue of those new licences must be re-engaged. Such persons, though they may not have lost a day's work or salary, are entitled to redundancy payments, which could amount to as much as £1,200. Yet the employees of T.V. Post cannot be reabsorbed, neither is alternative employment either available or being offered.
I will explain the history of the magazine in coming to the question of Ministerial responsibility. The magazine was started from nothing in 1959 and it has consistently succeeded in securing in Northern Ireland a higher penetration per 1,000 television sets than any other regional television magazine has attained in any part of the Kingdom. While I could see sense in the elimination of an unprofitable enterprise, such a yardstick cannot be used for measuring T.V. Post, which has consistently maintained an impressive profitability record.
A few moments ago we were debating rising prices. Until the end of last year this magazine sold for 6d., whereupon its price was raised to 8d., not because of rising costs but at the instigation of its

1245
successor to be, so as to ease the way for the new regional edition of T.V. Times, which is due to come out in September and which will sell at 9d. While it may possibly be logical for there to be a national programme journal for Great Britain——
Mr. Speaker: Order. I am in complete sympathy with what the hon. Gentleman is trying to advocate, but the Minister has no power to intervene in the contracts which I.T.A. establishes. He has power to ask for a report on what it has done, and the hon. Gentleman must address his remarks to that.
Mr. Pounder: That point is in my notes, Mr. Speaker, and I was trying to equate the whole with the Ministerial responsibility involved.
In this context, the I.T.A. has already agreed to exclude the Channel Islands from the national programme journal on the specific grounds that there were special conditions pertaining there which would justify the continuance of Channel Television's local guide, the Channel Viewer. If it is feasible because of special conditions, to exclude the Channel Islands, I would have thought that the same argument could be used to exclude Northern Ireland.
From its inception, the I.T.A. has rightly proclaimed its desire to see that Ulster Television should be Northern Irish in ownership, character and direction, thus ensuring that Ulster's particular needs would be met and its problems understood. That being so, why should a different criterion be used to measure the programme journal which should serve the people of Ulster? Surely it, too, should be Northern Irish in ownership, character and direction.
The I.T.A.'s legal right to force the television companies to accept a common programme guide is somewhat dubious. The offer of new television contracts from the Authority last year was subject to the successful applicants agreeing to take a regional or local edition of a national programme guide. From my understanding of the 1952 and 1964 Acts, it is questionable whether the Authority has the right to interfere in that way in the field of programme guide publications.
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There is also another point which cannot be fairly discounted and I give this as an illustrative point. Ulster is the only part of the United Kingdom having a land frontier with an adjoining friendly, but foreign, country, which also has its own television network and its own television programme journal. From September, as the I.T.A.'s plans stand at present, Ulster television would have lost its own programme journal to act as a curtain raiser to programmes on its screens while the competing cross Border station would still have its own journal which circulates freely in Northern Ireland. This is a situation for which there is no parallel in England, Scotland or Wales. The substantial local content which is featured in the T.V. Post would be lost in a regional edition of the national magazine which is envisaged.
The Postmaster-General has the specific power under Section 22(4) of the 1964 Act to direct the I.T.A. to include matters in its Annual Report. I ask him to direct the I.T.A. to publish a full description of what happened in this case. Considerable anxiety has been expressed in many circles in recent months about the ever-growing concentration of the Press, newspapers and magazines, into ever fewer hands. To eliminate the T.V. Post would be a further step in this direction. I suggest that the forced eradication of the T.V. Post could have a serious adverse effect on the newspaper industry in Ulster.
I trust that even at this late stage it may be possible for some action to be taken to secure the exclusion of Ulster from the proposed national television programme journal. I realise that the Postmaster-General may seek to claim that this is a matter which comes wholly within the powers and responsibilities of the I.T.A. as delegated to the Authority by this House, but I am sure that when the powers of the Authority were drawn up it was never envisaged that they would be used to eradicate a successful and profitable programme journal like the T.V. Post.
10.23 p.m.
Mr. R. Chichester-Clark: I support my hon. Friend the Member for Belfast, South (Mr. Pounder) in the plea he has made. The effect on

1247
employment will be quite considerable. That 40 people will be put out of work may not sound very much, but I am sure that the Assistant Postmaster-General will regard this matter sympathetically in this context because it is quite serious in view of the heavy unemployment there already.
May I ask for your guidance, Mr. Speaker? I understand that you said my hon. Friend was entitled to ask that the I.T.A. should be asked to furnish a report. Is he entitled further to ask what that report might contain? For instance, could he ask that the report should contain how far the employment situation was taken into account and how many people would be put out of work. I do not know whether that is in order or not.
Mr. Speaker: The I.T.A. has power to make certain contracts. The Minister cannot interfere with this. He can ask for a report. The hon. Member for Belfast, South (Mr. Pounder) and the hon. Member for Londonderry (Mr. Chichester-Clark) can ask for almost what they like in the report.
Mr. Chichester-Clark: In that case, I ask that that report should contain an account of the consideration taken of the unemployment situation in Northern Ireland and of the effect on the people concerned who have been working for this periodical. Otherwise, I strongly support my hon. Friend.
10.24 p.m.
The Assistant Postmaster-General (Mr. Joseph Slater): I should like to start by thanking the hon. Member for Belfast, South (Mr. Pounder) for raising the matter of the impending closure of the programme journal T.V. Post, published by Ulster Television. Next, I should like to enter a reservation. The hon. Member wrote in June of last year to my right hon. Friend the then Postmaster-General about the idea of replacing T.V. Post by a national programme journal. In replying, my right hon. Friend recalled that Parliament had, in the Television Act, vested in the Authority full responsibility for the day-to-day conduct of its affairs, and explained that the issue was therefore not one in which he could intervene. I mention this not in any spirit of com-
1248
plaint that the hon. Member has raised the matter again today, but simply to explain to the House the limitations which my reply must observe.
It is not for my right hon. Friend to answer for, or defend, the day-to-day conduct by the Authority of its affairs. Parliament has established the Authority to run television services. For reasons which, I am sure, do not need defending, it is none of Ministers' business to tell them how and how not to do it. I should have thought the purpose of Section 22(5) which the hon. Gentleman referred to was rather more of an auditing nature than he suggested.
Having said that, perhaps I should now recount the essential facts as I understand them. Ulster T.V. is the programme company which, under contract with the Independent Television Authority, provides the Authority's television service in Northern Ireland. It does so largely by transmitting programmes produced by other programme companies appointed by the Authority to provide a service in other areas. For the rest of its transmission time, Ulster T.V. produces its own programmes. From this, it follows that the programmes announced in its journal are, very largely, those broadcast by the I.T.A. throughout the country.
The next fact to get on record is the Authority's decision that, basically, a single journal should be provided throughout its regions. Here let me quote the statement made on 11th June, 1967, by Lord Hill when, as Chairman of the I.T.A. he announced the policy. He said:
"The Authority has not been satisfied with some of the programme journals. It has decided in principle that in the new contract period there should be a single national programme journal for independent television, with regional editions. The Authority's objective is that there should be a single publishing company formed by the programme companies, with the Authority represented on its Board. Details will be announced in due course after consultation with the companies."
This was the Authority's statement of its policy. Since then, the decision in principle has moved towards realisation. On 3rd October last, in pursuance of the Authority's decision, the programme companies announced their intention to set up their own publishing company to

1249
publish the national journal, with regional variations.
So much for the facts. The criticisms made by the hon. Member for Belfast, South of the Authority's decision seem to me to relate rather to what the critics see as its general implications, than to its implications for the service of television provided by the Authority. Thus, criticism has focussed on representing that the decision would put printers and journalists out of jobs. The hon. Member emphasised that. He mentioned a loss in Northern Ireland of at least 40 jobs.
Then again it has been represented that the decision is contrary to the policy of encouraging regional development. A third argument was that another effect of the disappearance of the T.V. Post, and its replacement by a national journal produced by one of the major publishing concerns, would be to concentrate still further the control of the Press into fewer hands. Obviously, there is much force in these arguments. But we have to recognise that, important though these arguments are, the Authority is bound to start by considering what is best for the service of television. This is the task which by statute has been laid upon it. In saying this, I do not imply that the Authority ignores all other considerations. As a public corporation it would, I am sure, want to weigh the wider considerations. The fact remains, however, that its first concern is with the public service for which it is responsible.
Another criticism has been the effect of the Authority's decision on the service in Northern Ireland. It is said that the decentralised, regional structure of independent television is an important part of its form of organisation; and that its value lies in the impulse it gives to regional variation in its programmes. The publication, in Ulster, of its own programme journal strengthens this impulse. The journal provides a medium for the expression of Ulster's particular interests and aspirations, and serves to reinforce its distinctive character and sense of identity. More than that, so the argument goes, through its editorial material and articles, the journal promotes and supports the television programmes produced by Ulster TV, which in themselves help to promote Ulster.
1250
These, then, are the representations, as they have been put to me, against the Authority's decision, and the considerations which, the Authority tell me, led it to make the decision. But, as I said earlier in my speech, the decision is statutorily the Authority's, and my right hon. Friend has no powers to intervene in it.
That being so, the hon. Member for Belfast, South will not, I trust, expect me to offer a view upon it. The expression of Parliamentary opinion on the performance of the broadcasting authorities is of course another matter. As the most important way in which public opinion is made to play upon them, and to keep them sensitive to it, Parliamentary opinion is one of the continuing checks on the performance of the Authority in this, as in other aspects of its functions. The chairman and members of the Authority pay the closest attention to what is said here about the service for which they are answerable.
The Authority go on to tell me that it had these various arguments well in mind when it was considering its policy. Against it, it had to balance the advantages, as it judged them to be, to independent television's viewers, of a national programme journal, with regional variations. The Authority's announcement of last June states that it had not been satisfied with some of the journals. It tells me that it regards the journals as part and parcel of the television service for which it is answerable. This seems to me to be a view which the Authority is perfectly entitled to hold and consistent with the statutory requirement to provide its service as a public service. On the merits of the view, as I have said, I have no opinion to express, but my right hon. Friend has no doubt it is a perfectly proper decision for the Authority to take.
What are the advantages, as the I.T.A. sees them, of a single programme journal? The Authority's view is, I understand, that a fully national journal representing independent television as a whole would seek and achieve higher standards of production and of content. Against the criticism stemming from the fact of Northern Ireland's separate identity and distinctive problems, the Authority would set these considerations.

1251
First, given the I.T.A.'s intention to provide, in the interest of viewers generally, a national journal, the exclusion of so large and integral a part of the United Kingdom as is Northern Ireland would not have been right. The Authority's view is that this is not in anything like the same degree true for the Channel Islands. Secondly, the differing identities of the various regions of independent television should find their expression primarily in the content of the programme material produced by each company in order to meet the particular tastes and interests of the region for which it holds the Authority's franchise.
Mr. Pounder: Before the Minister leaves that point, could he tell us——
Mr. Speaker: Order. If the Minister is in order in defending the contract, everything the hon. Member says is in order.
Mr. Pounder: Could the Postmaster-General tell us what motivated his decision on the Channel Islands. What were the special considerations?
Mr. Slater: I am not in a position to answer that interjection. I have given the information about the Channel Islands which has been passed on to me.
The ownership of programme journals is of lesser importance.
This, then, was the broad balance of argument before the Authority. As I have said, the Authority's decisions are its own and are not for me to defend. But the House will, I believe, have found it helpful to have heard what the various considerations were.
One of the formal ways in which the Authority gives public account for the discharge of its duties is, of course, through it annual report. As the hon. Member for Belfast, South has pointed out the Authority is under a statutory duty to prepare, as soon as may be practicable after the end of every financial year, a general report of its proceedings for that year. This report is published and presented to Parliament by the Postmaster-General. The requirement is contained in Section 22 of the Television Act, 1964. Hon. Members who interest themselves in these annual reports will be aware that they customarily contain
1252
a comprehensive account of the Authority's activities over the year.
May I emphasise that the reports are not a mere piece of procedure. They put on record for critical consideration the major decisions and actions taken by the Authority in discharge of its duties in the provision of a public service of great importance. More than that, the fact that one has to go on record in this way serves as a discipline—if discipline be needed. It is always a salutary thought that one has to give account of one's activities.
The hon. Member has drawn attention to Section 22(4) of the Television Act which provides that the report shall include such information as to the plans, and the past and present activities, of the Authority, as the Postmaster-General may direct. He has suggested that my right hon. Friend's power to make such a direction should be brought into play now, with a view to ensuring that the Authority's annual report for the year 1967–68 deals with the matter that we have been discussing: the matter of the decision to publish a national programme journal.
But it would not, I am sure, be necessary for my right hon. Friend to do so. The Chairman and members of the Authority can surely be relied upon to know, without being told, that all matters of real importance in the development of their policies should be dealt with in their report, and that hon. Members will expect them to be dealt with. If notice were needed that the subject of this debate were one such matter, then surely the fact that the hon. Member for Belfast, South has raised it today is enough to bring the matter to the Authority's attention.
May I, in conclusion, again thank the hon. Member for the service he has done us by raising this subject for discussion. I have no doubt that the I.T.A. will take note of what has been said in the course of the debate.
10.37 p.m.
Sir Harmar Nicholls: The Assistant Postmaster-General has given what might be described as a "fobbing-off" reply to the very forceful points made by my hon. Friend. I have not come here equipped with the terms of the Statute or the Instructions to the Authority, because I had not realised

1253
the points that my hon. Friend would be making. But, since the hon. Gentleman has given a clear defence of what the I.T.A. has done, I would have thought that that broadened the comments that one could make in criticising what it has done.
Whether or not it is working clearly within the terms of the Statute, it can be said categorically that, in closing down this publication, it is not working within the terms of the Instruction given by Parliament. I sat through the whole of the last Committee dealing with the Instruction to be given, and the then Postmaster-General made it clear that he wanted future programmes to be regional and not centralised. He thought that the strength of a television system lay in its ability to reflect the character and atmosphere of the various regions represented.
It cannot be said that no account was taken of the part played by the programme publications which came out in the regions, because it is within my recollection that, in fixing what the levy should be from the various programme companies, account was taken of the income that they derived from journals such as that published in Ulster.
I suggest to the hon. Gentleman that, instead of just waiting for the report to which he has referred, his Department has the power to indicate that it feels that the I.T.A. is not carrying out the wishes of Parliament and appears to be weakening the regional content of television programmes in Ulster and the other regions if these publications are to be brought to an end.
The Assistant Postmaster-General tried to give a balanced argument, and he added that he hoped that my hon. Friend's comments would be taken into account by the Chairman of the I.T.A. and others in authority there. There is an onus on his Department to indicate its feelings about this, and, recalling speeches made by the then Postmaster-General, the only possible indication can be that it deplores the ending of these publications.
The view has been expressed that television programmes should reflect the atmosphere of the regions. There is the special argument put forward by my hon. Friend that the decision affects the liveli-
1254
hoods of about 40 people in Ulster. Then there is the fact that it is adjoined by a friendly but foreign power which will use its television coverage to go over the border and effect the general type of programme to be seen there. All those matters must be taken into account.
I wonder whether even at this late hour we could persuade the Assistant Postmaster-General to discuss this matter further with his right hon. Friend and with the Department to see if they can bring influence to bear with I.T.A. headquarters to reconsider this decision before they actually terminate this publication. We all know that after a publication is terminated it is so much more difficult to sustain, and one can hardly sustain, an argument for reviving it.
I would go further and point to the powers which the Postmaster-General has. We all know that the franchise given to the various programme companies, including Ulster, is to run five years. At the end of the five years it is still within the power of the Postmaster-General to renew it or not, and to decide what to do about it. I should have thought that at this early stage he might sustain what Parliament wanted—the regional atmosphere. Certainly in the case of Ulster the regional atmosphere is more likely to be preserved by a separate publication which describes the regional programmes, which has separate editorials, which has separate reports, and reviews of what is coming on.
I believe that my hon. Friend has made a strong case, agreeing with what Parliament itself wished when we passed the Statute which affects television programmes. I feel that the Assistant Postmaster-General himself seemed to come down on the side of the case which my hon. Friend made, but I thought he showed a tiny bit of cowardice—I say it in the most friendly way—in not expressing the opinion of his own Department. I believe it has the power and the right to express the will of Parliament as shown when we discussed the last Act. I think the hon. Gentleman should say further consideration ought to be given to it before this journal comes to an end.
Question put and agreed to.
Adjourned accordingly at eighteen minutes to Eleven o'clock.

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  Shrewsbury-London (Rail Link)
  Shrewsbury-London (Rail Link)
  Level Crossing, Bechingham
  Level Crossing, Bechingham
  Automatic Half-Barrier Level Crossings
  Automatic Half-Barrier Level Crossings
ROADS
  Motorway Construction
  Motorway Construction
  Northern Region
  Northern Region
AGRICULTURE, FISHERIES AND FOOD
  Farm and Garden Chemicals (Regulations)
  Farm and Garden Chemicals (Regulations)
  Littlewoods' Cafeteria, Glasgow (Prices)
  Littlewoods' Cafeteria, Glasgow (Prices)
SCOTLAND
  Windblown Timber (Dumfries and Galloway)
  Windblown Timber (Dumfries and Galloway)
  Death in Hospital (Funeral Costs)
  Death in Hospital (Funeral Costs)
  Teachers
  Teachers
  Tourist Industry
  Tourist Industry
  New Towns (House Rents)
  New Towns (House Rents)
  Criminal Injuries Compensation Board
  Criminal Injuries Compensation Board
  Local Authority Houses
  Local Authority Houses
  Rents
  Rents
  Local Authority Houses (Rents)
  Local Authority Houses (Rents)
  Registration Offices (Hours)
  Registration Offices (Hours)
  Dyslexia
  Dyslexia
  A82 Trunk Road (Alexandria Bypass)
  A82 Trunk Road (Alexandria Bypass)
  Roads (Construction and Improvements)
  Roads (Construction and Improvements)
  Fishing Industry
  Fishing Industry
BOARD OF TRADE
  Photocopying (Copyright)
  Photocopying (Copyright)
  James Brown & Company (Voluntary Liquidation)
  James Brown & Company (Voluntary Liquidation)
  Selective Employment Tax (Non-ferrous Metals)
  Selective Employment Tax (Non-ferrous Metals)
AVIATION
  Boeing Aircraft Accident, Heathrow (Replacement)
  Boeing Aircraft Accident, Heathrow (Replacement)
TECHNOLOGY
  Phantom Aircraft (Costs)
  Phantom Aircraft (Costs)
  Harrier Aircraft (Cost)
  Harrier Aircraft (Cost)
HOME DEPARTMENT
  Royal Observer Corps
  Royal Observer Corps
  Mounted Police
  Mounted Police
  Metropolitan Police (Water Cannon)
  Metropolitan Police (Water Cannon)
  Licensed Clubs, Wales and Monmouthshire
  Licensed Clubs, Wales and Monmouthshire
  Race Relations Bill (Consultations)
  Race Relations Bill (Consultations)
  Off-Licences, Wales and Monmouthshire
  Off-Licences, Wales and Monmouthshire
  Licensing Act, 1961 (Restaurants and Grocery Shops)
  Licensing Act, 1961 (Restaurants and Grocery Shops)
  CENTRAL TREATY ORGANISATION AND SOUTH- EAST ASIA TREATY ORGANISATION
  CENTRAL TREATY ORGANISATION AND SOUTH- EAST ASIA TREATY ORGANISATION
  PERSIAN GULF (BRITISH FORCES)
  PERSIAN GULF (BRITISH FORCES)
  BRITISH MISSIONS OVERSEAS (COSTS)
  BRITISH MISSIONS OVERSEAS (COSTS)
COMMONWEALTH AFFAIRS
  Seychelles (Marine Laws)
  Seychelles (Marine Laws)
  Singapore (British Forces)
  Singapore (British Forces)
EDUCATION AND SCIENCE
  School Building Programme, West Suffolk
  School Building Programme, West Suffolk
  Free Milk
  Free Milk
  Birmingham (Teacher Quota)
  Birmingham (Teacher Quota)
  Part-time Pupils
  Part-time Pupils
  Road Safety Tuition (Automatic Level Crossings)
  Road Safety Tuition (Automatic Level Crossings)
NATIONAL FINANCE
  Short-Period Casual Workers (P.A.Y.E.)
  Short-Period Casual Workers (P.A.Y.E.)
HOSPITALS
  Children (Visiting)
  Children (Visiting)
LOCAL GOVERNMENT
  South Cornwall Water Board (Water Rate)
  South Cornwall Water Board (Water Rate)
MINISTRY OF LABOUR
  Unemployment
  Unemployment
POST OFFICE
  Non-Industrial Staff, Scotland
  Non-Industrial Staff, Scotland
  Envelopes (Preferred-sizes)
  Envelopes (Preferred-sizes)
  Unemployment (Scotland)
  Unemployment (Scotland)
  Sub-Post Offices (Security)
  Sub-Post Offices (Security)
  First and Second Class Mail
  First and Second Class Mail
  "Help Britain" Campaign (Recording)
  "Help Britain" Campaign (Recording)
PUBLIC BUILDING AND WORKS
  Official Cars
  Official Cars
SOCIAL SECURITY
  Family Allowance and Benefit Books
  Family Allowance and Benefit Books

Preamble
The House met at half past two o the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby.

S.E.T.: EFFECT ON EMPLOYMENT
2.35 p.m.
LORD DRUMALBYN: My Lords, beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they are now able to say what have been the respective decline in employment and growth in unemployment in manufacturing and distribution since the introduction of selective employment tax in terms of number and proportion up to the end of December, 1967, and what more recent figures are available; and what infer ences Her Majesty's Government draw from these figures.]
THE PAYMASTER GENERAL (LORD SHACKLETON): My Lords, between June, 1966, and June, 1967, there were reductions in employees in employment of 276,000, or 3·1 per cent., in manufacturing and 127,000, or 4·3 per cent, in the distributive trades. Employment statistics for the latter industry are only available for June each year. Over the same period the numbers of registered wholly unemployed increased by 77,000 in manufacturing and 23,000 in the distributive trades. Employment in the distributive trades and in the group of industries bearing S.E.T. increased each year from 1959 to 1966, even in years when employment in manufacturing fell. There has thus been a marked change between 1966 and 1967 in trend in employment in the tax-bearing industries. It seems likely that selective employment tax played a major part in bringing about this change.
LORD DRUMALBYN: My Lords, while thanking the noble Lord for that Answer, which plainly requires to be
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carefully examined, may I ask Whether it is the intention of the Government to maintain the selective employment tax in being? Do they expect that by so doing they will be able still further to reduce the numbers of people in distributive trades? Finally, do the Government think that the very heavy discrimination against the distributive trades has been justified by the figures he has given?
LORD SHACKLETON: My Lords, in regard to the first part of the Question, the Government continue hopeful, as on all occasions in all matters. With regard to the second part, I do not think I can usefully answer that, because it raises the whole question of the value or disadvantage of selective employment tax which we have debated on a number of occasions. I am sorry that I cannot, therefore, be more helpful.
LORD DRUMALBYN: My Lords, do the Government consider that they have enough figures available, and are they being kept in such a form, as to enable them to make satisfactory inferences?
LORD SHACKLETON: My Lords, I would agree that if a lot more figures were available it would be possible to make more detailed and, above all, more up-to-date inferences; but that would involve recruiting more civil servants.

REDUNDANCY PAYMENTS
LORD DRUMALBYN: My Lords, I beg leave to ask the Second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government how many redundancy payments have been made under the Redundancy Payments Act, since it came into force and in how many of these cases the persons to whom payments were made—

(a) also received a cash payment under their employer's private pension scheme;

(b) obtained new employment without any intervening period of unemployment;

(c) both received such a cash payment and suffered no unemployment;

LORD SHACKLETON: My Lords, 447,700 redundancy payments have been made under the Redundancy Payments Act between December 6, 1965, when it came into force, and March 31, 1968. I regret that the other information is not available.
LORD DRUMALBYN: My Lords, I thank the noble Lord for that Answer. May I ask—despite the fact that it may mean in this case some further recruitment of civil servants—whether the noble Lord thinks it will be possible to draw any conclusions as to the long-term value of this Act unless the information I have asked for is available to the Government?
LORD SHACKLETON: My Lords, without going into the whole purpose behind the Act, which serves both general social purposes and economic purposes, I think it will be possible to do so. I could not answer the noble Lord's question in detail; but it would be a good subject, if the noble Lord so wished, on which to put down an Unstarred Question. It would involve collecting a whole series of new statistics which I do not think would serve a very useful purpose other than to answer the noble Lord. I should like this information myself; but I really do not think its collection is justified. It would mean employing a number of extra people.
LORD DRUMALBYN: My Lords, may I then ask the noble Lord whether this is at least the sort of question that is being examined in the light of the Government's general social and economic policy in regard to employment?
LORD SHACKLETON: My Lords, I can give an absolutely categorical answer to that. The questions he has asked are extremely relevant and the Government are examining them, but they are attempting to do so in as inexpensive a way as possible; and I hope the information that they get will enable us to assess the value of this particular system of redundancy payments. Ultimately, of course, the proof will be in the long-term development and, to some extent, the re-structuring of British industry.
LORD DRUMALBYN: My Lords, I thank the noble Lord.

