Sitting of 24 April 1969

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

    Drug Taking by Schoolchildren
    Mr. Gwilym Robertsasked the Secretary of State for Education and Science if he will initiate regular medical examinations in all schools or a representative sample of schools to detect and curb the use of drugs by schoolchildren.
    The Under-Secretary of State for Education and Science (Mr. Denis Howell): No, Sir.
    Mr. Roberts: That is a most disappointing Answer. Is my hon. Friend aware that a system of medical inspection would have the effect of encouraging greater collaboration by parents in this very serious matter? Even a sample examination of the sort suggested would have a very considerable deterrent effect on the taking of drugs. Is my hon. Friend aware that at the moment we do not even know the size of the problem?
    Mr. Howell: I do not accept that. We know a great deal more about this problem now than we did two years ago. A tremendous amount of health education is being done by the medical officers in my Department. But since it is impossible to make one medical test to discover all known drugs—for example, the smoking of marijuana cannot be detected at all by tests—grave offence would be given to 99·9 per cent. of all school children if they were systematically examined for drug taking when they are good, healthy, wholesome youngsters.

    Grammar Schools
    Mr. Dudley Smithasked the Secretary of State for Education and Science
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    how many grammar schools he estimates will be in operation in the public sector of education by March, 1971; and how many will have disappeared since October, 1964.
    The Minister of State, Department of Education and Science (Miss Alice Bacon): Between January, 1965, and January, 1968, the number of maintained grammar schools in England and Wales fell by 130 from 1,285 to 1,155. This trend should increase as the implementation of schemes of comprehensive reorganisation continues, but I cannot estimate a figure for 1971.
    Mr. Smith: Is the right hon. Lady aware that many people who support the extension of comprehensive education wish a grammar school element to be maintained in our education system? Is it the intention of her right hon. Friend the Secretary of State that eventually all grammar schools should disappear? If so, what will happen to the children in the top range of ability?
    Miss Bacon: The introduction of comprehensive education means that a grammar school type of education will be available for far more children than ever before. If grammar schools exist alongside comprehensive schools, there must be some kind of test to decide who goes to the grammar schools. The whole aim of comprehensive education is to get rid of the segregation of children into different types of school at the age of eleven.
    Mr. Christopher Price: Is my right hon. Friend aware that the existence of the voluntary-aided and direct-grant grammar schools is inhibiting the more rapid introduction of comprehensive education? She gave figures for the maintained schools. Could she give figures for the decline in the number of voluntary aided grammar schools?
    Miss Bacon: I could not do that without notice. As my hon. Friend knows, the Public Schools Commission is considering, for its second report, the direct grant schools.
    Sir E. Boyle: But is it not a great mistake to go to extremes on this question? Would not the right hon. Lady agree that conditions in, say, a suburb or some rural area differ from conditions

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    in a big city where there are profound educational objections to having nothing but comprehensive schools segregated by neighbourhoods?
    Miss Bacon: The alternative is to have selection at the age of eleven. That is the dilemma. Not only we on this side of the House but many Conservative-controlled authorities are anxious to get rid of selection at eleven which means that grammar schools and comprehensive schools cannot exist side by side.

    Secondary Education (Parental Choice)
    Mr. Boyd-Carpenterasked the Secretary of State for Education and Science whether it is his policy to seek to provide the maximum of parental choice in secondary education in accordance with the Education Act, 1944.
    The Secretary of State for Education and Science (Mr. Edward Short): Yes, Sir. This is why it is the policy of the Government that all secondary school children should be taught in comprehensive schools, which alone can offer a sufficiently wide range of courses to give a meaningful choice to parents.
    Mr. Boyd-Carpenter: Does it not follow from that Answer that parental choice of school becomes non-existent if the only pattern of secondary education is that imposed by the right hon. Gentleman regardless of the wishes of local authorities?
    Mr. Short: I do not know what the right hon. Gentleman thinks happens at present. Eighty per cent. of children are directed to secondary modern schools. The other 20 per cent. are offered grammar school places. We want all children to go to comprehensive schools so that they may have a course which is tailor-made to their unique pattern of ability.
    Mr. J. E. B. Hill: In his Answer, did not the Secretary of State prejudge the whole question of direct-grant schools by saying that all children should go to comprehensive schools? To reiterate the point made from this side of the House, a small proportion of children, particularly those of special ability, might well, with parental choice and guidance, go to specially academic grammar schools without jeopardising comprehensive schools.
    Mr. Short: I believe that the segregation of children at the age of eleven is one of the greatest remaining social injustices in this country, and it must be ended as soon as possible.
    Mr. Biggs-Davison: Why should segregation necessarily be at the age of eleven and why is the right hon. Gentleman so dogmatic, particularly in view of the Prime Minister's pledge to defend the grammar schools? What consideration has he given to the misgivings of American educationists—for all their experience—about an almost universal comprehensive system?
    Mr. Short: I do not know about misgivings on the part of the Americans. Countries throughout the world are following our comprehensive system of reorganisation at the moment.

    Engineering Profession (Recruitment of Women)
    Sir B. Jannerasked the Secretary of State for Education and Science whether he is aware that in Russia one engineer in three is a woman whereas in Great Britain the comparable figure is one in 500; and what plans he has to improve the situation during the next few years as regards providing facilities for women engineers and encouraging them to enter that profession.
    The Minister of State, Department of Education and Science (Mrs. Shirley Williams): I am well aware of these figures. University and further education establishments have places available for women to study engineering, and they welcome applicants. The Government are spending nearly £100,000 a year in publicity to encourage young people to take up engineering, and a "Women in Engineering Year" was launched last month specifically to encourage women to consider this profession.
    Sir B. Janner: I thank my hon. Friend for her Answer, but is it not a fact that women in other countries have proved to be extremely efficient in the engineering profession? Cannot she get some kind of propaganda going by means of which girls in secondary schools and universities will come to realise that it is a profession in which they can adapt themselves and be very useful?
    Mrs. Williams: I could hardly be a greater ally of my hon. Friend. We

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    deprecate any suggestion to girls at school that they should drop the science subjects at an early stage, as happens very often in some schools. Secondly, we hope that we shall get the maximum coperation from industry to make places available to women as well as to men.

    Colleges of Education (Qualifications of Accepted Candidates)
    Mr. J. E. B. Hillasked the Secretary of State for Education and Science what percentage of accepted candidates for three-year courses at colleges of education had two or more General Certificate of Education A-levels in 1968 and in each of the three preceding years.
    Mrs. Shirley Williams: The provisional figure for 1968 is 37·0 per cent. The corresponding percentages for 1965, 1966 and 1967 are 38·2, 37·1 and 36·8, respectively.
    Mr. Hill: Is it not desirable if possible to improve that trend, bearing in mind that we want to see a higher proportion of newly-entered teachers completing courses and getting degrees as bachelors of education?
    Mrs. Williams: This has been a very steady trend, and those who say that more means worse must face the fact that the proportion of "A" levels in all sections of higher education has been fully maintained, despite the growth in numbers.

    School Meals and Milk
    Mr. J. E. B. Hillasked the Secretary of State for Education and Science what is the estimated total expenditure in 1968–69 and 1969–70 on school meals and milk.
    Mr. Denis Howell: Net current expenditure on school meals and milk in England and Wales, at constant prices, is estimated at £88·2 million in 1968–69 and £87·6 million in 1969–70.
    Mr. Hill: In view of the size of those figures, does the hon. Gentleman not agree that it is desirable to examine in greater detail the causes of food waste with a view to reducing if not eliminating it?
    Mr. Howell: There has been a saving of £1·7 million in milk for the half-year. I do not think that the waste arises there.
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    But as I think the hon. Member knows, we have recently appointed three catering advisers to deal with such matters as the quality of meals and wastage. Their efforts show signs of being welcomed by the local authorities.

    Secondary Education (Legislation)
    Mr. Laneasked the Secretary of State for Education and Science whether he will introduce legislation regarding secondary education before the summer adjournment.
    Mr. Edward Short: No, Sir, not before the summer adjournment.
    Mr. Lane: Will the Minister think long and hard before trying to compel comprehensivisation by Act of Parliament? Will he pay special attention to the wise advice given to us recently by Sir William Alexander that we should avoid making education a political shuttlecock and that further legislation, so far as possible, should be agreed legislation?
    Mr. Short: What the hon. Gentleman wishes to maintain is a system which draws a line at the age of eleven—[HON. MEMBERS: "No."]—and divides into two compartments children between whom there is no perceptible difference. If some authorities will not end this voluntarily—and I would prefer it to be done voluntarily—it must be done by this House.
    Mr. Raphael Tuck: What steps is my right hon. Friend taking currently to abolish segregation altogether, at any age, and when does he think that it will be achieved?
    Mr. Short: The Government have been trying to do it since 1964 on a voluntary basis. We have achieved a great deal of success. Over 100 of the 163 authorities have made progress. Obviously a number of authorities do not intend to make any progress, and I do not intend to allow the children in those authorities to suffer as a result.
    Sir E. Boyle: Is it the Minister's intention to present a White Paper or Green Paper to the House before the summer about the proposed legislation? Would it not be quite unprecedented to introduce a controversial Bill making a major

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    change in the relative responsibilities of central and local government without first doing so?
    Mr. Short: I hope that there will be no controversy about the desire to end this great social injustice. This is where the brain drain is, in fact. The real brain drain is not across the Atlantic but in the eleven-plus. I hope that the right hon. Gentleman will support me in this.
    Mr. Jennings: If segregation is wrong at the age of eleven, twelve or thirteen, how right is it at the age of eighteen?
    Hon. Members: Answer.
    Mr. Christopher Priceasked the Secretary of State for Education and Science when he now proposes to introduce legislation to compel local authorities to produce plans for reorganising their schools on comprehensive lines.
    Mr. Edward Short: I am not ready to make a statement.
    Mr. Price: But is my right hon. Friend aware that the Birmingham Conservatives, by their bigoted, ideological attitude to this problem, are putting at risk school places for secondary school children within the next year or two? In view of that, together with their threat to sue him, does not my right hon. Friend think that he ought to bring in some legislation very soon?
    Mr. Short: I will not comment on the threat to sue me. This is a hazard which all Ministers have to endure. I will not comment on the Birmingham position either, but I understand that the position is being reconsidered there and I hope to hear something from the local authority before too long.
    Sir E. Boyle: Does the right hon. Gentleman think that it is right or sensible to deny to authorities school-building projects which are badly needed and perfectly consistent with the policy of all parties in this House, on the ground that the authorities concerned will not reorganise or undertake to reorganise their existing schools?
    Mr. Short: All I have asked Birmingham for is information about its plans—that seems to make good sense—before I authorise any secondary projects.

    Teacher Training
    Mr. van Straubenzeeasked the Secretary of State for Education and Science if he will institute an inquiry into the training of teachers.
    Mr. Edward Short: I would refer the hon. Member to my reply to my hon. Friend the Member for Eton and Slough (Miss Lestor) on 27th June last.—[Vol. 767, c. 111–2.]
    Mr. van Straubenzee: Did not that reply, which I have clearly in mind, show a lack of understanding of the problems arising about the training of teachers? If the right hon. Gentleman is not prepared to reconstitute his National Advisory Council, is this not the obvious subject-matter for the next major inquiry?
    Mr. Short: Reconstituting the National Advisory Council is an entirely different question. The hon. Gentleman asked for an inquiry. There have been so many problems recently that it would be a good thing to allow teacher training to settle down for a while.
    I should be willing to reconstitute the Advisory Council, but I feel that it would be better to do it in the context of the General Teaching Council which I hope to set up next year.

    Secondary Reorganisation (Reading)
    Mr. van Straubenzeeasked the Secretary of State for Education and Science whether he will make a statement on his recent discussions with Reading County Borough Council on secondary reorganisation in the borough.
    Mr. Edward Short: I have nothing to add to what I told the hon. Member on 30th January. I assume that the authority's working party is still considering the issues involved.—[Vol. 776, c. 1510–11.]
    Mr. van Straubenzee: Meanwhile, to assist us, would I be correct in understanding from previous Answers today that, as the law stands, the right hon. Gentleman has no power to enforce upon Reading Borough Council a secondary reorganisàtion plan of which it disapproves?
    Mr. Short: I do not quite know the purpose of that question. As I understand it, the Reading Borough Council

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    has a working party studying this at the moment. I hope that the hon. Gentleman will help it and not hinder it.

    All-through Comprehensive Schools
    Mr. Silvesterasked the Secretary of State for Education and Science what was the total number of all-through comprehensive schools in England at the latest available date; and what was the total number of mathematics, physics and chemistry graduates in those schools.
    Miss Bacon: In January, 1968, there were 441 all-through comprehensive schools in England, compared with 313 a year earlier. In March, 1967, the latest date for which the staffing figures are available, there were in such schools 507 graduates in mathematics; 239 graduates in physics; and 314 graduates in chemistry.
    Mr. Silvester: is it not disturbing that the proportion of tuition in these subjects given to fifth, sixth and seventh years, which is given by graduates trained in the subjects, is consistently lower in comprehensive schools than it is in grammar schools? In view of the shortage of the output in these subjects, is not that another reason for regarding the pace of comprehensivisation as being too fast?
    Miss Bacon: On the last part of the hon. Gentleman's supplementary Question, I would take the contrary view. The quicker we can get comprehensive schools established, the more we shall get the transfer of science graduates into those schools.

    Documents, Manuscripts and Archives (Export)
    Mr. Ridleyasked the Secretary of State for Education and Science if he will advise the setting up of a Royal Commission in place of the Departmental inquiry to consider the question of the export of manuscripts, records and documents of all sorts.
    Miss Jennie Lee: I would refer my hon. Friend to my reply to my hon. Friend the Member for Ashfield (Mr. Marquand) on 17th April when I sought to make clear that we are not discussing first principles but the difficulties of having a viable, practicable scheme that can be put into operation. For that reason
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    the Working Party, which is now closely studying the problem, is the best way of going about it.—[Vol. 781, c. 1313–15.]
    Mr. Ridley: Will the right hon. Lady accept, first, that this is a totally different problem from the export control of works of art? Secondly, does she agree that it is the precise definition of the criteria which needs attention and that this might be done better by a completely independent outside body than by the proposed inter-Departmental inquiry?
    Miss Lee: I do not agree with the hon. Gentleman. We must keep in mind that a document of historical importance for London may not be so for Scotland. We have local and regional historical interests. This is a difficult problem. It is not a matter of first principles. It is a matter of trying to work out a scheme which can be implemented without having to ask civil servants to drop the jobs which they are doing to take over this one.

    Capital Expenditure (Devon)
    Mr. Emeryasked the Secretary of State for Education and Science what sum of money will be spent as capital expenditure for new buildings or school improvement schemes in the year 1969–70; and what is the project expenditure for 1970–71 and 1971–72 in East Devon.
    Mr. Edward Short: The building programme for schools in 1969–70 is fixed at £138·5 million. Work on major projects for new schools at Honiton and Dawlish worth £122,000 is expected to start in 1970–71. No decisions have yet been made for 1971–72.
    Mr. Emery: Is the right hon. Gentleman aware that the Devon County Council is extremely aggrieved at the low level of expenditure which is to be allowed in the ensuing two years because it is inadequate and much less than in most other areas in the country?
    Mr. Short: I think that it is a reasonably fair settlement. Four schools, or four biggish projects, are starting or planned this year. I went to Devon and had long discussions with the director and the authority and I saw a great many of the schools. In all the circumstances, I think that it is a reasonably fair programme.
    Mr. Peter Mills: Will the Minister bear in mind that it is a question of money being spent not only on new buildings but on modernising existing buildings? Will he also bear in mind that in Devon there are some schools where the children are most unhappy to go to the toilets because of the state of the toilets?
    Mr. Short: I agree. There are thousands of old schools throughout the country in need of modernisation. It is a pity that the Conservative Party did not do more when they were in office.

    Part-time Teachers
    Mr. Charles Morrisonasked the Secretary of State for Education and Science how many local education authorities have now informed him of their intention to employ fewer part-time teachers in 1969–70 than they did in 1968–69.
    Mr. Edward Short: Local education authorities are not required to inform me when they modify their policies on matters within their discretion, such as the employment of teachers.
    Mr. Morrison: Although that may be so, in view of the widespread anxiety felt on this score, would it not be a good idea if the Secretary of State instituted some inquiries? May we conclude from his Answer that he is satisfied with the present situation?
    Mr. Short: I collect statistics on this matter. Between October last year and February this year there was an increase of 800 full-time equivalents. That is many more teachers, of course. In February this year the figure was the highest ever—approaching the 20,000 mark. Overall, the position is very satisfactory, although I realise that one or two authorities are cutting down.

    Education Priority Areas (Capital Allocation)
    Mr. Christopher Priceasked the Secretary of State for Education and Science when a further specific capital allocation for schools in educational priority areas will be announced by his Department.
    Mr. Edward Short: I have no specific plans beyond the current £16 million programme.
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    But in allocating any resources available for the replacement or improvement of old schools I shall continue to give preference to those in educational priority areas.
    Mr. Price: While thanking my right hon. Friend for that reply, may I ask whether he agrees that it is a pity that, immediately after the Plowden Report, a specific allocation for educational priority areas which was put into the programme is now not to be continued in that specific form? Is it not important to keep up this concept of the priority area, not just in the immediate years after Plowden but in the years to come?
    Mr. Short: I agree with my hon. Friend. If he scrutinises the regional lists which have been published, or the planning list for 1969–70, he will see, first, that the building programme has been bent considerably in the direction of the educational priority areas. Secondly, he will notice that we have authorised the payments to teachers in educational priority areas. Thirdly, he will notice that the first phase of the urban programme has been announced.

    Manchester Opera House (Grant)
    Mr. Barnettasked the Secretary of State for Education and Science what grant the Arts Council has made to prevent the closure of Manchester Opera House.
    Miss Jennie Lee: The practice of the Arts Council is to consider making a grant in such cases only when requested to do so, and the Manchester local authority has not asked for one.
    Mr. Barnett: Does my right hon. Friend agree that it would be deplorable if the rumoured tranformation of the last Opera House in Manchester into a bingo hall were true? Will my right hon. Friend have some consultations with the Manchester authority and others in the area to ensure that that does not happen?
    Miss Lee: I entirely agree with my hon. Friend. Indeed, the Secretary-General of the Arts Council has written to the Town Clerk reaffirming the Arts Council's view that it is of great importance that people in Manchester should continue to have the opportunity of enjoying the Royal Ballet, the Sadler's Wells Opera, the National Theatre, the

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    Royal Shakespeare Company and other companies of real quality. For this reason, the Arts Council intends to continue subsidising these visits within the limits of its resources and to help in many other ways.