RHODESIAN STUDENTS AND SANCTIONS
2.39 p.m.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether provision will be made for men and women with Rhodesian passports holding bursaries for training in the United Kingdom to enter and leave this country, in the event of an Order in Council being made following the new measures on Rhodesia being accepted by the United Nations.]
THE MINISTER OF STATE FOR COMMONWEALTH AFFAIRS (LORD SHEPHERD): My Lords, the United Kingdom draft resolution tabled on April 23, 1968, has not yet been adopted by the Security Council. If it is passed, the necessary legislation will be debated by this House. Meanwhile I would only say that provision will be made for certain exceptional cases of the kind the noble Baroness has in mind.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, while thanking the noble Lord for his Answer, may I ask him two questions? First, will the concession be available for non-Governmental students as well as for Governmental ones? Secondly, could the noble Lord tell us how such people can apply for travel permits for this country?
LORD SHEPHERD: My Lords, I would first pay tribute to my noble friend who has rendered great service in overseas education and particularly for African students. I think it would be best to wait until the legislation is before the House before discussing how students from Rhodesia should be treated. But certainly we have this point very much in mind. As to the method by which these students should come to this country, again this is a matter that it would be better to leave until the legislation is before the House.
LORD CARRINGTON: My Lords, can the noble Lord say when the Security Council are going to discuss this resolution?
LORD SHEPHERD: My Lords, I have no knowledge of that.

PROBLEMS OF THE SCOTTISH HIGHLANDS
2.43 p.m.
LORD LOVAT LORD LOVAT rose to call attention to the problems of unemployment, depopulation and land use in the Highlands, and to move for Papers. The noble Lord said: My Lords, I beg leave to move the Motion standing in my name on the Order Paper. This debate has, perhaps fortunately, been postponed on two occasions. It was intended originally to raise the subject in January; and later in March, but at that time we were waiting for the Annual Reports of the Forestry Commission and the Highlands and Islands Development Board. In fact, neither is available, but that does not really matter, because since March a great many things have happened in the Highlands which can have only the most devasting effect on this, as I hope your Lordships will agree, important, albeit remote, area of the British Isles. I am dealing to-day entirely with the crofter counties, seven in number, a land mass which covers approximately 9 million of the 19 million acres in Scotland.
This debate is bound to be a fairly stormy one. We in the Highlands are particularly angry with a regional policy having suddenly been cut across by a national policy. We feel that we have been betrayed, and I think this is fair comment in view of the fact that S.E.T., which has been doubled, has really no bearing on an area which has no industry. We feel hurt at the Transport Bill, which seems to be particularly doctrinaire in its approach to a remote area which relies entirely on its very limited communications and which at one time, in the days when Mr. Tom Johnston was Secretary of State for Scotland, was almost on the point of getting a tapering freight rate.
With that preamble, my Lords, may I say that we have a fairly strong batting list on this side of the House, and I see opposite the noble Lord, Lord Hughes, who I am sure will put up a pretty staunch defence. I apologise for the fact that my own remarks are fairly rusty, and I am a most unsuitable speaker to open a debate of this kind. Frankly, I did not expect to find such a very well represented number of noble Lords and Peeresses on both sides of the House. I
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hope that those who are speaking on my behalf, the Highland Peers, will concentrate on their own particular subject. I also hope that we shall make our points clear in a debate which is a logical follow-up to a rather similar debate on a Motion moved by the noble Duke, the Duke of Atholl, roughly a year ago. On that occasion the noble Duke's Motion was in rather wider terms; it was on land use in the Highlands and other rural areas. I think that possibly on that occasion too much was said, the erroneous impression being given that we Highland Peers were concerned only with such matters as grouse, deer, salmon and sport. Of course that is a terribly wrong impression. I hope that those three words, grouse, deer and salmon, will not be mentioned too often this afternoon. I hope that everyone will keep to their subject within the letter of the law.
My Lords, I am going to confine my remarks entirely to agriculture, of which I have a fairly good knowledge, to forestry, to a lesser extent, and to some references to the Highlands and Islands Development Board and the regional planning which we welcomed and thought was important less than two years ago, but about which we have had certain after-thoughts regarding what is getting done. With those words I will enter into the subject about which I propose to talk.
I shall have to give your Lordships a few facts, but I think that they are fairly interesting. To begin with, there is the size of the population of the crofter counties. The seven counties can now muster a total population of only 275,000, which is a very alarming state of affairs in an area which covers 9 million acres. Depopulation continues at a very alarming rate. In the County of Inverness alone, about which I know most, the number of inhabitants dropped from 56,000 in 1951 to a total at the Census in 1966 of 51,000. In other words, 5,453 people have left the area in a period of 15 years. The second half of that Census period shows a very much higher rate of depopulation than the previous 10 years. In a county of this size there are only some 17,000 ratepayers who have to find a budget of £950,000 per annum. A penny rate raises less than £4,000, and our requirements in the annual audit accounts for 1966–67 were no less than £10 million in this one

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county alone. I am sure that your Lordships will readily understand that we are rapidly reaching the point of no return.
The figures of unemployment are even more distressing. I know that the noble Lord, Lord Hughes, will correct me if I am wrong. At the moment the national average in the United Kingdom runs somewhere about 2·5 per cent., while Scotland's average is rather over 4 per cent.; in the crofter counties in the Highlands it is 8 per cent. This is a very gloomy situation, which cannot go on. The feeling in the North is so strong now that I think there will be the kind of mass clearances which have not been seen since the time of Culloden. That is a situation which I hope we shall not allow to continue.
Other noble Lords will no doubt give chapter and verse, because I am not going to talk in any detail to-day about the sort of problems that have hit the county as regards the Transport Bill, but the sort of situation we are up against is this. The Transport Bill and S.E.T., combined with the increased cost of petrol, will put 2½ per cent. on the cost of food in Sutherland and Caithness, the two most northern counties in the United Kingdom. The six major employing industries in the Highlands have publicly stated that the Transport Bill and 4d. per gallon on motor fuel might Tender their operations in the North no longer viable. This is a serious matter, because there are not so many major employing industries. One of the biggest and best is the wood pulp mill at Fort William, which, as every Scottish Peer knows, is of considerable benefit to the North—indeed of major importance at a time when home-grown timber is hard to sell.
There are many sad stories, and no doubt other noble Lords will illumine and illustrate my remarks, but I feel that this one is so sad that it is worth reading out. Perhaps we all live too soft nowadays, with the benefits of television, the "local" round the corner, the bus route or subway, the "fridge", the morning paper and easy access to shopping centres. But this is a letter which has the stark reality of a Border ballad or, as we are talking of the Highlands, of a lost pibroch, a lament. It was written to me in my capacity of chairman of the Inverness Planning Study and Develop-
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ment Group of the County Council and it goes like this:
"I have been occupying this croft now for seven years since I left the Army. It is situated on a part of the estate that used to belong to my mother's family but has now been sold to the Forestry Commission. This house has no access and no electricity but it is a beautiful place and it happens to be my home. We make our living by running a small agriculture and sporting company. Until the Government's recent S.E.T. measures we had employed three men and two part-time women helpers."
These are the S.E.T. measures of more than a year ago. It has nothing to do with the present Budget.
"When we have recovered from this fiscal blow, we will employ these local people again. Now the time has come when my eldest child (5) has to start at Invergarry School. He must be rowed over one mile of open water in all weathers and then walk for half-a-mile over the hill to catch the school car."
He is only five years old. I hope the noble Baroness, Lady Summerskill, appreciates my point.
"All our supplies for the cattle, the food for the young people staying in the Sports Hostel, the Doctor, etc., must use this route. For the right to live in the croft house, we have to pay £185 every year in rates. If the County Council were to build a drive way from the main road to a point opposite our croft at a probable cost of £2,000, it would ensure that we are able to continue to live in the home that we love. It would also do a great deal towards ensuring that our business continues to survive. I feel very strongly in sympathy with Lord Lovat's remarks on recent heavy expenditure on access roads for people to ski in the Cairngorms. Do the Government want us Highlanders to stay in our crofts or do they prefer people from the South to work in the skittle-alleys on Speyside? Clearly there is not enough money for both."
This letter came from Garrygualach, which few Ministers or Secretaries of State have ever visited, but it is typical of the desperate situation in the Highlands that appertains to-day. I will not give more than one instance of that kind, but I think that the people I have described—and I do not know them and have no sort of axe to grind this afternoon—are are sort of Highlanders we want to keep living in the Highlands. Their case speaks for itself.
Now I turn to agriculture, the subject I know most about, and I should not be wasting your Lordship's time unless I knew I had a case to make out. I learned my farming the hard way, on the hills. I was brought up by a father who knew quite a lot about agriculture and forestry.

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He was the first Chairman of the Forestry Commission, so I learned forestry from a man who brought the Forestry Commission into existence. He was also responsible for developing the Gezira, an area of some 700,000 acres in the Sudan between the White and Blue Niles, at a point below Khartoum. His work made it abundantly clear to me that from a desert one can always produce a garden of roses if one knows how to make use of water, irrigation and land reclamation. When I was last in this area, while serving with my regiment in 1935, the Gezira was producing a cotton crop worth £2,500,000. Perhaps the noble Lord, Lord Hughes, will allow me, with that background, to give certain opinions about the potential of hill farming in Scotland which the Government have overlooked and which the Highlands and Islands Development Board have not considered in any way their responsibility.
I also, for my sins, have been an adviser on farming overseas. I have just returned from Ethiopia from giving some sort of advice to the Ethiopian Government on their project in Eritrea and I have done similar work in Venezuela and other remote and undeveloped countries. So I am not entirely a prophet speaking in the sense of thinking that something can be done—I know that it can be done. I have also some knowledge of raising beef cattle and of producing good beef from the Highland hills, which at one time was looked upon as quite out of the question.
I have been fortified at various times by such first-class advice as can be found in the Zukerman Report on Forestry, Agriculture and Marginal Land Use in 1957, the Ellison Report of the Land Use Study Group in 1966 and the Highland Panel's Report on Land Use in the Highlands, which appeared one year before the Highlands and Islands Development Board came into existence. On the 9 million acres that I have been talking about, there have been, as your Lordships know, over the past 100 years conflicting claims. There have been claims for sport, for forestry, for roads, and also—I think very necessary ones—for hydro-electric development.
Farming perhaps has come off least well of all three, in the sense that the farmer is intensely his own individual
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master. He does not take orders from anybody, if he can possibly help it, and he has no organisation to keep in step with the progress of the times. Anyway, rightly or wrongly, one finds that a good many glens which could have carried cattle have been flooded, and a good many slopes have been planted with trees when they should have carried both cattle and sheep, so reducing our wintering, which is the vital problem in the North. Nevertheless, it is perfectly obvious that there is a vast amount of room at this time, when I feel we ought to be saving on imports, for restarting on a big scale. This, I think, is something which the Government continually overlook. We have been told again and again to step up our exports and cut down on our imports. But in the North of Scotland this need seems to be completely overlooked.
There are three Peers whom I should mention who would have spoken to-day with great effect on this subject but are unable to be here this afternoon. One is the noble Lord, Lord Boyd-Orr, who would have told your Lordships about the present world wheat shortage. Then there is the noble Lord, Lord Boothby, who knows all about the Buchan braes where beeves are good, and who was the champion of farming in the North-East all the time that he was a Member of another place. Lastly, there is If e noble Earl, Lord Cromartie, who wild also have talked with great effect to extol the merits of cattle-raising in Scotland, but he is at a meeting of a committee and is unavoidably detained.
There are obviously certain limiting factors. I have said that there were 9 million acres of land mass in the crofter counties. But when you break that down, you discover a very serious defect in the overall picture, and that is that only some 600,000 acres out of 9 million are classified as being grazings or arable—that is to say, only 7 per cent. of the total area about which we are talking. Of that 7 per cent., there is much more grass than arable Yet Highland history tells us that in the 1850's at the Falkirk Tryst (which is one sale of cattle brought down on the hoof from the Highland glens, and indeed from some of the Islands crossing over from the Hebridean Islands) 150,000 head of cattle were sold in that small and not particularly well known town of Falkirk, in the industrial Lowlands. This was after

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the civilisation of the time had salted away as much beef for their own requirements as would get them through the winter.
To-day, in Scotland, I ascertained from the Department of Agriculture that in the same area, with all the advantages of science, agricultural improvement, and what-have-you there are only 102,622 cows drawing what is called the hill cattle subsidy, which is an excellent thing in itself and provides farmers with a douceur towards the risk involved in keeping cattle on the hills, where they can get into grave trouble in a severe winter. So your Lordships see a picture of fewer cattle being bred to-day, with all the modern advantages, than there were 100 years ago. Something tells me that this must be wrong. Before this debate I took the trouble to ring up the Government of Southern Ireland, and I was told the fantastic fact that we in the United Kingdom as a whole—not in Scotland, but in the United Kingdom as a whole—have to buy in annually for our own domestic requirements no fewer than 620,000 cattle which are produced in Eire. Those figures do not include what is bred in the North of Ireland. I think this is a pretty serious reproach to our agronomy, and I feel, therefore, that a great deal more could be done.
The way I think it should be done is to make a serious effort to undertake reclamation—not land improvement, but land reclamation—from the sea. In the Zuckerman Report, 100,000 acres were considered to be suitable for reclamation. So far as I know, however, private individuals, who can no longer afford the sort of money that this job takes, are the only people who reclaim land. My own particular bailiwick around. Beauly was all reclaimed from the sea in the days of my great grandfather, when they had only a spade and a spirit level: that is all they had to work it out. And this bottom land, as the Americans call it, produces 24 tons of wheat to the acre, which is a fantastic return, and 2 or even 2½ tons of timothy hay, which is even more extraordinary.
I think in imaginative planning the proportion of hill acres to the arable acres could well be argued to be on this sort of scale. I would say that one acre of reclaimed land of the kind I have described, which is first-class bottom
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land, is equal to about 5 acres of ordinary arable in a hill farm, which, in Scotland at any rate is very poor indeed. Five acres of marginal hill farm arable is equal to some 50 acres of hill grazing. So your Lordships can readily understand that if one took an area of 50,000 acres and divided it into 100-acre units, a great many people could be put back in the Highlands doing something very useful—people who are now going away simply because they have not a modus vivendi. The depopulation, as I have said, is accelerating because people have been very badly let down by promises of heavy industry coming, and American chemical projects, such as the £150 million Highland fling which was announced with tremendous headlines in an inspired article in The Times less than one-and-a-half years ago. I think this is the kind of work that Highlanders particularly like.
I do not know whether the noble Lord, Lord Strathclyde, is in the House (he is not down to speak), but he could tell your Lordships of the good work done by the Hydro-Electric Board, of which he was the recent Chairman, which has obviated one of the biggest dangers to land reclamation—that is Highland flooding. It does not always happen that way. There are times in wet weather when a Highland river is a torrent, and there are times when the dams have been overfilled. Such a case happened over a year ago and resulted in wrecking floods. But, by and large, if you control the river at one end of each of these firths (and I speak particularly about the Moray Firth and the Cromarty Firth, which is the area I know best), I see no reason why, with the application of a little of the actual machinery which the Hydro-Electric Board used at the time when they were working among the hills to build dams and contain water, you could not get immensely beneficial results. Of course, as your Lordships know, the Dutch proved this a long time ago, and the greater part of Holland has been reclaimed from the sea. I suggest that the Government should think about this matter very seriously. The most recent Dutch methods can in fact reclaim 20 acres a day on which factories can be built, and this is something to which I hope the noble Lord, Lord Hughes, will give his attention.
I cannot over-emphasise the importance of agriculture in the Highlands. It is

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our first industry, and it has been overlooked by the regional planning which is now supposed to control our future. To say, "Farming employs fewer people, so we are not interested" is an entirely wrong concept. It is true in one sense to say that farming employs fewer people, but only when you have combines and grain driers and an established organisation with modern machinery. It is quite another story if you have to dig the land up or carve the produce out of an area which has hitherto remained underdeveloped. The coastal firths and mud flats about which I am talking are amazingly suitable for this kind of development simply because they are, obviously, at sea level, and enjoy a far more benign climate than anything you can find in the hills. In all cases, the roads run beside them, and you have every modern convenience, so to speak, at your door. Let us face the fact that one of the problems of the Highlands is that the better people—or, rather, not better, but hardier and warrior type people of whom we are justly proud—find it increasingly difficult to keep the younger generation in the hills. There is not enough to do, and it is a pretty long night—and will be even longer with this ridiculous idea of inflicting an English version of Summer Time on us.
I seem to have a great deal more to say, and I have talked too much already. I will only just glance through forestry, which seems to be of very great importance to us. The noble Earl, Lord Dundee, will do most of the talking on forestry, so I will be extremely brief. Forestry is very often considered the refuge of the planner. It is very easy to say, "Plant more trees", but nobody is in a position to say what the timber trade will be like when the time comes to cut them down. I think that this has possibly been happening rather too much in our regional planning in the last few years. What is perfectly certain is that it is getting increasingly difficult to market home-grown timber. The traditional markets for home-grown timber have unfortunately largely come to a grinding halt, and will continue to do so with increasing violence in the sense of a repercussion at the selling end when road haulage and freight rates go up one jump higher than they are at present, which is inevitable. Traditional markets for timber, as your Lordships know, have
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already ceased to exist, in conifers at any rate. The railway sleeper, the wagon bottom and the pit prop are no longer wanted. They have been replaced by such things as tubular scaffolding and cement sleepers. The only glimmer of hope is in pulp or possibly chipboard; and in the Highlands the pulp mill, as I have already said, is in trouble because of the provisions in the Budget and the Transport Bill, It is increasingly doubtful whether the mill will be able to take the timber which the Forestry Commission can supply, least of all what can be supplied from private woodlands. And the marketing of timber is something which leaves a great deal to be desired.
For home requirements we need no less than £550 million worth of imported wood, and less than 10 per cent. of what we grow is used in the home market. This seems to be very wrong. There is a strong feeling that imported timber seems to be infinitely better than the limber we grow at home. This is largely due to prejudice and to a certain extent to faulty marketing and faulty saw milling where waste is considerable. Sawmills should have drying kilns, and all modern facilities should be made available. The point I am making—or I hope I am—is that at a time when we are really hanging on by our shoestrings as regards imports, we cheerfully go on buying expensive timber, which is even more expensive as a result of devaluation. I think that the Forestry Commission, or all growers of trees need the equivalent of a Lord Robens to go out and do something about it, because I think the marketing is extremely bad. Speaking as a private woodland owner, I deplore the fact that the Government have withdrawn certain grants which seem to be of vital importance if woodland owners are to carry on at all. I think that that is all I can say about forestry. Other noble Lords better informed than I am are going to speak after me on this subject.
Tourism is very much in the doldrums, although I think it will be of immense long-term importance for the Highlands. The S.E.T. and the breakdown of communications are certainly going to have a very adverse effect on the smaller kind of hotel and surely it is the smaller hotel, run by Highland people, which should be encouraged and allowed to flourish. The hotel trade in Scotland has suffered from what I think again was

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a misapplied measure, the Catering Wages Act. It might be of immense benefit to some people, maybe waiters or girls working in Soho and perhaps working for too long, but in the Highlands one has to make one's living in a very short period of the year. There it is necessary to work extra hard, as people gladly do, during the three months of the tourist season. There is no question of going off to have a rest. Girls and boys want to work round the clock to get the tips and everything else that is going at a time when they literally make their year's living. I think there is a tendency, with which I find some fault, although we want to encourage every form of tourism possible—and do not think I am averse to tourism—and I think we should allow the smaller units to keep open and not necessarily pander to some of the bigger organisations which do not even employ local labour.
Lastly (I have spoken for half an hour so I shall have to be very quick now) I should like to turn to the Highlands and Islands Development Board. We in the Highlands are not happy about the Board. They have had two years to produce positive results. I think I was perhaps rather hard on them, and I take Lord Hughes's point when he says that I may have been unfair in the debate in April, 1967. But the Board have had a very long time to get off the ground. The noble Lord, Lord Bannerman, who is a Gaelic speaker, may appreciate the joke better than some of your Lordships, but the local name for the Board in Gaelic is the "lead balloon"—something which never leaves the ground. This is probably wrong, because they have had endless opportunities. I frankly feel that they have placed their priorities entirely the wrong way round. I would argue that the primary industry in the Highlands is agriculture and fisheries, and this should be closely followed by forestry, tourism and industry, with particular emphasis on light industry; because light industry has small communities and provides more diversification of work in different parts of the North. And surely the No. 1 object of the Highlands and Islands Development Board is to keep native Highlanders in the Highlands.
We have had a whole series of extraordinary crackpot ideas, none of which really benefit the Highlands. I do not
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want to denigrate anything that is being attempted, but first things come first, and when millions of pounds are spent—that is an exaggeration, but I am taking the proposed big industrial projects, such as various things that have not happened at Invergordon and have so disappointed the native indigenous Highlanders when those projects have not come off—one feels the subject is being tackled the wrong way round. One should encourage all those things which are known to be suited to Highlanders first, and the rest must come later.
With respect, I feel that while the loans and grants schemes have been excellent (providing they go to the right people) the names of the beneficiaries and the amount they have received should be published. This has been urged for two years without any success. Equally, if the building of boats for fisheries and the grants for hotels and small industries are kept going the Board will continue to do useful work, so long as they do not stick their necks out on projects which should be left to the Board of Trade.
I am talking again now about industry. I feel that nobody on the Board has experience of big business, and in addition nobody on the Board has a great deal of experience either of forestry or agriculture, which I keep urging is a subject to which greater attention should be paid. A great deal could be done in research which has not yet been done. I feel that the Highlands and Islands Development Board is rather like a fifth wheel on a coach; it is cutting across existing organisations which are doing a fine job, and I do not think it is dovetailed sufficiently well into such things as the Crofters' Commission, the National Farmers' Union, the Forestry Commission, or local government—and certainly not the Inverness County Council. I do not know about the Hydroelectric Board. It certainly has not met with strong support from the Scottish Council (Development and Industry). And what a pity that the Toothill Report, which is such an admirable document, did not include the Highlands in greater detail and left out a lot of the problems with which it coped so successfully in industrial Scotland.
I have talked with people on all these organisations up and down the Highlands, and I am not giving anything away

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which would boomerang, certainly not in my own area, but I think it is felt that there should be much closer liaison; that industry would be much better handled by the Board of Trade, and possibly—and I think this is the best suggestion of all—that a Minister should be in charge of the Highland area, with the Highlands and Islands Development Board directly responsible to him.
There is only one last thing I want to say. I have talked for nearly three-quarters of an hour, but this last thing is very near my heart and it is something which, to me, is infinitely sad and which will hasten depopulation. I refer to the, to my mind, quite senseless disbanding of the Territorial Army. The Highland Division needs no bush so far as I am concerned. The Territorials have always been the best young men in an area as remote as the North of Scotland. The drill hall has really been the only place where they could go in the evening—the drill hall or the shinty field—and when that goes there will be a considerable exodus from the North. It makes me infinitely sad that when it required only £2 million a year to sustain the whole Territorial forces of the United Kingdom they should be chopped off, as they were, in their pride. Thank you, my Lords, for having listened to me so patiently for rather too long. I beg to move for papers.
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR SCOTLAND (LORD HUGHES): My Lords, I did not wish to interrupt the noble Lord, Lord Lovat, in his speech, but I should like him to confirm two points which I did not quite catch. When he spoke of depopulation I think he referred to the population figures for the County of Inverness, and when he was reading from the letter, was the figure which he mentioned of rates payable £185?
LORD LOVAT: My Lords, those points are correct.
3.28 p.m.
LORD BANNERMAN OF KILDONAN: My Lords, I have made short speeches since I had the privilege to enter your Lordships' House, but I propose to-day to make a longer one, as to-day's debate concerns the life or death, economically, socially and culturally, of my
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native area of Scotland. But I hasten to assure your Lordships that my speech will not be as long as those which some of your Lordships make on less important subjects.
The noble Lord, Lord Lovat, has earned our appreciation, and indeed he received it by the attendance in the House to hear what he had to say. We are agreed, I am sure, that he deserves our thanks for initiating this debate; and in his usual manner he pulled no punches. If his speech was couched occasionally in emotive terms, he is to be congratulated, for there is no merit in making a dull speech about an important subject. The Highland problem, however, does not require just red-hot words; it requires a widespread militant action from the people left in the Highlands to show their anger at the chronic neglect of their country by London centralised Government.
The noble Lord, Lord Lovat, gave an expert and a factual résumé of what is required for a new deal for the Highlands, but I would remind him, and noble Lords sitting on the Tory Benches, that it is conscious or unconscious arrogance to decry Socialist Government efforts in the Highlands during a period of a few years, when successive Tory Governments, in power on and off for nearly a century, reduced this area—the half of Scotland, as the noble Lord, Lord Lovat said—by errors of omission and commission, to the depopulated wilderness (and I use the word advisedly in this connection) that it is to-day, where only a little over 4 per cent. of the people of Scotland new live.
It is an area where a search for peace, power and privacy attracts the only immigrant who during the last twenty years at least, has found that he can purchase in the Highlands these assets, with a few thousand acres thrown in, for the price of a town bungalow. When you add all of them together, big and small, you find in the Highlands to-day a large, selfish block of not unintelligent people who use every devious method, as unobtrusively as possible, to work against any kind of development that may disturb this peace, power and privacy purchased at bargain rates. If you run down a people and a country for over more than a century of time, the immigrant I describe is the only type that will move in; and who can blame him?

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The problems of the Highlands have been discussed ad nauseam. A smokescreen of reports and pseudo-advisory bodies have for generations blanketed the whole area. Some of the reports, if acted on, would have changed the dismal picture that we see to-day in the Highlands. The best of them, in my opinion, in recent times, was the Hilleary Report of 1938. But what happened to it? It was a good Report for the comprehensive reconstruction of the Highlands. The Tory Government of the day voted for this comprehensive reconstruction of 9 million acres of Scotland £80,000, and of that sum they earmarked £30,000 to provide township roads. They failed to say that there were over 200 townships in the Highlands at the time that had no access roads to them at all. Most of these townships, sadly, have now died off for lack of a lifeline to the nearest road. How would your Lordships like it if you had to carry a creel of peats over a bog moor track to reach your house to keep it warm for the winter, a track where not even a horse and cart could go?
I remember in Skye going out at midnight with the local doctor who had been called out to a community such as this and had to leave the car some distance away. Then, by the light of a flashlamp, the doctor and I crept over a moor and arrived at a township which had originally consisted of ten houses, but only three of which were occupied, including the one where his patient was. That was a difficult operation. Can you imagine what a major operation it would be to get the old lady out of the croft and send her to a hospital? These difficulties existed throughout many hundreds of communities of the Highland area in my lifetime; and no redress came.
The picture may be dismal to-day, but at least in my opinion it has more hopeful qualities than it had. Many now say in the Highland area that it is better to live as a servant of the State than die under selfish private enterprise. That has come to be the opinion of many people who do not for a moment condone overlord-ship by the State. Strangely enough, it is a Labour Government who are concerned now with land utilisation, although they have not yet started to tackle it, as the noble Lord, Lord Lovat told us. This Government has a long way to go before
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it solves the land problem in the Highlands. The Highlands and Islands Development Board should be told that their basic job is first to settle people on the land and make agriculture and forestry the twin pillars of reconstruction in the Highlands.
The Highlands Board, if they wanted to give really comprehensive benefit to the Highlands, could do so in one measure, could give new hope to this area. But they must first shut the door of the Highlands to the Transport Bill, which is looming up, and to S.E.T.—even more should they shut the door than they might have done last year—and they should then proceed to taper steeply freight rates within the area of the Highlands. Tom Johnston, in his day, was prepared to see to it that this remedy for the ills, economic and social, of the Highlands was the basic remedy. If that were done on road, rail, sea and air, it would develop and give initiative to enterprise in the area.
In the winter time, let the Highlands and Islands Development Board, if they have the power, cut the charges for freight and passenger movement within the Highlands by half, so that, instead of hibernating during the winter, the Highlands people could use these service facilities, which at the present time run empty in the winter and at great loss to the operator. This would undoubtedly cost more than the £1½ million to which the Highlands Board apparently restrict their sights. But dividends to the people and to the Government would accrue immediately from this transport cost reduction. Initiative and enterprise would be boosted. Tourists would flock into our area, and agriculture and forestry would be further helped and would begin to expand as the main markets were brought nearer by lower freight costs.
No longer would the Highland area be one of the highest cost of living areas in Britain—and I am not sure that I would except even London in that regard. The loaf of bread costing 1s. 7d. on the southern mainland to-day costs 2s., and far more in the remoter areas. Petrol costs 6s. 6d. to 7s. a gallon in the remoter areas of the Highlands; and when you want to take hay to the Outer Islands you pay £6 10s. per ton. A crofter in the islands said "Corrugated iron would be corrugated

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gold before I could put it on my roof and pay the freight charges".
Often one can point a moral more clearly by a humorous incident than by serious words, and perhaps I may relate a true story of personal witness of the primitive transport conditions under which the Highland area has suffered for so long. I was there a few years ago in the height of the tourist season in July hove to in a MacBrayne's boat outside Arinagour Bay, in Coll. The Island of Coll used to have 22 viable farms on it but never any pier from which to get their produce away to the mainland: it all had to be brought out in a rowing boat. The day I was waiting on the MacBrayne steamer, hove to, a boat eventually came out, rowed by two men; and in the middle, tied by every rope possible, was a cow. That was the only way they could get the cow to the open market.
The belly-band gantry was swung out from the swinging boat and put under the cow. It swung her up into the air. The tourists on board this ship thought this was the most interesting thing they had seen. Those who had not been in the South Sea Islands had never seen such transport facilities in their lives. When the cow was at maximum height and tourists were photographing it with avidity, the cow protested in the only way that a cow can in that position, and the tourists scattered. It was the most effective protest made for many years in the Highland area, especially when one takes into account some of the speeches made in another place concerning the difficulties of the Highlands.
I do not see the noble Lord, Lord Mitchison, present, but he knows that when there were 40 or 50 boats in the Carradale area a pier was necessary and required by the fishermen. Sixty years after it was first asked for it was built, and finished, I think, in 1960. There were then only eight boats left in the village or in the area to use this pier.
The story of the Highlands area, and particularly transport, is the story of "too late", never doing anything that can stimulate the people and allow them to have a lifeline to the market. If your Lordships will only agree that action should be taken now, we can avoid writing "too late" on the tombstone of the Highlands. But this Government
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must open the purse strings. No Government in any case has done so in the past. No Government has really been in any way generous so far as the basic needs of the people in these areas are concerned. People are deprived of the ordinary services that they should have and to which they have a right as citizens of this country. They have never had these, merely because Governments here have always pleaded the shortage of money.
LORD ROBERTSON OF OAKRIDGE: My Lords, will the noble Lord allow me to intervene for just a few moments? I think, in fairness, he will have to agree that MacBrayne's shipping services have been most generously subsidised by the Government over a long period of years.
LORD BANNERMAN OF KILDONAN: Yes, my Lords, "MacBraynes for the Highlands" is what they say. But the MacBrayne financial set-up is a set-up which demands 5 per cent. on the capital investment in MacBrayne's. They go past, and have religiously through the years and in my lifetime gone past, communities that require to be served. They are diminishing communities. MacBrayne's have passed them by because they felt that a 5 per cent. return on the money invested could not be obtained in that particular port or community. They have passed that community by, and that community has eventually died, just as effectively as the other communities on the mainland died where there was no communication with the outside world.
Therefore, I hope that the Labour Government of to-day will raise their sights and that they will give honest, constructive, comprehensive legislation to the Highlands; that they will stop the patch-working that has been given to us over a century of time so that hardly any of the economic fabric is left to patch. The people of the area deserve better than this scurvy treatment. They may not be numerous, but they still have their rights as citizens of this Great Britain of ours, and they deserve better treatment than has been meted out to them for so long. Lord Lovat said that I spoke Cache, the native language of Scotland. I do as a Highlander, speak Gaelic, We have an old phrase in Gaelic, which is
"Tha choir mar a chumar i",
which means that to have your heritage and to hold it, you have to fight for it.
VISCOUNT MASSEREENE AND FERRARD: My Lords, before the noble Lord sits down, may I ask a question? In the early part of his speech he spoke about the great selfishness of private landlords in the Highlands. May I ask him, for instance, about Lord Leverhulme, who in the early part of this century spent millions of pounds in the Outer Hebrides? People did not take advantage of it, and he asked my grandfather, who was a Member of Parliament for Argyllshire at that time, to go out there and reason with the people. My grandfather told him that the people did not—
SEVERAL NOBLE LORDS: Order, order!
VISCOUNT MASSEREENE AND FERRARD: My Lords, I should also like to point out about Lord Trent, who spent hundreds of thousands of pounds—
SEVERAL NOBLE LORDS: Order, order!
VISCOUNT MASSEREENE AND FERRARD: But the noble Lord was extremely unfair to the noble Lords.
LORD HUGHES: The noble Viscount is down to speak later.
3.47 p.m.
LORD TAYLOR OF GRYFE: My Lords, I am sure we are all appreciative of the great knowledge and experience of Highland problems which has been given to us to-day by the noble Lord, Lord Lovat, and by the noble Lord, Lord Bannerman of Kildonan. I have been advised that in making a maiden speech I should not be controversial, but I am afraid that when Lord Lovat introduces the Motion by saying that there will be some angry speeches made, and that "we feel somewhat betrayed", it is extremely difficult to be non-controversial in such an area.
May I say, too, that I apologise perhaps for intruding in this debate as a Lowland Scot, because apparently we are to have a great deal of knowledge and experience provided to this House by noble Lords who are resident in the Highlands, or have experience of the problems there. I must confess that I have a special and personal interest in the Highlands, although I am a Lowland Scot and a non-Gaelic-speaking Scot. I am the chairman of a large organisation with considerable investments in the much-maligned distributive trades in the Highlands of Scot-
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land. In addition, I have been for a number of years, and am at the present time, a Forestry Commissioner, and of course have considerable interest in the expansion of forestry in the Scottish Highlands. I hope that the noble Lord, Lord Hughes, who will be replying for the Government, will not consider it an intrusion if in the course of my remarks I say something concerning forestry development.
I confess that I was somewhat surprised at the tone of the opening speech of the noble Lord, Lord Lovat, in which he appeared to indicate that the Highland problem had arisen in fairly recent times. Much was said about the Highlands and Islands Development Board, but it should be remembered that the Board was set up only two and a half years ago whereas the problem of the depopulation of the Scottish Highlands began early in the last century, when people were driven from their fertile straths to the coast and beyond, becoming the first displaced persons in the country, to make way for sheep, which were a more profitable form of investment at the time.
It is not my intention this afternoon to deal extensively with the past. If we are going to evolve the proper partnership relationship which is essential to the welfare of the Highlands, we should not dwell too much on past experience but should consider how we can evolve a rational and productive partnership between the State and private enterprise to ensure the further prosperity of this vast area. The noble Lord, Lord Lovat, reminded the House that this area comprises half of the total area of Scotland and one-fifth of the total area of the United Kingdom. In this vast area 275,000 people earn their living.
Perhaps because in my daily life I am much concerned with business operations and with balance sheets, I tend to look at the Highland problems in terms of a balance sheet. I look at the assets side of the balance sheet and see the very tangible but much under-utilised assets which we have there. We have in fact 9 million acres of land. In a period when land values are rocketing, and at a time when there is a great demand for land it is remarkable that there are to be found in the crofting counties 9 million under-utilised acres. The area contains minerals, fish, wild animals for food as

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well as for sport, and a landscape of infinite variety and great beauty.
When one considers this combination of assets, one must agree that they are substantially under-utilised. Any businessman looking at such a balance sheet would be very much aware of the need to make use of this tremendous capital asset. Yet despite the existence of these assets the constant stream of young Highlanders away from their native land to other areas continues, since they can find no outlets for the skills which they have now acquired in the technical colleges, no outlets for the ambitions which they naturally feel. Therefore they have to wander furth of Scotland to seek some outlet for their talents. All Scots have felt the Highland problem very much on their conscience, and little has been done in a total and comprehensive way because there are a great variety of problems involved in the development of this area. Nothing of a comprehensive character has been done until the establishment of the Highlands and Islands Development Board only two and a half years ago.
A few moments ago, the noble Lord, Lord Bannerman, said that he would welcome the Government opening the purse strings. But we should realise the extent to which aid is already being given to the Scottish Highlands. I understand that the amount of Government aid now stands at £120 per head per annum. Those of us who are much concerned with the future of the Highlands should be less anxious to go round with the begging bowl every time the Highland problem is discussed. This is not good for the Highlands, nor is it good for the people. The Highland people are a proud people. We should be concerned with evolving schemes whereby these people might participate in developments to help themselves.
I speak with some experience of international organisations involved in the giving of Government aid to underdeveloped countries. I have never found it to be good policy to proceed to these countries simply with open purse-strings, dispensing charity and aid, without making the people feel that they have an involvement in building up their own institutions and in making their country healthy and more prosperous. So that although the Highlands and Islands
1110
Development Board are concerned with investment, the encourgement to people to help themselves should be our guiding philosophy. In addition to the assistance of businessmen in the organisation, to which the noble Lord, Lord Lovat, referred, I should like to see within the organisation a place found for a community development officer specifically concerned with stimulating people to mutual aid and self-aid.
It is unfair to condemn the Highlands and Islands Development Board for not dealing with all the complex problems of the Highlands in a short period of two and a half years. We shall not assist them by making "snide" remarks about their failure to get off the ground. I apologise for using that term, but it is unfair that an organisation which is dealing with the problems left to it by generations of neglect should suddenly be condemned after only two and a half years' experience. New organisations, whether they be business or Government organisations, take a considerable time to become equipped with management skills, personnel, judgment and analysis of problems before they can really operate successfully. Within the two and a half years the Development Board have approved grants and loans of just short of £3 million.
LORD LOVAT: My Lords, it I may interrupt the noble Lord, I did not seek to condemn the Board in any way. I did not say that they were not doing excellent work, but—
LORD HILTON OF UPTON: My Lords, I would remind the noble Lord that this is a maiden speech.
LORD LOVAT: My Lords, I apologise to the House.
LORD TAYLOR OF GRYFE: My Lords, I am sorry if I misrepresented the noble Lord's comments on the Development Board. Perhaps I was thinking of Press comments which I had read recently concerning other speeches in other places in the North of Scotland. I was saying that in the last two and a half years the Development Board had approved grants and loans to the extent of almost £3 million. These will provide job opportunities for 2,400 people. To people living in a large city this may not seem to be a major accomplishment, but in

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terms of the population of the Highlands 2,400 new jobs—quite apart from the big industrial developments projected at Invergordon—is quite an achievement. Publicity and promotion in an attempt to bring people to the Highlands has been undertaken by the Board seriously and, I hope, effectively. Thirty-five new boats will be in the water in the next seven years. Loans have been given from Government sources as well as from the Board, and schemes for the training of crews have been undertaken and these should help the outward Isles.
Then there is help for the tourist industry. Grants and loans to the extent of £700,000 have been given by the Board, which again provides opportunities for 600 new jobs. Five new hotels are going to be built by the Board in the Western Highlands and the Western mainland. Something has been said of the Scottish tourist industry—and I regard the development of the tourist industry as of great importance to the future prosperity of the Highlands—and recent Government grants of 25 per cent. for the development areas should help that industry considerably. Also, the exemption of the hotels from the S.E.T.—albeit partial exemption in Scottish rural areas—should be of considerable help to them.
I do not get the impression which the noble Lord, Lord Lovat, gave, of an area which is dying. In going about the Highlands I find a new sense of hope in the air. I spent Easter at Aviemore, and anyone who has been in Aviemore will have had a very encouraging experience. From all the villages for miles around the young people were assembling early in the morning; sunburned, lively, healthy young people carrying their skis and making their way up to the ski slopes at Aviemore. This is a changed Highlands. This is not a Highlands that is dead and dying, with fusty, musty old hotels. This is a lively area where young people are finding a new sense of adventure in facilities provided by a combination of private enterprise and State support. So I hope that this vision of the Highlands may be the vision of the future of the Scottish Highlands. In the Forestry Commission camping site down the road at Loch Morlich there were 88,300 camper-nights spent at the foot of the Cairngorms last year. The Highlands
1112
are becoming alive, and young people who are frustrated by the big city life and are seeing all its weaknesses and its emptiness are finding new life in the open spaces of the Highlands. This is being encouraged by the State, and being taken advantage of by private enterprise.
I said that I would say a word about forestry, because I agree with the noble Lord, Lord Lovat, that forestry will play a very important part in the future development of the Scottish Highlands. The Report of the Highlands Panel indicated that while there were 9 million acres in the Highlands, about 1,650,000 acres could be planted. If we had regard for intelligent land use in the area, 650,000 acres would be put under trees. If we look at the programme which the Government have developed for forestry in the crofting counties, I am sure that the noble Lord, Lord Bannerman of Kildonan, who was also a Forestry Commissioner at one time, will appreciate that this is not at all a picture of stagnation. In fact, the programme provides that while in 1968 we are planting 17,500 acres, in 1975—and forestry is essentially a long-term project—we build up to a programme of over 28,000 acres.
All of this brings ancillary industries, such as sawmilling, pulp mills and so on, and through the projected programme of the Forestry Commission, in partnership with private planting which should run at the rate of about 2,500 acres per annum, we can build up to employment in the woodlands in felling, extraction and planting for some 6,300 people, and in factories in sawmilling and ancillary industries for about 5,800 people. We can, in fact, build up to employment for 12,000 people in forestry and ancillary industries in the Scottish Highlands. If you consider that 12,000 people are scattered over 90 towns and villages, that makes a substantial contribution to the regeneration of rural areas in the Scottish Highlands.
I have been saying a good deal about the assets side of the balance sheet, about the potential which is there for future development; and, as I say, for the first time in many years I see a picture full of hope when considering the rather special problems of this area. But I should like to mention one or two matters which still require attention. Obviously, the anxiety of the Highlands and Islands Development Board to attract capital must be

1113
tempered with strict feasibility studies and discrimination. Inevitably, in developing this area they cannot look to the market for capital which is not normally available, and consequently there will be a higher ratio of risk. But I think we shall all agree that strict feasibility studies are necessary, and I know that the Board are aware of this.
Secondly, considering what has been done in connection with tourism and improving hotels and facilities, we now have a first-class product, and I think that marketing in tourism is essential. When I look at the budget of £3,500,000 to £4,000,000 per annum of the Irish Tourist Board, and consider that the annual budget of the Scottish Tourist Board is around £120,000, I feel that the day of amateurism in tourist development is past. I know that Tom Johnston, whose name has been mentioned in this debate, had the view that the Scottish Tourist Board should be independent of Government aid and Whitehall control, but I feel that we are now in a very professional business in the promotion of holidays and tourism and that this is an area where we might look at better marketing arrangements.
I also feel that there is a case for the withdrawal of the selective employment tax from the distributive trades in the Highlands. I feel rather strongly on this matter because of my involvement in the distributive trades. Anyone who operates among these scattered communities, and seeks to provide a reasonable service with city prices for the people, finds that with the burden of transport and other costs it is extremely difficult. Particularly for the co-operative movement, with which I am associated, distribution becomes increasingly a social service and less and less a profitable undertaking. We do not mind undertaking these social services from time to time, but we are concerned about returning the surpluses of our trading to the people where we operate. That we do, but the burden of an additional 50 per cent. S.E.T. makes it extremely difficult to earn surpluses to return to the communities in the Highlands. I think there is a rather special case in this instance.
Also, we ought to create machinery for a better liaison with Government Departments. The noble Lord, Lord Lovat, has made reference to dealing with the Highlands Board and the Board of
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Trade, but one of the problems of industrial development in the Highlands is the fact that, frequently, so many Ministries are involved and delays occur. I take the case of Scottish Pulp, who have had two very bad years financially and who are looking for some revision of their arrangements. I would not comment on the subject of the revision, but it occurs to me that there are, problems of delay when major investments are involved. I hope there will be a further expansion of investment in Fort William, together with a new pulp mill in the North-East to supplement it and take the products of the forests for years ahead. It makes for considerable delay and frustrates potential investors when at least five Government Departments are involved with inevitable delay in decisions. I think this is a problem of mechanics rather than of politics, of which I am sure the Government are aware.
My Lords, I was told that my speech should be non-controversial and that it should also be brief. Perhaps I have offended on both scores. If so, I apologise to your Lordships. Bit may I just say this? When we talk about helping the Highlands, I think the Highlands can help us. This is a vast area. It can be important to a balanced economic and a balanced social life in this country. It am not only concerned that people should make profit and should develop this area in a profitable way. The Highlands represent a vast area where people can escape from all the complexities and frustrations, as I have called them, and all the weaknesses of living in vast cities, to gain new health and a balance in their lives from the quietness, the tranquility, which is so much missing from our lives. I hope that we shall look at the Highlands not simply as a retreat but as an area which has great potential for development, and as an area which is important to us in improving the quality of our lives as human beings.
4.11 p.m.
THE EARL OF DUNDEE: My Lords, I find myself in the delightful position of being tightly sandwiched between two maidens. I am glad to be the first to offer your Lordships' congratulation to the noble Lord, Lord Taylor of Gryfe, on his maiden speech, winch was notable, I think, both for the width of knowledge

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which it displayed on so many subjects and for the balance with which it was delivered. I hope we shall often enjoy the pleasure of hearing him. I also look forward in a few minutes to hearing the next maiden speech-that of my noble friend and kinsman, Lord Arbuthnott, who is to follow me.
I think your Lordships are all grateful to my noble friend Lord Lovat for raising this debate. His Motion has been on the Paper for a long time now. No one has a better right than he has to talk on this subject, and I always listen to him with particular pleasure, because it is so interesting to try to spot something of which he does not thoroughly disapprove. He did express unqualified approval of the Toothill Report, but only to add that it had nothing to do with the Highlands. There are many people in Scotland, and in the Highlands in particular, who would agree with my noble friend's complaint that regional policy is often thwarted and frustrated by the policy imposed from Whitehall; and that, indeed, is one of the reasons why Scottish nationalism has attracted so much more support in the last year or two than it ever did before. With regard to the selective employment tax, I think I am right in saying that the Highlands are one of the areas where the hotels will now be able to have this tax refunded. But it has already done a great deal or harm. As for the Transport Bill, if it reaches your Lordships' House I hope to be able to move an Amendment to the effect that the Bill should not apply to Scotland, because the damage which this Bill could do to the vulnerable economy of the Highlands might be disastrous.
I also strongly agree with what my noble friend said about the Territorial Army. I think that a year or two ago we jointly signed a letter to the Press protesting against what was then being done—the first time a blow was struck against it. Now that has been followed by another. I wish the War Office would try to appreciate that the Scottish Highlands, in proportion to their population, are about the best recruiting area we have, and that pride in local regiments is absolutely essential if that position is to continue. And, as my noble friend said, the local Territorial centres, besides providing the opportunity for training, are in
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many of these remote Highland villages an indispensable centre of social life.
My Lords, when my noble friend Lord Lovat was speaking of the Highland Board at the end of his speech I thought of two proverbs—at least, one proverb and one quotation, I think. The first was, "Familiarity breeds contempt". The noble Lord lives in close proximity to the Highland Board, and that proximity may often give rise to feelings which are not always charged with admiration. But the other quotation of which I thought was, "Distance lends enchantment to the view". I live at a great distance from the Highland Board, and although I cannot say that my feelings towards them are those of unqualified enchantment, I should like to modify some of the things that my noble friend said.
I am sure nobody is more conscious than the Government of the possibility that their original appointments of the Board's members may not all have been guided by infallible wisdom, but I think that the Board have done a lot of good and have had some very bad luck. It was very bad luck that the best member of the Board, in my view, should have been tragically killed in an air accident less than two years ago, just at a time when he was completing another very important job, though not in the Highlands—the construction of the Tay Bridge.
I also thought it was very hard on the Board the way they were reported, or their affairs were discussed, a year ago by the Press in a series of the most childish, idiotic and silly articles which I have ever read—and I am afraid that some of the more responsible papers were not blameless. When I read these very silly, sensationalist, reports of what was alleged to be going on, I thought, as did many other people, "If the British papers make such an unholy show of it as this, this is the very way in which to stop the petro-chemical industry from coming to Invergordon", as was then in prospect. I thought it was very unfair on the Board that they should be subjected to this damaging frivolity.
There are two other things I should like to say about the Board. One is that they were appointed as the instrument to carry on a policy which had also been the policy of the late Government,