    University Students (Scientific and Technological Subjects)
    Mr. J. H. Osbornasked the Secretary of State for Education and Science (1) what percentage and numbers of students entering universities in the year commencing October, 1968 are reading scientific, technological, engineering and arts subjects, respectively; and how this position has changed from the previous two years;
    (2) what was the total number of places in universities available for scientific, technological and engineering subjects in October, 1968; how many of the places available for new students were taken up in each subject, respectively; and how many places have not been taken up respectively and in total.
    Mrs. Shirley Williams: Since the Answer contains a number of figures, I will publish it in the OFFICIAL REPORT.
    Mr. Osborn: Is it not a fact that the number of students in universities taking scientific and technological subjects as a percentage of the whole is diminishing? On top of the fact that many places are not being taken up in the universities in these subjects, does not this present the hon. Lady and the Government with

    NEW ENTRANTS TO UNIVERSITIES IN GREAT BRITAIN AT UNDERGRADUATE LEVEL

    Science

    Engineering and Technology

    Arts

    Number

    Percentage of total admissions

    Number

    Percentage of total admissions

    Number

    Percentage of total admissions

    October, 1966

    …

    14,748

    27·5

    9,077

    16·9

    10,758

    20·1

    October, 1967

    …

    16,210

    28·4

    9,375

    16·4

    12,119

    21·2

    Information about admissions in 1968 is not yet available from the University Grants Committee. Figures for 1968 obtained by the Universities Central Council on Admissions, which are not necessarily comparable with those given above, are set out in their Sixth Report and are contrasted in Table 5 of the Report with the universities' estimates of the numbers they could admit.
    a problem? What are they going to do about it?
    Mrs. Williams: It might, if it were true, but I am glad to say that it is not entirely true. Between 1966 and 1967 the percentage proportion of science places showed a slight increase. The percentage proportion of technological places showed a slight decrease, but less than the increase in science. Although the finalised figures for October, 1968, are not yet available from the U.G.C., there is reason to believe, on the provisional figures, that the pattern is again repeated.
    The early indications for October, 1967,—I want to stress that the figures here are sample figures of the earliest admissions—seem to suggest that the trend is changing considerably in the direction of science and technology. I hope that that trend will be confirmed.
    Mr. J. E. B. Hill: As this is "Women in Engineering Year", may I ask the Minister what she is doing to encourage more women to become students in engineering and scientific subjects?
    Mrs. Williams: The right hon. Gentleman was kind enough not to suggest that I abandon my job and become an engineer, but I take the hint. I should like to stress that we are endeavouring, through project technology and by persuading the universities to broaden their entrance qualifications, to get more girls and boys available to take technological and applied science courses.
    Following is the Answer:

    C.E.R.N. 300 GeV Accelerator
    Mr. Fortescueasked the Secretary of State for Education and Science whether, in the light of the recent statement by the Chairman of the Science Research Council, he will now make a statement about the possibility of British participation in the 300 GeV nuclear accelerator at C.E.R.N.
    Mrs. Shirley Williams: I have nothing to add to the reply my right hon. Friend gave to my hon. Friend the Member for West Lothian (Mr. Dalyell) on 24th October last.—[Vol. 770, c. 328.]
    Mr. Fortescue: Is there not every sign here of another first-class administrative muddle? The Chairman of the Science Research Council assumed in a public statement that we are going to join the C.E.R.N. project in two years. The Government say that there is no possibility of this and that, if it happens at all, participation must be put off indefinitely. Could the hon. Lady please give us some more definite statement, if only for the sake of the civil servants working at Nimrod, many of whose jobs will be put in jeopardy if we do join C.E.R.N.?
    Mrs. Williams: The Government made a decision and have at no stage since that time changed their decision. However, we accept the freedom of choice of the scientific and academic community to express their own views, and, in a purely domestic lecture, the Chairman of the Science Research Council expressed a view which is well known to the House and which, in this respect, differs from that of the Government.

    Youth Service Personnel
    Mr. Charles Morrisonasked the Secretary of State for Education and Science what plans he has for in-service training facilities for full-time youth service personnel.
    Mr. Denis Howell: The training of full-time youth workers must be looked at as a whole and the starting point is initial training. The Department, in association with the Youth Service Development Council, is at present replanning the provision for initial training and an announcement will be made as soon as possible. This will provide a basis for considering the need for in-service training, the importance of which I recognise.
    Mr. Morrison: Will there be anything on this subject in the Report of the Youth Service Development Council which will be published soon, following the work of the Milson and Fairbairn Committees?
    Mr. Howell: Yes, the Youth Service Development Council Report on the whole future of the service has a great
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    deal to say about basic training and subsequent in-service training.
    Mr. R. C. Mitchell: Is my hon. Friend aware that some Conservative-controlled local authorities, including my own, have made such drastic cuts in the youth service budget for the forthcoming year as to seriously damage the whole fabric of the youth service and that there will be no one to train if we go on like this?
    Mr. Howell: I regret that very much. I said in a recent Adjournment debate that the amount of resources additionally reallocated this year for the youth service and adult education was considerably above the 3½ per cent. for education as a whole.

    Post-Graduate Students (Grants)
    Mr. Barnettasked the Secretary of State for Education and Science what guidance he has given to local education authorities about grants for post-graduate students in management and business studies; and if he will make a statement.
    Mrs. Shirley Williams: The main responsibility in this field from 1969–70 will lie with the Social Science Research Council, and local authorities are aware of this.
    Mr. Barnett: But did my hon. Friend see the report in The Times on 8th April which referred to a cut of 60 per cent. on the 1967–68 figure in the total grant in this field? Is that not deplorable? Should we not be moving to expand our educational facilities in this direction, if only for our long-term economic needs? Rather than leave it to that Council, will my hon. Friend look into this and see that we do not have that sort of cut?
    Mrs. Williams: May I make the position absolutely clear, since there has been a good deal of misunderstanding reflected in the Press about this figure? The Department of Education and Science asked the local authorities to give returns of the number of bursaries for management courses. We received a return which showed, for 1967–68, that the number of L.E.A. bursaries in this field was 149. We then made arrangements that the S.S.R.C., when it took these bursaries over, would be able to bring about a minor expansion of the total number of bursaries.

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    Subsequent to that, the Social Science Research Council made its own survey, inquiring not of the local authorities but of the universities. The figure which it received for the same year was not 149, which we had received from the local authorities, but 266. We are trying—
    Mr. Arthur Lewis: On a point of order. Could not this answer be circulated in the OFFICIAL REPORT to save time?
    Mrs. Williams: We are trying to find the reasons for this discrepancy and we shall be making a statement to the House shortly, but we are still studying the matter.
    Mr. Speaker: Order. In answer to the point of order, long answers mean fewer Questions.

    Expenditure
    Mr. Roebuckasked the Secretary of State for Education and Science what was the total spent on education in 1964–65; and what is the estimated figure for 1969–70.
    Mr. Edward Short: Actual public expenditure on education in Great Britain, including school meals and milk and local libraries and museums, in 196465 was £1,527 million. I estimate that expenditure in 1969–70 will be £2,322 million, an increase of 52 per cent.
    Mr. Roebuck: Is my right hon. Friend aware that that is such a splendid Answer that I am rendered almost speechless. Will he continue to resist the incontinent demands of the brass-faced business men opposite for cuts in public expenditure and see that these facts are driven into the heads of the tiny minority of congenital belly-achers on this side of the House?
    Mr. Short: If it left my hon. Friend speechless, it must have been quite an Answer. The incontinence of the Conservative Party is well known, of course. As in most other spheres, this is part of the excellent record of this Government, which must be maintained.
    Sir E. Boyle: Will the right hon. Gentleman remind his hon. Friend, when he is in a mood to listen, that the primary school population alone has risen by
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    half a million since 1964? Is it not obvious that this component of expenditure is no more the consequence of anything done by the present Government than, for different reasons, it was due to myself?
    Mr. Short: I am not sure what that means. However, what the present situation means is that under this Government there has been a massive shift of resources from other areas of spending to education, and, for the first time ever in our history, we are spending more on education than on defence this year.

    School Building (Expenditure)
    Mr. Roebuckasked the Secretary of State for Education and Science what was the sum spent on school building in 1964–65; and what is the estimated figure for 1970–71.
    Miss Bacon: The allocations for school-building projects, including those for special school, announced for 1964–65 totalled £85 million. The corresponding figure for 1970–71 is £160·5 million. I take it that my hon. Friend will now be quite speechless.
    Mr. Roebuck: Is my right hon. Friend aware that this is another election promise on its way to fulfilment? Can she exert any influence on local authorities when they build these schools so that the whole community may gain the benefit of the capital expenditure and the schools are not used only from nine o'clock to four o'clock during the school year?
    Miss Bacon: This is a very important point, which we are trying to impress on local authorities. We hope that they will take that course.
    Sir E. Boyle: Will the right hon. Lady state the corresponding figures for school improvements? Was it not the President of the Board of Trade who said that that was the important element which gave us the true measure of our priorities?
    Miss Bacon: I had not the separate figures for the improvements for new school buildings, but, on minor works, which means the improvement of older buildings, the figure for 1964–65 was £18 million and for 1970–71 it will be £30 million.

    South African Cricket Tour
    Mr. Winnickasked the Secretary of State for Education and Science what further negotiations have taken place with the Marylebone Cricket Club over the proposed South African cricket test tour next year.
    Mr. Denis Howell: Visits to this country by sports teams from overseas are a matter for their hosts, the governing body of the Sport in England, in this instance the newly-created M.C.C. Council. In the case of a South African cricket team, there would be no question of any grant from Government funds, and whilst I am naturally available to any governing body which may wish to consult me, sporting visitors are in the same category as all other visitors from that country.
    Mr. Winnick: Would it not be absolutely disgraceful if, following the disclosures over the d'Oliviera affair, the South African cricket team came here to play in Britain next year? Is my hon. Friend aware that many of us consider that the advice which was given by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) to the M.C.C. was deplorable and unworthy of anyone in his position in public life?
    Mr. Howell: I have made it clear many times that I deprecate the choice of teams on any racial basis, and there is no question of money being given for tours here or for British teams to tour in South Africa while apartheid remains. But it is purely a matter for the sports concerned whether these ethical and moral questions should be implemented in the manner which many hon. Members would like.
    Captain W. Elliot: Would the hon. Gentleman not agree that contacts between nationals of different nations is one way of moderating attitudes and that this has been particularly borne out by the moderation of attitudes between the West and Russia since the last World War? Is it not juvenile to cut off these contacts and to ostracise another country, which is merely self-defeating?
    Mr. Howell: I am aware that there is a genuine feeling among many sporting folk that the considerations which the
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    hon. Gentleman has in mind are true, but, in my view, there is absolutely no evidence that the continuing contacts in South Africa are having any beneficial and civilising effects on the Administration there.

    Women Medical Students
    Dame Irene Wardasked the Secretary of State for Education and Science if he will give an assurance that in the provision of extra places for medical training women will have equal opportunities with men for entry and that merit shall be the only qualification, without sex discrimination.
    Mrs. Shirley Williams: I would refer the hon. Lady to my Answer to my hon. Friend the Member for Wolverhampton, East (Mrs. Renée Short), on 17th April. I am sure that universities, which are responsible for their own decisions on the admission of students, will bear in mind the advice of the Royal Commission on Medical Education on this matter.—[Vol. 781, c. 1313.]
    Dame Irene Ward: That Answer was a little difficult to follow having regard to the fact that when the conversation on the expansion of medical training took place last week, which was after 17th April, it was stated that the Question ought to be put to the Secretary of State for Education. I am presumably right in assuming that there will be no sex discrimination. I trust that this opportunity will be available for all medical entrants, covering the whole field and not just a new extension? Perhaps I could have an answer to the question, is that correct?
    Mrs. Williams: The hon. Lady does not seem quite to appreciate that universities in this country are autonomous. We can only advise them, as we have done, to exercise no sex discrimination. We cannot dictate to them that they should exercise no sex discrimination.

    Public Lending Rights Scheme
    Mr. Ridleyasked the Secretary of State for Education and Science what progress has been made in his consideration of a scheme of public lending rights for public libraries, based on a charge for each book borrowed.
    Miss Jennie Lee: A Departmental Working Party is reviewing various possibilities and, in particular, the Arts Council's proposals, but none which involves a charge on borrowers.
    Mr. Ridley: Since the right hon. Lady said earlier that she could not find the £2 million of public money involved in this scheme and since a penny on borrowing would yield £2½ million, why does she not put the cost of the scheme on to those who benefit from it, the readers, rather than on the taxpayers, who do not?
    Miss Lee: I know that a few hon. Members opposite look with favour on a small charge for borrowing, but I hope there will not be many who do so because we must rule out entirely the idea that we should breach the principle of a free library service. [HON. MEMBERS: "Why?"] There are all kinds of people, old and young, who are attracted by books, even though they may not all be first-class literature. This is a gain which we have. While we are grateful to the Arts Council for putting forward a scheme acceptable both to authors and publishers, it is not acceptable to many local library associations or to the Association of Municipal Corporations. We are working on various schemes and we hope to bring the various interested parties closely together.
    Mr. Ogden: Would there not be an acceptable medium whereby local authorities could make a contribution from rates to pay those authors whose books are loaned through local libraries, thus maintaining the principle of a free library to those who want to use it while at the same time making a proper contribution for those who write the books?
    Miss Lee: I am sure that the Working Party will listen to anything that is said by hon. Members and will consider it. The Working Party is also considering other schemes which may raise funds, but not from rates or taxes.
    Mr. Channon: Can the right hon. Lady say when we are likely to see the Report of the Working Party, which seems to be taking a long time? Has she seen reports about the alarming situation in Sweden where authors are taking militant action, which we do not want to see happening here?
    Miss Lee: In Government everything is a matter of priorities. The £2 million which it is reckoned would be the cost of the Arts Council scheme would not in any circumstances be found from the Arts Council grant. This must be additional Treasury expenditure and, as additional Treasury expenditure, it is a matter of Government priority.

    Temporary Playgroups
    Mr. Juddasked the Secretary of State for Education and Science how many temporary playgroups for younger schoolchildren he estimates were organised by educational authorities in England and Wales during the recent school holidays.
    Miss Bacon: Arrangements of this kind are within the discretion of local education authorities and I have no returns on which to base an estimate. I think it is a very worth while form of activity.
    Mr. Judd: Is my right hon. Friend aware that projects of this kind can make a very significant contribution to the social life of deprived areas of major urban centres? Has she studied the very successful experiment in Portsmouth? Will she encourage all local authorities wherever possible to take similar action?
    Miss Bacon: Yes I shall certainly encourage local authorities and I will go a step further. I am willing to consider proposals made under the urban programmes for areas of special social need.

    Museums and Art Galleries
    Mr. Juddasked the Secretary of State for Education and Science how many of the largest twenty local authorities in England and Wales have no municipal museums or art galleries; and whether he will make a statement.
    Miss Jennie Lee: Excluding the Greater London area where there are special circumstances affecting the pattern of museum provision, only Cardiff of the twenty largest municipal authorities in England and Wales has no museum or art gallery provided or maintained by the local authority. The National Museum of Wales is in Cardiff and this is assisted financially by the City Council. It is for each local authority authorised to provide museums or art

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    galleries to decide whether and to what extent to do so.
    Mr. Judd: Does not my right hon. Friend agree that in comparison with other European countries our provincial centres are sadly lacking in the standard of these amenities? What can be done to improve these facilities?
    Miss Lee: I should like to see standards improved, and they are improving. Total expenditure by local authorities on museums and art galleries in 1967–68 amounted to £3·9 million, an increase of 13 per cent. over the previous year. The Government made a grant of £100,000 towards the cost of purchasing objects for display in those museums and galleries. The area museum councils are also being helped. We are anxious to improve standards.

    Primary Schools (Norfolk)
    Dr. Grayasked the Secretary of State for Education and Science if he will make a statement on his visit to the Norfolk primary schools; and what proposals he now has for the improvement of the buildings.
    Mr. Edward Short: I saw much of interest during the visit, which covered secondary schools and a technical college as well as primary schools. I am authorising four new primary schools in areas of growing population in the county.
    Dr. Gray: As there was criticism by the East Anglian Planning Council of the environmental circumstances of these primary schools, does not my right hon. Friend think that something should be done to raise the standard of primary schools in Great Yarmouth and Norwich and to think of the whole of Norfolk as a priority area?
    Mr. Short: I could not judge about the criticism by the Planning Council, but from the schools which I saw there was certainly nothing to justify the criticism made in the Planning Council's report.

  PRIME MINISTER (SPEECH)
  Mr. Hugh Jenkinsasked the Prime Minister whether he will place in the Library a copy of his public speech
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  on industrial affairs at Prescot on 14th March.
  The Prime Minister (Mr. Harold Wilson): As my hon. Friend will be aware from my replies to Questions by my hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts) 24th March, and the hon. Member for South Angus (Mr. Bruce-Gardyne) on 15th April, I have already done so, Sir.—[Vol. 780, c. 223; Vol. 781, c. 985–990.]
  Mr. Hugh Jenkins: Is my right hon. Friend aware that I am grateful that he has carried out this suggestion because on reading the full text of the speech I found that it did not quite carry the antitrade union impression made by Press reports?
  Dr. Winstanley: Will the Prime Minister bear in mind that if he listened to speeches in the North-West of England instead of making them his Government's Industrial Relations Bill might bear a closer relationship to the facts of industrial life than seems likely to be the case?
  The Prime Minister: I spent a great deal of time last week listening not only to speeches but to views of people in the Manchester area and other parts of the North-West. I do not think the Bill is yet available to the hon. Member because it is not yet drafted. I returned convinced that the proposals of my right hon. Friend bear full relation to what is required and to reality.

  MONEY SUPPLY (CONTROL)
  Mr. Bruce-Gardyneasked the Prime Minister if he will take steps to improve co-ordination between the Secretary of State for Scotland and the Minister of Housing and Local Government on the one hand, and the Chancellor of the Exchequer on the other, regarding the control of the money supply.
  The Prime Minister: I am not sure in what sense the hon. Gentleman is using the phrase "money supply" and no doubt he will make that clear in any supplementary question.
  My right hon. Friends already work closely together on the financing of public sector transactions.
  Mr. Bruce-Gardyne: I am sorry if my Question was not clear. The point which I had in mind was subsidisation of local authority borrowing rates by the taxpayer. How does the Prime Minister reconcile that with the Chancellor's attempts to get better control of money supply? How does he explain this contrasting policy to Mr. Goode of the International Monetary Fund?
  The Prime Minister: This has been the policy for some years, and the hon. Member was probably involved in debates in this House in relation to the lowering of the effective interest rates which local authorities have to pay. I should have thought that he would agree that this is an extremely valuable contribution to housing problems whether in Scotland or in England and Wales. I do not think that it in any way interferes with the Chancellor's general policies in relation to monetary control and in relation to money supply, on which he had quite a lot to say in his Budget speech.
  Mr. John Fraser: Is my right hon. Friend aware of the stringent controls placed by the Chancellor on the supply of money to local authorities for house-purchase schemes and the supply of money to housing societies? As personal consumption on housing is preferable to that on consumer goods, because it involves a lower import input, will my right hon. Friend consider what he can do to increase the supply of money for this purpose in the national interest?
  The Prime Minister: My hon. Friend will be aware of the decisions announced by the Government in relation to public expenditure. This was one item on which restraint had to be asked for. At the same time, the Government have given full support to local authorities in building houses for rent where there is still a very large problem.

  PRICES AND INCOMES BOARD'S REPORT (TOP SALARIES)
  Mr. Boyd-Carpenterasked the Prime Minister whether he will issue directions to the Ministers concerned with the implementation of the report of the National Board for Prices and Incomes on the salaries of chairmen and members of nationalised boards.
  The Prime Minister: I would refer the right hon. Gentleman to the statement which my right hon. Friend, the First Secretary of State made in the House on 3rd April.—[Vol. 781, c. 659–61.]
  Mr. Boyd-Carpenter: How does the right hon. Gentleman propose to tighten up the disparity between the board salaries covered by that statement and the salaries being paid to member; of the Steel Corporation in view of the effect of this disparity on the remuneration of crucial higher management of the nationalised industries? Will he say what he proposes to do about it?
  The Prime Minister: The hon. Gentleman will be aware that the Report did not deal specifically with the British Steel Corporation. He will also be aware that the question of the salary of the present Chairman of the British Steel Corporation, whose original term of employment comes to an end later this month, was explained to the House by my right hon. Friend the Minister of Power on 15th March, 1967. In reply to the right hon. Gentleman's earlier point about the Report of the National Board for Prices and Incomes, this was the subject of debate in the House, I think during the Adjournment debates before the Easter Recess.
  Mr. William Hamilton: Will my right hon. Friend confirm that Lord Melchett will get the £8,000 or £9,000 increase in salary for which he has asked? Since the recommendations of the National Board for Prices and Incomes will be implemented, will my right hon. Friend say whether the chairmen of the boards will be worse off if they lose their expenses allowances?
  The Prime Minister: I cannot confirm any rumours or suggestions about what the salary of the Chairman of the British Steel Corporation will be, but a statement to the House will be made as soon as the responsible Minister is in a position to do so. I have nothing to add to what my right hon. Friend said in the debate about the Report of the National Board for Prices and Incomes on the wider question raised by my hon. Friend.
  Mr. Peyton: On reflection, does the Prime Minister agree that it is hard to see who is being helped, or what useful

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  purpose is being served, by referring this admittedly difficult matter to the National Board for Prices and Incomes?
  The Prime Minister: I assume that the hon. Gentleman, who has some experience in this matter, having been a junior Minister in a Department dealing with certain nationalised boards, has not had time to study in full the Report of the National Board for Prices and Incomes. It was important to get these matters fully studied and certain declarations or suggestions made by the Board. The Government's policy on this was explained by my right hon. Friend in a statement in the House before Easter, and debated shortly afterwards.
  Mr. Atkinson: Is my right hon. Friend aware that Lord Robens receives a larger salary than the Prime Minister, and does he think that that is right? Secondly, if the justification for increasing the salaries of the chairmen of nationalised industries is to maintain the differentials of lower grades, are the Government saying that existing differentials should be maintained, whatever the cost, for senior grades?
  The Prime Minister: The National Board for Prices and Incomes dealt with the issues in the Report, including the problem of manning up national boards when there was a competing and very high income pull from private industry. I do not think that Lord Robens has considered being lured away from the Board by whatever he may consider to be the attractions of my position. I do not think that that arises.

  POSTMASTER-GENERAL (SPEECH)
  Mr. Bruce-Gardyneasked the Prime Minister whether the public speech of the Postmaster-General in London on 26th March about the state of the balance of payments represents the policy of Her Majesty's Government.
  Mr. Maurice Macmillanasked the Prime Minister whether the public speech of the Postmaster-General in London on 26th March, 1969, on the state of the economy represents the policy of Her Majesty's Government.
  Mr. Waddingtonasked the Prime Minister whether the public speech made by the Postmaster-General to the Electronics Engineering Association in London on the 26th March on the state of the economy represents Government policy.
  Mr. St. John-Stevasasked the Prime Minister whether the public speech of the Postmaster-General in London to the Electronic Engineering Association on 26th March, 1969, on the economic situation represents the policy of Her Majesty's Government.
  The Prime Minister: I would refer the hon. Members to the reply given on my behalf by my right hon. Friend the Foreign and Commonwealth Secretary to a Question by my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) on 1st April.—[Vol. 781, c. 85.]
  Mr. Bruce-Gardyne: Will the Prime Minister tell us why the Postmaster-General got into such hot water on this occasion for telling the truth about the state of the balance of payments, or are all Ministers, apart from the Chancellor, required to subscribe to the Prime Minister's own fancy about an economic miracle?
  The Prime Minister: That raises a number of questions with which I should like to deal. First, my right hon. Friend got into hot water only in the more imaginative sections of the Press. My right hon. Friend, having heard what he thought were several rather complacent speeches about the economy at the business lunch which he was addressing, felt it right to put them in perspective. He spoke fully on the lines on which my right hon. Friend and I have spoken, and he used the word "critical" quite rightly in the sense of a turning point. This country economically is facing a turning point, and the House spent four days last week debating that. It was a very interesting debate.
  Mr. St. John-Stevas: Is not the truth of the matter that the Prime Minister has long been intoxicated by his own natural but excessive optimism over the state of the economy, and would not it be for the good of us all, if not of his party, if for once he would admit that he had been wrong?
  The Prime Minister: The hon. Gentleman has suggested a state of inebriation about the economy. I have repeatedly in many speeches warned the nation and the House about the problems which we face, particularly in relation to exports. I also warned my own party that, because we have done so much to restructure industry, we intend to get the fruits of that, and of that economic miracle which others have talked about, and not leave the fruits to right hon. Gentlemen who have not earned them.
  Mr. Dobson: Is the Prime Minister aware that many hon. Members on the benches behind me feel that he would be well advised to answer these questions by informing the House of the massive contributions to the electronics industry which the Government have made, including the restructuring of the industry and the Government contracts which have been placed, and also of the excellent research which has been done?
  The Prime Minister: This would be very apposite. If I thought that hon. Gentlemen opposite were interested in real facts, I could, with the help of my right hon. Friend, on a suitable occasion give some very important figures to the House about the remarkable growth of productivity in the publicly-owned industry which my right hon. Friend was defending at the luncheon, and about the remarkable increase in investment, particularly in the telephone service, for which the Government have been responsible and for which we have had to find the money.

  NIGERIA (PRIME MINISTER'S VISIT)
  Sir C. Mott-Radclyffeasked the Prime Minister whether he will state the number of officials and other staff that accompanied him at public expense on his recent visit to Nigeria; and if he will state the total cost of the visit.
  The Prime Minister: There were 20 advisers and officials, including Lord Hunt and Mr. Macolm MacDonald, and 33 other staff concerned with secretarial administration and security duties.
  It is not yet possible to give firm figures for the total cost of the visit but the estimated cost is under £50,000. This includes the cost of supporting aircraft, including the transport of relief supplies.
  Sir C. Mott-Radclyffe: Does the Prime Minister agree that, unless he was far more certain than he could have been that he and he alone was likely to achieve some success as a result of this visit, the task was more fitted to have been undertaken by the Foreign Secretary, and at less cost?
  The Prime Minister: This was considered. As I have explained to the House, one of the main reasons why I went was that I felt it necessary to represent to those whom I saw the acute anxiety of the House about a large number of questions, on which I received satisfactory replies. For example, one was about the terms under which the Nigerian Government were prepared to enter into negotiations. A great volume of expenditure is involved in relief supplies, and I had to satisfy myself about what the priorities were in the matter of relief. The hon. Gentleman will know that, quite apart from the deep issues on the war and on relief which have upset the House, the continuance of the war for a day longer than is avoidable involves this country in heavy economic cost.
  Mr. Ogden: Is my right hon. Friend aware that the best possible way in which £50,000 could be expended by a nation as rich as ours is in an endeavour to bring peace and prosperity to our brothers in Africa?
  The Prime Minister: If one compares the cost of the visit and the achievements, not only in Nigeria but also in talks with O.A.U. and with the Emperor, with the continuing cost to this country for two years, the cost of the visit represents a small fraction of the cost to this country in one day of the war.
  Sir A. V. Harvey: Will the Prime Minister say what was the cost of sending H.M.S. "Fearless" to Lagos? In retrospect, does not he think that H.M.S. "Fearless" would have been better employed in the Mediterranean, where there was considerable activity by ships of other nations?
  The Prime Minister: H.M.S. "Fearless" was not due at that time to stay in the Mediterranean. To answer the question I would have to get separate costs for various elements in the estimates being constructed. There were a

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  number of reasons why H.M.S. "Fearless" was used. One was that, if it had been possible—and it looked likely at one moment—that there could be talks with Colonel Ojukwu, which might have helped to resolve the issue more quickly than it has been resolved, then it was desirable to give him a chance of talks in an area in which he would feel thoroughly secure and away from Federal control.
  Mr. John Mendelson: Will the Prime Minister also recall that before his visit he had been hard pressed by many of us to make representations to the Nigerian Federal Government on the cessation of bombing operations and also about ensuring the personal safety of the Ibo people in the entourage of Colonel Ojukwu. We are greatly satisfied that he himself undertook this task.
  The Prime Minister: I thank my hon. Friend for those words. Those were two of the four important issues which I took up with General Gowon. In fact, the visit was originally planned and settled, not even in the period when these representations were being strongly made. It had been settled some weeks before, and before the serious debate which took place in the House was scheduled. After that I felt all the more strengthened in the representations which I had to make.
  Sir Knox Cunningham: If the Prime Minister feels that the expenditure of £50,000 was of value to this country in respect of the visit to Nigeria, would he consider going to Anguilla?
  Mr. James Johnson: Is the Prime Minister aware that it is not back-benchers who matter in this respect, but that the O.A.U. thought that the Prime Minister did a magnificent job in going there, and that they are saying so in Africa at this moment?
  The Prime Minister: There are one or two developments which have not yet, we are sad to see, led to a cessation of the fighting. The discussions in Addis Adaba following those in Nigeria may have contributed in small measure to this. Where I take issue with my hon. Friend is that I know that when I was expressing these anxieties in Nigeria, I was speaking for a large number of hon. Members on the other side of the House as well as on this side. My doing so was generally welcomed in Africa.

BUSINESS OF THE HOUSE
Mr. Heath: Will the Leader of the House kindly give us the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): The business for next week will be as follows:
MONDAY, 28TH APRIL—Supply [18th Allotted Day]: Until Seven o'clock, there will be a debate on an Opposition Motion on the effect of high interest rates and the change in the gilt-edged market on local authority finances.
Afterwards, a debate on refunding of the betterment levy, which will also arise on an Opposition Motion.
Motions on the Eggs (Guaranteed Prices) Order and on the Sunday Entertainments Order for Derwent.
TUESDAY, 29TH APRIL—Progress on the remaining stages of the Post Office Bill.
WEDNESDAY, 30TH APRIL—Completion of the remaining stages of the Post Office Bill. Afterwards, remaining stages of the Education (Scotland) Bill, and Lords Amendments to the Agriculture (Spring Traps) (Scotland) Bill.
THURSDAY, 1ST MAY—Consideration of Private Members' Motions until Seven o'clock.
Afterwards, consideration of Lords Amendments to the Foreign Compensation Bill.
Motion on the Motor Vehicles (Tests) (Exemption) Regulations.
FRIDAY, 2ND MAY—Private Members' Bills.
MONDAY, 5TH MAY—Supply [19th Allotted Day]:
The topic for debate will be announced later.
Mr. Heath: Last Thursday, when the Leader of the House was pressed, he said that it was right that the Secretary of State for Social Security ought to make a statement about the cost of the contributions for increased pensions. When will the Leader of the House assert his authority to ensure that his right hon. Friend makes this statement which the

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House badly needs? When will the horrible truth be revealed?
Did the right hon. Gentleman hear the Prime Minister, in answer to a supplementary question a moment ago, say that he could not announce a date when the Bill for reform of trade unions would be published because it was not even drafted yet? What is the explanation of this extraordinary state of affairs in which a White Paper was published months ago and the Government promised legislation and now, when the Chancellor of the Exchequer in his Budget has put so much emphasis on the urgency of a Bill for the good of the economy, it is not even drafted? When will it be published?
Mr. Peart: On the second matter which was raised, I hope that we shall have the Bill before Whitsun. I cannot be specific, but I will do my best. I hope the right hon. Gentleman will appreciate that I am giving him a fair answer to his question. I will do my best to inform the House. I hope that if possible it will be just before Whitsun.
On the first matter which was raised, I conveyed to my right hon. Friend and his colleagues that I thought that a statement should be made and that I felt it was right to do so. The Chief Secretary made a statement—[Interruption.] I know that it was criticised by hon. Members, but as Leader of the House I felt that I should convey the views of hon. Members, and I did so sincerely.
Mr. Heath: Would the Leader of the House accept that for a Minister to stand up and say that he is making a statement when he has no statement to make, is not in effect making a statement for the benefit of the House? May I express appreciation for his saying that he does not know when the trade union Bill will be published.
Mr. Peart: I said that I would do my best to get it out as quickly as possible.
Mr. Shinwell: Does my right hon. Friend intend next week to move his Motion on declaration of Members' interests? Although I in no way doubt the integrity of the Members whose names are included in the Motion, would it not have been more satisfactory if he had ascertained whether those who had been nominated for this Committee had declared their interests before accepting
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appointment? May we have some satisfaction about this matter? Are all those persons nominated to the Select Committee quite free of outside interests in order to ensure that no prejudice is injected into the discussion?
Mr. Peart: I should have thought not. I am sure that every hon. Member who has been mentioned will deal with the matter impartially and honourably.
Mr. Boyd-Carpenter: Could the right hon. Gentleman say when his right hon. Friend the Secretary of State for Social Services will make the statement telling us what will be the increased contributions for National Insurance? Will that statement also cover the other changes which are always made at the same time, such as those in respect of war pensions and supplementary benefits?
Mr. Peart: I cannot say when, but I will convey hon. Members' views to my right hon Friend accordingly.
Mr. Dalyell: Could we have an early debate on the interesting White Paper, which was presented last week by the Leader of the House, on marine science and technology?
Mr. Peart: I agree that it was an interesting paper, and I hope that hon. Members will have read it. Although I have responsibility for it, I am afraid that it will not be discussed next week.
Dame Irene Ward: May I ask the right hon. Gentleman if he could find time to discuss a constitutional matter? When last Monday I asked the Minister of Social Security whether he could have an inquiry into nurses' problems, which are very important, he said that this was a matter for the Whitley Council. But I notice that when a number of demonstrating nurses went to the Elephant and Castle, where his office is siutated, he met them and said that he would look into the matter. What is the constitutional position, and why should not the statement about the problem of the nurses be made to Parliament rather than on the steps of the Elephant and Castle?
Mr. Peart: I see nothing wrong in making a speech outside, even though it may be at the Elephant and Castle. I do not think that this was a breach of constitutional propriety. I agree that it is a good thing that Parliament should

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be informed, and if a statement is necessary I will ask my hon. Friend to make it.
Mr. Thorpe: Reverting to the matter of trade union legislation, does the Leader of the House recollect that the First Secretary of State, in her speech on the Budget, said that there would first be published a White Paper giving the Government guidelines on industrial reform.
May I ask two questions? First, when does he expect the White Paper to be published? Secondly, will the House have the opportunity to debate the proposals before they are turned into legislative form?
Mr. Peart: The whole question relates to the matter to which the Leader of the Opposition rightly drew my attention, namely the date of the publication of the Bill.
Miss Lestor: I would draw attention to Motion No. 268—
[That this House deplores the decision of the Barbarians Rugby Club to participate in matches in Southern Rhodesia and considers that this action actively contributes towards bolstering the illegal Smith régime.]
which is on the Order Paper in my name dealing with the visit of the Barbarians to Southern Rhodesia. Could we ask him to find time to debate this Motion about the whole question of sports activities by apartheid teams?
Mr. Peart: I am aware of the sentiments expressed in this Motion, and I understand them, but I am afraid the answer is "not next week."
Mr. Peyton: The right hon. Gentleman told us that he informed his right hon. Friend the Secretary of State for Social Services that, in his opinion, a statement ought to be made to the House. What further steps is he now to take to persuade his right hon. Friend that such a statement is overdue? We all hope that he will be much more successful this time. Is he losing his influence with his colleagues?
Mr. Peart: I would not say that. I hope that I have a good influence.
Mr. William Hamilton: May I refer to the question raised by my right hon.
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Friend the Member for Easington (Mr. Shinwell) about the Motion on to-day's Order Paper, "Members' Interests (Declaration)"? Could he give a categoric assurance to the House that there will be an opportunity to debate this Motion, if only so that Members can express their anger and frustration at the apparently arbitrary exercise of the kind of patronage that goes with the selection of members for this Committee and others, without reflecting in any way on the merits and intentions of the members selected?
Mr. Peart: I hope that my hon. Friend will not say that there is patronage here. This is a group of Privy Councillors, with the exception of the hon. Member for Orpington (Mr. Lubbock). It is a Committee which will have to do a hard job. There is no question of patronage.
Mr. Godber: Would the right hon. Gentleman confirm that the Northumberland Committee will be publishing its report next Thursday and will the Minister of Agriculture be making a statement in this House on that date?
Mr. Peart: I hope this will be on 1st May.
Mr. Ellis: Does my right hon. Friend realise, with regard to the matter raised by my right hon. Friend the Member for Easington (Mr. Shinwell), that while we are all sure that all Members of the House are honourable, it seems that there is now some dispute about some being more honourable than others? Therefore would he make it clear—
Mr. Speaker: Order. We cannot debate at this moment the Motion on today's Order Paper.
Mr. Ellis: Will he make it known to his right hon. Friends that we want this matter cleared up very quickly, so that these points do not arise?
Mr. Peart: I do not think they should arise. I assume that all hon. Members are honourable men.
Mr. Biffen: Reverting to the Second Reading of the Industrial Relations Bill, can the right hon. Gentleman make an early statement, preferably next week, confirming that the Committee stage will be taken on the Floor of the House?
Mr. Peart: I cannot do that at the present moment.
Mr. John Fraser: Does my right hon. Friend recollect the assurance he gave to communicate to the Foreign Office the concern of the House over the Foreign Office decision on the resolution of the Council of Europe on Greece? When will he complete the second part of that assurance by making a statement to the House on what the Foreign Office issues are? Does he appreciate that it must be made before next week, because the Council of Ministers meets on 5th May, the following Monday?
Mr. Peart: I have conveyed the views of my hon. Friend and those who feel as he does. I will convey again to my right hon. Friend that certain hon. Members would wish a statement. I cannot promise one next week.
Sir Knox Cunningham: As the Leader of the House has said to my right hon. Friend the Leader of the Opposition that he hopes that the trade union Bill will be introduced before Whitsun, will he say whether it will go through all its stages before the Summer Recess?
Mr. Peart: Let us wait and see.
Mr. Hector Hughes: In the name of humanity, can my right hon. Friend find time next week for my Early Day Motion No. 257—
[That this House is of opinion that Clause 12 of the regulation relating to disabled persons' cars, which provides that when the child or children of the disabled person reaches the age of 14 years or ceases to depend on the disabled person, the car will not be replaced, by substituting a later age which will enable the disabled person to continue his or her care of the relevant child or children.]
Strange as it may seem, there are disabled persons, even among the robust and gallant population of Aberdeen.
Mr. Peart: I understand that my hon. and learned Friend had a Question down to the Secretary of State to which he has received an Answer. I have nothing to add to that, although I appreciate his concern in this matter.
Sir F. Bennett: Can the right hon. Gentleman say when the Finance Bill will be published? Can he at the same
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time give an absolute undertaking that the material and information we are still awaiting about National Insurance contributions will be available before the Second Reading of the Bill? Will he give that assurance in such a categoric form that none of his colleagues, not even the Chief Secretary, will be able to evade or misinterpret it?
Mr. Peart: I thought that I had made my position plain on the earlier questions. As to the later question he asked, it would be convenient for Members on both sides if I say that it is proposed that the Committee stage should be taken in two parts, one upstairs and one on the Floor of the House, and that important matters affecting the Finance Bill, such as S.E.T., Corporation Tax and Purchase Tax, should be taken on the Floor of the House, while detailed minutiae should be taken upstairs. This will be done.
Mr. John Mendelson: Will my right hon Friend, in spite of the unholy pressure from the declared enemies of the trade union movement opposite to hurry a proposed Industrial Relations Bill, take note of the fact that the Trades Union Congress is proposing new alternatives to suggestions which have been made and that the Government are committed to full consultations? Would he declare that there is no hurry? This is a responsible task and the Government ought to take their full time in reconsidering these matters.
Mr. Peart: I hope that my hon. Friend appreciates that my right hon. Friend the Secretary of State does believe in adequate consultations and that she has already had consultations.
Mr. Edward M. Taylor: Will the right hon. Gentleman be able to tell us next Thursday the date of announcement of the increased National Insurance stamp? Does he realise how urgent this is for some small firms whose businesses are already being seriously threatened by the big increase in S.E.T.?
Mr. Peart: I will convey that to my right hon. Friend. I cannot say it will be next week.
Sir C. Osborne: Since yesterday's sterling rate dropped to the lowest point ever and is reaching the point now that a further fall would suggest yet another