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and your Lordships may remember that when the Highlands Development Bill was before this House Lord Craigton, who had been Minister of State in the late Government, told your Lordships he thought that if the late Government had continued in office the Board, or a similar Board, would probably have been appointed for the same purpose as that for which this one was being appointed by the present Government.
The other thing I should like to say is this. In the newspapers we often find ill-informed and ignorant items suggesting that landowners are hostile to the Board. I should like to make it absolutely clear to your Lordships that the Scottish Landowners' Federation has always done everything it can, actively and positively, to co-operate with the Board in their work of improving the economy and development of the Highlands, and in making the best possible use of land. Two years ago, the Federation opened a new branch office in Inverness, where it is represented by a part-time secretary who resides there, very largely for the purpose of keeping in touch with the Board and of helping them, by giving any advice which we can give to them, in all their activities, which we desire to assist and to further.
In connection with the Board, noble Lords have mentioned the possibility of the aluminium factory being built. I do not know whether the noble Lord, Lord Hughes, expects to be able to tell us very much about this factory, but we shall, of course, be glad to hear what the position is. Many of your Lordships will remember the long and difficult task which the late Government had in getting the Wiggins Teape pulp mill to Fort William. It has now been established and, as your Lordships know, it has had some teething troubles; but I am confident that it will be a success. And, as the noble Lord, Lord Taylor of Gryfe, has just said, a very large planting programme is an essential requirement in order that the money spent on this factory may be justified.
With regard to the development of Invergordon, I would only say that with its very deep harbour Invergordon is an ideal place for what is called a growth point. Nobody wants so to industrialise the Highlands as to have factories everywhere; but some growth points in the
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Highlands—or in any rural community—are of great benefit to the inhabitants of the area. They are of great benefit to the rural as well as the town people. I hope that the Board will not be in too much of a hurry to make plans which turn out to be ahead of present realities. I think it would be better for them to proceed empirically. First get your factory "in the bag", then build it, and then decide what further developments in the way of roads or houses you may require.
My Lords, I should like to conclude with a few words about forestry, which, of course, must be looked at from a very different viewpoint—because when you are talking of building factories you are talking about something which may happen fairly soon and which may, in a few years, offer employment to a large number of men. But when you are talking about forestry, you are talking of something terribly unspectacular and very slow. No Government will ever win a lot of votes by planting 100,000 acres in five years, because by the time the trees have grown up and have started to be of benefit most of the voters will be dead. With the best will in the world people are not always inclined to be interested in what is going to happen in 20 or 30 or 40 years' time, however fond they may be of their children.
I have always believed, as your Lordships know, in long-term forestry as the principle undertaking to be encouraged in the Highlands. I regret very much that the Report of the Forestry Commission for the last year, September, 1966, to 1967, has not yet come out. I understand that the reason is that the House of Commons Accounts Committee has insisted on some new form of accounting being adopted which has made it necessary for the Commission to do all their sums all over again from the beginning. Whether that is justified or not, I do not know; but it is very inconvenient that people who are interested in forestry from the public point of view should have to wait so long for this Report.
However, I have obtained from the Commission and from the Department of the noble Lord, Lord Hughes, the figures of planting in Scotland for the most recent year, 1966–67, to which I should like to refer. I do not think they are at all

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discouraging. The total Forestry Commission planting in Scotland for the year is 34,485 acres; that is 2,000 acres up on the year before. Of that total, 17,400 acres are in the five Highland counties. The figure for private planting is 19,500 acres, of which just over 7,000 acres are in the five counties.
I should like to make one or two comments on those figures. If you add the Commission's planting of 34,500 acres to the private planting of 19,500 acres, you arrive at a total of 54,000 for the year, which happens to be exactly double the English planting figure for the last year, which is 27,000 acres—13,000 acres Commission and 14,000 acres private planting. But the noble Lord, Lord Hughes, need not worry that I am going to talk about Basingstoke in this debate.
LORD HUGHES: It is your "pigeon", anyway.
THE EARL OF DUNDEE: Perhaps I will do so on another occasion. I merely wish to discuss those figures in connection with the booklet on Land Use in the Highlands which was produced by the Highlands Panel. It has been referred to by a previous speaker and we debated it three years ago. The Highlands Panel recommended that the Commission should try to plant 20,000 acres a year in the five counties. This was looked on as a rather ambitious recommendation, because the previous figure at that time was only about 13,000 or 14,000 acres. They wanted to bring it up to 20,000. With regard to private planting (which was then about 4,000 acres) they said that they thought it would come down to 3,000 acres. Their recommendation was that we should have an annual target of 3,000 acres private and 20,000 acres public planting in the five counties. The public planting figure is now 17,500 acres; and if one adds to that the private figure, which is just under 7,000 acres, it comes to over 24,000 acres—and we are already 1,000 acres ahead of the combined target that they gave.
My Lords, I said at the time that I thought that their expectation that private planting would be reduced was unnecessarily gloomy. I am glad to see that there has been such a large increase; and it is time there was such an increase because for a long time there
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has been far too little private planting in this part of Scotland. The Forestry Commission planting figures make it look as if the Commission were going to reach the last target but one which the Government set—although it was only two years ago—of 36,000 acres a year in Scotland. They are only 2,000 short of that target now—and it was to be reached in 1969; so I hope that they will hit the 36,000 acre figure next year. The proportion was 20,000 acres in the five Highlands counties and 16,000 acres in the rest of Scotland.
Since then, my Lords, the Government have announced for Scotland a new target of 50,000 acres a year. This was announced last October by the Prime Minister. I do not want to press the noble Lord unduly for information about that. It is obvious, I think, that the 36,000 acre target has been fairly carefully worked out and that the Commission have an idea of how it is going to be distributed, but we do not know whether the new 50,000 acre target has been worked out. We shall all be glad to have information about it; but I am satisfied that it is well within the bounds of possibility, and I hope very much that this new target will be achieved. Assuming that the proportions between the Highlands and the Lowlands are about the same, that would presumably be rather under 30,000 for the Highlands and rather over 20,000 for the Lowlands. There is always an ambiguity here. I prefer to talk about the five counties, because about half of the rest of the planting is at Perth, Aberdeen, Nairn, Stirling and other parts which are in fact the Highlands. Politically, we always divide the five counties from the rest of Scotland. My Lords, I hope that this new programme will be achieved. I hope also that there will be a large increase of private planting, particularly in the Highlands, because we want that as well.
The noble Lord, Lord Taylor of Gryfe, said something about the increase in population which could be brought about by large-scale afforestation. There again it takes a very long time, but in the few areas where the Forestry Commission really got off the mark quickly in 1920 the increase in the population in purely rural parishes has been remarkable. Excluding the urban population, the country population has been multiplied by three, and the child population

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has been multiplied by five, which is even more encouraging from the point of view of keeping young people in the country.
It does not sound particularly spectacular or inviting to say that at this rate we shall have solved the problem of Highland depopulation by the year 2020. But suppose that the programme upon which we are now embarking had been begun immediately after the First World War when the Commission was established, and had maintained its momentum, by this time we should be half-way towards our goal and a great deal of good would have been done. And suppose that a hundred years ago our great-grandfathers, had begun doing what we are beginning to do, there would be no problem of Highland depopulation now at all. We should have people engaged not only in forestry but in all the ancillary industries which accompany fully matured woods. Although it may not be a spectacular or vote-catching thing to do, surely there is no reason why we should not do, or try to do, for our great grandchildren what our great grandparents ought to have done for us.
I hope, my Lords, that the Government will not let up on this matter. I hope they will give equal encouragement to public and to private forestry. Public forestry is certainly a good investment, and in the view of some people the money spent on grants to private forestry are, nationally, an even better investment. I am not going to draw comparisons between them, because neither the Commission nor private planters can do everything that is needed without the help of the other. We must have both, and I hope that the Government will continue to give encouragement to both.
4.34 p.m.
THE VISCOUNT OF ARBUTHNOTT: My Lords, I do not know whether it is a convention to congratulate another maiden speaker, but I should like to congratulate the noble Lord, Lord Taylor of Gryfe, for his composure under fire. It is perhaps one of the risks that we Lowland Scots run if we speak at all on Highlands matters. Although I hope that I shall not be a controversial maiden, perhaps I may be a provocative maiden.
Before I develop the main theme of my speech I should like to consider one aspect of this matter which, in my view, needs emphasis. It is the attitude of
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mind we bring to this problem. Just how prejudiced are we when we consider it? Much emotion is engendered when any land use matter is discussed, and so much more is peculiar to Highland land use. I do not think it is putting it too high to say that for 200 years these problems have represented the bad conscience of central Government; that for over half of that time any major change of land use, however desirable, has also been associated with unhappy social consequences; and that few people can claim an entirely unbiased view to-day. At the same time I do not advocate that the matter is one purely for clinical and unemotional land use surveys.
I believe that the Highlands mean a lot of things to many people, but to most they represent some sort of recreation of the mind or body. They are not thought of as a place of work. To many they mean shimmering August days, or crisp October mornings, or still evenings by loch or stream in June or July. To a growing number they mean a welcome respite during a winter weekend at a ski slope or in the negotiation of a climb or a hill walk. To perhaps a greater number still they constitute a source of continuing glorious views amid constantly changing scenes as seen from the inside of a car during the course of a week or a fortnight's touring holiday. My Lords, I think that if we look at this dispassionately, we should agree that this reflects the feelings that most people have for this part of Britain; and I feel that we should admit that it must be a distorted view gained over a short period when the viewer was in holiday mood. It cannot surely be a good or a sound basis on which to judge the land use problem.
We have to remind ourselves all the time that there are 365 days in a year, even in a Highland year; that life has to be lived by the local communities through all those days and that life needs to be as full, as active and as rewarding as possible. No one who has felt the white terror of a blizzard or experienced the daily drudge of feeding stock, or the anxiety of meeting a child from school in those conditions; no one who has had to endure weeks of winter storms on a Hebridean island and the constant nag of wondering whether the steamer will call; no one who has had to face the

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routine of travel in all the vagaries of Highland weather, to do a daily job or carry out a round of visits, will ever be bemused into thinking of the Highlands only as a holiday retreat. But how many people, my Lords, have the advantage of that undistorted view?
Over the last fourteen years I have had an opportunity of getting to know a great variety of Highland and Island communities in all seasons and conditions. They stretch from Shetland to the Outer Isles, from Argyllshire and Sutherland to the Cairngorms and Coigach. I must confess that I grew almost to dread the first visit in the early part of the year—that is to say, in February and March—when resistance was at its lowest and men and women and their families had begun to wonder whether wet and wind and cold would ever pass. That was the time when the daily task really counted, when the 365-day interest really mattered. Indeed, it was then that the need was greatest to sustain a work pattern.
This can be done only if each community has a pattern to its life and, in my considered view, if that life is geared to a worthwhile and viable occupation. There is absolutely no point in attempting to sustain an occupation that is unrewarding in a practical sense. If the great majority of visitors to the Highlands are, as I believe they are, holiday visitors, and if they wish to continue to find the scenes that attracted them in the first place, they must recognise that life in the Highlands depends almost exclusively on a web of inter-related land use practices, each gaining its impetus from the use of the natural resources of the Highlands. Thus the need to conserve those resources is paramount. I do not know a better definition of conservation than that of wise use, and if use implies controlled and sensible exploitation it also implies a use which is understood, a traditional use.
I do not see how the Highland communities can surivive unless first priority is given to the main uses of crofting, agriculture and forestry. We have heard of these this afternoon. I would, however, add a fourth use, which it may be unfashionable to extol but which to my mind plays a vital part—that is, the land-use practice of the traditional sporting estate. I have no interest whatever as owner or
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occupier of any such estate. I have always counted my part of Kincardineshire as lying South of the Highland line. So I feel that I can speak quite openly on this matter.
It is all too easy to overlook the fact that a great deal of capital investment, bringing in its wake employment and often the pursuit of other land-use practices, has come to the Highlands, and is engaged there, entirely as a result of the sporting interest. If one translated that interest into the more prosaic terms of deer stock conservation and fishery management, one then sees it as I think it should be seen, as a perfectly valid form of land use in an area that needs enterprise and investment in any form. And what better than one that is making a year-round contribution to the problem of unemployment and when the other subsidiary uses are also taken into consideration?
However, I do not want your Lordships to feel that I think exclusively of agriculture, forestry or sporting interests. I emphasise these as they are understood and, where viable, are still in my view the best major land-use practices to be fostered. But I believe very strongly, too, that we must guard against any tendency to be too conventional in our choice of land use; and there must be flexibility and an awareness of the need to change the emphasis; that it is positively harmful to continue to bolster un an economy that is mainly based on a practice that is on its way out in a district.
We know that in many West Coast Highland areas it is the exception to have a lambing percentage over 60 per cent., and that anything below that figure is unrealistic in terms of agricultural use. Then there must be a change in the traditional use. Larger holdings and amalgamation are only part of the answer, because the unit must still be the right size. A unit only big enough for a man and a half is obviously no use, and, equally, part-time employment in another occupation will work only where that other employment is available. It is a process that will involve positive thinking by the land user and an ability to take difficult decisions. I think that we tend to adopt too rigid a framework in planning land use within an estate or district. I have never been taken with the concept of zoning uses too intensively. That tendency stems from the fact that

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each major land user, whether a private owner or a public organisation, has inevitably a dominant reason for being where he is. Each then adopts a conventional stance in defence of that interest and tends to shut his mind to the consideration of other views. That is often almost inevitable.
It is clearly the duty of every land user to run a good business and to get the return he wants from his investment. At the same time, I believe that he should be flexible enough in his approach to see the value of change. He will need to accommodate other compatible uses, even at times against the strict economic advice which does not favour diversification in the short term unless the total return is to be enhanced. This underlies the difference between what is called a single-purpose use and a multi-purpose use of land. In the latter case, multiple-use follows from the fact that the dominant interest of any landowner, under agriculture, forestry or anything else, is capable of satisfaction. Then he can and should accommodate other uses in the interests of flexibility and to keep the countryside alive all the year round.
I can give many examples of this in practice. There is the privately owned sporting estate where forestry, farming and a social need, in the form of an adventure camp or similar enterprise, are by-products of the main interests. There is the similar estate where forestry is dominant and other interests are subsidiary, but encouraged and viable. There is the National Trust of Scotland at Inver-ewe, where the main interest is centred on the gardens but where a varied community life is sustained and encouraged, and where a real attempt is made to cater for the influx of visitors who go to that coast in increasing numbers every year, whether they are directed to or not. Again, there are examples of Nature Conservancy and Forestry Commission lands being used to assist local farming, forestry and tourism, apart from the main conventional use for nature conservation and research, on the one hand, and timber production, on the other. All these private and public estates are practising skilled and integrated land management and have refrained from exclusive or single-purpose land use. All depend, too, on mutual support and co-operation with neighbours; yet all have their chief interests for being where they are.
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It is sad that sometimes a land user finds that social pressures or local prejudices inhibit his desire to change or to accommodate other uses. I know of an owner who had a major interest in fishery management and the creation of a hatchery business, yet felt that he had to continue to maintain a sheep stock, at a considerable annual loss, for fear of what would be said if he gave it up. We should recognise that it is correct and good management for such a man to employ three men successfully in a hatchery, rather than to have two or three unhappily employed on an unrewarding farm business. Perhaps fiscal and grant-aiding policies are too rigid and inhibiting in this field when the broad pattern of Highland use is being considered. The best form of land use, if it is managed as a business, whether it is deer management or a fish hatchery, could, I believe, be given better recognition.
Where have I got and where am I going, some of your Lordships may well ask. I should like to sum up my views as follows. The total natural resources of the Highlands can be conserved only by a broad-minded and flexible approach. It is better to adopt the attitude of mind that change will come, and is desirable, but that the viability of the main enterprise must be sustained and thereafter other compatible but subsidiary uses can follow. Co-operation and co-ordination of land management on a district basis as between land users is as important as the need for skilled integrated management of the various interests on a single estate. I believe that diversification is a practical aim and is essential to maintain the necessary flexibility. I believe, above all, that a varied and all-year-round pattern of land-use practices beyond and throughout the holiday season is an essential prerequisite for the maintenance of an interested, an occupied and a contented local community.
Your Lordships have been very patient with me. I have been chided in the past for being too didactic in my delivery, and if I have erred again I crave your indulgence. I cannot sit down without thanking the noble Lord, Lord Lovat, for initiating this debate and for giving me my chance to speak for the first time in your Lordships' House.
4.50 p.m.
LORD TAYSIDE: My Lords, it is with great pleasure that I find myself on the list of speakers following the noble Viscount, Lord Arbuthnott. His speech has been interesting and has given us an insight into the thoughts he has on the social and economic problems affecting the Highlands and not only the county in which he lives. I hope we shall hear him on many future occasions. I should also like to congratulate the other maiden speaker, my noble friend Lord Taylor of Gryfe. I was one of his sponsors. I was most interested to hear the details about forestry which he was able to give to the House.
My Lords, in this matter of Scotland and the Highlands I intend to look a little bit back into history, to look at the problem as I saw it to be a few years ago and at the solutions which have taken place and are taking place. One hundred years ago in some parts, and 130 years ago in other parts, the maximum population of the Highlands was in being. It varied, of course, because in various parts of the Highlands the drift took place at different times. For some one hundred years now the Highlands of Scotland have presented a problem to many thoughtful and sympathetic people who wished to help the country to attain an economic stability.
Their plans and attempts were opposed, sometimes by Highlanders themselves and sometimes by a relatively few wealthy incomers whose principal desires were to enjoy for themselves and their friends the sporting interests which they had purchased. I have said that these few wealthy incomers wished to retain advantages for themselves, but they were not, of course, meaning to be harsh and selfish. Indeed, within their own limits they were convinced they were doing good work for the country and for the native population in employing men and women in their service, and, when the requirements of their pastimes permitted, in promoting some beneficial and worthwhile local schemes for those for whose welfare they felt a genuine social responsibility: and, indeed, in many cases were prepared to spend money towards this end. They reflected the times in which they lived, and generally, for their times, they were good employers.
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But the clan system and the local loyalties that it engendered made the Highlanders tend to accept without much questioning the authority of those in high position in their midst. This continued in the Highlands long after local loyalties had ceased to be the governing factor in other parts of Britain. Indeed, it still operates to-day in the Highlands to an appreciable extent, and basically this can be a very good factor for the future if we can now proceed to infuse into the Highlands that economic viability that the great majority of us wish to see.
My reason for saying this is that much of the feeling of loyalty is now less for the chief or the man in high position than for the local village or township. And this, if it can be properly exploited, is excellent. It must go without saying that the most important factor in the Highlands is the people living there. They must be afforded opportunities to use their skills and services in a variety of ways so that they have a choice in deciding their future livelihood. Agriculture exists now to a large extent. My order of priorities is, first, that manufacturing industries are required, and secondly, to exploit the natural resources.
What has been done so far in the tackling of these priorities? The first step which was really effective was the setting up of the North of Scotland Hydro-Electric Board, of which to-day I am a member. We have heard many previous speakers refer to Tom Johnston. The Hydro Board arose out of the passionate desire of the late Tom Johnston, who was then Secretary of State for Scotland, to lay the foundation for a better social and industrial future in the North of Scotland. How well it has succeeded in its aim of laying that foundation!
The Highlands Board's area includes more than the Highlands, for it has Scotland North of the Tay Estuary as well. This Eastern coast was already then reasonably well supplied with electrical power, so the following figures are really the more impressive when one is considering the Highlands and Islands alone. In 1947 the Hydro Board had fewer than 190,000 consumers. To-day the figure is in the region of 450,000. The output has increased from around 425 million units to nearly 3,000 million units. About 95 per cent, of all premises in the

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area are now supplied with electricity. This is a tremendous achievement in 20 years, and reflects great credit on the calibre and abilities of the men and women who have carried on the work of the Board at all levels, and on the contractors' staffs who have constructed so many large projects. Work on new projects is planned, and old schemes are considered for replacement in due course. But the whole area of the Highlands, except for pockets here and there (and we have heard about two or three of them to-day) is now serviced for power and light. Since the last war, then, a great psychological boost has been given to remote rural areas merely by connecting the people to a service that other parts of the country have long taken for granted.
Industry and the skills connected with industry are now required. The Highlands and Islands Development Board was set up in 1965. This was the result of a far-sighted plan for which to-day the major Parties seem to take some credit. It has now overcome the difficulties which to some extent, in the early months, it brought upon itself through the idealism of the members generally. One can say that they gazed at the stars and their feet stumbled on the ground. When the Board started in 1965 it had the good will and, indeed, the enthusiasm of members of all Parties and of the public: for the chairman, Professor Robert Grieve, although not an industrialist, was already renowned as a planner and as a man who could get things done; and one of the members, the late Mr. William Logan, to whom reference has been made already, was a Highland industrialist of the highest integrity and wisdom—the type of man who fully justifies the setting up of bodies whose members are appointed from outside and who are not there because of the ballot box.
It is to the Highland Board that Scotland's North and West must look for a furtherance of the general level of prosperity in the greatest number of their towns and villages. Hitherto the Board's industrial activities have shown up in the encouragement of small industrial ventures, for manufacturing enterprises are scarce in the Highlands, which has three-quarters of its working population engaged in service industries. It is from
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manufacturing industries that the greatest contribution is sought to prevent more and more the drift from the Highlands. That the drift was severe was shown by the 1961 Census. In 1961 the population was only 67 per cent. of the, maximum figures of 100 years and more before. Have Government measures in the last three or four years been effective? I hope that my noble friend Lord Hughes will be able to tell us what has happened because of the measures that this Government have taken.
While the smaller industries have been encouraged and promoted by the Highlands and Islands Development Board, and are beneficial, the Board hoped that a giant or two would settle in. Giants are alarming and disturbing elements, and so it is not surprising that there are some who do not wish to see smelters or chemical concerns attracted. But such people are few in number. All Scotland—not just the Highlands—is deeply interested in the future of that romantic area, and there are not many people who grudge the North the opportunities of really large-scale industrial installations. Nor need we unduly worry about the amount of agricultural land involved. There will be a loss certainly, but the estimated figure is only about 3 per cent.—much the same as that expected for many other parts of Scotland in the next twenty years, and only a fraction of the size of the city of Birmingham.
Perhaps the greatest problem in having an aluminium smelter in the Moray Firth area, as I am sure there will be, will be in balancing other areas by the provision of small industries lest they in their part become completely denuded in favour of the Moray Firth area. It is for this reason that I am particularly glad to see the recent and continuing interest in the setting up of small and medium-sized industries.
I put as my second priority the exploitation of natural resources. This, of course, includes forestry, where latterly the Forestry Commission in Scotland have employed first-class planning in their approach to the fundamental problem of best land use. They are also co-operating much more closely with farming interests, to the benefit of both. Timber gives shelter and cover, as well as providing its own crop from the land. In

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some parts of Scotland where extensive afforestation has taken place, co-ordinated with agriculture, there has been an increase of cattle by up to 100 per cent., and of sheep by up to 25 per cent. These are perhaps extreme cases, but nevertheless they show that a change of land use from agriculture to forestry does not necessarily mean a loss to agriculture.
Tourism offers increasing scope for longer periods of the year than hitherto for the employment of people. Little things like hedges instead of fences are an attraction, as are lines of birches and other trees. Small matters must be considered. The discovery that Scotland can offer winter sports at more attractive costs than is often the case on the Continent is quite recent. The glens, the hills and mountains, the rivers and lochs and the harbours all offer sport on foot, with rod and with camera. But people have to get there easily and need somewhere to stay. To attract tourists in appreciable numbers modern hotels are required, but above all good roads—and good roads, of course, include not only improving existing roads, but the provision of new roads, and bridges, where none now exist. Much development work, much wonderful work, is being planned by the Highlands and Islands Development Board, and a start has now been made. But the main financial difficulty about tourism, as I see it, is to ensure that people continue to come to the Highlands for the greater part of the year, and that is one reason why good roads are so important.
I would sum up by saying that the North of Scotland Hydro-Electric Board has laid on the source of energy, but it is the Highlands and Islands Development Board which has the priority task to see that the power is utilised to the full. The Highland Board has funds of which it can dispose of its own volition, and has access to further funds for really large projects. It has powers for compulsory acquisition of land. I see in the Highlands and Islands Development Board the real hope for the revitalisation of the area under its jurisdiction.
I must confess that I was sad to hear the noble Lord, Lord Lovat, say that he saw such a poor prospect for the future. He lives in the Highlands, and therefore he should appreciate perhaps better than
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I do, living on the fringe, what the position is. But I do not think that is the case here. Scotland as a whole is looking for the action and the daring that are needed to provide work in the Highlands, and to offer men and women the means of remaining there if they so wish. I believe that the Highland Board, set up by the Labour Government in 1965, and which has not had very long to work, will be successful in this task.
5.5 p.m.
VISCOUNT STONEHAVEN: My Lords, I want first to thank the noble Lord, Lord Lovat, for putting down this Motion and enabling us to take part in this debate this afternoon. I live athwart the Highland fault, so I do not know whether I am a Highlander or not. I have one leg in the Highlands, and the other is not. However, I hope that that allows me to take part in this debate. The noble Lord, Lord Balerno, has very kindly offered to relieve me of the task of talking about S.E.T. and our hotels, which is a matter of grave concern and grave discontent, so I am not going to say anything about that subject. And, of course, he will say it very much better than I should.
I would first say that big industrial complexes have the danger that they do exactly the reverse to the people living in the country districts of what is wanted. They attract people out of the country and, if you are not very careful, you find that it is like bees going to a honeypot. These industrial complexes can do more harm than good, although no one denies that they produce prosperity where they are. But if one really wants to develop the country, and keep people in the country, this is a very great danger which I think must be kept well to the fore.
I want to talk about the natural resources in the part of Scotland where I live, which is just a fringe of the Highlands, because I think that some of the problems we face, and possible solutions, apply to other parts of the Highlands. I want to talk about the economic utilisation of forest products. We have heard a great deal—we always do and it is very illuminating to listen to debates in your Lordships' House—on the planting and growing of trees. But what are we going to do with them? This point is never gone into in detail, and it is a very difficult

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problem indeed. By 1970, in two years' time, the Forestry Commission alone—and they are doing excellent work and I am a thorough supporter of them—will be producing annually about one million hoppus feet of thinnings within a radius of about 30 miles of Stonehaven, the town in which I live. This is creating a problem (the forests are 100 miles from any market) and therefore I want to consider one or two basic facts.
One starts forestry, very roughly, by planting about 1,300 trees to the acre. One tends and weeds those trees for the first five to ten years, and during the 70-year life of the rotation those trees have to be thinned roughly in the twentieth, thirtieth, fourtieth, fiftieth and sixtieth years. In all, one has to thin out about 1,080 trees to arrive at a final crop of only 230 trees, out of the original 1,300. These are typical figures culled from the Forestry Commission yield tables. Of these trees, the equivalent of some 820 trees are too small to mill. For example, of the 7-inch breast-high, quarter-growth trees, only about half are big enough to saw. It is quite obvious to me, and I hope to everybody, that foresters cannot afford to waste nearly a third of the forest products. This problem is not a temporary one: it is always present. In the growing of trees one always has to go through these operations. I am not trying to tie my example down to exact figures.
Another factor in the utilisation of timber is this. A hoppus foot of green timber contains about 36 lb. of water which is of no use to anybody and has to be driven off. As transport plays an enormous part in the timber-using industry it must be considered. As for transport costs, the loading and unloading costs are the same, no matter how far the journey. But there is a ton-mile factor, the weight times distance, which must be considered. If you look at the matter this way you will find that because the weight of the manufactured product is about two-thirds lighter than the green wood, you can transport green wood from the wood to the central processing plant, about 30 miles, or transport the manufactured product nearly 100 miles, for about the same cost. This is the kind of figure that never seems to be talked about, but it is a figure which has vast significance. The logical steps would be to locate the timber-processing industry in the centre of a 30-mile
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ring and 100 miles (or as near as one can get to it) from the major market. These figures can all be reasonably met in one place: Stonehaven, where I live and in a moment I will say why I am interested.
If productivity means anything, it means cutting out waste, and there are two major kinds of waste which are very prevalent indeed. They are, first, using material uneconomically and therefore not realising its full potential, and, secondly, not using large portions of the available material. The sort of thing that happens is using timber that could be used for sawn logs and cutting it up for pulp and chipboard, and burning "slabs" because the market is wrong and the price is poor. This commonly happens to-day.
There are two predominantly waste product users in the timber world. One is the ground wood pulp mill, whose operations require quite a lot of water but can be done on a very small scale. I do not know enough about that to say whether it is a possibility in the Highlands. The other is the chipboard industry, which requires very little water but, of course, a supply of timber. Some chipboard mills are working economically to-day on quite small intakes of the order of 700,000 hoppus feet a year and producing something like 8,100 tons of chipboard a year. This, again, fits into the particular area about which I am speaking. The annuals output of the Forestry Commission's thinnings by 1970 would fully supply the quantities necessary in that particular district.
Considering the Government grants and loans which are available, I suggest that these facts, which I have presented roughly to your Lordships, justify the setting up of a working party to go fully into the proposition of starting up a fully integrated enterprise, tailored to fit the conditions which exist. I suggest that each unit of that enterprise could be run by a sub-contractor, and all the sub-contractors could share one office organisation, one servicing organisation, such as a laboratory, saw doctor, fitter's shop, and that type of thing. There could be tacked on to the main unit the reception area and peeling centre, and then a saw mill of a fairly simple type which would deal with smallish logs, probably a recirculating saw—and these practices are well known—and then it

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would be necessary to have seasoning sheds.
Although one talks about kilning, this is unnecessary in the first instance. As long as timber is put under an elementary type of roof and it can be left there for five months, properly stacked, it will dry down of its own accord to a figure of something like 20 per cent. moisture content, which is nearly as low as one has to go. It may be necessary to kiln some of it for the last five degrees or so. This is not a great difficulty, but what would be required would be a long-term contract with the Forestry Commission and co-operation with successful chipboard manufacturers who know what they are talking about and who have done this job—and there are quite a number of such manufacturers in the country. One would also require co-operation with, say, a local saw miller and with existing Forestry Commission contractors and timber merchants.
If one regards it as a sun with planets arrangement, the sun would be the central peeling depot, the saw mill and the chipboard mill, with all the waste from the saw mill going into the chipboard mill, and drying roofs for about 350,000 cubic feet of timber, which is not enormous. The integrated satellite units one might have, for example, would be a truss fabricating shop equipped with something like a Robinson's saw, a hydronail system and a monopress, all of which have been tested out at the building research station and also by the timber research people. One could have a pallet and packing shop using all this kind of timber; one could have an agricultural requisites shop making posts, gates, troughs, and that kind of thing. One could have a wood wool unit making wood wool for packing, and wood wool and cement blocks, which are simply made; and I think there should be a wood preservative plant. Possible later additions would be a sawdust treatment plant for plastics, and perhaps a plant for extracting tannin from the bark.
The advantages would be that one would have maximum transport efficiency and minimum costs; shared overheads and office and administration services with, therefore, minimum costs in that connection; minimum raw material internal prices, and maximum utilization
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of waste products. In this case the maximum output could be totally absorbed by the available market within the 100 mile radius. I will say a word about that in a moment. In addition, there would be utilisation of natural resources, and it would produce jobs in the country for local Scotsmen, suitable to their traditional skills, which is a big point in its favour.
It is a mistake to allow oneself to become mesmerised by enormous-scale operations, which always bring problems of their own. For example, the difference in cost per square foot of ¾-inch thick chipboard by doubling the size of the mill reduces the price by only 0·6d. That figure is mentioned on page 25 of the Forestry Commission's Board Mill Survey, so I think it is a respectable figure. It may not be completely accurate, but it is a reasonable estimate.
I should like to invite Her Majesty's Government to participate in setting up a pilot scheme at Stonehaven, financed as to one third by the Forestry Commission, one third by local investment by industrialists, and one third by direct Government grant. You could call it a nationalised industry—I do not mind; I think this is fine. I think we should get together. There are enormous problems that nobody has yet tackled. You may find them easier to tackle than you think, or a lot harder. You cannot know until you try. But unless the problems are tackled on this kind of basis we are all talking of enormous global figures, and nobody does anything; we never come anywhere near the earth at all. I feel that it is time something was done in this particular place, which is ripe. In two years' time, there will be one million hoppus feet, which will be enough. It takes a long time and a lot of work to get these things going.
I would point out that in the building trade alone, of which the noble Lord knows a great deal, we in the area that I am discussing are building over 6,000 houses a year within about a 100-mile radius. Six thousand typical small houses, and each having a ground area of 24 ft. by 20 ft. could use 2,880,000 square feet of chipboard in the floors, 3,000,000 square feet of chipboard in the roofs and half a million square feet of chipboard in the doors. That is a total

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of nearly 6½ million square feet. That is the full output of a mill for 217 days a year. The market is there, if one goes after it, within this distance. Transport is the tying factor. The same houses could use 72,000 trusses, and that would keep a double unit truss mill fully occupied for the entire year. And the noble Lord, of course, knows that the use of truss rafters at 24 ft. centres saves something like 60 per cent. of the man-hours in site erection—which, with the kind of weather we have, is an important point—compared with traditional methods. These figures again are from the research people.
It might be necessary to give homegrown chipboard some slight protection against dumped foreign manufactured products. After all, one has to protect a young tree from competition from weeds for a few years after it is first planted. This would be a new industry, and it might need protection in its early days. This does not go against the Treaty of Rome, for example, supposing we are European-minded, as I think we are. I should like to draw the noble Lord's attention to Article 92 in the Treaty:
"The following may be deemed to be compatible with the Common Market:
(a) aid intended to promote the economic development of regions where the standard of living is abnormally low or where there is serious under-employment ….
(c) aid intended to facilitate the development of certain activities or of certain economic regions provided that such aid does not adversely affect trading conditions to such an extent as would be contrary to the common interest."
So there would be no objection on that score; there might be many others on other scores, I have no doubt.
Knowing how long it takes to get these kind of things going, I am going to make a suggestion which, if it does nothing else, might make quite a good cartoon. I am inviting the noble Lord to come alongside me and the noble Lord, Lord Bannerman, who made an excellent speech saying what was wrong, but not one single word of what he proposed to do or how anything could be done. I think that the three of us should take our coats off and do something, instead of talking. Let us have a "dummy" run.
5.25 p.m.
LORD BALERNO: My Lords, I should like to express my gratitude to the noble Lord, Lord Lovat, for initiating this debate and, as a Territorial officer who served in the war, support what he said about the importance of the Territorial Army as a social welfare agency in the Highlands of Scotland. Next, I should like to congratulate the noble Lord, Lord Taylor of Gryfe, on his maiden speech. It was meticulous, comprehensive, and just what his reputation in Scotland would have led us to expect from him, and then something more. I should also like especially to congratulate the noble Viscount, Lord Arbuthnott, on his maiden speech. He is the third of his family I have known to hold the title, and he seems to have fully inherited, as well as the title, the sincerity and praticality of his forbears; and his moving and sincere speech was all the more effective for his quiet delivery and an absence of all theatrical hyperbole.
There are two points that I wish to make to-day, and the first is the non-removal of the selective employment tax on the hotels in the North-East of Scotland. It seems to me that there has been a very invidious selection of the areas from which this tax on the hotels has been removed. I would ask the Government whether they cannot take another look at the decisions they have made in an attempt to get a more rational solution of the situation. It is difficult to understand why Banffshire and Morayshire should be included, yet, going round the corner to exactly the same type of country, a mixture of hill and lower land going down to the sea, in Aberdeenshire, you find that it does not get the benefit of the remission of tax, except for one extraordinary little area of Royal Deeside. The hotels there are exempt from S.E.T., but the poor, impoverished, hard-up land of Donside is a tongue sticking out into the plutocratic Banffshire and the plutocratic Deeside, and its hotel-keepers will get no remission from this ghastly tax. If you go slightly to the South, to the area from which the noble Lord who has just spoken comes, the area of Angus and Mearns, you might think this was outwith the scope of the Highland area, but my justification for talking about the hotels in this area is that in this area is situated what the Romans called Mons

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Grampius, from which the whole title of the Grampian mountains is taken; and that, therefore, justifies me, I feel, in extending the Highland area down into Mearns, and even into Angus.
Let me give your Lordships an example of the effect of the selective employment tax in the burgh of Stonehaven. It has closed a four-star hotel of outstanding excellence. That has been turned into an old folks' home—of outstanding excellence, too, we hope. Two other hotels have already been closed. One stands empty at the present moment, and the other has been turned into fiats. Four more hotels are advertised for sale and may be closed at any time. The noble Lord, Lord Taylor of Gryfe, told us about five new hotels being set up in the West. It looks as though seven hotels have closed in the one burgh of of Stonehaven to balance that number—not a very good balance.
Other burghs and towns in Angus and the Mearns that have been hardly hit by the selective employment tax are Arbroath, Brechin and Montrose. Montrose is primarily a holiday resort, with wonderful sands. Yet Stirling gets remission from the tax. The City of Perth gets remission from the tax. Last summer, Montrose lost 70 manufacturing jobs, so that the hotel employees who are thrown out of jobs through hotel closure owing to S.E.T. cannot get manufacturing jobs in the area. Therefore, the purpose of S.E.T. seems to me negative.
It may be argued that the figure for unemployment in the North-East of Scotland is low compared with that in other parts of Scotland, and that therefore people thrown out of work through S.E.T. will get other jobs. I hope that this argument will be examined a little more closely. I must confess my interest, that 1 am a Gordon Highlander and have served in the North-East and am particularly thirled to that type of person. My experience of the man from the North-East of Scotland is that when he is unemployed he does not stay put, but goes out of the North-East and looks for a job. The unemployment figures in the North-East tend to be low, but I submit that it cannot be used as an argument for the non-remission of the S.E.T. from hotels.
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May I now move to another fringe area of the Highlands, down in the South-West. If your Lordships study the area covered by the Highlands and Islands Development Board (it is coloured green on their official map), you will see, lonely and neglected, two substantial islands, the islands of Arran and Bute which have not been included in the area of the Highlands and Islands Development Board. I wish to put before your Lordships, as an example, the case of the first island I mentioned—Arran. That island has a present population of some 3,500, which is about half what it used to be last century. If the present trend of depopulation in that island continues as it is going just now by 1980 there will be only some 2,000 people permanently resident in the island.
The Arran District Council have taken the initiative and have run a project which they call "Project Beacon", to find out whether people want to come and settle in Arran if they are given opportunities of finding work and housing. They have discovered 400 persons anxious to move into the island, provided that work and accommodation can be found for them. One-third of those people are under 35 years of age, and 80 per cent. of them are under 55 years of age. So it is not as a retirement place that people want to go to the island of Arran. The island has been getting some help from the Scottish Country Industries Development Trust. I understand that the Development Commissioners are visiting it later this month. But I would ask the Government to take another look at this problem and to see whether they can improve it in the Highlands and Islands Development Board area.
The finance that can be obtained is important, but even more important, I think, is the know-how that the Board can contribute to the earnest, sincere people who are doing their best to develop the island and retain the population there. We must get that island viable and able to support its own senior secondary school, which has had to be closed. No community can be a real community unless it can feed into a secondary school, without need to send its children away. In some of the smaller islands of course, this is not possible; but it is within reach of the island of

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Arran to achieve this, and I honestly cannot see how the Government can refuse consideration of this problem.
The Act says that the area of the Highlands and Islands Board may include—and these are the words which we debated carefully in this House:
"such areas in Scotland as having regard to their character and proximity to the said (seven) counties the Secretary of State may by Order make under statutory instrument designate."
What I ask is that the Secretary of State should so designate these areas. The peninsula of Kintyre comes down more or less the whole of one side of Arran and continues considerably to the South. The whole of Kintyre is in the Board's area. I earnestly ask the Government to give full consideration to these two problems of geography which I have mentioned, the North-East of Scotland and Arran and Bute. For I think that at the present moment, in both cases, they are drawing a line in the wrong place.
5.37 p.m.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, it is clearly an act of a most unwise and foolhardy kind for an English farmer to intervene in a debate of this nature where so many noble Lords have such close links with, and such intimate knowledge of, the Highlands. In fact, I think I can say without contradiction that noble Lords opposite own most of those places. But nevertheless, I think it is important that the question should be looked at in a broad context. It is, after all, just one instance, though a most important one, of the problem of marginal land, which is a world-wide problem which has always fascinated me. This is why I have felt unable to keep silent in regard to an area with which I am not well acquainted.
I propose, therefore, to consider for a moment or two the problem of marginal land as a whole; to ask why, and even whether, agricultural production from marginal land should receive assistance. Before doing so, I should like to say how much I enjoyed the maiden speech of my noble friend Lord Taylor of Gryfe. I should also like to thank the noble Viscount, Lord Arbuthnott, for his excellent maiden speech, and to tell him that I shall try not to be too clinical, though
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I hope to be more clinical than some other people who have spoken with great emotion and, to me, in a most moving way. But I think there is a period to stand back and look at the question.
I want to suggest that there is no economic case for assisting agricultural production except on the test of cost-effectiveness. On this test the case for assisting marginal land fails as against the case for further investment in Lowland farming where investment will yield higher returns. I was encouraged by the suggestion of the noble Lord, Lord Lovat, about reclaiming land from the sea, where, of course, this argument would not apply. We want to find some things which can stand up to an economic test.
There are, of course, a number of other reasons for subsidising either people or areas—strategic and social reasons, and reasons of amenity. If one accepts these kinds of reason, as I do, then one must separate them from economic reasons. Most of our difficulty in finding proper ways of aiding the hills has been because we have tried to pretend that they could compete with the Lowlands economically, which they cannot. The best way to bring back vigour to the hills and to preserve their heritage is to aim directly at these objectives and not to regard them as byproducts of agricultural or forestry policy. We can probably agree on the first proposition that the test for agricultural assistance should be that of cost-effective-ness. I hope that noble Lords accept the second proposition, that from an.agricultural economic point of view assistance to the Highlands fails the test. If your Lordships do not agree, this failure is easy to demonstrate, and I will give a few facts about it which are relevant to the whole subject. I speak here not of the Highlands, but of the hills in general.
In the first place, the gross output per acre is one-tenth of the gross output per acre from the Lowlands; and if one takes croppable land only, it is just over 50 per cent. The contribution of the hills to the national output is about 4 per cent. of the whole. Of this a small part only comes from milk production; that is to say, about 3 per cent. of the nation's output; and cattle contribute from 5 to 7 per cent. of the total slaughterings. Sheep sold off the hills account for something in the region of 40 per cent. of total slaughterings, and this is very

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much more significant. I will not conceal from your Lordships the fact that I have been unable to obtain absolutely up-to-date figures. The figures which I have were collected by Davidson and Wibberley for their pamphlet The Agricultural Significance of the Hills, which is still the standard work on the subject. I believe that these figures are as true to-day as when they were written some nine years ago, though I shall probably be shot down on that statement.
These gentlemen estimate that if we decided to scrap assistance to the hills, the result of removing all sheep from the uplands would be to reduce the mutton and lamb supply in this country by 60 per cent. Although nothing as extravagant as this would happen overnight—and although Lowland farms at the moment are largely under-producing, no doubt in due course it could be made up —it would be a serious item, and if we lost a section of our market to importers it might be difficult to get it back. Therefore, the hills have a real contribution to make, but from the point of view of pure agricultural economics only in regard to sheep. We can easily replace from the Lowlands the contribution of cattle and milk.
The position is quite different when one comes to forestry. As was pointed out by the noble Lord, Lord Lovat, we import over 90 per cent. of our timber at a cost of over £500 million. I think my figures are the same as the noble Lord's. Not merely is there a great opportunity for import saving in this matter, but the best people tell us that there is a world shortage of timber in sight. Therefore, it is only prudent that we should work up our forestry. But as early as 1958 it was quite clear that the Forestry Commission was failing to plant more than about half its planned programme. The reason for that failure was that it could not get the land. There was no possibility of any reasonable acreage of land being acquired in the Lowlands, so it was hoped then to acquire something like 4 million acres in the high lands of Britain—I do not mean in the Highlands, but in the hills of Britain. This failed for two reasons: first, because the Forestry Commission's terms of reference, as the Zuckerman Committee put it, were to grow trees for the single purpose of pro-
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ducing a reserve of standing timber. Hence its plantations had to be justified without reference to the benefits which trees might confer on adjacent agricultural land, or more generally on the local community.
It is not too much to say that the planting of large-scale blocks of conifers on land between the farms and the hilltops has been not merely of no help, but has been a considerable hindrance to the interests of farmers, and indeed landlords, and in this way has earned their hostility. In consequence, they have not been keen to sell land to the Forestry Commission. More than one Minister of Agriculture has noticed this. Speaking of the Mid-Wales Report in 1956 in the other place, the then Tory Minister said:
"Wherever possible planting by the Commission will be so planned as to provide the maximum benefit to agriculture."
Ten years later the Labour Minister of Agriculture said:
"All those who have studied this problem have emphasised the need for integrating over a reasonably wide area the use of land for forestry and agriculture on the hills so that they are complementary and not antagonistic to one another."
My impression from reading the Forestry Commission Reports—unfortunately not the last one, because we have not yet got it—and from speaking to friends in both Scotland and Wales is that the Commission has not changed its policy in a very material way as a result of the Ministers' statements of intention. My impression is not based on a thorough examination, and I hope that I am wrong. If my noble friend Lord Hughes can tell me so, I shall be only too pleased.
In any case, whether or not the Forestry Commission has made an energetic beginning in this policy of integration, it can be said that if the Commission is to gain the co-operation of the farmers and to induce them to sell it their land, it must be persuaded sometimes to plant uneconomically, to plant shelter belts with long fence lines, to plant small strategic blocks and to give farmers access to the sheep runs on the hilltops. It might help the Commission if it were authorised to debit to a special integration account the difference between uneconomic planting and its normal economic planting. Its members are only human and are trying to do the job

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as well as they can. Unless they can show that they are spending this money for a purpose which we want, they are going to look as though they are inefficient. A second, and possibly more important reason why they have not been able to get land—and this is paradoxical but true—is because the general level of agricultural prosperity, low though it is in these places, has been kept artificially high enough so as to make farmers unwilling to sell. They still think that somehow they are going to manage. This has been achieved by special subsidies. So one has the age-old picture of one Government Department spending money in order to refute the objects of the other. This is not new to any of us, but one must point it out when one sees it.
I should make it plain that, although I believe the interests of the Forestry Commission should be given full consideration, the best evidence suggests that on a long-term basis the return from investment in forestry is higher than the return from investment in hill farming. I do not suggest that the hills and uplands should be largely turned over to forestry. I do not believe that any generation has the right to immobilise land of moderate agricultural value. The value of land in the Lowlands for purposes other than agriculture is so great and is rising so fast that we may reach the day when it is commercially competitive to produce from land which costs so much less to buy and has on it so much less competing claims.
The function of the farmers, as I see it, is to preserve the hills for the nation. Landowners, tenants, and owner-occupiers, should be encouraged to remain as caretakers. At the same time, they should be helped to farm the land at the least cost to the nation and to release the less good agricultural use for the use of the Forestry Commission. It has been shown again and again that the profitability of farms on the hills, as everywhere else, is directly related to size; and in the case of sheep, which is the important item here, it is directly related to the size of flock. There are in Scotland some 60,000 holdings of 11 acres and over, while about 3,000 farms carry 75 per cent. of the hill sheep and occupy half the total area of rough grazing. It is generally agreed that nobody can make a living with a
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flock smaller than 600 or 700 ewes, but in Scotland one frequently has flocks of 1,000 to 2,000 and is much better off than those in Wales. Those are the farms which, with help, can be made to compete in a modest way with tie Lowland farms, and on which farmers should be encouraged to remain and preserve the countryside as it is to-day.
When I say "help" I mean with items which have been mentioned during the afternoon, such as roads, fences, drainage, fertilisers, reseeding, transport and lime but not henage payment, which is a very inefficient way of assisting and pays as much for a scrub cow as a good one. In general, what we do not want to do is to keep small farms going on the edge of failure, squandering our resources for making the larger units viable. What we do not need is any more additions to a series of ad hoc subsidies which have kept the problems of the hills in being without ever having solved them. May I remind your Lordships that in 1944 the Scottish Hill Sheep Farming Report recommended that wartime subsidies should continue, but said:
"Let nobody think that this is a permanent affair. This has got to be worked out very quickly indeed."
The Report visualised three or four years later, but it is now twenty-four years and those subsidies will never go.
What we want is an overall plan for the full integration of the interests of agriculture and forestry, bearing in mind the generally accepted need to preserve the solitude and beauty of those areas of the hills and uplands for the benefit of the nation as a whole. That is easily said and I think we all agree with it. But in my opinion there is only one way to do it, and that is by the proper integration of forestry with agriculture. I believe we do not have it, but we could get it. I believe that the way to get it is through a rural development board, as suggested by my right honourable friend Mr. Peart in the 1965 White Paper. This is not quite the same as the scheme of the Highlands and Islands Board of which I confess I do not know the real details. But if rural development boards are looking at an area, with power, with money and, above all, with the, right people working really hard on them, I believe it will be possible to do what the noble Earl, Lord Dundee, suggested,