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devaluation—[HON. MEMBERS: "Oh."] This is true. Will the Leader of the House try to find time, next week if need be, for an emergency debate on the steps the Government will take to preserve sterling, as promised by the Prime Minister
Mr. Peart: I understand the hon. Member's views which he puts frequently and eloquently to the House. I hope he will appreciate that to panic over day-to-day movements of sterling would be very wrong. I do not think that a statement will be called for.
Dr. Gray: In view of the letter to The Times signed by 10 eminent professors of the L.S.E., would my right hon. Friend arrange a debate next week into the affairs and direction of the L.S.E.?
Mr. Peart: No. That is not a matter in which I should get involved. A statement is not necessary.
Mr. Dudley Smith: In view of the most unsatisfactory Answers we have had earlier this afternoon on the future of comprehensive schooling and the policy for the grammar schools, and the doubt cast on the future of the direct grant schools, would the right hon. Gentleman consider providing time for an early debate on this subject in advance of the Government's forthcoming Bill which will very seriously restrict the education powers of local authorities?
Mr. Peart: As the hon. Gentleman knows, I too have an interest in education. It might be useful if the Opposition sought to take a Supply Day on this. They have that opportunity. I hope that when my right hon. Friend does present a Bill the hon. Gentleman will give it his full support.
Mr. Eldon Griffiths: On the subject of Mr. Gerald Brooke, the Leader of the House will recall the Foreign Secretary's statement on Tuesday that he was making inquiries and my right hon. Friend's willingness to await those inquiries. Would he convey to the Foreign Secretary that the House is anxious to hear the results of his inquiries, when he has completed them, at the earliest possible stage?
Mr. Anderson: Would my right hon. Friend consider having an early debate on the Report of the Hunt Committee
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on intermediate areas, published today, which will have serious consequences for the constituencies of many hon. Members.
Mr. Peart: I hope that my hon. Friend will carefully study the Report before pressing me for a debate. Certainly we cannot have one next week.

HUNT COMMITTEE (REPORT)
The Secretary of State for Economic Affairs (Mr. Peter Share): With permission, Mr. Speaker, I should like to make a statement on the Report of the Committee on the Intermediate Areas under the chairmanship of Sir Joseph Hunt which is published today. Copies are available in the Vote Office. As the Report touches on the interests of so many parts of the country my statement will be somewhat lengthy, and I apologise for this.
The Committee was appointed in September 1967 and Sir Joseph Hunt and his colleagues have prepared a very full Report on a subject of great complexity. The Government warmly appreciate the Committee's work.
Its principal conclusions and recommendations are as follows:

(i) The whole of the Yorkshire and Humberside and the North West Regions should qualify for an entirely new 25 per cent. building grant not linked to the creation of new jobs. They should also qualify for training grants and direct training assistance on the same basis as in the development areas.

(ii) In selected growth zones within these regions there should also be Government estates and factory building with supporting investment including link roads.

(iii) For these two regions and in the Notts./Derby and North Staffordshire planning sub-divisions there should be an 85 per cent. grant for derelict land clearance as in the development areas. The clearance programme should be speeded up in all these areas and in the development areas.

(iv) The industrial development certificate control should be relaxed throughout the country by raising the exemption to 10,000 square feet.

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(v) The Merseyside development area should be de-scheduled and treated on the same basis as the rest of the North West Region.

Four members in three notes of dissent have expressed reservations about some of the Committee's findings.
The Government have considered these recommendations against the background of our assessment of general economic prospects for the regions in the recently published Economic Assessment to 1972, in the context of our regional policy as a whole and within the need to limit public expenditure.
We are convinced that it is necessary to retain for the development areas and special development areas a large margin of preference in assistance to industry. Although the massive increase in Government preferential assistance to industry—for these areas—from some £30 million in 1964 to over £260 million—is making a vital and growing contribution to overcoming their still serious structural problems, none of these areas is yet ready for de-scheduling. The Government do not propose therefore to accept the Hunt Committee's recommendation for the de-scheduling of Merseyside.
Against this background we have considered carefully on the one hand the Hunt Committee's arguments for spreading limited resources over the whole of the two regions concerned and on the other hand for concentrating these on a few areas where present and prospective needs are greatest. We have concluded that the better course is to concentrate assistance to industry with an employment link on a strictly limited number of smaller areas. For this reason, we have not been able to accept the Hunt Committee's proposal for a general building grant.
The Government consider that the selection of areas to be given assistance to industry must be governed strictly by criteria of need, especially the level and character of unemployment and numbers of unemployed, the incidence of high net outward migration and the real scope for industrial growth.
I turn now to our proposals.
Assistance to Industry: Areas
In indicating the areas to which in our view these criteria most clearly point I must emphasise that I describe them in broad terms. We shall take fully into account any further views of the regional economic planning councils. Consultations with them will be completed and the precise boundaries of these new intermediate areas will be announced after the Whitsun Recess. Thereafter we will bring forward the necessary legislation as quickly as possible.
These areas are:
The Yorkshire coalfield area, the Erewash Valley area of Derbyshire, parts of Humberside, the main industrial areas of North East Lancashire east of the proposed New Town, a substantial part of South East Wales, Leith and Plymouth.
We have considered the problems of other areas, but we have concluded that these problems do not at present justify the use of financial incentives to divert industry to them.
Assistance to Industry: Measures
We propose to seek powers to make available to these intermediate areas certain assistance under the Local Employment Acts. This will not include the loans and grants, for general purposes, which are made in the development areas on the advice of the Board of Trade Advisory Committee.
What it will include is:

(i) Grants at 25 per cent. of factory building costs;

(ii) Government built factories (both custom built and advance factories) on the same basis as in the development areas;

(iii) The full range of development area training grants and other training assistance together with assistance for the transfer of key workers.

The date from which firms will be eligible for this assistance will be announced later.
We agree with the Hunt Committee that industy in the intermediate areas should be encouraged particularly in places which have real scope for growth. The studies made by regional economic planning councils have attached importance

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to the development of suitable growth zones and we will take councils' views fully into account.
There will be some additional expenditure on roads in the selected areas and proposals for the povision of new housing associated with industrial growth will be encouraged. There will also be an enlarged national programme for derelict land clearance for schemes certified by the Board of Trade as contributing to the development of industry in the area. For the North West and the Yorkshire and Humberside Regions, as a whole, in the areas selected for assistance to industry and in the North Staffordshire and Notts./Derby planning subdivisions, we intend to seek power to make available to local authorities a capital grant of 75 per cent.
I turn now to I.D.C. policy.
The industrial development certificate control is operated flexibly and with sensitivity to industrial and local circumstances, but it remains essential to relate its operation overall to the priorities of our regional policy, particularly to the needs of the development areas. The Board of Trade will continue to operate the I.D.C. control so as to give the development areas and the new intermediate areas general priority. In the rest of the North West and the Yorkshire and Humberside Regions, the control will continue to be administered liberally except in the congested parts or places otherwise unsuitable for industrial expansion.
We do not accept the Hunt Committee's proposals that the general exemption limit should be increased from the present levels to 10,000 square feet or that all control should be removed from moves to overspill towns. But we do see the need for a more flexible policy for such moves where planned development may be held up if the flow of industry to overspill towns from an exporting area is impeded. It certainly is our intention that all approved schemes for new and expanding towns should be properly supported by employment opportunities.
When these measures are in full operation their cost will amount to nearly £20 million a year. This will be met out of the very substantial and growing sums being spent on assistance to industry in
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the development areas. Even so, expenditure in the development areas will remain very high and they will of course retain a very large and continuing preference over the rest of the country including the new intermediate areas.
The work of the Hunt Committee and our proposals for the new intermediate areas which have flowed from it mark an important new stage in the development of regional policy.
We are pressing on with the recovery of the development areas. We are responding flexibly to the changing needs of the different parts of the country. We will continue to seek through our regional policy to serve the interests of every region and of the whole country.
Sir K. Joseph: The House will understand that with a 250-page book available only half an hour ago and a long statement made only a few minutes earlier, it is impossible to arrive at instant judgments. Would the Secretary of State tell us when he expects to introduce legislation? Will the Government note that in addition to the £30 million spent on what were then development districts in 1964, a large share of the £275 million was spent in investment allowances and, in addition, £45 million in a full year on free depreciation in the development districts? In other words, the figure of £30 million used by the Secretary of State is a gross distortion. My hon. and right hon. Friends are very glad that the Government intend to repair some of the damage caused in the "grey areas" by this sharp discrimination in Government policy against them, for it appears that a number of the recommendations of the Hunt Committee are not being accepted. Of course, we cannot judge the sense of that at this stage.
For the moment, I would only press the Secretary of State on finance. Do we understand that the Government intend to find the £20 million, the cost of their proposals in a full year, by cutting the money made available otherwise to the development areas? If that is so, how and where are they going to cut? Would the Secretary of State note that in our view, without touching development area funds at all, there are large sums now going in R.E.P. and S.E.T. refunds to firms that neither need nor seek subsidies that could perfectly well

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be used to finance the Hunt Committee's proposals, and more, on the "grey areas", if necessary.
Mr. Shore: I am interested in the right hon. Gentleman's suggestion as to how savings might be made. I want to make it perfectly clear that R.E.P. has been guaranteed for a period of seven years, and we stand by that guarantee. That apart, the saving, as I have already said, must come from industrial assistance to development areas. This will be considered and we shall make a statement on it in due course.
The right hon. Gentleman asked when we expect to be able to legislate. I hope that it will be some time this year, but I think we must wait until I make a further statement, when I hope to pronounce definitely on the areas which we have selected.
Several Hon. Members rose—
Mr. Speaker: Order. I shall be able to call a fair number of those hon. Members who are seeking to put questions if the questions are short.
Mr. Jay: Is my right hon. Friend aware that at a time when development area policy is being more successful than ever it would be the greatest mistake to make minor changes in policy, and will he assure the House that before the Government make up their mind on all the further details they will listen to the views of hon. Members as well as to those of the regional councils?
Mr. Shore: I shall be most anxious to have the views of my right hon. and hon. Friends, as well as the views of the economic planning councils. I am not proposing major changes in development area policy. I repeat what I have said. They will continue to enjoy a clear and substantial preference over the intermediate areas.
Mr. Heath: Is the right hon. Gentleman aware that this afternoon he has given yet another example of the Government's entering into financial commitments, namely, £20 million to help the intermediate areas, to be cut from development areas, without having a clue as to how it will be done, without being able to tell the House where the cuts will be made, without having worked out any of the
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sums, let alone being able to tell the House when the legislation will be brought in to put this into effect? This again, like the failure to tell us what the insurance contributions will be, is the mark of a totally incompetent Administration.
Mr. Shore: I thought that the right hon. Gentleman would make point.
Hon. Members: Answer it.
Mr. Shore: The right hon. Gentleman should not over-play his hand. He thought that he made a good point earlier this week, but he has made a bad one now. We are not entering into financial commitments. I have not yet reached the point at which I have even agreed with the E.P.C.s and others the precise areas which are to be helped.
The questions which are worrying the right hon. Gentleman will be made clear certainly not later than the time when I make my statement on which areas we have selected to help.
Mr. Simon Mahon: As Merseyside has a 3·9 per cent. unemployment problem, and is beset by massive social problems, may I, on behalf of people from the North-West, welcome the Government's statement and hope that the wisdom which they had displayed on this occasion will be echoed by better industrial relations on Merseyside?
Mr. Shore: I warmly welcome my hon. Friend's comments. Knowing the North-West Region so well, I think my hon. Friend will appreciate the difficulties in arriving at the best judgment about how to help the region as a whole, and we have tried to get the right balance.
Mr. Geoffrey Lloyd: Is the right hon. Gentleman aware that the Hunt Committee very closely argued its proposal for what it called a relatively modest change to increase the exemption limit for I.D.C.s? In the light of that, and the abrupt and summary dismissal of this policy by the Government, it will be felt in the West Midlands that the Government have sacrificed a strong economic case to the political prejudices of the Labour Party.
Mr. Shore: I do not think that is so. I understand the right hon. Gentleman's concern and interest in this matter, but I

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think that one of the things that has come out very clearly in the discussions which Sir Joseph Hunt has had, and in the evidence that he has received, is that there is a great deal of misunderstanding about the way in which I.D.C. control is operated. It is not the same thing to say that there is, as it were, a limit beyond which people cannot go without getting a certificate, as it is to say that this is, as it were, a veto on new developments. It is nothing of the kind. All it means is the more industrial expansion is brought within the possibility of being steered into development areas than would otherwise be the case, and I think that we must give that priority.
Mr. Anderson: Can my right hon. Friend confirm that in delimiting new areas one of the criteria will be the contribution which border firms make to the employment needs of areas within an existing development area? If not, surely it would be ludicrous if firms such as those in South Monmouthshire which get more than two-thirds of their work force from within a development area received no assistance under the new scheme.
Mr. Shore: As my hon. Friend knows, there is always a problem at the frontier of any scheme which is introduced. All that I can do is to undertake to look at the point that he has made.
Mr. Wall: I regret what appears to be a considerable watering down by the Government of the Hunt Committee's proposals for Yorkshire and Humberside. Will the right hon. Gentleman bear in mind that it is no use trying to attract industry to a growth area such as Humberside unless, at the same time, we provide good communications, both roads and the Humberside bridge which was promised in a certain famous by-election about three years ago?
Mr. Shore: I bear in mind the problems of Humberside. I hope that the Humberside Report will be published next week.
Mr. Barnett: Is my right hon. Friend aware that, much as one would want aid in one's own area, he is right not so to water down the assistance to development areas as to get the worst
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of all possible worlds? On the other hand, will he reconsider this question of the R.E.P. and save the £100 million involved, bearing in mind that most industrialists do not take this into consideration in working out their projects? Will he, therefore, use that money towards the help that he is now proposing to give for the development of derelict land and other things?
Mr. Shore: I have heard my hon. Friend before on the subject of R.E.P., and it would merely be going over old ground to say that I profoundly disagree with him as to the benefits of what is involved.
Mr. Richard Wainwright: Is the right hon. Gentleman aware that his proposal, even after the legislation is eventually passed and Government policy has got under way, will amount to less than £20 million, compared with the £260 million a year now being devoted to development areas? Is he further aware that in abandoning the idea of intermediate areas and scaling them down to intermediate districts he is surrendering to Conservative policy, accompanied by a strong flavour of party political lobbying? Does the right hon. Gentleman agree that if the intermediate regions were protected by powerful and democratic regional councils the Government would never have been able to get away with the repudiation of this Report?
Mr. Shore: I shall consult the councils about the Hunt Committee's Report as a whole and about my proposals.
The hon. Gentleman has made for me the point that I made earlier, that there will remain a strong differential in favour of the development areas. I do not apologise for that.
Secondly, with regard to the scope of the intermediate areas, what we have done is to narrow the area, but we have made available within the intermediate areas which I have defined, or we are proposing to make available, just that assistance which Sir Joseph Hunt proposed, with one exception, namely, that building grants will be employment linked, and not simply without such a link.
Mr. Arthur Davidson: Is my right hon. Friend aware that his words would appear to be deserving of a great and

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warm welcome in North-East Lancashire, despite the predictably grudging response by hon. Gentlemen opposite? Is my right hon. Friend also aware that if he said these recommendations would be implemented very soon he would receive an even warmer welcome in North-East Lancashire?
Mr. Shore: I know my hon. Friend's keen and continuing interest in the problems of intermediate areas. Having said that, I hope to make a definitive statement shortly after Whitsun; I hope that my hon. Friend will not think that we are dragging our feet when he takes account of the need to have proper consultations with the E.P.C.s and other bodies.
Mr. Hirst: Although the right hon. Gentleman's reply to my right hon. Friend the Leader of the Opposition rather devalues his statement, may I ask whether he will nevertheless bear in mind that the failure of the Committee to recommend higher investment grants for the wool and textile industry will be deplored, and will he give serious consideration to reversing that decision? In that regard, will the right hon. Gentleman bear in mind that the difficulties of the Committee in arriving at that decision are by no means understood, and that the situation is quite simple and easy to investigate?
Mr. Shore: I should not like to be drawn too far along that road at the present time. The proposal was put forward, but it did not win approval. Nor do I necessarily accept that the best way of helping the wool and textile towns is to accept the hon. Gentleman's suggestion.
Mr. Eadie: Would my right hon. Friend make it clear that the central theme of Government policy is the proper redistribution of industry? Would he also make it clear that he rejects the philosophy of the laissez faire economy as espoused by hon. and right hon. Members opposite, which would mean disaster for Scotland, Wales, the North-East and other areas? Is my right hon. Friend aware that the people of Leith, and particularly my hon. Friend the Member for Edinburgh, Leith (Mr. Hoy), who has fought very hard for some alleviation of this policy, will be very grateful for what he has said?
Mr. Shore: I thank my hon. Friend. I assure him that we cannot afford a laissez faire policy for the location of industry.
Mr. Tilney: I welcome the decision not to de-schedule Merseyside, but would the right hon. Gentleman bear in mind that what Merseyside needs more than anything else to become a growth area is better communications between north and south and between Merseyside as a whole and the M6?
Mr. Shore: All that Merseyside needs is the continuation of existing policies.
Mr. Milne: Has my right hon. Friend noted that the solution to the problems of the intermediate areas is similar to that for the development districts, namely, full employment? Until there is an intensification of Government policy towards that end, the problems of both types of area will remain unsolved.
Mr. Shore: The major purpose of the policy is to deal with the problems of unused resources and, above all, unemployment. Although my hon. Friend has spoken of development areas as opposed to intermediate areas, only 18 months ago we defined special development areas in recognition of particular problems in development areas.
Mr. Stodart: Is the right hon. Gentleman aware that, despite the remarks of the hon. Member for Midlothian (Mr. Eadie), there will be no rejoicing in the City of Edinburgh tonight as a result of the Report? The right hon. Gentleman mentioned a concession to Leith. Would he make clear whether it covers the whole of Leith or merely the dock area? Will the Government's review of the situation in Edinburgh recommended in the Report be continuous?
Mr. Shore: I can say nothing about the borders. This is one of the questions on which I want to consult the Economic Planning Councils. I do not think that I understood the hon. Gentleman's second question. Would he repeat it?
Dr. John Dunwoody: I congratulate my right hon. Friend on his response to the Hunt Report, and particularly on his continued concentration on the development areas and his rejection of the proposed modifications of I.D.C. policy.