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quite rightly, we could have done years ago, which is to put this matter right for our children.
I want to thank the noble Lord, Lord Lovat, for his exposition of this problem, and I hope that my general remarks have not strayed too far from the Highlands. I feel that a debate of this kind may help us to work towards a solution of this most difficult problem.
5.53 p.m.
LORD BURTON: My Lords, in spite of what the noble Lord, Lord Bannerman of Kildonan, has said, I should feel very much happier carrying a creel of peat to-day in the Highlands than I am standing before your Lordships. Feeling as I do, I should like to congratulate the noble Lord, Lord Taylor of Gryfe, and my noble friend Lord Arbuthnott on the excellent delivery of their maiden speeches.
It has been interesting to look back since we had a similar debate about a year ago, and see what progress has been made in the Highlands. I fear that we have found what some of us tried to explain would happen. The Highlands and Islands Development Board is a largely unnecessary piece of bureaucracy. Had even a proportion of the money spent upon and by them been given to the existing agencies, such as the Forestry Commission, the Department of Agriculture, the Development Department (particularly for expenditure on roads), local authorities, the Tourist Board and such like bodies, how very much better off we should have been to-day! The noble Lord, Lord Lovat, touched on this point. We are seeing a massive waste in duplicated effort and, consequently, of taxpayers' money.
Let us take the much vaunted exercise "Counter drift", a register compiled by the Development Board of some 6,000 people who apparently wish to return to the North to a job in the Highlands. I myself have sought to employ people from this register, and I could not find a suitable applicant for any of the jobs which I had to offer. Surely this employment agency should have, and could have, been the work of the Ministry dealing with employment—I think it is now called the Ministry of Productivity and Employment, but it changes names very fre-
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quently. I am not clear why two Government bodies should be doing what one body could quite comfortably have done.
Take again the promotion of tourism. The Tourist Board have always said that they could do the task provided they were given the necessary funds, but what has happened? The Highlands and Islands Development Board has set up a branch duplicating the work of the Tourist Board. There is also duplication of the work of county development officers. Expensive consultants have been engaged in doing work which should be done by the Forestry Commission and the Department of Agriculture. There is a large loans and grants department doing work which was partly done previously by banks, and was very successfully done by the Highland Fund. I cannot see why this loans department should not have been an extended Highland Fund. I think that would have done the work very much more cheaply and efficiently.
We have had from the Government Benches an interesting list of investment and employment, but we have singular difficulty in securing from any Government spokesman a list of those who have received funds. We cannot get a list of the expected return from this so-called investment. Furthermore, we never received a list of the jobs which have ceased to exist since the Board was constituted. Perhaps I can help in producing that list.
The chipboard factory in Inverness has closed down not only causing a considerable loss of employment in the factory but removing an excellent and desperately needed outlet for small timber, thereby also affecting the forestry industry. My noble friend Lord Stonehaven mentioned the possibility of setting up chipboard factories, but, alas!, the one we had in Inverness has gone, under this Government. The aluminium factory at Foyers has closed down, leaving the little village of Foyers with a desperate shortage of permanent work, though I have no doubt that the noble Lord opposite will tell me that temporary work is in the offing from the new hydro-electric scheme. We are very grateful for that, but the village is going to be left without permanent work.
Some of the various ploys of the previous member of the Board, Frank Thompson, are no more. Those short-lived enterprises, such as the engineering works in Dingwall have gone bankrupt,

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leaving a trail of lost investments and lost jobs. The distillery at Invergordon —another Thompson ploy—has had to reduce the number of men it was employing, thereby creating employment problems in the area. The drawing office of Insulated Callender's Cables—an excellent type of employment for Inverness —has been moved South, to the dismay of most of its 25 employees. The threat to the atomic operations at Dounreay is now, I hope, not going to materialise, but there is a threat. My noble friend Lord Lovat has said that the mighty pulp mill —another Tory accomplishment—is itself threatened by the Transport Bill, and a number of small contractors who haul timber to the mill will find conditions unworkable if the Transport Bill is not amended. The dismal story above is not, of course, in the main attributable to the Development Board, but it is mostly attributable to the Government.
The noble Lord, Lord Tayside, said that manufacturing industries are scarce in the Highlands and, as I have shown by my list, they are very much scarcer now than they were two years ago. The project at Aviemore was mentioned. Fortunately, that is not yet closed. But, surely, that is another Tory achievement. The Tories started the scheme going, and I cannot understand the sniping which there has been at their achievement in the Highlands. It may be worth recording a small example of how I myself have been thwarted by Government action in an attempt to get a small enterprise under way. Between Invergarry and/or Invermoriston and the Kyle of Lochalsh, a distance of some 50 to 60 miles, there was no garage for repairing vehicles. I therefore felt that the conversion of some of my old buildings for this purpose would make a good and useful enterprise and would be a little development which would employ a few people. The Board of Trade promised a grant, and work was almost completed. Then along came selective employment tax. The whole enterprise is now completely uneconomic and I have not been able to start it. I have consulted the Development Board, and I think they are in full agreement with me. In just a small way this shows how the Government are strangling the Highlands.
Let me give one or two instances of further Government folly. There appears
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to be a desire to encourage tourism in the Highlands, so the worst burdens of selective employment tax are removed from hotels in certain areas. As my noble friend Lord Balerno has said, it is not in all areas but only in certain areas. But there is a crying demand for more camping and caravan sites, and selective employment tax is still retained for employees working on those sites. I cannot see why it should be removed from hotels and yet kept for caravans and camping sites. It seems to me quite contradictory. Then, again, there is the Land Commission Bill. At the present time no landowner in his right mind is going to offer any of his land willingly for sale or feu when he knows he is going to be taxed on this transaction to nearly 40 per cent. I have been faced with this dilemma on a number of occasions already. The Highlands and Islands Development Board have sought ground from me for small factories, and they know the problems well. One does not want to hold up development; nor does one want to pay an unnecessary capital levy on the transaction.
My Lords, it is sad to have to paint such a dismal picture, but one must face realities. The last two years have been very bad ones in the history of the Highlands. The noble Lord, Lord Lovat, mentioned probable Highland clearances. He was not exaggerating. Though the clearances may be more humane than those of the Whig farmers a hundred years ago—and I should remind the noble Lord, Lord Bannerman, that I think the Whigs were Liberals—
LORD BANNERMAN: A hundred years ago?
LORD BURTON:—these clearances will be none the less effective now than they were in time gone by.
My Lords, I have been highly critical, but perhaps I can now come to some constructive suggestions and advice. I noticed that after twenty minutes there was nothing particularly constructive that I could find coming from the Liberal Benches. The easiest solution is probably for the Government to resign, but as there are no signs of that perhaps we can prevail upon them to take some of the right steps. There was a discussion yesterday in your Lordships' House which amply demonstrated the unremunerative cost of

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subsidies and grants. Annual subsidies and grants in an attempt to make uneconomic enterprises viable are not sound propositions. What we require is public investment in such works as roads, so that the enterprises become viable and we have the right atmosphere which will encourage further investment and development from private sources. That atmosphere, I may say, has been seriously jeopardised by misrepresentation from certain sources, and the real facts have not been brought out—and some of the remarks we have heard to-day have been witness of this.
We need less unremunerative paper work, officialdom and administration, and more practical work on the ground. We need development of what I think is now called the infrastructure. I recall a discussion with a fairly influential official who advocated, first, getting industry into the Highlands, arguing that the infrastructure would follow. I fear that this seems to be official policy; and I may say that not only is it the official policy of this Government but that it was that of all recent Administrations. I am sure it is wrong. It is putting the cart before the horse. The noble Lord, Lord Hughes, will know that when a sound contractor sets out to build a housing scheme he does not put up the houses and then find that he has got no water supply. He does not lay the roads and then dig them up to put in the gas pipes. We must get our priorities right. I am sure we must put in the infrastructure before the factories, and not the factories before the infrastructure.
It cannot be repeated too often that the trunk roads of the Highlands are the first priority, and that the Perth/ Inverness road, the A.9, is top of the list. But what are the Government doing? They have reduced the Inverness trunk road expenditure for this coming year, and this at a time of rising cost, so that there will be a reduction in maintenance, let alone improvements. This is a very important road, and to my mind it is the key to all Highland development. We have lessons to learn from Fort William. We built the pulp mill and then scrambled furiously to provide houses, schools and the like. What is the result? The situation is far from satisfactory. New houses are damp and
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leaking. The firm which built them is now out of action, and nothing can be recovered from them. The schools will, I believe, be a problem. And, surprisingly enough, there is a crisis because for the last two years it has not been possible even to find the site for a rubbish dump. Furthermore, most of this conglomeration has been set up on the small amount of arable land which used to exist in the area.
Can we look for a moment at the possibilities of Invergordon? People in the Highlands are unable to understand the Government's delay in making any announcement on what developments are envisaged. This speculation is not good for the area. The Government can surely tell the people what they are trying to do. If not, at least they can say why there is this interminable delay. I think there has been someone down here from Invergordon trying to see the Prime Minister this week. I do not know what success he has had. The impression given is that no one in Whitehall cares about the Highlands. Now that there has been a breathing space, however, have any of the lessons of Fort William been learnt? So far as Invergordon is concerned, is any action being taken behind the scenes? Is any planning developing? Are the dredgers on their way to reclaim Nigg Bay from the Firth? Because this is the obvious site for any industrial development there.
My Lords, I should like to end with one very important plea: spare the arable land of the Highlands wherever possible. The noble Lord, Lord Tayside, said it was not important, but I shall try to emphasise in a few words why I think it is very important. My noble friend Lord Lovat has already given a number of details, but he has not told your Lordships that during the last ten years for which figures are available—that is, from 1957 to 1966–25,000 acres of arable land were lost to the Highlands, or approximately 4 per cent. of the total arable acreage in the Highlands. This is very serious and if we are going to have these linear cities and the like it is going to be very much worse.
I myself have undertaken in the Highlands reclamation of arable land from the sea. I have perhaps been rather trespassing on my noble friend's preserves, but I have restored 200 acres near the

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Lovat land of Beauly, and it is now galling to see public bodies destroying such land. But I would point out that in this area there are still 2,000 acres which could quite comfortably be recovered. In 1948 or 1949, when the late chief engineer of the Department of Agriculture, Alec Scott, was looking at some of these developments, we worked out some schemes, and it was going to cost only £1 million to recover those 2,000 acres and cut 7 miles off the main road from Inverness. Surely that was a well worth while project. It was going to be only one-eighth of the cost of the Moriston hydro-electric scheme. Yet it is still not done, twenty years later.
There has, of course, been the inquiry at Invergordon, which one must not prejudge; but arable land has been taken for housing at Aviemore, where rough ground could have been used. Arable land has also been taken for a school at Kingussie; there is the case at Fort William, which I have already mentioned; and almost everywhere one looks the county councils are building upon arable land because it is cheaper to develop. A fine farm on the outskirts of Inverness is now threatened—it already belongs to the Secretary of State—and one of the main reasons for this is that he has offered it first of all to the local authorities. Naturally, they are receiving it openly with both hands, and are planning to build houses on it. I should not prejudge this matter, either, because I think the objections by the agricultural executive committee are still to be sent to the Secretary of State, but it is criminal to use this land for housing—and, my Lords, golf courses, too, are to be built on this land as things are envisaged—when there is so much inferior land in the Highlands. Can no incentive be given to encourage building, and particularly house building, on rougher ground? It is different, perhaps, for a factory, which one may want to build on flat ground. It may require some subsidy to local authorities, but something should be done. I remember what was said some years ago by the brother of my noble friend Lord Lovat when he was opening a garden fete, or some such function. I hope I quote him correctly. He said that one morning we shall wake up and find that we have plenty of electricity and plenty of trees but nothing to eat. That is a very real risk. We must safeguard that scarce
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commodity, arable ground in the Highlands.
6.10 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I should like to thank the noble Lord, Lord Lovat, for having initiated this debate and to congratulate warmly the two maiden speakers. The noble Lord, Lord Taylor of Gryfe, gave us a very clear and concise speech, and the noble Viscount, Lord Arbuthnott, a most impressive one. What he said about visiting the Highlands in the winter was, I think, very pertinent to our debate. So many people who write about the Highlands see them only in the summer when everything is beautiful. But if they went there in February or March, or even in April; if they saw the black hills without a blade of grass, the poor and acid soil, six inches of wet peat or turf on basalt rock it would cause them to tone down their writings about putting tens of thousands of people back on to the land.
I should like for a moment to allude to the speech of the noble Lord, Lord Bannerman of Kildonan. I am afraid I cannot congratulate him on the earlier part of his speech for the noble Lord said—and I hope I quote him correctly —that the trouble with the Highlands Was that the private landowners had despoiled the Highlands through selfish self-seeking.
LORD BANNERMAN OF KILDONAN: My Lords, may I have the permission of the House to answer the noble Viscount concerning the accusation he has made? I did not mention landlords from start to finish of the speech I made to-day. I merely mentioned the fact that there had been Tory Governments over the centuries that had done very little for the Highland arms. If the noble Viscount wishes to identify himself with these Tory Governments then he is culpable, so far as the Highlands are concerned.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I really must disagree with the noble Lord. If he will read his own speech in Hansard tomorrow morning he will find that he said what I attributed to him. But I will wager the noble Lord in any sum he likes that he cannot produce for me any landowner in the Western Highlands or

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Islands who makes a profit out of the rents from his sheep hill farms.
We have heard a lot this afternoon about depopulation of the Highlands, and of course this is a fact and is a very serious matter. As I have pointed out before in your Lordships' House, the great trouble with the Highlands is that it is an agricultural area. Agriculture is the greatest industry and—though this is an unhealthy sign—it is dependent on the sheep. There is a far greater drift from the rural land in England; but it is not noticed in England because all that happens is that the agricultural worker goes to the nearest manufacturing town, some eight or ten miles away, where he finds work. He cannot do that in the Highlands. He has to leave for the South.
There is bound to be depopulation in the Highlands owing to the ever-growing efficiency of agriculture. It is true enough that the labour force employed in agriculture in the Highlands has fallen drastically in the last twenty years or so, but the productivity of Highland agriculture has greatly increased. What we have to decide is whether the land use of the Highlands' 9 million acres is to be dictated entirely by economic efficiency or whether the emphasis is to be on maximum employment, irrespective of viability. The noble Lord, Lord Donaldson of Kingsbridge, I thought, said that if you cannot have a viable agriculture—or viability in anything—you ought not to have it at all. I cannot agree with that. There are social considerations, too; and if you treated the Highlands entirely on the basis of economic efficiency you would need further to depopulate very large areas. I should hope that we could come to a compromise between viability and maximum employment; and I am sure that this is the Government's wish. But in order to have maximum employment in the Highlands it is essential to have, as we do have, help from the taxpayer in the shape of subsidies, grants, and so on.
Agriculture, as I have said, is the greatest industry in the Highlands, but in my view we cannot look with any great hope to increasing the population through agriculture. My noble friend behind me has talked about reclaiming the flats in the Beauly Firth and so on, about which I know very little. Where I
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live there are no flats; the shore of the Atlantic goes straight down. There is no question of reclaiming any land from the sea. Leaving aside my noble friend's suggestion, I really cannot see any increase in population coming—certainly not through sheep farming; although it might come through cattle farming.
My noble friend behind me, speaking of cattle, mentioned the Falkirk Tryst in the old days. I was interested in that because in my estate in the West we have hill drove roads through which the cattle used to go to the market. My noble friend mentioned 150,000 cattle to the market from the West; and he further pointed out that in the same area to-day there are only, I think, 102,000 cows. But there are two reasons why, in the eighteenth century, the Highlands had far more cattle. They had a completely different breed of cattle, small black cattle which were as hardy as the deer. That breed has completely died out as a result of showing, and the necessity for farmers to have quick-growing and heavier cattle for yarding. In those days, too, there were very few sheep. To-day, we have far softer cattle on the hills, and this makes it more difficult to have a heavy stock.
My Lords, I think that if a great many of the sheep could be taken off the poorer land in the Highlands, the money thereby saved on subsidies could be used for improving the lower slopes for cattle; and if that were done I am quite sure that we should have a more viable agriculture industry in the Highlands. On my hill farms I do not get a higher lambing percentage than 50 per cent., and in a bad year we have what we call a "black" loss, we have most appalling losses. I have twice lost 25 per cent. of my ewe stock, and that is not viable. The noble Viscount, Lord Arbuthnott, said that a great many landowners are frightened to take the sheep off the hills and embark on something more viable, because, if they do, they are called antisocial. And there is a great deal of truth in what the noble Viscount said.
Last year, we had an excellent Agriculture Bill which made provision for the amalgamation of farms, with the assistance of the State. I should like to see the Government compensate certain hill farmers who have poor farms and thereby enable them to take some of the sheep off

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the hills and concentrate more on raising cattle on the lower ground. I should like the Forestry Commission to plant some of the lower slopes. Where the Forestry Commission go wrong, as they have now probably learned, is in their inclination to plant large blocks. This may take up ground suitable for wintering for the deer and the hill sheep, and therefore make the tops completely useless in the summer, which is criminal because in the summer the high ground provides a lot of very valuable grazing.
My noble friend Lord Lovat asked us not to talk too much about stags, salmon or grouse, and so I will not refer to them, except briefly. I often wonder whether the Government yet realise the tremendous income to the Highlands from these three sources. If I had no deer or salmon on my estate, I could not support the hill farms. I should be completely out of pocket, and I hope that the point will sink in with the Government that in the wilder areas of the Highlands revenue from sport is of great importance in connection with the provision of employment.
A month or two ago I was talking to the Hungarian military attaché who is, of course, the representative of a Communist Government. He told me that his Government approved of sport in Hungary and that a great many German and other tourists came to Hungary.
LORD HUGHES: My Lords, may I ask whether the noble Viscount, Lord Massereene and Ferrard, is referring to "German tourists" or "German Tories"?
VISCOUNT MASSEREENE AND FERRARD: I refer to German tourists who, I was told, are prepared to pay £500 for shooting a really warrantable stag. I must say that that surprised me; but the Hungarian military attaché assured me that it was quite true. I should like to commend that thought to the Forestry Commission. The Commission are getting more sport conscious, but when their plantations are over twenty years old I should like them to let in the deer. Very little damage would be done to the trees, and there is a great deal of sporting revenue to be obtained thereby.
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To-day, my Lords, we have heard a great deal about forestry from my noble friend Lord Dundee, who is such a great expert, and from my noble friend Lord Lovat. I have always been very pro-forestry, chiefly because with forestry you get a close-knit community. It provides employment in ancillary industries—sawmills and so on. We are told that forestry employs one man to every 120 acres. With sheep farming you have one shepherd for 800 or 1,000 ewes, which may mean one man to 5,000 acres. The great trouble about forestry in the Highlands to-day is that the price of timber, sawn logs and pulpwood, is not enough.
Take for example the Isle of Mull where the Forestry Commission send pulpwood to the pulpmill. It is all right for the Commission, because they are a State organisation. But if a private individual sent pulpwood there it would not pay, at the price obtainable, in view of the cost of handling and transportation. So we must do something about the marketing of timber. We have various private societies, like the Scottish Woodland Owners, which do great work. But the Government must make a supreme effort to get the marketing of timber on a commercial basis; otherwise, the continued planting of trees, though useful socially, will not be in the end a commercial proposition.
I should like to say a few words about the Highlands Development Board. I have been slightly critical of the Board in the past, but I suppose I am becoming used to it and I think that perhaps they are now beginning to find their feet. They had a sticky start. They have certainly helped a great many small businesses—small hoteliers and people wanting to acquire boats for tourists and fishing—on the Isle of Mull, where they have given over £80,000 in grants. Of course, that is just what the Board should do. I have always thought that the purpose of the Board was to help Highlanders to stay in the Highlands, and not to help English industrialists to carry out some vase undertaking in the Highlands. That, as the noble Lord behind me said, is the job of the Board of Trade.
The only criticism we have of the Board in my area is that we had a good company called the Crofters Supply Company, which was a great help to all local

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crofters and fishermen, and it failed for lack of financial support. I thought that the Board should have taken the company over but they just let it go. I cannot understand that. All the local people were surprised, because it was a good organisation. We could have many more small industries in the Western Highlands, like cheese-making and tweed-making. We could even have scents made from Highland herbs. In fact, one such industry has started in Barra. I do not know whether the Board has helped it, but I should say that from the point of view of tourism it is a worth while project.
The building of hotels by the Board in the West is a moot point. It is possible that they will be viable, although I rather doubt it because the summer season is so short and there is no ski-ing. I would not discourage the Board from building one or two hotels in the Western Highlands, but we do not want them to build a rash of hotels suddenly because, if they prove uneconomic, it would only mean a great loss of money. One thing we must be careful about in encouraging tourism is that many people who come to the Highlands come for the tranquillity and beauty they find. We now have over 100,000 amateur naturalists, and I hope that under the Scottish Countryside Bill large areas will be protected from open access to the public, so that they can be used by naturalists and geologists. We have been told that the Highlands cover 9 million acres, but when we think of the vast population of the British Isles it is a comparatively small area.
I think it was the noble Lord, Lord Taylor of Gryfe, who spoke as if the Highlands were a great fertile area, but the truth is that over 90 per cent. of it consists of only six or eight inches of waterlogged peat over rocks, and with the best will in the world it cannot be turned into a productive paradise. Many writers who write about the Highlands cannot understand this. They remind me of Lloyd George's saying, of how the deer in the Highlands graze under the oak trees with the grass up to their bellies, and all that sort of nonsense. Quite a few people still regard the Highlands as being like that.
One great difficulty is to keep the young people in the Highlands. With television
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and all the other forms of entertainment, the average young person is curious to go to the big cities. How we can make the countryside attractive to counteract that, I do not know. Perhaps if good communications with Glasgow and Edinburgh made it possible to go backward and forward more readily, that would help, but I believe the young people will always want to go to the cities.
I should like to mention the Transport Bill. Obviously, I am not going to argue now the pros and cons of driving freight on to the railways by heavily taxing private hauliers, but if that is done it will make things impossible in the Highlands, where large areas have no railways. It would raise the cost of everything. Though there may be some argument for this in England or in the South of Scotland, there is no argument for it in the Highlands. I only hope that before the Transport Bill becomes law the Government will make special provisions for hauliers in the Highlands, because otherwise it will be most unfair. That is all I want to say. I see that the noble Lord, Lord Bannerman, is still here, and I only hope that I have demonstrated to him that the private landowner in the Highlands is not as bad as he thinks, but is in fact a great philanthropist.
7.41 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I did not put my name down on the list of those to speak because I wished to hear the line of the debate, but a few words from the noble Lord, Lord Bannerman, certainly spurred me into action. But speaking also gives me the opportunity of congratulating most sincerely the noble Lord, Lord Taylor of Gryfe, on his admirable maiden speech, and to express my apologies in that I was unable to hear the maiden speech of the noble Viscount, Lord Arbuthnott, who I am told on all sides made a splendid contribution to our debate.
I speak as a Lowlands Scot, but within the last 18 months I have acquired a property in Sutherland and therefore come to the economic and social problems quite new and, I hope, with a fresh mind. This property comprises some 110 crofts, something between 4 and 20 acres of arable land, usually allied to some outrun grazing rights, either individual or with a grazing club. As the owner,

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except in certain cases I am not responsible for buildings or fencing: I am merely the ground landlord.
I must say that I find these fine people resentful of the days past—and I have seen the evidence from the top of the hill of the deserted old street of cottages. But I think it is a little unfair of the noble Lord, Lord Bannerman, to talk about a hundred years of Tory Government. Social conscience grows with the passage of time, irrespective of political Party or view. One hundred years ago good Christians, God-fearing men in Scotland or in England, were accepting child labour. We have gone on since that time, and, therefore, to mirror conditions to-day in relation to what existed then leads to a wrong conclusion. But I think probably the only person with that conclusion in his mind is the noble Lord.
LORD BANNERMAN OF KILDONAN: My Lords, may I just say this? Did it not take from the time of the Napier Commission in 1886 until 1911 for the crofters' humane Acts of security of tenure to be finally promulgated? Was that a fast movement?
LORD BALFOUR OF INCHRYE: I was going to remind the noble Lord that the Government of his Party between 1906 and approximately 1916 made a fine contribution to neglect. I am sure the noble Lord is proud of those particular years. I was surprised also at what the noble Lord, Lord Bannerman, said when he told us the very pathetic and moving story of the isolated person who had to have a doctor's services. Coming to this as I do with a fresh mind, I am surprised at the tremendous achievements in road building in Sutherland, anyhow—not only main road building, but roads to remote crofts—and at the laying of water and drainage, much of which, I must say, is quite uneconomic, but is nevertheless socially desirable.
The problem that I and perhaps others have to face, including, I think, the Government, is what can be done to improve the lot of these crofters. They have security of tenure. They have assistance—and I think it was the noble Lord, Lord Taylor of Gryfe, who said it was an average of £120 a year. They have assistance for building, fencing, sheep, cattle, arable land and general improvements. I do not criticise that; I am
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glad of it; and I am glad when I see in nearly every case crofters with a television aerial and a motor car. That is splendid. But what can be done for a better prospect for the crofters, to prevent them from being what I would term subsidised citizens, not by their own wish, but by an economic necessity? What can the owners do? The noble Lord, Lord Bannerman, questioned whether any of these crofters would not prefer to be under State ownership rather than under private ownership. I wonder whether that is so.
Let me take a particular instance. First of all, I would say that most of the rents of my property were fixed in 1888. I found a house the other day, with a few acres of arable land, the annual rent of which was £7 18s. a year. On investigation, I found that the insurance (and it has to be insured, because I should be liable if it burned down) came to £7 3s. a year. Therefore, I am obtaining 15s. a year from that house. Now, under a new valuation which has had to be made in case the house is burned down, the insurance premium will come to £17. That is minus £10. When it was suggested to the owner that he should pay, not a higher rent, but at any rate the new insurance premium, he did not refuse—he is a good man—but he did say: "I am not getting much out of it" It is true that he is not in his life; nor am I. That is my proof that the position is basically uneconomic.
LORD BANNERMAN OF KILDONAN: My Lords, the noble Lord did not build the house. Why should he ask for the capital of the house?
LORD BALFOUR OF INCHRYE: As someone coming fresh to these problems, I am putting the question to the Government.
Recently, I believe it was last year, in Inverness, the Scottish Trades Union Congress passed a resolution condemning those who owned properties, referring to what they called, I think, the "grouse and gillie economy". If the landowner is willing to help, does not raise his rents, and tries to treat well those men in his direct employ and tries to ensure that their houses are in good condition, what more can he do? What do the Government want him to do? What do the Scottish Trades Union Congress want him