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Does he accept the suggestion that there should be a comprehensive review of existing development area policy?
Mr. Shore: The Government keep development area policy under constant review. We have no proposals for a separate or independent review.
Mr. J. H. Osborn: May we have a definition of the new development districts? For instance, will the definition of the South Yorkshire coalfield include the area covered by the 44 Group and be incorporated with North Derbyshire and include Sheffield?
Mr. Shore: I am not talking about development districts. I am, for the most part, talking about fairly substantial intermediate areas. I cannot help the hon. Gentleman about the boundaries, for the reasons I have given.
Mr. Mikardo: While welcoming my right hon. Friend's statement, may I ask him whether he recalls that in a previous incarceration he was the author of Labour Party policy documents which argued that the Conservative policy of bribing enterpreneurs to go to development areas to provide employment was inadequate and that it would have to be supplemented by measures to bring public enterprises to the development areas? May I remind him that the present policy has resulted in a situation in which the cost to public funds of providing every job is very high, running to thousands of pounds? What has happened to his former beliefs?
Mr. Shore: I recall very well, as does my hon. Friend, that the Labour Pasty and this Government are pledged to do all in their power to correct regional imbalance at the earliest possible moment. We shall use whatever instruments of policy are to hand, whether public or private enterprise, and inducements to carry out that policy.
Mr. Maxwell-Hyslop: Since the Government reduced the maximum square footage which can be built without an I.D.C. from what it was under the Conservative Government, is it not clear that our judgment has been vindicated by the Hunt Report and that the Government are going directly against and not just ignoring
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the recommendations of the Hunt Report?
Mr. Shore: I do not know what the hon. Gentleman's judgment was, or what that of his party was, or what period he is speaking of. But I would not accept that we are rejecting the Hunt Report or its proposals on I.D.C.s. We have indicated that we shall make I.D.C.s freely available in the intermediate areas. That is sensible. But if we are to open up the areas in which there is to be a free I.D.C. policy, it is common sense to maintain I.D.C. control strictly over congested and prosperous areas.
Mr. George Jeger: Can my right hon. Friend say when he expects his policy to have some practical application? For example, can he advise the local authorities in my constituency, in some parts of which unemployment is running at 11 per cent., that they can take action, in which they have been frustrated up to now, by inviting industrialists to set up their factories in the locality?
Mr. Shore: I advise my hon. Friend, impatient as he inevitably and understandably is, to wait for my statement after the Whitsun Recess.
Mr. Clark Hutchison: Does the right hon. Gentleman realise that, while I am grateful for what has been done for Leith, there is no boundary between Edinburgh and Leith? Why should Edinburgh be excluded when unemployment there is increasing? Would the right hon. Gentleman have another look at the recommendations of the Edinburgh Chamber of Commerce?
Mr. Shore: The reason for this is straightforward. We take the view that Edinburgh as a whole has much more favourable prospects.
Mr. Alfred Morris: Is my right hon. Friend aware that his proposals will be received with much pleasure in many parts of Lancashire? Can he say when he is likely to be able to estimate the financial advantage which will accrue to the area of the North-West Economic Planning Council, or can he give that figure now?
Mr. Shore: I cannot give the breakdown now. It would be premature before we have agreed on the precise boundaries of the areas themselves.
Mr. Emery: Is the right hon. Gentleman aware that, with the exception of Plymouth, the South-West will be particularly disappointed with the Report and by what the right hon. Gentleman has not had to say about the South-West? Would he accept immediately the one recommendation in the Report to benefit the South-West and give a high degree of priority to the spine road?
Mr. Shore: The spine road already has a very high degree of priority.
Mr. Emery: It has not.
Mr. Shore: The whole of it to Plymouth will be either completed or under construction by 1975. That is well on the way. [Interruption.] If the hon. Gentleman would consider the length of the road, he might not make such silly comments. As for the South-West as a whole, I am glad to be able to announce the intermediate proposals for Plymouth, which I know will be well received.
Mr. Ogden: Would my right hon. Friend pass the thanks of the whole House to the Chairman, members and staff of the Hunt Committee for the work which they have done? Would my right hon. Friend confirm that, far from his statement being politically motivated, the recommendations for the North-West which the Government have accepted are exactly those made by the North-West Economic Development Association, which represents all parties? Would he request my hon. Friend the Member for Bootle (Mr. Simon Mahon) to ask my hon. Friend the Member for Poplar (Mr. Mikardo) to visit the Post Office Giro on Merseyside?
Mr. Shore: I shall willingly convey the thanks of my hon. Friend and other hon. Members to Sir Joseph Hunt, who has already received the warm appreciation of the Government.
Mr. Eldon Griffiths: Is the right hon. Gentleman aware that in many areas of East Anglia wages are lower and job opportunities are scarcer than in some of the intermediate areas which he proposes to help? Does he not recognise that we simply cannot build successful overspill towns unless we get more industry? Is he aware that his own
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regional policy is denying that industry to us?
Mr. Shore: If the hon. Gentleman studies my statement carefully, he will perhaps be moderately pleased with what I had to say about overspill towns and the inflow of industry to them.
Mr. Hazell: I welcome the fact that my right hon. Friend is to meet the regional economic planning councils. Will he take full note of what the East Anglian Council will have to say regarding Norfolk, with its high unemployment and low earnings, which are referred to time and time again in the Report, with a viewing to his giving some considerations to these problems?
Mr. Shore: I must not be over-encouraging in what I say at present. I will carefully consider any representations by the E.P.Cs.
Mr. Eyre: Is the Secretary of State aware that the Report refers to the West Midlands as a seedbed area for new development and goes on to call for the relaxation of I.D.C. control, which affects small firms which provide the new infant industries? Will he give sympathetic consideration to this, which could well be of great importance to the whole country's export potential?
Mr. Shore: I fully appreciate the seedbed argument, but I do not think that this in itself justifies the recommended changes in I.D.C. controls.
Mr. Alexander W. Lyon: Does my right hon. Friend agree that his modifications of the Hunt Committee's proposals will make it much more difficult for areas such as mine which are caught between intermediate districts and development areas? In view of this, is there not something to be said for the Hunt Committee's proposal that there should be some de-scheduling of the fringe areas which do not need the benefit that is at present given to development areas?
Mr. Shore: There is, as I said earlier, always a border or frontier problem. I cannot at present promise anything in the way of changes in development area frontiers.
Dame Joan Vickers: Does the right hon. Gentleman think that what he has given us today fulfils the promise made

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by the Prime Minister in Plymouth recently that the Hunt Report would make a major contribution to the area? I reiterate that what we need is the spine road and a further study of the airport. We have already had three.
Mr. Shore: The answer is, "Yes—most certainly yes".
Mr. E. Rowlands: Does my right hon. Friend realise that everybody in Wales will welcome the decisions, particularly the decision to include an intermediate area in the South-East? My right hon. Friend referred to a substantial part of the South-East. Will he say which part of the South-East? Does he realise that the real problem in areas like South-East Wales is not so much attracting new industry as preventing industry from leaving and jumping over the border into nearby development areas?
Mr. Shore: On the second point, I know about my hon. Friend's concern, but I advise him closely to study the evidence which was put forward and which is contained in the Report. As for the boundaries, I can only repeat that I must consider these and consult the E.P.C.s.
Several Hon. Members rose—
Mr. Speaker: Order. I must move on.

ROYAL ASSENT
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act, 1967, that The Queen has signified Her Royal Asent to the following Acts:

1. Customs Duties (Dumping and Subsidies) Act, 1969.

2. Glasgow Corporation (Superannuation &c.) Order Confirmation Act, 1969.

3. Barnsley Corporation Act, 1969.

ORDERS OF THE DAY

  AIR CORPORATIONS BILL
  4.26 p.m.
  Order for Second Reading read.
  The Minister of State, Board of Trade (Mr. William Rodgers): I beg to move, That the Bill be now read a Second time.
  The Bill will, I believe, be welcomed by the House because it will give B.E.A.—Britain's leading airline and flag carrier in Europe—the opportunity to face the future on a sound financial footing. It implements the Government's pledge of 2nd August, 1966—the "Mulley pledge", as it has become known—when the then Minister of Aviation told the House that B.E.A. would re-equip with British aircraft instead of the American alternatives it would have preferred. At that time the Minister said that the Government would
  "take steps to ensure that B.E.A. is able to operate as a fully commercial undertaking with the fleet it acquires."—[OFFICIAL REPORT, 2nd August, 1966; Vol. 733, c. 261.]
  The events giving rise to the pledge underline the continuing problem of the relationship between Government—any Government—and the nationalised industries, bearing in mind, on one hand, the Government's responsibilities for the economy as a whole and, on the other, the prime need of the industries to be allowed to operate commercially, free from day-to-day intervention. Government policy and the affairs of B.E.A. interact in various ways, including the Government's concern with the well-being of the aircraft industry as well as the operators and with the balance of payments.
  The State has a major interest, as owner and banker, in the nationalised airlines conducting their affairs as fully commercial undertakings able to compete with foreign airlines on equal terms. I am sure that this aim is common to us all. But in the last resort the Government, with the agreement of the House, must reserve the right to decide whether broader objectives outweigh the commercial considerations which should normally guide B.E.A. As the Select Committee on Nationalised Industries said in its Report of 1967 on B.E.A.:
  "In so far as the Government's choice of aircraft to be developed is influenced by considerations of international co-operation and of

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  dollar-saving and equalising the work load on the industry, your Committee accept that the interests of Government policy override B.E.A.'s interests …".
  The problem, then, is this. How can we reconcile the consequences of proper Government intervention, particularly over re-equipment, with full commercial responsibility for B.E.A. at all other times?
  It may be helpful if I briefly recall the circumstances leading to the present situation. In June, 1966 B.E.A. proposed to re-equip with a fleet of 23 Boeing 737s and 18 Boeing 727s. This was the fleet composition of B.E.A.'s choice based on its commercial judgment. It would have been failing in its responsibilities if it had not made clear the best way in which it judged that its needs could be met. I am sure again that there can be no quarrel with this. But B.E.A. was not allowed to buy the aircraft of its choice. The Government took the view that it should continue to fly British. This decision was welcomed by both sides of the House. Accordingly, Government approval for B.E.A.'s proposal to purchase 18 BAC 1–11/500s, with an option on a further six, was announced by my right hon. Friend's predecessor in a statement to the House on 16th December, 1966.
  For the second and major part of its re-equipment, B.E.A. asked in February, 1967 for approval to buy 30 BAC 2-11s, with an option for a further ten. Hon. Gentlemen will recall that the position was complicated by the tripartite agreement with the French and Germans to build a European airbus using Rolls-Royce's RB207 new technology engine; and also by the concurrent efforts by Rolls-Royce to secure American orders for the RB2-11 engine, which was also the designated power unit for the BAC 2–11. However, after thoroughly examining B.E.A.'s proposal, the Government decided that the BAC 2–11 could not be supported, since there did not appear sufficient justification for the investment required for launching aid.
  Instead, B.E.A. was told that the Government were prepared to meet a share of the launching costs for the Trident 3B and to approve its purchase should B.E.A. decide to buy it. B.E.A. accordingly proposed a purchase of 26 Trident 3Bs, with an option for a further ten,
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  subject to fulfilment of the 1966 pledge. My right hon. Friend gave approval in principle to the purchase on 13th March last year.
  I must make quite clear that the assistance provided by the Bill is not a subsidy for operating British aircraft. The aircraft B.E.A. has chosen—the BAC 1–11 certainly and the Trident 3B, we hope—are fine examples of what the industry can do. Let there be no doubt about that: they are planes of which British industry, and Britain, can be proud. The BAC 1-11s already in service are proving attractive to European passengers, and I am confident that both British jets will prove profitable to B.E.A., once maximum utilisation has been achieved. But—and this is the crux of the matter—it will take some time before this can happen: and whereas the Trident 3B cannot come into service before the 1971 summer season, the American aircraft of B.E.A.'s choice would already be coming into service now. The Boeings are also established aircraft which could probably have given B.E.A. a high rate of utilisation from the outset. In addition, some of their operating characteristics, and also their size, would have allowed a pattern of operations more suitable for B.E.A.'s own particular network. This is no reflection on the British aircraft but a plain statement of fact about needs and means in the highly complex and very competitive airline industry. I should perhaps add that the independents are always free to buy what they want where they can get it to meet their own particular operational needs, which are not necessarily the same as B.E.A.'s.
  As the House knows, the Edwards Committee's Report is to be published shortly. My right hon. Friend has already received it. The Committee has assumed that the Government will implement their promise to give B.E.A. the opportunity of operating commercially; and nothing in the Report casts any doubt on the desirability of doing so. There can thus be no controversy about the wisdom of, or need for, implementing the Government's pledge at this stage.
  The financial settlement we reached with B.E.A., which is embodied in this Bill, was outlined in my right hon. Friend's statement to the House on 10th July last. We are reducing the capital

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  liabilities of B.E.A. by some £25 million with effect from 1st April, 1968, and are providing for this sum to be carried to a special account from which sums will be credited to B.E.A's revenue accounts in predetermined instalments over the four years from 1968–69 to 1971–72.
  There is also provision, should this be needed, and subject to the approval of the House, to convert a further tranche of borrowings of up to £12½ million into a special account on 1st April, 1972, to support B.E.A.'s revenue accounts over the three years 1972–73 to 1974–75.
  Mr. Nicholas Ridley: What could the second tranche of £12½ million be needed for? Presumably, the costs of the introduction of the Trident have already been assessed and added. What is the need for a possible further £12½ million at some stage in future?
  Mr. Rodgers: I hope I shall answer the hon. Gentleman during my speech, but if not I will try to give him more detailed information when I reply to the debate.
  At the same time, we seek power to introduce an element of public dividend capital into B.E.A.'s capital structure on or after 1st April, 1972. Finally—and this is important—the Bill provides that the Government should have the power from 1st April, 1972, to require B.E.A. to surrender any sums in reserves which appear surplus to requirements or to convert such sums into interest-bearing redeemable loan capital.
  We reached agreement with B.E.A. on this form of assistance because it is consistent with the concept of B.E.A. as a commercial undertaking—in contrast to a morale-sapping general subsidy. It achieves the underlying aim of avoiding an accumulation of substantial losses; it can be readily identifiable in B.E.A's accounts and involves no fresh outlay of Government funds. Instead the National Loans Fund forgoes interest on and redemption of the loans involved.
  We decided that the course consistent with the pledge was to assess the amount needed to give B.E.A. the opportunity of achieving profit margins, after payment of interest charges, sufficient to allow
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  modest appropriations to reserves. B.E.A.'s forecasts over a ten-year period were the basis for this calculation. These showed a prospect of continuing losses until 1974–75 with profits thereafter which we considered to be adequate for commercial viability.
  Mr. Cranley Onslow: When were these forecasts formulated?
  Mr. Rodgers: I like to give way to help hon. Members, but I shall cover that point in my speech as well.
  We were conscious of the special difficulty of forecasting in the airline operating business, which is prone to unpredictable troughs and peaks owing to vulnerability to political and economic developments in the international market it serves. The fallibility of forecasting is not peculiar to B.E.A. I noticed, for example, in Flight for 26th December last that B.U.A. was able to forecast a profit for the year 1968 and a larger one for 1969, whereas a year previously it had been expecting losses of over £1 million in each year. However, on all the information available at the time, we assessed £35 million as the amount required to afford B.E.A. the opportunity of achieving the profit margins I have indicated.
  In view of the inherent uncertainties in forecasting so far ahead, the Government decided that the figure of £35 million should be divided into two tranches; £25 million to cover the period until 1971–72 and up to £12½ million—the additional £2½ million being in recognition that B.E.A. will be paying interest on the second tranche from April 1968 until April 1972—to cover the following three years if these should turn out to be necessary. Waiver of interest on these sums amounts in a full year to £1·4 million on £25 million, rising to £2·1 million if the second tranche is required.
  The scheme allows for incentives to B.E.A. to improve on its forecast results. In the first place, the transfers from special account to revenue accounts will be pre-determined. The instalments have been agreed with B.E.A. and they are £5 million in 1968–69, £4 million in 1969–70 and £8 million in each of the last two years. If B.E.A. achieves better results than forecast, these transfers will not be reduced on this account. Instead, B.E.A.'s reserves will benefit.

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  Secondly, Sir Anthony Milward has accepted the challenge of so improving over forecast during the first four year period as to be able to manage without the second tranche of assistance. If B.E.A. succeeds in attaining this objective, the Government have undertaken to consider the possibility on or after 1st April, 1972, of giving it some public dividend capital. This will depend on B.E.A.'s financial prospects at the time and on the outcome of the experiment with B.O.A.C.
  The Bill also provides for some recompense to the State if B.E.A.'s future fortunes should justify it, in that, on or after 1st April, 1972, the Government can require B.E.A. to surrender any sums in reserves which appear surplus to its requirements or to convert such sums into interest-bearing redeemable loan capital. This is the provision for "clawing back".
  I am glad to say—and I hope that the House will be pleased too—that, since the settlement was announced nearly a year ago, B.E.A.'s financial results and prospects have somewhat improved. The accounts for 1968–69 have not yet been finalised or audited but B.E.A. tells me that provisional figures indicate that the profit for the year, after crediting £5 million from the special account and after allowing for some additional provision for depreciating aircraft shortly to be phased out of service, could amount to some £3 million. This is an improvement of rather more than £1 million over the out-turn assumed last year and the outlook for the next few years also looks more promising.
  This can be largely attributed to an improving rate of traffic growth for operators generally—one example has been a higher level of holiday traffic, helped by the experimental winter tariff. B.E.A. has secured a share of this growing market. Its management effort will continue to be directed towards attracting more traffic, reducing costs and increasing productivity.
  But I am certain—and I emphasise this—that this more encouraging trend is no reason for going back on our promise of last July to give assistance as provided in the Bill on the strength of which B.E.A. placed its order for Trident 3Bs. B.E.A.'s objective of managing without the second tranche could not be achieved without improving on last year's forecasts,
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  and for the first year of the period they seem to have moved towards attaining the required measure of improvement. As I say, the prospect is better but forecasting remains an art, not a science. We cannot be quite sure which way the cookie will crumble.
  But one consequence of this improvement in prospects is that we have been able to set a financial objective, in agreement with B.E.A., at a higher level than would otherwise have been reasonable a year ago. On the basis of current expectations and the present organisation of the industry, we and B.E.A. believe that it should be possible for the Corporation to achieve an average of 8 per cent., after aid but before charging interest on borrowings, on net assets over the four-year period 1968–69 to 1971–72. It seems likely that the return in 1968–69 will turn out to be somewhere in the region of 5 per cent., so the House will appreciate that B.E.A. will need to do well over the next three years if it is to succeed in raising the average to 8 per cent. over the period as a whole. This 8 per cent. target, which is rather higher than B.E.A.'s current estimates indicate, is consistent with the Select Committe's views on the financial objective as a realistic assessment of what a nationalised industry can be expected to achieve, assuming that appropriate investment and pricing policies are pursued with maximum efficiency. We have agreed with B.E.A. that we should jointly review the 8 per cent. figure in a year's time to see if a change should be made in the light of the out-turn of this year's operations and any decisions following the Edwards Report.
  There are two more provisions in the Bill to which I should refer. The first relates to B.E.A.'s borrowing powers. At this time last year, my right hon. Friend introduced a Bill, now the Air Corporations Act, 1968, to increase B.E.A.'s borrowing limits to £210 million, rising, subject to the approval of the House, to £240 million; and to confer on B.E.A. the power to borrow within these limits, and the Board of Trade to lend, sums required for financing any deficit on revenue account up to £10 million accumulated by March, 1970.
  This deficit financing power was precautionary and has not been used. With the financial assistance granted under the Bill, the power will no longer be required

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  and is consequently repealed. B.E.A.'s borrowing limits are reduced by the same amount to £200 million and £230 million respectively and these limits are expected to be sufficient to meet B.E.A.'s requirements to the end of 1973, taking account of the fact that their existing level of borrowing against these limits is reduced by the Bill.
  The second provision is intended to bring both B.O.A.C. and B.E.A. into line with other nationalised industries by empowering the Board of Trade to require their Board members to disclose any financial or other interest likely to affect their functions as Board members. This provision should, I believe, be particularly non-controversial.
  Mr. Hugh Jenkins: Would I be right in thinking that this provision does not apply to the British Airports Authority, and should it not apply, having regard, for example, to the longstanding connection between the Chairman of that Authority and Beagle Aircraft Corporation, for example?
  Mr. Rodgers: That is quite a different question. The Bill involves B.E.A. and I regret that my hon. Friend has used the opportunity to make remarks which I think are inappropriate to the Bill but which I should be very glad to deal with on a future occasion. Although it would be unfair for any implications to be attributed to what my hon. Friend said, he will appreciate that now is not the time to debate Mr. Peter Masefield. Although that second additional provision may not entirely satisfy my hon. Friend, I think that it will be acceptable to the House as a whole.
  The objectives of the Bill are, I believe shared by the whole House and its terms follow my right hon. Friend's Statement of July last, which was welcomed. If there are any further points on the Bill, I will do my best to answer them at the end of the debate. Meanwhile, I commend the Bill to the House.
  4.46 p.m.
  Mr. Cranley Onslow: The last time we debated B.E.A. was almost exactly a year ago, when the Minister's predecessor said:
  "Obviously Parliament will not wish to have presented to it a series of civil aviation measures,
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  each modifying the previous one."—[OFFICIAL REPORT, 4th April, 1968; Vol. 762, c. 700.]
  To the extent to which the present Bill removes that need, we must certainly welcome it. It is not a controversial Bill, although we may have some reservations about its timing. After all, we have had to wait nine months for it since the President of the Board of Trade made his statement on 10th July. This may be the normal striking pace of this Government, but it is a long time.
  It is a shame, however, that it could not have been just one week more, since then we would have had the advantage of having the Report of the Edwards Committee, which I understand is due for publication on Monday. Why this timing has been forced upon us I do not know. It may be that the organisational genius of the Leader of the House has contrived this situation, but one must also remember, I suppose, that, originally, it was forecast that the Edwards Committee's Report would be available in the spring of 1968.
  In one sense, the Bill is still something of a stop gap Measure. Although it finally disposes of the consequences of decisions, dating back to August, 1966, that B.E.A. should not purchase American aircraft, which were welcomed by the whole House at the time, a good deal remains uncertain—not simply the effects of the Edwards Committee's Report and subsequent legislation on the future structure of B.E.A., but also the extent to which all the powers which the Bill provides may ultimately prove necessary.
  The Minister said that there was considerable room for reconsideration of past forecasts in this respect. We may well want to consider this in Committee. After all, we know that there must be at some time in the next two years, one trusts at least, a major civil aviation Bill to cover the whole field, although I doubt whether it will fall to the present team to introduce it. It is of some advantage that we have been obliged to wait, because it should enable us better to test, in the light of experience, the validity of the forecasts on which the Bill's calculations are based. It looks as though we may hope to discover in Committee from the Minister that some of the forecasts which were made pessimistically

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  have been improved upon with the performance of the past year.
  The prospects of B.E.A. have altered in the past year. The likely original loss for 1968–69 seems to have been reduced by about £1 million, which is a considerable achievement. It is particularly noteworthy in the context of remarks by Sir Anthony Milward in the B.E.A. newsletter on 1st January, 1969. Speaking of 1968, he said:
  "In retrospect, the year proved a better one than was at one time feared."
  In the light of some of the "difficulties, disappointments and disasters" which befell B.E.A. in 1968, one is bound to express one's gratitude that such a good result has ultimately been achieved. Sir Anthony mentions the decision not to proceed with the BAC 2–11, the increased landing fees at Heathrow, the crash at Heathrow which deprived B.E.A. of two of its Tridents at the peak of the season, the "miserable restrictive" travel allowance, the strike in France, the industrial troubles at Abbots-inch and the "valuable planning time" taken up by the European air bus negotiations which produced no result except that the future of the BAC 3–11 now looks "considerably brighter".
  As I said, we shall need to test the calculations in Committee. However well they may have been worked out by the Board of Trade and B.E.A. together, Parliament still has a right to be informed and a duty to insist on information before approving the expenditure of public money.
  In that context, I would remind the Mininister of the exchange that I had with him at Question Time on 11th December last, concerning the basis of the calculation. I asked him whether he agreed that Parliament was entitled to ask for the necessary explanation and that the necessary explanation would be given. The somewhat eliptic answer that he gave was that he was sure that Parliament was entitled to ask for the information. Perhaps it was accidental, but he did not say that the necessary information would, of course, be given. When we come to the Committee stage, I hope that we can go some way to satisfying the legitimate requirements of Parliament on this issue. I have no desire to insist upon the publication of information which would put B.E.A. at a disadvantage in its operations
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  in terms of its competitors. It would be no wish of mine to try to drag out of anyone information which would do B.E.A. damage. However, this is an issue upon which the members of the Committee should be informed and, if it cannot be done in the conventional process of exchange across the Floor of the Committee, I still hope that a way round this difficulty will be found.
  The Committee will also want to know what have been the detrimental effects of the past year and what are the prospects of the coming year for B.E.A. It now faces unexpectedly increased costs in certain areas. Increased air navigation service fees have been announced and are the subject of a Prayer which I hope that we shall come to in due course. I will not enlarge upon it at the moment, except to say that the result will be that a good deal of money will have to be spent by B.E.A. which it could not have budgeted for originally. No doubt there are other effects of the latest Budget, including the prospective increases in National Insurance contributions, which will put additional burdens on the operation of the Corporation.
  Another offsetting factor about which we would like some information is how the aircraft coming into service with B.E.A. are performing. I am thinking of the Trident 2, for example, which has been in service for almost exactly a year—the first was delivered, I think, in April, 1968. It could not have had its performance taken into account in the forecasts made except on a purely guesswork basis. I want to ask the Minister if he has any reason to suppose that the original forecasts of the operating performance and passenger appeal of the Trident 2 were again pessimistic ones. We remember with some distress the way in which the attractions of the VC10 were written down by B.O.A.C., the pesimistic forecasts of its profitability that were pat about the world and the resulting damage to the manufacturing industry. We should not do the industry any service by ignoring the possibility that, in operation, the Trident 2 may prove to be a much more attractive aircraft than cautious forecasts originally suggested.
  Such inquiries as I have made lead me to suggest that it is drawing in a considerably higher load factor than originally estimated. If we ignore that, we are not

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  just ignoring a fairly vital part of the whole equation but playing down the value of the products of the British manufacturing industry in not going out of our way to establish where they beat their specifications and forecast performances. In due course, if the Trident 3 also provides a bonus in this way, we should be prepared to recognise it when it comes and to consider how far the calculations in this Bill can be revised in terms of the second tranche of £12½ million. By the time that consideration of the payment of that tranche comes due, I hope that we may be able to say that nothing like £12½ million will be required.
  I want now to refer to some other aspects of B.E.A.'s operations. I have no intention, Mr. Speaker, of testing your generosity by seeing how far we can range over the whole of aviation. I think that we were taken by surprise on the last occasion when the President of the Board of Trade launched us on a major civil aviation debate when most of us expected to be talking only about B.E.A. The debate may widen itself, but I do not seek to extend the bounds of order.
  There are some matters concerning B.E.A. about which the House could usefully be informed. One is the status and profitability of its two subsidiary companies. I refer to the two wholly-owned subsidiaries of British Air Services Limited, in which B.E.A. holds 70 per cent. of the capital. They are B.K.S. and Cambrian. I do not know how they are going. I do not know whether they have any future aircraft equipment plans. I hope that they are not thinking of buying American aircraft. The House will welcome any more information about them when the Minister comes to wind up the debate.
  It will also welcome information on the extent to which B.E.A. contemplates using its resources over the next few years to invest directly or indirectly in the hotel business in this country. The Minister spoke of B.E.A. having the opportunity to put certain sums into reserve. It was not clear whether he meant that B.E.A. could make use of those sums not to increase its reserves but to increase its capital investment in other areas of activity.
  Mr. Ian Mikardo: It would be a good idea.
  Mr. Onslow: The hon. Member for Poplar (Mr. Mikardo), who is always anxious to diversify public corporations, says that it would be a good idea. I would be delighted to have a long doctrinaire debate with him about that, but I will not detain the House now.
  In the context of this Bill and the arithmetic in it, we had better know what plans B.E.A. is committed to or is considering in terms of investment in the hotel industry. I would not promise those plans the uncritical and cordial welcome that the hon. Member for Poplar would accord them in his capacity as Chairman of the Select Committee on Nationalised Industries.
  Another important aspect of B.E.A's operations is the Highlands and Islands service. I understand that it is a point on which the Edwards Committee has been asked to report. In view of that, it is perhaps premature to say anything much about it now, but when we are considering B.E.A's finances over the next few years, I think that we ought to consider whether this service, with its strong element of social need, can be justified on the present financial basis. Should it not be treated on a par with other transport services where there is a direct subsidy accruing to the operator concerned? This has always been treated as difficult, if not impossible, in the past, partly because of the obstacles to isolating the costs of the operation. The fact that B.E.A. has now established a separate Scottish division may make the accounting process somewhat easier. Certainly I feel that we ought to ask ourselves, if there has to be some element of subsidy in the operation of the service, whether it is wholly appropriate that it should come from B.E.A's passengers on other more profitable routes.
  Then there is the position in relation to borrowing abroad. I understand that B.E.A., like B.O.A.C., has moved into a policy, no doubt with Government approval, of financing some of its needs by raising loans on foreign markets. It seems to me that we ought to have an opportunity to examine the effects of this, if nothing else. Where this happens, we are to an extent pre-empting future foreign exchange earnings and mortgaging future sterling balances. I am not sure that I am convinced it is a wholly good idea to be doing it, nor

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  do I know how far the Government intend that financing of this kind should go.
  B.E.A. has also announced plans to set up a separate charter company. I do not know that this is necessarily the best thing. No doubt we shall be able to test it in due course against the recommendations and findings of the Edwards Committee, although one of the few leaks which has come from Edwards suggests that the Report will not necessarily favour this operation.
  I turn now to the question of other capital investment in necessary services, particularly investment in the cargo terminal being put up jointly with B.O.A.C. at Heathrow. I saw it with other colleagues the other day. It is a highly sophisticated and necessary piece of equipment which amounts to a real recognition of the growing importance of air freight in the air transport business. It is highly capital-intensive, but at the same time it brings out a peculiar problem in modern industrial relations. It looks to me as if the few men who will be employed in operating that cargo terminal will have great industrial power in their hands. It looks as if here, once more, we are having a new nerve point created in the economy where irresponsible industrial action can deliver a sort of karate chop to society. Industrial relations in B.E.A. are not bad. I had better not say more, because it might have the wrong effect. But certainly their record in the past has not been amongst the worst in British industry.
  To digress for a moment, may I say, in the presence of the Chairman of the Select Committee on Nationalised Industries that, as an ordinary member of this House, it seems to me that there is a case for that Committee considering the state of labour relations in the nationalised air corporations. If it could do this, it should have the effect of adding to the status of Parliament and proving the flexibility of the Committee. I think that it would also produce a kind of informed report, which is extremely difficult for the House and the public to obtain by any other means. Happily there appears to be no immediate crisis in either B.O.A.C. or B.E.A., but it may be that this would make such a course of action the more appropriate at this
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  stage. I merely throw out that suggestion as an ordinary member of this House, in the hope that, the members of that Committee will give it some consideration.
  Turning to the longer term re-equipment problem of B.E.A., which must be very much in our minds, I do not think that I can say that the Government have been wrong in the way that they have handled the questions which have so far come before them on the airbus or the BAC311. I am not sure that they have been right on purpose. I have a feeling that some of the skill we can detect in retrospect may have been inadvertent unless they were quite Machiavellian in their insistence on getting 75 orders for the airbus by last July, which everyone knew to be impossible, and unless they foresaw the possibility that the RB207 engine could never be built by Rolls-Royce because the resources involved would not be available if their hopes for the R B211 bore fruit. Whether they have avoided error on purpose or by accident we are in a situation where the important and correct decision still remains open to be taken.
  I think that we must express it in this way. The apparent willingness of the French and Germans to continue with the A300B makes it clear that this is a politically motivated aeroplane. As such, it is not one that should interest us. We ought to be thinking of commercial and internationally competitive aeroplanes for our industry to build.
  The BAC311 still shows every sign of being just that, particularly when we take into account the balance of payments burdens which would be involved in massive purchases of American aircraft which have already and rightly, proved so objectionable to the Government. We are, of course considering a Bill today which arises from a similar danger. I hope that we shall see Government interest in the BAC311 continue. I hope that we shall not see the dead hand of the Treasury economisers fall on the project. I believe that this aircraft offers great potential and the only real prospect of continuing the situation where B.E.A. flies British right through to the end of the 1970s.
  The aviation industry is, we must all hope, expanding. As a nation, we ought to be aiming to increase the British share

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  of this major international activity and to derive increasing profits from it. When Edwards reports next week I hope we shall find his committee has had the courage to diverge a little from its somewhat negative and introspective terms of reference. Looking back now we can see that they would have been much improved had they had words included, "To maintain and, indeed, to increase the British share of the international aviation market." But to do this we have to be sure that the capital will be there. When we consider the longer term effects of the Bill we must satisfy ourselves whether the proposals for Treasury equity and the continued existence of a measure of Treasury control will ensure this. I realise that we will have to consider all this further in the light of what the Edwards Report says. However, when we come to consider that report we ought not to forget that other nations have developed different approaches to the business of competition in the aviation industry. For example, K.L.M. and Lufthansa, which do not finance themselves in precisely the way that we now find our nationalised industries financed and whose methods of maintaining themselves as efficient competitors in aviation certainly should not pass without examination. Looking at Lufthansa's performance on the North Atlantic, it would be very interesting to know why it gets the good results that it does.
  When we approach the Edwards Report, we should not dismiss from our minds, from any purely doctrinaire reasons, the possible benefits which may accrue from measures which will have the effect of attracting private capital participation into operations of this kind. In the long term all depends on the environment. This is why the reform of the environment is the most important task which will face us when Edwards reports. This concerns the future of the A.T.L.B. which one Committee of the House has recommended should be abolished, but which I prefer to see very much strengthened. We have to wait for Edwards but we must go into the future of aviation with a mood to compete, to expand and to recognise that this is the sort of progressive economic activity to which our nation is particularly suited. We must not be tempted to yield to the
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  dangers of what I should call, to give it a pseudo-medical name, the "Foulness syndrome" which simply leads people to suppose that if aircraft cannot be uninvented at least they should be banished as far from sight and sound as possible, totally regardless of the economic consequences involved. That sort of attitude will not help us or B.E.A.
  In closing I should like to pay tribute to B.E.A., to Sir Anthony Millward, who is now entering his last full year of office and to whom the country owes a debt for the way he has fought and continues to fight for British aviation, to all the staff, the pilots, the cabin staff, the ground staff and to all the employees of B.E.A. at home and overseas. We should not allow ourselves to forget the importance of the contribution which the latter make.
  I was recently the guest of B.E.A. on a Trident 2 inaugural flight to Tel Aviv. I hope the House will not misunderstand me when I say that I could not fail to be impressed by the standard of the service. But, rather than ask the House to accept a compliment which it may regard as somewhat prejudiced in this respect, I should like to quote part of an advertisement which I saw during that flight in Time magazine. It reads as follows:
  "B.E.A. is a superb way to fly.
  If it wasn't, we wouldn't waste
  our own space saying so."
  B.E.A. did not pay for that advertisement; that makes it all the more worthwhile. It was paid for by one of B.E.A.'s competitors and it was a tribute such as we must all wish to see continue to be paid to this important section of our aviation industry.
  5.10 p.m.
  Mr. Ian Mikardo: I begin by commenting on three observations made by the hon. Member for Woking (Mr. Onslow). I first associate myself, and, I am sure, with myself most, if not all, hon. Members, in the tribute he paid to the work and progress of B.E.A. It has some defects, and the Select Committee drew attention to them, but with all those defects it is still a pretty good advertisement for British initiative and enterprise.
  Second, I listened with interest to the suggestion the hon. Member made that the Select Committee on Nationalised Industries might take a look some time at