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to do? That land carries one sheep to 4–5 acres—nothing else. Why should the trade unions abuse those who are trying to do their best in an uneconomic climate?
My question to the noble Lord, Lord Hughes, and to the Government, is this. I have, I hope not at length, deployed the position of one who is an owner, who wishes to fulfil his obligations as an owner and, I think, does so. What can he do, but, far beyond that, what can the Government do, to alter the position in such an instance as I have outlined this afternoon? What can the Government do to alter the basic uneconomic position of those such as I have referred to?
6.52 p.m.
THE EARL OF PERTH: My Lords, I am in the same position as the noble Lord, Lord Balfour of Inchrye. I did not put my name down to speak, and I will not speak for more than six minutes. The thing that has struck me about the debate—and perhaps no one will be surprised: least of all the noble Lord, Lord Hughes—is how one after the other noble Lords have talked about S.E.T. and the damage it has done to the country, and especially to the Highlands. Even the noble Lord, Lord Taylor of Gryfe, who made his excellent maiden speech, which by tradition is not something which is provocative, felt obliged to put in at any rate a plea for the distributive trades, which is another way of criticising and being, rightly I think, provocative.
This has encouraged me to give one more example of the damage or difficulties that arise from S.E.T. I have particularly in mind the Highland Home Industries, which is a concern known to many of your Lordships. Indeed, Mrs. Stirling, aunt to Lord Lovat, who made such a good speech in opening this debate, is the founder and still active head of Highland Home Industries. The Highland Home Industries, as its name implies, gets its goods from the crofters, from the knitters and weavers, all over the Highlands. No fewer than a thousand of these people provide goods for Highland Home Industries to sell. The turnover is something over £130,000 a year. It is a difficult and "dicey" business, and it is kept going only be-
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cause of the determination of various of those who are active in its work.
Then comes the blow of S.E.T. Some £1,300 more has to be found; and then we get the further attack of a 50 per cent. increase. I know that this is only a matter of £2,000, but the strain on something like the Highland Home Industries, believe me, is very great. The danger that it will close up is something which has frequently been discussed. Think of the disaster of that to people in a thousand homes up and down the Highlands who get, as a result of their activities, some £100 each which helps them in all their living expenses; indeed it may make just the difference between staying where they are or going away. So much for S.E.T.
There looms ahead, as many of your Lordships have said, the same sort of trouble over the Transport Bill. The point I want to press on the Government is this. I beg them to change what appears to be a sacred principle of Government, that on all fiscal matters they have to legislate for the country as a whole. I recall very well that when S.E.T. was first announced I begged the noble Lord, Lord Hughes, to make an exception, to seek from the Government an exception, for the Highlands. At that time he scored a debating point, saying that this was a novel idea but nobody had ever suggested that a whole area should be excluded from overall taxes. He went on to say that of course if only the Conservative Government had set an example it might be a different thing, but surely it was unreasonable to expect such a happening.
What has happened since then? We all know that one exception after another has been developed and found for letting people off, or letting groups and industries off, S.E.T. This has happened owing to the pressures—I almost said "the lobbies"—of various vested interests. I am not blaming people for making the pressures. I am just saying that this is a thoroughly untidy and unsatisfactory, and to many people an unfair, way of operating S.E.T. The noble Viscount, Lord Stonehaven, gave the example of a sequel of it in an area around where he lives in relation to hotels. I see no advantage to anybody in operating it as it is operated, unless it be of course that it

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demands a bigger and bigger force of civil servants to operate it.
If the Government could be persuaded to make an exception by area, as well as by activity, in fiscal matters, that would be the most important advance for the whole of the Highlands that I could imagine; and I beg that when it comes to dealing with the Transport Bill this will be not only borne in mind but acted upon. The Highlands should be excluded from the start. I would go one step further, following the example of the noble Lord, Lord Bannerman, and say that not only should it be excluded from the start, but if we could go even further and have a tapering system then I believe the future outlook in the Highlands would be one which we could all feel was very bright, and many of the matters we have talked about would be unneeded.
6.58 p.m.
THE DUKE OF ATHOLL: My Lords, I should like to intervene for just a very short time to raise two points. First, I should like to ask the noble Lord, Lord Hughes, whether there is any hope that machinery used for the extraction of timber might be given investment grant. We have discussed this matter before, but since we last discussed it there has been a new President of the Board of Trade in office, and I should hope that Mr. Jay's successor might look with more favour on the idea of giving investment grants for the extraction machinery in timber, particularly in view of the great storm damage which took place on the morning of January 15 this year and which has affected all the central belt of Scotland, including parts which are definitely within the Highlands.
The second point I should like to raise is on the question of tourism. I am no longer on the Scottish Tourist Board, so I can promise your Lordships that I have no axe to grind and no personal interest in what I am going to say. But I think it is quite fantastic that the Scottish Tourist Board (and I must admit that I had great hopes when the present Government came into power that they would do something about this) has to stagger along on a free income of about £100,000. And I think I am right in saying that £25,000 of that cannot be spent as the Tourist Board thinks fit
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but has to be spent upon research in the Highlands.
The Irish Tourist Board this year will get £2 million for promotion, and £500,000 more for development. Ireland has much the same population as Scotland, and I think I am right in saying that when the Irish Tourist Board was set up the country had a considerably smaller tourist industry. Now it has a much greater and more profitably tourist industry, simply because the Irish Tourist Board is given by the Irish Government sufficient money to enable it to operate in a constructive and consistent way and to publicise attractions to induce people to come and stay in the country.
One only has to look at the Aviemore Centre to see what can be done if the money is there. This project was undertaken by a combination of far-sighted companies, and I hope they will find it extremely profitable, because they deserve it. There are very few places where it would be possible to do this sort of thing without Government help, so I ask the noble Lord, Lord Hughes, to persuade his Government colleagues to give the Scottish Tourist Board sufficient money so that it can do the job. The Isle of Man Tourist Board receives far more money than the Scottish Tourist Board, and the Isle of Man, Northern Ireland, and similar areas with which Scotland has to compete, are equally near to the large centres of population in both the North and the South of England. My Lords, that is all I want to say, but I do feel most strongly about those two points.
7.3 p.m.
THE MARQUESS OF LOTHIAN: My Lords, I would like first to add my thanks to my noble friend Lord Lovat for introducing this most important Motion to-day, and also to add my congratulations to the two maiden speakers, the noble Lord, Lord Taylor of Gryfe, and the noble Viscount, Lord Arbuthnott. They both made high-class contributions to your Lordships' debate, and I hope that we shall hear from both of them again very shortly.
It may seem strange—and I certainly feel rather diffident about speaking in this debate, corning, as I do, from the opposite end of Scotland to the Highlands—but we in the Borders have to some

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extent a similar problem area; and I think it is true to say that at least the general principles as to how the problem should be solved are to some extent similar as between the two regions. In any case, the noble Lord, Lord Hughes, has received such a welter of expert advice and suggestion to-day that there is little for me to add at this stage of the debate. Therefore, I propose to be quite brief and to confine myself to underlining one or two of the points which noble Lords have already made.
I think it is true to say that the problem of the Highlands, which was outlined so ably by my noble friend Lord Lovat and by other noble Lords, is, at any rate to some extent, by virtue of geography and climate, unique in the British Isles. And I think that the Government, by setting up the Highland Development Board, have recognised this fact. As has been said, I believe it is too early yet to judge whether the Highland Development Board is going to be the complete answer. That remains to be seen, and of course we must all hope that it will prove to be so. Certainly as noble Lords have said, in many ways, after a rather shaky start, it has settled down and is doing some fine work.
It is clear from the speeches which have been made to-day that one thing the Highlands need very greatly is an injection of suitably sited industry and, at the same time, an injection of a suitable increase in population. As with the conditions in the Border country, these two things must really come together; and this will require the most careful planning organisations, because there are obstacles to be overcome—for instance, to some extent the lack of an industrial tradition in the Highlands, and indeed of a pool of labour. Technical and managerial skills are still in fairly short supply, and therefore it seems important, as has been pointed out this afternoon, to concentrate the greater part of the smaller industrial development on those enterprises which would use local resources and local skills, such as the tweed industry, which has already been mentioned, and possibly boat-building.
Nevertheless, these small, light industries, though playing an important part, and although they may be economically
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viable and socially valuable, are not going to stem the population drift from the Highlands. Only some large-scale project, such as the possible aluminium smelter, will go some way to doing that and to restoring the morale of the people living in the Highlands. Although I doubt whether the noble Lord can say much to-day, he may be able to give us some hint of what is going to happen in this regard, because it seems to me to be a suitable development that there should be one fairly large giant established industrially up there.
One population problem that worries me slightly is that if a large number of people have to be imported, as it were, from outwith the Highlands, this will be, I feel, a difficult matter. Even in the South of Scotland, where overspill agreements have been made—for instance, with Glasgow, moving populations well out into the Borders and the East—there have been difficulties. People leaving the towns, and especially Glasgow, like to remain more or less in the area of that town—I was going to say in the Rangers-Celtic orbit—so that they can get back on a Saturday without too much difficulty to the place from which they came. This means that when an attempt is being made to induce people to leave, very strong financial inducements have to be offered; and it also involves the provision of more than adequate local amenities and amusements. This is a field in which the Government and the Board can be of the greatest possible assistance.
Reference has been made many times this afternoon to transport costs, and to problems of communications generally throughout the Highlands. I believe that this is one of the crucial aspects in the whole problem, because it is useless to expect firms and farms and forests to produce more, to make expensive plans and to build new houses, if the products cannot be easily and relatively cheaply got away to the market. This will mean that much more expenditure will be needed on roads; there will have to be more efficient railway services, and better air services. These will all cost money, and I hope that when the noble Lord replies he will not hide too much behind the present economic difficulties facing this country and make them an excuse for doing as little as possible.
SEVERAL NOBLE LORDS: Hear, hear!
THE MARQUESS OF LOTHIAN: Apart from the industrial possibilities, as we have heard to-day the Highlands have a tremendous potential for development in many ways. We have heard of tourism, forestry, fishing and the working of minerals. All these have been mentioned. The development of winter sports has, I think, given some parts of the Highlands something which is unique in the British Isles, and that is an all-the-year-round tourist industry. And this is something which is still, in my view, in its infancy. My noble friend Lord Dundee and others have discussed the prospects for forestry, and I agree with those who say that this is essentially a long-term matter, a most important development, because it is of great social and economic benefit and, of course, amenity value as well. The only difficulty about forestry is that, purely in terms of employment figures, it does not rate in the same class as industrial development.
I do not intend this evening to discuss all the possible ways of helping to solve the problems that noble Lords have raised this afternoon concerning the Highlands. What I think the House wants to know is how the Government view the present situation, what is their general line of approach, and how does it account for its stewardship in this part of Scotland. I think it is right that the Highlands, as in my part of the world, the Borders, should be regarded as a whole, and that some general master plan should be worked out, howevery loosely, by the Highland Development Board; and no doubt that is what they are doing. I am sure that is the only answer in the long run, for just patching up here and there will be of little value. I am wondering also, speaking entirely personally, whether there may not eventually be a case for completely revising the system of taxation for commercial undertakings in the Highlands. It is true that the Government have to some extent accepted the principle of selectivity in this matter by removing the S.E.T. tax on the hotel industry in the Highlands and other development areas, and I have often thought it inequitable that taxation generally is so very much the same, whether the firm is within five or 500 miles of its markets and regardless of local and regional differences.
I think also there is a strong case for the Highlands to be treated more generously in respect of money for the building
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of roads. Roads are badly needed, as noble Lords have said, especially in regard to the pulp mill at Fort. William. We all know how inadequate the road system is for getting the timber there. Roads are also badly needed to open up new ski-ing areas in the Cairngorms and I feel this is a problem which could be tackled fairly quickly. It will also be necessary, if any large-scale industrial development is to take place, to ensure that the commuter systems running to factories are adequate. What I am saying is that if, as appears to be the case, the Government have decided that the Highlands are a special area, then I hope that they will increasingly carry this philosophy into practical action and follow up some, if not all, of the advice offered to-day by noble Lords who know the situation most intimately, and far more intimately than I do, because any sort of status quo is never the answer, particularly in this sort of problem. The Government must get moving for ward in the right direction, and I suggest that the speeches this afternoon from all parts of the House have shown the right way for the Highlands.
There is one further point. I am sure, myself—and one or two other noble Lords have made this point—that any solution for the Highlands must not be imposed from outside or it will not be really effective. What must be done is to create the right conditions for the people in the Highlands to help themselves to develop their own land. It is important to encourage the natural growth of initiative and enterprise. By all means give help, as the Highland Development Board does, but do not impose artificial solutions. Perhaps most of all I think the Highlander must be given a sense of long-term security in the sense that if he stays in the Highlands and works hard and uses his skill he may get his reward as easily as if he had been living and working in the South of England, for example. I most strongly urge the noble Lord to consider these points; and as I know the House is very anxious to hear what he has to say I do not wish to stand in his way any longer.
7.17 p.m.
LORD HUGHES: My Lords, this debate has for me many advantages over the one a year ago. The first is that, notwithstanding the prediction by the noble Lord,

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Lord Lovat, in his opening remarks, we had no angry speeches at all. That was an advantage compared to a year ago. The second advantage is that we have had the undoubted benefit of two admirable new entrants into our debate. It was a double pleasure to hear the most excellent maiden speech by my noble friend Lord Taylor of Gryfe, a double advantage because it enables me to refer to one of the changes from a year ago. There have been four speakers in this debate from the Government side and last year there was only one. I hope the numbers will continue to grow so that we may yet reach the day where if we reach a vote on a Scottish debate the Government may win. I should like also to say how much I appreciated the maiden speech of the noble Viscount, Lord Arbuthnott. I did not so much find from him any detailed proposals, but I found a most admirable attitude to these problems which I think is going to be exceedingly helpful to us, and it makes me feel happy that your Lordships will approve of at least one of the members who form the new Scottish Countryside Commission. To take those views into that body will be helpful.
In replying to what has been a very lengthy debate, I do not propose to adopt the method of replying to what each noble Lord has said, because a theme of subjects has been running through the speeches, and if I should reply on themes without naming those who have raised the points I think it would be the most effective way of using my time. But I will from time to time refer to particular points which noble Lords have made. Your Lordships will recollect that at the end of Lord Lovat's remarks I put two questions to him, because I was not at all certain what he said in the first instance, and the figures he quoted for Inverness were so different from the ones I had that I wanted to be quite certain he was referring to Inverness. I have looked at the figures and I think the mistake is a simple one. He has probably misread his own writing or perhaps somebody else's writing, because it is only the first figure which is wrong, but that is the important one. However, I will come back to that point, because depopulation is one of the subjects.
The main points which have been raised in this debate have been with regard to the effects of the Transport
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Bill, the effects of selective employment tax, the importance of forestry, tourism and agriculture, and the activities of the Highlands and Islands Development Board. May I say, in passing, that I ought to congratulate the noble Lord, Lord Burton, for being the only one now to stick to his original attitude. He will remember well that the only thing I feared when we were considering the Highlands and Islands Development Bill was that his approval would have damned it in the Highlands. I am glad, therefore, that he has maintained his opposition to it. I am not at all certain that it is helpful to the Board that the noble Viscount, Lord Massereene and Ferrard, has now come round to the point of saying that he has got used to it. It may be helpful, but I am not certain. Then, finally, there is the subject of Invergordon. I think that if I touch on all of those in the time at my disposal I shall probably have met reasonably your Lordships' wishes.
May I take, first of all, the subject of the Transport Bill? There are the most extraordinary misconceptions about that Bill. If the noble Earl, Lord Dundee, carries out his threat to seek to remove Scotland from the effect of the Transport Bill, he will be depriving Scotland and the? Highlands of a number of undoubted advantages as well as the things which he considers disadvantages; and the views on some of the things which are considered by the noble Earl and by almost everybody else who has referred to the Transport Bill as "disadvantages" are based on misreading or misrepresentation of the provisions of the Bill. Those things will not have the adverse effect throughout which have been forecast by some of the critics.
First of all, the immediate effect will be to exempt more than half of the road haulage vehicles from the quantity controls of the proposed carriers' licensing system. In the interests of road safety the remaining vehicles will be subject to new safety controls; but most of them will be free to carry any goods anywhere, both on their own account and for hire and reward. That is a tremendous improvement on the situation as it presently stands, and I do not think that Scotland would wish to be exempted from that. Neither the proposed new quantity controls nor the

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reform in the drivers' hours provisions will be brought into effect immediately. The Government recognise that reforms on the scale proposed will call for a big effort from both management and unions to ensure that they can be carried through without major increases in operating costs; and it is for this reason that the Government have indicated that real progress towards increased productivity by both sides of the industry will be essential before the enabling powers are used to bring the new law into effect. In other words, we want it to start off working economically.
On the subject of Highland transport, in particular, both the Government and the Highlands and Islands Development Board have always recognised that an efficient system of transport is one of the key factors in Highland development. Anyone who pretends otherwise is either a complete fool or—I do not know what the alternative is. What can be worse than a complete fool? The need for special measures has already been recognised, for example—and this has been referred to—by the Exchequer grants to Highland shipping services which now amount to over half a million pounds a year. The Transport Bill will make it possible to extend this assistance—I ought not to say this because it is outside the terms of our discussion; we are talking about the Highlands, but on this occasion I accept the interpretation of the noble Lord, Lord Lovat, of the Highlands, that we are talking about what takes place in the crofting counties. I remember he took me to task a year ago for calling an Aberdonian a Highlander. In passing may I say that the Clyde services are going to be brought into this scheme of assistance. That is of importance in a wider reference to tourism. The Government have recently invited tenders for the construction of a new cargo boat for the North Isles of Orkney which will provide the first example in this area of the valuable new technique of shipping goods in containers.
There has been a great deal of misunderstanding in the Highlands about the effects of the Transport Bill. Little mention has been made of the provisions of the Bill which will be of real advantage to the Highlands; and in concentrating on things which people think are wrong they completely overlook the things which are of real advantage. After all, no other part
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of the United Kingdom is so dependent on rural bus and ferry services which will become eligible under the Bill for local authority and Exchequer assistance. Grants will also be available for the provision of new buses, towards duty on bus fuel, and towards capital expenditure on passenger transport facilities. A great degree of integration will be achieved by the transfer of the Scottish Bus Group, the Caledonian Steam Packet Company and MacBrayne's to the new Scottish Transport Group. That is a measure of devolution in transport which is going to be helpful to us in Scotland.
It is seven or eight years ago since I had the honour of being a member of the Inquiry into Highland transport under the Chairmanship of Lord Kilbrandon. The solution which he then recommended was that there should be an integration of transport facilities in Scotland in general and in the Highlands most certainly. That is going to be brought about as a result of the Bill. So if one takes away the understandings on the part of some on quantity licensing and so on, and then looks at the definite advantages, tilt Highlands have a great deal to gain from the Transport Bill. I should also like to say, in passing, because of its effect on forestry, that timber has been removed entirely from quantity licensing proposals. So the forestry side is not going to be affected by anything at all which may happen in quantity licensing.
May I pass on to forestry generally? This is a subject for which I think the noble Earl. Lord Dundee, and I have equal enthusiasm. My first responsibilities in government when I became an Under-Secretary at the Scottish Office was at the Department of Agriculture and Fisheries for Scotland, and forestry came very much within my remit. It was a tremendous disappointment to me then to find the extent to which forestry had been allowed to go back by our predecessors. I know that if they had been of the mind of the noble Earl, that would not have taken place. The fact was that it did.
The first thing that we as a Government did in relation to forestry was to make an increase immediately in the acreage in Scotland, taking advantage of the inability of the English and Welsh to use their quota. We did this without in any way increasing the expenditure of

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the Forestry Commission. Within a year or eighteen months we had increased substantially the targets of the Forestry Commission in Scotland, and, as the noble Earl said, last October the Prime Minister announced what was virtually a further increase of 50 per cent. in the figures of which we had previously spoken. I would say to my noble friend Lord Donaldson that I greatly welcome his intervention in Scottish debates. I wish our English and Welsh colleagues would remove from their minds any idea that they must have a visa in order to enter into Scottish debates. I should welcome many more of them coming in, particularly when their contributions are helpful. That is not to say that I agree with everything the noble Lord said—perish the thought!—because, after all, I have to live in Scotland; he does not. But to a certain extent he put his finger on fundamental points. He talked about the integration of forestry and agriculture. I do not like the word "integration"; I should prefer that those two industries should regard themselves as being complementary the one to the other.
In Scotland we do not have the problems which the noble Lord has experienced South of the Border. The Forestry Commission have not had difficulty in dealing with landowners, and it has been the experience of the Forestry Commission—and this will please the noble Viscount, Lord Massereene and Ferrard—in their negotiations with Scottish landowners that they have been exceedingly helpful. I do not see any expectation that there will be any change in that situation, since the Forestry Commission have never had occasion to use the compulsory powers which they possess. Only very occasionally do the Forestry Commission, in surveying land for future development, come up against a refusal to permit a survey to take place.
THE DUKE OF ATHOLL: My Lords, to give credit where credit is due, it is the experience of landowners in Scotland that the land acquisition officers of the Forestry Commission are remarkably good and very easy to deal with.
LORD HUGHES: My Lords, I hope that my reply does not develop into an exchange of compliments. I should like to make one or two comments about what is going on at present on the ques-
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tion of survey work. The following areas in the Highlands have either been surveyed or are in the course of being surveyed: East and Central Sutherland; the Strath of Kildonan; Central Inverness-shire; the Island of Mull; and Central Ross-shire. Before any survey is begun the landowners in the chosen area are asked if they are willing to co-operate. There have been only one or two cases where we have not been able to get complete co-operation and have not received permission to survey.
Officers of the Forestry Commission inspect each estate and mark on a map the land which they assess as plantable. Officers of the Department of Agriculture then carry out an agricultural survey and indicate on the same map the plant-able land which the Department would be prepared to clear for afforestation. After the field work has been completed, the results are discussed between the Commission and the Department, and an approach is made to each landowner to invite him to discuss the findings. While these surveys are not intended to be comprehensive, they will enable an owner to consider the forestry and agricultural potential of his land in conjunction with other possible uses of his estate. We hope that as a result of the subsequent discussions owners will make land available to the Forestry Commission for planting.
The noble Earl, Lord Dundee, referred to the figure of planting last year. I welcome an expansion of the activities of the private forester just as much as I want to see the expansion of the activities of the Forestry Commission. In this connection I am delighted to say that the co-operation is first-class. In fact, if everything in Scotland went as well as the way in which the various interests in this matter work together, many of our problems probably would have been solved.
If I may turn to tourism, I must venture on my first note of criticism. I wish to make a comparison between what was said by the noble Lord, Lord Lovat, about the tourist situation and the remarks of my noble friend Lord Taylor of Gryfe. My noble friend spoke about what is taking place in Aviemore, but I would not wish to suggest that everywhere in Scotland tourism is going as it is going in Aviemore. But Aviemore is

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showing a spirit of liveliness and activity which ten years ago nobody would have believed possible—and it is spreading. It cannot be the case, as I think the noble Lord, Lord Lovat, said, that tourism in the Highlands is in the doldrums. I think that it was the noble Lord (or it may have been somebody else) who said that in the last two years in the Highlands tourism had been very bad. But the facts do not bear this out. I am certain that tourism will play an increasing part in the prosperity of the Highlands. It is an industry whose activities we want to encourage, for it induces people to use their time in a first-class way. We are not paying the people in the tourist industry to do a job that does not matter. We are giving them the opportunity to carry out a job which is worth while and which adds to the wealth, not only of Scotland but of the United Kingdom.
The noble Duke intervened towards the end of the debate because of his past experience as a member of the Tourist Board and his desire to see a great deal more done. I should be misleading the House if I pretended that I was happy about the Scottish Tourist Board having £100,000 a year, but if I could get out of the Chancellor of the Exchequer all the additional money I should like to see spent in Scotland—and even if we could get out of the Chancellor all the additional money which noble Lords opposite would like to see spent in Scotland—the poor English would have a devil of a time raising the money for us!
We need a lot of money, and we have to get our priorities right. We can spend more money on some things, or we can spend a little money on everything. If we do the latter, then nobody will benefit. If we exercise our priorities properly, we can get considerable advantage. But I hope that before long our priorities will make it possible for more money to be made available for the promotion of tourism in Scotland. Frankly, I can see little direct expenditure of Government money which, in the short term, will produce for the country as a whole a greater return of income than investment in the promotion of tourism. This subject is at present being actively considered by Government Departments. I am sorry that I cannot say more than that. I
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should have been delighted to announce that the £100,000 had become £150,000, and even more delighted if I could have said that it was £1 million. But I am hoping that out of these deliberations tourism will get a bigger share of our resources than it has at present.
LORD LOVAT: My Lords, I am sorry but I must have said something rather misleading. I did not mean that tourism was in the doldrums, in the sense that it was neither important nor flourishing. I intended to say as an original member of the Tourist Board, under Mr. Tom Johnston, that we were not getting sufficient assistance to make tourism the success it should be. I am sorry if I gave a false impression. I have great hopes that tourism will open up. I did say that the smaller hotels have suffered.
LORD HUGHES: My Lords, in fact I wrote down the phrase as the noble Lord used it, and quite obviously it did not convey what he intended to convey. I know that the noble Duke and the noble Lord, Lord Lovat, would have been delighted if I had been able to say that we were multiplying the amount of money available to the Tourist Board. So should I. I cannot say that we are doing so, but we are living in hope.
I congratulate the noble Lord, Lord Bannerman of Kildonan, on his s Beech. It was interesting to hear those noble Lords on the Benches opposite who would normally have been venting the whole of their wrath on me using up so much time engaging in an argument with him as to who was responsible for the greatest part of the deficiencies of the last century. Well, my Lords, it was before my time—either as a Minister or as a man. But I was grateful to him for the way in which he pointed out that not everything in the Highlands before 1967 was perfection. He obviously made the noble Lord, Lord Burton, a complete opponent, because from the tenor of Lord Burton's remarks one would have thought that in the Highlands things had improved by 1964 almost to the peak of perfection, and that then the Government changed and the bottom fell out of the Highland market. Could there possibly be a more fanciful picture?
Why was the Highlands and Islands Development Board created? It was because everything which had been done