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  the broad question of labour relations throughout the public sector. I entirely agree with what he said, and I am grateful to him for having said it. When a few months ago the Select Committee was considering its programme for this Session and choosing subjects to investigate, I took the liberty of suggesting a number of possible topics. One was an inquiry into labour relations, but the Committee in its wisdom chose one or two others as more urgent and interesting. I hope that the Committee will come back to consideration of this matter in the next Session, and I hope that it will be influenced by what the hon. Member was kind enough to say.
  The third point has reference to the Air Transport Licensing Board. The hon. Member said he did not agree with the Select Committee's suggestion that it should be abolished. Has he read the transcript of the evidence in which witnesses from the board appeared before the Committee?
  Mr. Onslow: I hope the hon. Member will not misunderstand me. I should like to see the Board reformed. I should like the average age of some of its members reduced. I should like to see it given real powers, and staffed by men positively seeking to maximise the opportunities which exist in this industry in this country.
  Mr. Mikardo: The Committee formed the impression that the average age of its members might with advantage be reduced. I formed the impression—and here I do not speak for any other hon. Member—that their competence could be considerably increased, but one also got the impression that they were trying to do something which could not be done in that way by that sort of instrument. If one reads the transcript one sees that it is a piece of comic literature which does not give one any confidence.
  I welcome this Bill. I express thanks to the Minister, which I am sure are shared by all the teeming multitudes at present in the Chamber, for the speech he made. It was a most helpful, informative and clear exposition of the Bill and its purposes. I want to comment only on Clauses 1 and 2. My comments on Clause 1 are highly interrogative and designed to get the Minister, when he
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  winds up, to say more on one or two points which would make his ideas and the ideas behind the Bill even clearer than he has made them.
  I begin by way of preamble by referring, as the Minister did, to the examination of B.E.A. by the Select Committee. We gave B.E.A. generally a clean bill. We referred to some defects, and I am greatly impressed by the very fair-minded attitude which the Corporation has taken in its reply to our Report and the criticism we made. It has not been defensive. It has been gracious enough to admit error here and there and to say that it will try to put the error right. The Corporation gave the Committee every assistance and came out of the whole matter extremely well. But the Minister will know that the general theme of the Committee is that while, of course, it must be, and must remain, true that in the end the Government must have the power to decide in the overall national interest that a corporation ought to do something which is not strictly commercial on its own account, when the Government make such a decision they should bear the cost and responsibility of that decision.
  So far as it is possible the extra burden imposed by that decision should be isolated and quantified. It should be borne, as the hon. Member for Woking suggested, not by the passengers but by those who have made the decision and those in whose interest the decision has been made. What the Committee has never liked—this goes back to long before the time when I was associated with it—is that the effects of non-commercial impositions upon a public corporation should be blurred and hidden away in some general overall sum, call it subsidy or whatever one will, so that it is impossible clearly to allocate responsibility and impossible to say how far the operations of the corporation are being carried out efficiently because the picture of that efficiency is blurred by this overall degree of subsidisation.
  My feeling about the relationships between the Government and public corporations—the Select Committee brought this out in its major report on the general relationships between Government Departments and public corporations—is that the relationships ought to exist in this way: "I, the Minister, can instruct you, and will instruct you, to do things

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  you may not want to do in your commercial interests. We shall quantify how much those instructions are costing you. I will pay you that amount. I will be, so to speak, your customer in the provision of those services which I am requiring you to provide, having been your customer and having paid you your just price, as to all the rest you jolly well have to operate on a commercial basis because you have no excuse for not doing so. You cannot say afterwards, Minister, we made a loss this year but this was your fault because you compelled us to do this, that or the other' because the answer will be, 'I paid you to do what I wanted you to do.'"
  This is what I mean by sharply dividing responsibility between Minister and corporation. Let each bear his own burden. Then we can see to what extent each is carrying out properly his own functions.
  This is interrogative. I am not arguing and debating sideways. This is a request for information because I am not clear about it. I ask the Minister how far this £25 million, if it is ever called upon, and the subsequent slice of £12½ million—I hope the House will not think me eccentric in using the English word "slice" rather than the French word "tranche"—measures up to this criterion of not being a blurring factor. How will these amounts be settled? Will the payments out of this fund cover all losses, or will they cover only the losses directly attributable, as the Minister described them, to the delay in carrying into service the new Tridents and the BAC 111 500s? I would not want a situation to arise in which the waiver of interest about which the Minister told us constituted a hidden and, above all, unidentifiable subsidy. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) made a pertinent intervention when he said that the one thing which the second slice cannot be is compensation for delay in bringing these aircraft into service because by then they will be well and truly in service. This process has wide implications for the new financial objective about which the Minister told us.
  I make in all friendship a small criticism of the Minister's speech. In that part of his speech in which he spoke
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  about financial objectives he did not appear to have kept up with the most modern thinking about the financial control of nationalised industries. The 1966 White Paper on financial control of the nationalised industries, although it is highly ambiguous, as almost all Treasury White Papers are—some passages can be read to mean anything that anyone wants them to mean—said, "We have been grossly wrong in the past in thinking of the financial objective as the sole instrument of financial control. We should be pretty wrong in thinking of it as a major instrument of financial control. We should be wrong to some extent in thinking about it as a realistic instrument of financial control."
  That White Paper pointed out that there are three interlocked factors which affect each other—the pricing policy, the rate of discounted return on new investment, and the overall financial objective—and that the fixing of any two of these will residually automatically fix the third. Although there were some reservations, the White Paper came down on the side of making pricing and investment return the operative factors and the financial objective only the residual factor. I detected in the Minister's observations a departure from that point of view. If I am wrong, I shall be delighted to hear it.
  I turn to Clause 2 and make some observations about the introduction of Exchequer dividend capital. When I got my copy of the Bill and read that the Government proposed, doubtless on the advice of the Treasury, whose advice is always operative in these matters, to introduce Exchequer dividend capital in B.E.A., I was more excited than I had been in all my 20 years' membership of the House. That wild excitement was due, not to my belief that there was something wonderful about having Exchequer dividend capital in B.E.A.—it is not bad, it does not do any harm, but there is nothing marvellous about it—but to the fact that for the first time in my 20 years I had evidence that the Treasury was prepared to admit an error.
  When we were examining the Treasury witnesses in our inquiry into B.E.A. we had the temerity to ask them why they thought it right to have Exchequer dividend capital in B.O.A.C. and not in B.E.A. They told us that they applied three criteria

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  in deciding whether any corporation should have Exchequer dividend capital. They said that all three criteria applied in B.O.A.C. but not in B.E.A. There follows in the transcript of the evidence another piece of ripe comic literature. If the Minister is looking up the reference, I can help him. It is Question No. 265. In cross-examination it became evident that not only was it not true that the three criteria which they applied operated in B.O.A.C. and not in B.E.A. but, that they operated more in B.E.A. than in B.O.A.C. It seems that the Treasury was influenced by that little passage of arms. What I find exciting is the revelation that it is possible to make a microscopic dent in the Treasury's permanent assumption of its own monumental infallibility. I welcome the change of heart—"There is more joy in Heaven over one sinner that repenteth …".
  The Committee did not think—and I share its view—that the introduction of Exchequer dividend capital makes a great difference. It may make a psychological difference, and, to be fair to B.E.A., that was the ground on which, as a second line, it argued it. I do not ignore the fact that psychological factors are important in running an operation. B.E.A. made a chump of itself in the first place by trying to bargain acceptance of aircraft which it did not want against Exchequer dividend capital, which was a nonsensical thing to do. The Committee said that it was nonsensical, and I am delighted to see that B.E.A. has admitted that we were right. It spoiled its case, such as it was, for Exchequer dividend capital by linking it to something to which it was not relevant. Now that it has come, so be it. I do not want to see too much made of it. In the end, the criteria for control should come not out of this sort of thing but out of the more sophisticated instruments of control to which I have referred.
  I welcome the Bill. I hope it will enable the Corporation to make even better progress than it has made in the past.
  5.28 p.m.
  Mr. Nicholas Ridley: I agree with all the points which the hon. Member for Poplar (Mr. Mikardo) made, except one. I agree that we can all rejoice that the Treasury changed its mind over Exchequer dividend capital. However, I feel that it
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  did so in the wrong way and that it might have been better if it had decided to abandon the experiment for B.O.A.C. and not introduced it for B.E.A. The Second Report of the Select Committee on B.E.A. in 1967 said:
  "If one of the three methods is to be chosen, the method (advocated by B.E.A.) of capital reconstruction with an element of Exchequer dividend capital similar to that of B.O.A.C. appears to Your Committee unsuitable."
  Although I was not a member of the Sub-Committee which made the Report, I feel that there is something bogus about Exchequer dividend capital and that when it is coupled with writing off a large chunk of debt it is even more misleading. It is possible, as B.O.A.C. has done, to pay a very large dividend on the Exchequer dividend capital, because the interest does not have to be paid on the debt which was waived. I think that in the case of B.O.A.C. it was £110 million. This gives a false impression as to the profitability of the airline, which may be good for the morale of those who work in it, but is less good for the morale of the taxpayers who are carrying the interest burden on the £110 million.
  The Bill represents a further injection of subsidy into our two Corporations. In 1952 we injected £60 million; in 1968, I think, £110 million; and in 1969 the Bill proposes as much as £37½ million more, making a total of £227 million subsidy on capital account.
  We should take a look at airlines in other parts of the world which have got through this, admittedly difficult, 20 years with much lesser sums in subsidy, or none at all in some cases. The House should muse a little as to why this has been necessary. I am sure that the greatest reason—and I shall mention three—is the question of buying aircraft. In so many instances we have bought unsuitable aircraft, which not only cost more to buy but very often cause large losses because they are unsuitable for the task for which they were bought. It is a pity that the VC 10, the Vanguard and the Trident have all proved not to be world sellers.
  The time has come when we should consider whether it is the right policy to require the nationalised air corporations to commission and tailor-make aeroplanes from British manufacturers which are

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  suitable to what they imagine to be their own needs. I do not say that the Government should not assist the British aircraft industry. I shall say in a few minutes how I think they should do so. But we must keep the boundaries of responsibility much more clear. If we tell airlines to make money in the business of carrying passengers, we give them a clear definition of what they are to do. If we tell aircraft manufacturers that they are to make money in the sale of aircraft, they also know what they are to do. The market for aircraft is world wide, they should do their market research world wide, design their aircraft for world markets and sell them in the world market.
  The airlines, so far as I can see, should confine themselves to choosing in the world market that aeroplane which is most suitable and which is on the market, for the task they have in mind. This would enlarge our operations, and although we might buy more foreign aircraft I believe that we would also export more British aircraft, and the foreign exchange plusses and losses would balance out. At present we have a situation in which we are locked into a narrow protectionist view of the matter, which in the long run could well result in the strangulation of the British aircraft industry.
  If the Government wish to subsidise the aircraft industry as a whole, or any particular aircraft, they can still do so by giving the industry or that aircraft special aid. But I am sure that the decision as to what aircraft to buy should be in the hands of the airline corporations and not in those of the civil servant, who probably does not know so much. If he does—and here I use the phraseology of the hon. Member for Poplar—he should be employed by the airlines and not the Board of Trade.
  I think that we have also been wrong on the question of uneconomic routes. The duty of airlines should be to make money in the operation of their passenger and freight aircraft. If they have a route that is uneconomic there is no doubt in my mind that they should refuse to continue to operate it unless they are specifically rewarded for the loss by whoever wants it done, whether the Government
  708
  or somebody else. B.E.A. is operating at least two routes at a loss—the Highlands and Islands network and the Berlin-Hanover route, which I happen to know does not pay.
  If the Government want B.E.A. to continue to operate those routes it should not twist its arm or adjust its capital, but should ask, "How much do you want to run these routes?". If the reply is a sum that they think worth paying, that amount should be paid openly and annually to the airline. I realise that that gives the airline an opportunity to blackmail the Government. It could say that it would not fly to the Highlands and Islands unless the Government gave it such large sums of money that it would be making an unnecessarily large profit. That is why I believe that we need competing alternative airlines, so that if one takes the Government for a ride the contract can be given to another airline. There should be as many as three or four alternatives who can take up such contracts, one in competition with the other.
  A third area in which I think we have been doing the wrong thing concerns the veiled reference to earning dollars made by the Minister in his speech. The subsidy to British airlines is often justified with a sort of undefined comment that they are major earners of foreign exchange, and that in a situation of financial crisis, such as we have permanently, it is wrong for anybody to question anything that earns foreign exchange; that it must be right. I want to question this assumption.
  The price we must pay for earning foreign exchange depends on how much we are in debt and what our balance of payments is. But it may well be that rather than by investing another £37½ million into B.E.A., if we put that money into agriculture we might save more foreign exchange. To take another example, we have just put £40 million into an aluminium smelter which will certainly save foreign exchange, but may be a very high price to pay for it.
  But in all these questions of how much foreign exchange we shall save by any particular subsidy or Government policy, we should assess what we are putting in in terms of subsidy in order to achieve the foreign exchange. In other words, we

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  should put a price on foreign exchange; we should have a premium as to what it is worth our while in investment or subsidies to achieve a given quantity of foreign exchange.
  In all this, it seems to me that airlines are not for earning foreign exchange, nor are they for promoting the British aircraft industry, nor are they for subsidising remote districts and areas which cannot economically maintain an air route by the strength of traffic which they generate.
  These are perfectly legitimate objects of Government; to bolster the aircraft industry, to provide a service to the Highlands and Islands, or to earn foreign currency reserves. But in all cases the Government should require the airlines to be entirely commercial and to resist pressure to do things of this sort unless they are openly and suitably rewarded in the way I have indicated.
  I ask myself how other airlines cope with these problems because they are not singular to us. I visited both K.L.M. and Lufthansa, and had the honour of long discussions with the directors and some of the officials in each of these airlines, when I discussed the very questions we are now discussing. They both said that this sort of interference is intolerable, that it makes it quite impossible to run their businesses if they are always going to be told what aircraft they should have, where they should fly to, or how they should raise capital and things of that sort. They said that it is a very competitive, very difficult business, that they have managed to pull Lufthansa and K.L.M. into the black out of loss situations, and that the one essential they have insisted on with their Governments is that the Governments stop interfering. The President of K.L.M. went so far as to tell me that the airline was in such a financial state that he was able to make his own terms. He is a distinguished industrialist and was able to say to the Government "I will not take on the Presidency of the K.L.M. unless you give me everything I want". They were so desperate that they agreed.
  He said that the need to insulate the airline from the interferences of Government was so great that one could not trust good intentions, however much the Government of Holland, or indeed the Government here, might say "We have
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  finished interfering. We are not going to tell you to do any more of these un-commercial things ever again". When chairmen of airlines had lunch with the Ministers there was no directive, but those subtle pressures, which those who have been in politics for a few years understand better perhaps than those who have not, began to be exerted.
  The President of K.L.M. said "In order to make sure that you do not interfere with me and make me do uncommercial things, but allow me to run my airline according to my best commercial judgment, I want there to be a few other owners. I want a few other people who will be able to protest if I do anything which is not in their best interests." He insisted that half the equity shares were sold on the market to private individuals or companies of Dutch nationality in Holland. I do not know whether it was 49·5 per cent. or 50·5 per cent., but the fact is that an equity holding was introduced into both those airlines, as into other airlines on the Continent of Europe, in order to give a guarantee that other people will be involved if interference takes place.
  There is one other advantage in this procedure. We know that the strain on our finances as a nation is becoming excessive. We know that one of the great difficulties in the future will be to raise these large sums of capital. The sums which are represented by this Bill, and by previous Bills, involve £227 million which has already been written off. This is as nothing compared to what we shall have to put in in future in terms of new capital.
  Lufthansa airline and the Royal Dutch airline raised their new capital by means of rights issues. They simply say that all existing shareholders, Government and private, are able to take up their rights or sell them when they need new capital. Most of the new capital which has been put into our competitors in Europe has not come from the taxpayer, but from private investors. Of course, with an airline like K.L.M., which is half Government-owned, the Government must take up its rights or it loses control of the airline. Subject to what Edwards may say, and subject to all kinds of ifs and buts, I suggest that we should be wrong not to examine this sort of solution to the problems which beset British airlines.

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  I do not wish to be offensive, but I thought that there was a note of inevitability about the Minister's speech this afternoon when he said that this was a direct and foreseeable matter, indeed almost a consequence to be welcomed, arising out of the way we have run the airlines. There was no note of regret at all about the £227 million—which would be enough to float an enormous airline, a third airline on the world airline scene, or indeed to float a large company which could be situated in Scotland or in one of the development districts to manufacture and give employment. We must have regard to the value of the capital which we have written off over the years, and we must be careful that we do not commit ourselves in the future.
  The argument of insulation against the effects of Government interference and the need to raise new capital are matters which are fundamental to the reasons why our airlines have not proved financially successful in the past. Whatever may happen in the future, this is a matter which from now on we cannot afford not to take up.
  5.45 p.m.
  Mr. R. F. H. Dobson: I have had the pleasure on a few occasions recently, both on the Floor of the House and in Committee, to follow the hon. Gentleman the Member for Cirencester and Tewkesbury (Mr. Ridley). He spoke of his solutions to some of these problems, and I was struck by what he feels to be the rôle of the public sector in the way in which it deals with its finances in the future. He knows from our previous discussions that I could not possibly agree with him on the matters about which he has talked, intriguing as they are and put forward in such an agreeable and lucid manner.
  I thought that the hon. Member was unfair when he said that the Minister's speech contained a note of inevitability in regard to the future of airlines. As I understood my hon. Friend, he was saying that a guarantee had been given in the statement last year and that this Bill was a result of it. All the more credit to him, because in the interim period the finances at B.E.A. have improved above the forecast which was then assessed without substantial difference between the President
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  of the Board of Trade and the airline authorities themselves.
  The hon. Member for Cirencester and Tewkesbury left out one part of the equation which was most important, namely the aircraft procurement programme. The part of the equation which he left out of his assessment is that no new aircraft can be built in this country without support on a massive scale by the Government of the day. This has been done not only by the present Government, but by previous Governments. However much we should like to see a change in that situation, one can never see it taking place because of the sheer practical conditions under which aircraft manufacturers work.
  Mr. Ridley: I do not think I said that this should not be done, nor did I say that it could not be done. I said that it would probably still be necessary to subsidise British aircraft, but that it should be done in relation to an aircraft saleable in the world market rather than in the narrow market of the British Corporations.
  Mr. Dobson: The hon. Gentleman is only saying what was said by the Plowden Committee in 1965: that where it can be achieved all aircraft projects should have a sale which is international.
  The problem in practice is that it is most difficult to get into international markets. One can criticise previous Governments for not bringing the aircraft manufacturing people together early enough to make an impact in the way of British sales of aircraft on world markets. The hon. Gentleman is right to say that it is a difficult problem to solve in the way of aircraft procurement for B.E.A. and all other airlines.
  The decision which was made last year, about which I had a slight reservation, to get B.E.A. to buy British was, in retrospect, quite right. It was right for two reasons. First, had it bought American aircraft it would have taken on a large capital debt which it is doubtful whether it could have solved, projecting it into these figures. B.E.A. might have got some improved operating from the aircraft in comparison with the Tridents, but it was right that we should meet the difference in the cost, if that is the particular problem which bothers B.E.A.