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by all Governments, including the 1945–51 Labour Governments, the 1929–31 Labour Government, the 1924 Labour Government, and all the Tory and Labour Governments that went before, made the mistake of thinking that it was possible, by dealing with the problem piecemeal, to find a solution. The setting up of the Highlands and Islands Board is the first attempt to draw the whole thing together, to make certain that in all the areas in which the other bodies did not have powers there were powers vested in the Highlands and Islands Board.
The results are even now speaking for themselves. It is complained that the Board has been in existence for two and a half years and has not yet solved the problem of the Highlands. But if the Board had been capable of solving in two and a half years the problem of the Highlands, we should not be worrying about whether the next Government of this country would be Conservative or Labour: all that we should need to do would be to move, and say to Professor Grieve, "Take over. Obviously, you are the man who should be running the whole country."
The Board has made very remarkable strides in a very short time. After all, it spent the greater part of the first year getting an organisation together, and it is only since then that things have really been moving. Your Lordships will remember that we were criticised for making only £150,000 available in the first financial year. Quite obviously, this was because, with the best will in the world, the Board could not have any major projects, or even any small projects, going, other than on a most elementary scale.
LORD BANNERMAN OF KILDONAN: My Lords, may I ask the noble Lord whether the idea of tapering freight rates—the basic remedy which we should like to have immediately in the Highlands—is finding any favour with the noble Lord or with his Government?
LORD HUGHES: My Lords, whether or not it finds favour is a totally different thing from whether or not it will be brought into operation. I do not expect it to be brought into operation.
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But if I may come to the noble Lord's point (I diverted myself on the Highlands and Islands Board), he said that he wanted to see the purse strings loosened. I do not know where the noble Lord, Lord Bannerman of Kildonan, has been, because I know that there is no man in this House more interested in what is taking place in the Highlands. But on the question of loosening the purse strings, I think the figures which I am going to quote lay me open to the charge from the noble Lord, Lord Burton, that we have in fact taken the string off and thrown it away. I am going to be fair on this, because it is not only under the present Government that expenditure in the Highlands has increased. I am going to take four years—1960, 1961, 1964 and 1968—since I am not one of those who subscribe to the doctrine that at a given point in time progress started, and that at another point in time it will come to a stop.
In 1960, the expenditure in the crofting counties from the Secretary of State's Departments in every direction was £22,076,000. In 1964 it had risen to £30,836,000. In 1968 it has increased to £43,814,000. If the figure of 265,000 population is taken—and it is pretty nearly right—that gets a bit ahead of £120 per skull in the Highlands. That, I should say, is a very decided loosening of the purse strings, and if pouring money into the Highlands was the answer the problem would have been solved. But, of course, pouring money in is not the answer. It depends what you are putting the money into. After all, you can get rid of an awful lot of money by just pouring it down a grating, but it does not help anybody very much. So that saying that the money is increased only goes so far; it is how we are using the money which makes the result.
This brings me back to the Highlands and Islands Development Board. Everybody, I think, with the distinguished exception of the noble Lord, Lord Burton, had some good to say of the Highlands Board. I am not going to repeat what the noble Lord said, but he certainly did not go out of his way to be complimentary to them. We recognise that, if and when the aluminium plant starts operations in Scotland, it will be a major development, just as we recognised when

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the pulp mill was opened that it was a major development in Scotland.
I wonder how many of your Lordships realise that what the Highlands and Islands Board has accomplished in its two and a half years is to create in Scotland almost four times as many jobs as the pulp mill has brought about up to the present time. At the present time 680 people are employed at the pulp mill. It will rise to 1,000, and by the time it has reached that figure the probability is that the Highlands and Islands Board will still be running at four times its level. That is an achievement which has not been touched by any previous activity in the Highlands. If one considers the population of about 270,000, what the Board has done is the equivalent of finding 10,000 new jobs in Glasgow. Imagine, my Lords, the headlines in every Scottish paper; imagine the headlines in every English paper, if it were announced to-morrow that a new industry was being established in Glasgow to employ 10,000 people. That is the equivalent of what the Highlands Board has done.
LORD BURTON: My Lords, I wonder whether the noble Lord can tell us how many of those jobs are on the Board's own staff?
LORD HUGHES: My Lords, the noble Lord, Lord Burton, does not do credit either to himself or to me in putting forward such a frivolous question, because he knows that the employment of the Board is small. If the noble Lord is implying that anything other than a minute fraction of the 2,400 jobs I have spoken about are on the Board's own staff, then I suggest that after he has seen the latest Report of the Board, which I believe will be out in about a month, he can put down a Question. I have not had the advantage of seeing the Report, but I know that I am not sticking my neck out.
This is part of the answer to the question which the noble Marquess, Lord Lothian, quite properly put to me at the end of the debate. May I say how much I appreciated the way in which he drew the threads together and summed them up in two questions to the Government: How do you account for your stewardship, and what do you propose to do in the Highlands? It is part of the strategy which the Government laid down right
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away that, first of all, we were going to create a regional policy. We departed from the idea of single isolated growth points.
Again, in passing, may I say that I rather marvelled at the compliment which was paid to Sir John Toothill, when it was stated that he wrote an excellent Report, but that it would have been much better if he had brought the Highlands in and left out part of the central area of Scotland. In other words, what was being said was that if Sir John Toothill had written a Report with the sort of policy which the Government had put into operation, it would have been a good Report, because the Government have brought in the Highlands and other areas in a way never done before as part of a proper regional policy.
The Government have made in, perfectly clear during the time of the Highlands and Islands Board that they regard the Highlands as an area with problems peculiar to itself, which could be solved only by methods that would not be appropriate, or would not be permitted, in any other part of the country. I assure your Lordships that we should have liked to see the Highlands and Islands Board with powers available in other parts of Scotland. I can assure your Loardships that English Ministers would have been delighted to have these powers for some of their areas. But it is something that was reserved for the special problems of the Highlands, and it is showing results.
My Lords, as to selective employment tax, I know that this tax probably has more critics in the Highlands than it has friends. It probably has more critics in the country as a whole than it has friends. But which tax anywhere in the country has not more critics than friends? I cannot think of any tax which I pay with any enthusiasm. But the fact that people are against a tax does not make it necessarily a bad tax. On this question of selective employment tax, we lave been told that the most important industry in the Highlands is agriculture. And agriculture, of course, does not pay it. We have been told that tourism is very important to the Highlands; and, of course it is going to be exempted from this tax. If it is said to us, "Of course, you have made a mistake for a couple of

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years", I would reply that I used to have an old friend in local government in Dundee who probably made more mistakes than any other human being I ever knew but who occasionally did things right; and she used to say, "After all, the person who never made a mistake never made anything".
Even Governments are permitted to make mistakes, and it is a good Government who will change things which have been done wrongly. Too often in the past this country has suffered from the effect of Governments doing things wrong and then not being willing to change them. Taking S.E.T. off hotels in the Highlands will be a very great advantage to the Highlands; so except for Lord Burton's caravan and camping sites (which, incidentally, I shall be very happy to look at), tourism is to be exempt. Industry does not pay S.E.T. in the Highlands. In fact, it is the other way round: such industry as there is will get money back under our regional policies. So we come down to the fact that, from the point of view of the Highlands, the areas which suffer from selective employment tax are those which are elsewhere.
As to the distributive trades, my noble friend Lord Taylor of Gryfe put forward a plea on their behalf. After all, he is the head of the Scottish Wholesale Cooperative Society. They have many retail shops, and they pay a great deal of S.E.T. Just like anybody else who pays the tax, my noble friend does not like it. Selective employment tax has advantages, in that the money which thus becomes available helps the Government to do some of the things they want to do; and a fair amount of the money which is being poured into the Highlands could not be poured there if the Government were not raising money from taxation—and there is a great deal more money raised in taxation in other parts of the country from which the Highlands benefit than the other way round. So to a certain extent we have to take the rough with the smooth, and, in the changes which have taken place in selective employment tax, we are getting a bigger share of the smooth and a smaller share of the rough.
As to depopulation, my Lords, this is probably the crux of the problem. I dis-
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agree completely with what the noble Lord, Lord Lovat, said on the subject of depopulation, and with the figures which he quoted. He said—and I think I have a note of his actual words:
"In the county of Inverness alone, about which I know most, the number of inhabitants dropped from 56,000 in 1951 to a total, at the Census in 1966, of 51,000. In other words, 5,450 people have left the area in a period of 15 years. The second half of that Census period shows a very much higher rate of depopulation than the previous 10 years."
My Lords, the figures are these. In 1951 the population of Inverness was not 56,000, but 86,191. I think the mistake is that an "8" has been misread for a "5" Otherwise, the figures agree. But it has a relevance, because of the proportions.
LORD LOVAT: This figure came from the Inverness County Council, my Lords.
LORD HUGHES: I am coming back to the Inverness County Council. The noble Lord, Lord Burton, spent the greater part of his speech drawing attention to the iniquities of the Inverness County Council. But, after all, I did not appoint them.
LORD LOVAT: What are the noble Lord's population figures?
LORD HUGHES: The population figures—and these are not my figures; they are the Registrar-General's figures—are: Inverness, 86,191 in 1951; in 1961, 82,838; and in 1964, 81,165. The figure for 1967 is 84,333. So we have gone up 3,000 since 1964, and we have gone up nearly 2,000 since the 1961 Census. If I may go from Inverness to the seven crofting counties as a whole, the population figures there are interesting; I will not take it further than that. In every Census from 1851 to 1961 the population of the seven crofting counties was less than it was in the preceding Census. In 1964 the population was 276,328. In 1967 the population was 276,303–25 less than four years before.
My Lords, the trend has been arrested, and this is the first time it has happened in more than a hundred years. This is the second part of the results of the Government's stewardship in the Highlands. I do not like making forecasts, because if they are wrong there are always plenty of people who are willing to point out the error of your ways, and if you

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are right nobody ever bothers to congratulate you. But I will take the risk of saying that when the next Census takes place in 1971, it is more likely than not (if I may use a phrase which commended itself to the noble Viscount, Lord Dilhome, in a previous debate) that for the first time in 120 years the population of the crofting counties will have risen.
LORD BALFOUR OF INCHRYE: My Lords, will the noble Lord allow me to ask one question? He has given the global figure of the population, but will not the creation of new jobs by the Highlands Development Board in fact depopulate the countryside, bringing those individual jobs to the urban and industrial areas?
LORD HUGHES: No, my Lords. To a certain extent the creation of large projects will do that, but the beauty of what the Highlands and Islands Board have done at the present time is that the jobs which they are creating are in small pockets all over the country. If I may use the opportunity of the noble Lord's intervention to come back to the point which he raised, this is important, because we could not achieve improvement in the Highlands if we were to destroy crofting as part of the way of life. Crofting cannot possibly give an economic livelihood to those who live on the land, either now or in the foreseeable future.
What therefore has to be done is to create jobs which can be added to the crofting economy of the country; and in considerable measure this is the task which the Highlands Board have set themselves. It is an unrewarding task, in the sense that there is nothing very glamorous which emerges from it. When I quoted figures a year ago I was taken to task by a Scottish newspaper because I had referred to half-a-dozen jobs here and twenty jobs there. But half-a-dozen jobs in one of these small communities can be the solution of the problems of that community. But, I repeat, there is nothing spectacular about it. If we were only being spectacular, we should, of course, have the effect which the noble Lord has feared: we should in fact be creating inside the Highlands another central belt. That would not be solving the problem; it would just be creating another one.
VISCOUNT STONEHAVEN: My Lords, may I ask the noble Lord what influence Dounreay has had and what bearing the increased population of Thurso has had on the very interesting and satisfactory figures which the noble Lord has given us?
LORD HUGHES: I do not know exactly the extent to which the population there has increased; but obviously it has an effect on these figures. What has taken place is that there has been an increase of the population through Dounreay, through the pulp mill, through the other projects that have taken place, and through the things the Highlands and Islands Board have set out to do; and, against that, there has been a loss of population for other reasons, such as the closure of the chipboard factory, to which the noble Lord, Lord Burton, referred. The effect of the pluses and minuses is that, for the first time, they are ironing out and there has been an arrestment of depopulation. I should be happy if I thought that we were as near that point in the Borders. My Lords, I think I have covered most of the points to which I wish to refer.
LORD LOVAT: My Lords, the noble Lord has been extraordinarily kind and disarming on the facts and figures. May I ask one question? I have detected the error in the crofter counties' population to which he referred. Our figurer, more or less, come together. The difference I had here was that the Inverness burgh was separate from the landward area. It bears out the remark of the noble Lord, Lord Balfour of Inchrye, that the burgh population has grown by 2,334 people during the period whereas population in the landward area has dropped by 5,453. But my relevant period is between 1951 to 1966. The noble Lord's figures are for a different period. This brings us closer on that particular point. I was going to ask a question on the agriculture aspect. The noble Lord has not touched upon that. What I am worried about in the Highlands and Islands Board set-up is that, with respect, they do not have a skilled agriculturist and a skilled forester. I think that is important in the economy of the Highlands. But I am not being critical. The noble Lord has been very kind.
LORD HUGHES: I thank the noble Lord. I still do not think he has reconciled the figures. He said the poppulation in the burgh has gone up by 2,000 and in the county has gone down by 5,000, a net reduction of 3,000. In fact, the 1951 figures were 86,191 and the 1966 figures were 84,471. At a quick calculation this represents a total drop of about 1,700 in that period, and not 5,000 minus 2,000, giving a net drop of 3,000. The important thing is that, taking the seven counties as a whole, we have a remarkable change in the situation in a comparatively short period of time. I think it is only the beginning of an intensive period of change. I hope that all the crofting counties, both in their burghs and in their landward areas, will participate in this regeneration of the area, because it is important that as many people as possible should find it desirable to continue living in the area where they are at present.
My Lords, among this mass of papers I have found my note about the points to which I wish to refer. Agriculture is one of them, but I cannot be very helpful on agriculture. If I were to accept the point of view about agriculture in the Highlands which my noble friend Lord Donaldson put forward, I doubt whether I should have many friends on the opposite Benches. I do not know that I have any at the moment; but if I have I should lose them if I subscribed to that doctrine entirely. Yet as it emerged, it did not appear to me that my noble friend went as far as the beginning of his speech suggested when he seemed to say that the only agriculture that should survive in the Highlands was sheep. I have a colleague who would not subscribe to that point of view. He is a former Minister of the present Government. He once said to me, "You know, we should be all right in the Highlands if it were not for these Pygmalion sheep." So there are two points of view about sheep in the Highlands.
But I would say to my noble friend that we appreciate that there is a limit beyond which one cannot go in propping up an industry, be it agriculture or anything else, which is quite uneconomical. We have not yet reached that point in this country in connection with agriculture; but I would remind your Lordships of the extent to which the Government
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have gone in closing uneconomic activities in the coal industry. If we had applied the same standards to agriculture as to the coal mines, a lot of the present agricultural activity would not be carried on. But my noble friend went on to say that we must consider the social aspect as well as agriculture. There is no doubt at all that in the Highlands the social aspect enters into things much more heavily than a viable agriculture.
I was disappointed in one sense in the speech of the noble Lord, Lord Lovat. I thought he was going on to put forward alternative proposals about agricultural usage in the Highlands which would enable us to get down to some more viable use of agricultural land. But, in fact, he said that if we can only add to the land of the Highlands by reclaiming some from the sea we can make good agricultural use of the reclaimed land. The noble Lord knows that this matter was discussed recently (and he was present) with officials from my Department. We are interested in this question of estuarial reclamation. I hope that it will have its place in the future development of the Highlands. But although it may help to make the Highlands more prosperous by adding to its first-class land, it does not help us solve the question of finding a way of making money out of the agricultural use of the land that is there at present.
I cannot say other than that the Government recognise the continued importance of preserving and helping agriculture in the Highlands. I think it is true to say that we have done more to help Highlands' agriculture during the last three and a half years than, perhaps, any other Government at any time in history. And no one can say that we are helping our friends, because I doubt very much whether we get a handful of votes from them. If we wanted to lay out money to get votes we should have given it to the miners rather than to the farmers. But we are doing it where it is necessary. It does not matter whether it brings in votes; we do not refrain from doing it because it does not bring in votes. I was glad to see the noble Lord, Lord Lovat, nod his head when I said the Government was helpful to agriculture.
My Lords, it remains for me only to talk about Invergordon. I wish the Prime

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Minister had delegated to me the task of announcing what was going to take place; but high as is his regard for me—of which I have no doubt—it does not extend quite so far as that. I cannot make the announcement that we are all waiting for. I should like to point out to the noble Lord, Lord Burton, when he criticises the Government for taking so long to make an announcement, that he knows as well as I that projects of this magnitude, which involve work with enormous private interests, as well as the expenditure of Government money, take a very great deal of time to work out. In this case there are international considerations also to be brought in. We are all aware of the interest of our EFTA partners in this. It is not just something which can be done just like that. I can assure your Lordships that the Scottish Ministers and the United Kingdom Ministers equally are well aware of the importance which is attached to the location of an industry of this kind at Invergordon. I look forward, as I am sure do all noble Lords opposite and on these Benches, to an early announcement on this subject which will be a source of gratification to us all.
My Lords, I have not touched on some of the points which have been raised. The noble Lord, Lord Balerno, was good enough to tell me that he was going to raise the matter of the selective employment tax and its lifting in respect of hotels outside the area. I have not touched on that matter because it is not within the terms of our remit. I said that I was happy on this occasion to accept the limitation which the noble Lord, Lord Lovat, placed on the debate to the seven crofting counties. Every hotel in the seven crofting counties is to be freed from the selective employment tax so that, so far as this debate is concerned, I have given 100 per cent. joy on that matter. If the noble Lord, Lord Balerno, wishes to have the matter discussed, it must take its place in some other debate, or perhaps be the subject of a Question in your Lordships' House.
I have spoken much longer than I intended. My only defence is that the debate is one which I thought merited an over-full rather than an inadequate reply. Even then I have no doubt that I have not satisfied everyone. I can say, however, that I am quite certain that
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time will show that the people of the Highlands have cause to be grateful for the fact that in 1964 this country got a Labour Government determined to make the Highlands a special area; and they will have no desire to go back to the Millenium of the noble Lord, Lord Burton, of pre-1964.
LORD BALERNO: My Lords, before the noble Lord, Lord Hughes completes his speech, can he tell us anything about the possible inclusion of the Islands of Arran and Bute in the definition of the seven counties by the Highland Development Board?
LORD HUGHES: My Lords, the Islands of Arran and Bute are outwith the seven crofting counties, but I think I may be justified in answering that question because as the noble Lord, Lord Balerno, said, the Act itself contemplated the extension of the area from the seven crofting counties to areas which were contiguous and similar. It is quite obvious that the Islands of Arran and Bute to which he referred come into that category: they are similar and they are contiguous. If there were any question of extending the area at the present time, I can imagine no place or places more suitable for inclusion than these two. But, given the magnitude of the task which the Board have in the area for which they were primarily set up, it is too soon to contemplate adding other territories to their responsibility.
The Secretary of State has very much in mind the fact that this is an aspect of the Board's responsibility which must be examined from time to time, but it would not be helpful if we were seeking merely to spread the jam—no matter how generous the jam may be—a little more thinly over a wider area. I think that the addition of these areas must await times which are more propitious for extending the financial resources of the Board.
8.15 p.m.
LORD LOVAT: My Lords, the night is late and I think that most of us feel rather like Lord Bannerman's cow. I shall certainly not make another speech. It would be churlish of me even to gross swords with the noble Lord, Lord Hughes. He has spoken with great charm and certainly made a lot of our arguments appear to be null and void. I am not sufficiently

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intelligent to react quickly to much of what he said, and in Parliamentary language I think that I should like a good deal more notice of the Transport Bill. I cannot believe that some of the bigger businesses who briefed me to speak for them can be talking entirely through their hats, but time will tell. On S.E.T. we have kept fairly clear of politics all through the evening, but I should tell the noble Lord that he is going to lose an awful lot of votes in the Highlands, and he must face that fact. Maybe, as a Christian martyr, he will meet that situation with fortitude.
LORD HUGHES: My Lords, may I interrupt the noble Lord to say that we cannot possibly lose a lot of votes in the Highlands, because so far we have not got an awful lot of votes there.
LORD LOVAT: Well, my Lords, I must say that for the first time in my life I saw an M.P. literally committing political suicide at a mass meeting at the town hall in Inverness. It was the Member for Caithness and Sutherland, who said that there were certain good things about the Transport Bill. I have still to be reassured that it is going to do a great deal of good in the Highlands.
With regard to S.E.T., I do not understand why small hotels or farmers, or any other small body of people, have to send money off and get it back in three months' time. There must be a subtlety there which I do not appreciate, but I accept what the noble Lord says. It seems to add to the vast army of non-profitable civil servants who, under this Government, have increased greatly beyond the number of the population in the crofter counties—but we take that in good part.
I think the noble Lord, Lord Hughes, made out a good case for the Highlands and Islands Development Board. I hope that the Government will bear in mind what I have said, as it was said without rancour. I think that these £50 million, rather up-in-the-air stories, like the one about Invergordon, petroleum, American finance, and—what do they call it?—Occidental Petroleum never do awfully well with companies which originate with £100 share capital. There is one company called Grampian Chemicals which has the same sort of background. I do not think that these things work too well.
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It is not intended as a criticism of the Development Board in any way when I suggest that big business, in which they are not really competent to operate, would be better left to the Board of Trade. That is only a suggestion, and I throw it out with all good wishes to the Board.
I think they have made a mistake in not having a really top forester or a top farmer on the Board. They have found an excellent land use officer after 18 months, although I think that he may be slightly over-loaded with other projects. As your Lordships will know, I feel—and I am probably right about this—that we could do a good deal more with cattle in the Highlands. The Board have made clear that they are not interested in agriculture, and I think that is wrong. It is bad luck having a man in charge of forestry and agriculture who is, no doubt, first-class in his own sphere which is fisheries and affairs that appertain to the sea.
The Board have done great work in building boats, and things of that kind, but I should like agriculture to be borne in mind always as the first industry in the Highlands. I am connected with an estate which has agricultural interests and forestry interests, and I can assure your Lordships (this might interest the noble Lord, Lord Donaldson, who talked about sheep, trees, cattle and other developments in a Highland glen) that a glen that I know sends out every year something like £45,000 gross in cattle and sheep, plus subsidies. It would take an awful lot of forestry to get that amount out every year. It would take fifty years, and then you would be lucky to get away with it, because the roads would not carry the heavy traffic. The Forestry Commission never show their profit and loss accounts, and that makes it rather difficult at times for the private woodland grower to know, when he is encouraged to grow trees, what the end product is going to bring in. These are sobering thoughts. The only limiting factor to cattle raising on the scale I envisage in the Highlands is the winter keep. That is why I talked of getting good land, if necessary, coming down to the sea, but that does not come within the limits of the debate.
I should like to thank every noble Lord who has spoken from all sides of the

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House. The speeches have been first-class. I should like to thank the noble Lord, Lord Hughes, for keeping the heat off; perhaps only he could have done it. There have been a good many odd characters in the Highlands during the course of centuries. It is not without significance perhaps that the Earl of Atholl and Sir Simon Fraser were both hung, drawn and quartered in 1307 for trying to reform what might have
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been the House of Lords in those days. But tonight we did not come to blows, and I should like to thank the Government Benches and beg leave to withdraw my Motion.
Motion for Papers, by leave withdrawn.
House adjourned at twenty Minutes past eight o'clock.