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  But that is not the full answer for the future. In one thing the hon. Member for Cirencester and Tewkesbury was right—that there should be more consultation between the airlines and the aircraft manufacturers on an aircraft which fits the bill for the routes which they have. The difficulty, of course, is that, in discussions of this kind, which are continual, both sides have different answers and sometimes some difficulty in assessing actual costs, rather than a rough "guesstimate". Nevertheless, there is a need to look to the future to see whether or not aircraft manufacturing policy relates to the needs of British aviation.
  The point is now being met in part at least by the sort of marketing survey which B.A.C. has done for its 3–11. One might feel that some of its sums might be wrong—for instance, its penetration of the American market—but substantially what it is trying to do is to forecast the need for a British aircraft into the international scene, and to that extent the job should be useful to the Government.
  But the hon. Member starts from a different position to mine. He feels that Government intervention is totally and wholly wrong and I do not. If the Government finance a publicly-controlled Corporation, we have every right at all stages to query, qualify, discuss, amend and generally process what the airline is doing within the sort of ambit of the President of the Board of Trade's authorities.
  It is unfortunate that we did not have the Edwards Report before this debate, but if it does anything at all the Report should be so substantial—I hope that it will make some satisfactory changes—that we could not have had a debate next week or the week after to do justice to it. We have been cliff-hanging for the Report for a long time, and in such a major area of policy it will be looked for as the good Report which we have not had so far for the future of civil aviation.
  I think that the hon. Member for Woking (Mr. Onslow) was wrong to suggest that Edwards could not look ahead. The terms of reference were clear and included the term:
  "… the prospects of the British civil air transport industry …"
  which gave it some authority to look ahead for the British share of world
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  markets, which is where we want to see developments.
  The hon. Member for Cirencester and Tewkesbury—I hope that he does not think that I am picking on him, but he made an interesting speech—was wrong to write off the foreign savings from selling seats to people for dollars or other foreign currency. He is much more of a financial expert than I, but I think that he is wrong there, because he starts from the wrong basis.
  The last B.E.A. Annual Report and Accounts is a valuable document, especially for its detailed information, but it has one major defect. In the review of the year and the look ahead, it seems to be pessimistic—I was about to say "anti-Government". It seems wrong for a public Corporation owned and backed by the Government to make continual references to Government interference and pessimistic statements about doing something or not being allowed to do something else, the economic crisis and the continuation of the overseas travel allowance, described as "a travesty of justice to B.E.A.".
  That might be the view of some people, but it ill behoves a public Corporation to say these things in the way that they have been said several times. I would expect it from some independent travel and tourist operators, but when the Government technically own and finance the airline, help to run it and see it through difficult passages, as with this Bill, it is not a good idea to write such statements into the Annual Report, however much the individuals responsible may feel that they are true. But the information in the Report is absolutely superb: it could not be bettered.
  On National Insurance, according to my calculations, in a total wage bill of £29 million for a year, possibly now increased to over £30 million, even if the insurance stamp were increased by a shilling, it would be an increase of £0·05 million, and, if it were two shillings, an increase of £0·1 million, which are derisory sums compared with expenditure of over £30 million.
  The Report is very valuable for the background of this short Bill. The hon. Member for Woking said that there was a complaint about air navigation fees increases. I would have thought that

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  this was the wrong thing to do. There is a need to increase fees, because safety regulations for aircraft coming into British airports must be improved. If one can criticise British airports it is for the fact that very few are adequately equipped for modern aircraft, not only in runway length but by the navigational and other aids which they need. But I was very disturbed to read in the B.E.A. News of Friday, 18th April, that the lack of ground facilities at certain airports is holding up the blind landing and auto-land techniques.
  I believe this is something which the Minister could usefully look at. We all know that the most dangerous time for aircraft in flight is as they land; and the object of automatic landing is to make that operation as safe as anyone can make it. It brings down the accident risk substantially. It enables aircraft to land automatically without risk to the passengers in extremely close weather conditions which otherwise would close the airfield or restrict its use. This system is valuable, therefore, from the point of view of reducing potential accidents to passengers and in relation to the ability of aircraft to land in bad or close weather, which may also be to the passengers' disadvantage at times.
  On one flight returning to London I was first diverted to Hamburg. That seems a ludicrous diversion. I am not saying that in such a case automatic landing would have got me down in London but it might have done so and saved me a great deal of inconvenience and extra travelling time. The statement in a report of this kind that blind landing facilities in the United Kingdom are lagging behind, presumably because of lack of development, is something which should be mentioned in a debate of this kind. I am sure my right hon. Friend is aware of it, and I hope that he will do his best to improve it. I feel that I can give a general welcome to this Bill because it is sensibly laid out; it is making adequate provision against the background of a pledge given by the then Minister of Aviation; and we ought to have no trouble at all in passing this Measure this afternoon.
  6.0 p.m.
  Mr. Tim Fortescue: I am glad to follow the hon. Member
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  for Bristol, North-East (Mr. Dobson), with many of whose ideas on aviation I always find myself in agreement. On one or two small points that he has made I should like slightly to disagree, and I am sure he will understand that there is no personal element in that disagreement. He rather chided B.E.A. for daring to criticise the Government in its annual report. This is a fashion which has been set by the chairmen of all the nationalised industries, with Lord Robens in the lead. The Governor of the Bank of England and heads of every national industry make a practice of criticising the Government, and I do not see why B.E.A. should be held to be an exception to this apparently universal rule.
  The second point with which I would slightly disagree is the question of air navigation charges being increased at municipal airports. I should declare an interest since they are being increased at Liverpool Airport, which happens to be in my constituency. The complaint of municipal operators is that although charges at their airports are being increased by 50 per cent.—a remarkable increase in the light of the prices and incomes policy and the other restrictions on our economy—charges at Heathrow are not being increased on the ground that it pays its way; but charges at other British Airport Authority airports are not not being increased either. This is the burden of the complaint of municipal operators, and, as my hon. Friend the Member for Woking (Mr. Onslow) has said, it is to be hoped that we shall in due course have a chance to put the arguments against these increases to the House when a Prayer to annul the Order is moved.
  We are debating the future financing of an airline of which the whole House and the whole country is very proud, an airline which advertises itself as No. 1 in Europe, and which in the minds of most citizens of this country certainly is regarded as No. 1 in Europe. As several hon. Members have said, that is no reason at all why we should not criticise it and look at what is wrong with it, because there is something wrong with every human institution. I hope that nothing I may say will be construed as meaning that I am not very proud of being a part owner of British European Airways. The Chairman of B.E.A. in a statement at

  717
  the end of last year, just after the sad demise of British Eagle, a statement which was given wide publicity, said:
  "How I wish we could, as a nation, stop arguing private versus public ownership, because one can only promote the one by denigrating the other. Could not we call a halt to all this and accept, for better for worse, that this nation has a mixed economy and will always have one?"
  I am sure that in the Middle Ages the bold, had baron in his castle looking out over his domain at the peasants working in the fields said something like that, asking, "Could we not call a halt to any attempt to change the present situation? We have always had a mixed economy and we always shall have". I am sure that the aristocrats in France just before the Revolution looking at their serfs toiling in the field must have said, "Thank goodness we have a mixed economy and shall always have one".
  Sir Anthony Milward—to whom I pay tribute—showed in his statement a lack of imagination in chiding the independent sector of the airline business for saying that perhaps there ought to be a change in the balance between the public and the private sectors. He is the "haves". They are the "have nots". He has all the schedule routes, and they have hardly any. It is all very well when one is sitting on a bag of gold from which someone wants to take just one or two pieces to say, "We have a mixed economy. This is the way we do things. We have always done this and always will". For airlines the schedule services are the key to prosperity. Without scheduled services it is very difficult to make an airline pay. Historically, scheduled services in Europe and the United Kingdom have been reserved for B.E.A., though one or two have escaped the net. British Eagle managed to devise a few which B.E.A. did not want, and it was ingenious in doing so. But no independent airline can possibly become prosperous unless it has some of the scheduled services which at the moment are reserved to the nationalised Corporations, which the independent airlines get only as crumbs from the rich man's table. The prize example is British United Airways. When B.O.A.C. said it did not want to run the scheduled South America services any more because it could not make them pay, British United picked up that very substantial crumb—
  718
  the only time there has been one. Within one year it had made a profit on those services, and yet B.O.A.C. wanted a subsidy of £1¼ million to continue to run them for a year. This is direct evidence of the ability of independent airlines to work on a financial and economic basis if they can have scheduled services.
  I strongly believe that unless we want to hand a complete monopoly of the air services in this country to B.E.A. some of the scheduled services will have to change hands. This is what the Edwards Report is all about. I can understand the Minister bringing on this debate before the Report is published, because had it been published before this would have been a debate on the Edwards Report, which is not at all the intention of the Government. To my mind that was right because that report will take many days to debate and we have only half a day. Not content with hogging all the scheduled services in Europe and the United Kingdom and objecting always when anybody else applies for one, B.E.A., I understand, is now going to invade the charter section of airline business which until now had been more or less reserved for the independents. This bold, bad baron, not content with sitting in his own castle watching the peasants in the fields, wants to pinch the fields as well. I believe that this enterprise must be looked at very closely. There is a tendency just beginning for blocks of seats in aircraft on scheduled services to be reserved and chartered at cheap rates. This must be looked at. It should be a matter of the closest consideration by the Government because if the Corporation, with Government money behind it, is to be allowed also to invade this sphere, then I see very little future at all for the independent airlines.
  Mr. Leslie Spriggs: Is the hon. Gentleman aware that because of the high quality of service which B.E.A. provides to the public, there is a public demand that B.E.A. should enter the charter service?
  Mr. Forteseue: The service provided by B.E.A. is like the curate's egg. It is good in parts.
  I am a little surprised to find, though this is to a degree because of my own ignorance, that hitherto there has

  719
  apparently been only inadequate provision in the legislation covering B.E.A. on the level of Schedule 2 of this Bill, which provides that board members of B.E.A. should not have a conflict of interests when they are appointed to the board. This will become more complicated when the new charter activity of B.E.A. begins. I recommend the Minister to re-examine the interests of the present directors of B.E.A. to make certain that none of them has interests in charter companies or in travel agencies which place a lot of their business with charter companies. I think that this new activity will complicate the position, and the provisions in Schedule 2 have come just in time.
  I turn now to the standard of service provided by B.E.A. The Civil Aviation Licensing Act, 1960, passed by the Conservative Government of nine years ago, is entirely out of date, and will, I am sure, be modified as a result of the Edwards Report. Under that Act the Air Transport Licensing Board has to take certain matters into consideration when granting a licence, or considering granting a licence, to an airline. There are many factors which it has to take into account, but I shall refer to the principal ones only.
  It has to take into account the competence and fitness of the applicant to operate the service having regard to his experience and financial resources. It has to take into account any unfair advantage over other operators through the conditions of employment of his staff. It has to take into account the need for the proposed service, and the extent of any likely duplication or diversion from other licensed services, and so on. Nowhere in that Act is it said that the board in considering granting a licence has to take into account the interests of the passenger. He is not mentioned anywhere. By law the airline does not have to look after the passenger. The applicant for a licence is given a licence whether he is willing to look after the passenger or not. Nor are the interests of the British aviation industry one of the criteria which the board must take into account.
  The chief safeguard for standards of service to be maintained in any undertaking is the competition of similar undertakings. This is the one matter which
  720
  keeps people on their toes—that if an operator does not have proper standards of service his competitors will take his business. This is why people provide a good service, and this is proved in the case of B.E.A.
  I do not know how many hon. Members have flown by B.E.A. from Frankfurt to Berlin. The competition there is very hot indeed. The route into Berlin is flown by several airlines, and they are all very good. B.E.A. did not have jet planes, and it found that it was losing business. As soon as it put the BAC 1–11 500 on the route, its business picked up. These airlines watch one another like hawks. The standard of service on that route is magnificent, and I pay the highest possible tribute to it. I am sure that anyone would be proud to fly B.E.A. over that route.
  In this country, however, where B.E.A. has only the minimum of competition, can anybody in this House say that when he flies by B.E.A. on a domestic route, or when he uses one of B.E.A.'s subsidiaries on a domestic route, he is proud of the service that he gets and satisfied that the service could not possibly be improved? I fly a lot in this country, and I am constantly ashamed of the service that I get.
  The route between London and Liverpool, which I fly frequently, used to be operated by both British Eagle, of blessed memory, and Cambrian Airways, which is now a subsidiary of B.E.A. When they were both flying that route, the service was very good. British Eagle is not there any more, and this route is now flown by Cambrian Airways alone. There is now a new pattern of behaviour. One goes to the airport, and just before the aeroplane is due to leave the passengers are herded into a bus. The bus has only a few seats, and one has to stand for 15 or 20 minutes waiting for the bus to move off to the aeroplane.
  I have complained long and bitterly about this. The reason given for the hold-up is that after the ordinary passengers have got into the bus the airline staff begin to check in people who are there on the off-chance that they will get a ride—what are called stand-by passengers who pay a reduced fare.
  That is one way of doing things, but it is not a very good way. When there

  721
  was competition between British Eagle and Cambrian Airways it never happened. Passengers were not kept waiting 20 minutes in a bus before boarding the plane because both airlines knew that if one of them did that, on the next occasion the passengers would use the other airline. Standards of service can be kept up only if there is proper competition, and it is essential for the standards of B.E.A. services to be stimulated constantly by competition wherever this is possible.
  We have heard about the new aeroplanes which B.E.A. is to get, and good luck to them. We have heard the hope expressed that B.E.A. will be able to buy the new BAC 3–11. We shall look forward with great interest to hearing from the Minister of Technology eventually whether development backing will be given to that aircraft. I hope that it will be. I have every reason to believe that B.E.A will be delighted to have it.
  But we have to look one generation of aircraft beyond that. We have to look to the end of the 'seventies and the beginning of the 'eighties. By then the new concept in civil aviation of vertical take-off and landing or short take-off and landing aircraft will be with us and will be a commercial proposition. We have heard that by 1973 the Americans will have in service a 40-seater helicopter which will carry passengers over a range of 500 to 600 miles at a cost of 2½d. per route mile, which compares with anything flying now.
  Trains do the journey from London to Liverpool, station to station, in two and a half hours. Trains will be improved, and we shall get to the era of super-trains running on different kinds of track, and perhaps even running on the hovercraft principle. When that happens, the journey time between London and Liverpool by train will be reduced, and unless within the next ten years there are air services from city centre to city centre our airlines will lose all their traffic to the trains.
  The opportunity for providing such services will become available because, by the march of events the dock areas in our great cities will become smaller. With the container revolution in shipping, fewer docks will be needed. Ships will turn round more quickly, and these huge areas
  722
  of docks in the middle of London, Liverpool, Manchester and Southampton—to name but a few—will no longer be required. The dock areas in our great cities will be ideal sites for vertical take-off and landing planes, which will be able to convey passengers very quickly from point to point, though, of course, no faster in the air than—if as fast as—is the case now.
  In the intervening stage between now and then, what better could B.E.A. do than turn its attention to the two short take-off and landing aircraft now in operation all over the world? They are both British made; we can be very proud of the Islander and the Skyvan. These are two most excellent small aeroplanes holding their own in markets everywhere, and yet no one in this country, except in the very north of Scotland, is even considering them.
  B.E.A. has an helicopter service from Penzance to the Scilly Isles. It is the only scheduled helicopter service in this country. It is operated with American helicopters. Is this not an ideal opportunity to replace those American helicopters with the Islander or the Skyvan, both of which can land on and take off from the Scilly Isles with full loads, to prepare the way for the time which must come in the near future when this type of aircraft is operating on trunk routes in this country?
  I wish the Bill well and hope that it has a speedy passage through Committee, where, I assure the Government of my support for its general principle.
  6.20 p.m.
  Mr. John Rankin: I listened to the hon. Member for Liverpool, Garston (Mr. Fortescue) with great interest. I agreed with a great deal of what he said. I welcome B.E.A.'s intention to take part in holiday traffic because it will ensure higher standards of treatment and safety for passengers than are provided by many other operators catering for this type of traffic. It is a lucrative and expanding traffic. The hon. Gentleman said that civilian passengers should travel in the best conditions. I agree. I apply the same dictum to holiday traffic. There has been a tendency to pack people into aircraft which have been out of use for long periods and to take them to the Continent as quickly as

  723
  possible. I have heard it said—I have not proof of this, but it comes from good sources—that sometimes their return is not assured.
  I disagree with the hon. Gentleman about the service provided by B.E.A. on the ordinary passenger routes. I have been travelling on these routes since the days of the D.H. Rapide. Therefore, I can compare the time when we did not even have a glass of water to ease our trepidation, if we were nervous, with the facilities of comfort and speed provided by the Trident. I can compare the 54 minutes of sleek comfort which one enjoys while the Trident covers the distance between London and Glasgow, and vice versa, with the 2½ hours which one used to spend on the journey.
  Mr. Fortescue: I have no criticism to make of the safety and efficiency of the aeroplanes and their crews once they are in the air. Those are first-class. It is the cavalier way in which passengers are treated on the ground at both ends of the journey which worries me and which is not nearly as good as the treatment which one receives between Frankfurt and Berlin where the competition is much more acute.
  Mr. Rankin: It puzzles the hon. Gentleman, but it mystifies me. The bus has disappeared at London Airport. I am lucky perhaps because I cannot recall when I last saw a bus. The pier now is fully used. Therefore, there is no crowding of passengers into buses. We are like people going to work in the morning. We leave at 9 o'clock and return at 4 o'clock. There is no rush, and a seat is waiting for us. The hon. Gentleman must admit that tremendous progress has been made not only in the development of the aircraft and its safety but in the way in which passengers are dealt with at our large terminals.
  I completely agree with what the hon. Gentleman said on the second matter to which he referred. In Britain we are at the beginning of another revolution. Profound changes are taking place under our noses. The hon. Gentleman referred to the speed at which trains now operate between London and Manchester, Newcastle and even Glasgow. With the advent of a different type of rail, the speed of those trains will be doubled. When that happens,
  724
  the short-haul aircraft in the United Kingdom will begin to see the end of its days. Surface transport will take over again, and the aircraft will have to seek its fortune outside these shores.
  Another development is the jumbo jet. The crowd of 100 people which used to get off the Vanguard will rise to 250 or 280 when the jumbo jet lands. There will be an entirely different approach to the phenomenon of air travel. People will visit places on holiday which they do not even visualise now. Instead of Europe, holiday makers will be going to East Africa and the nearer parts of Asia.
  We are waiting not for Lefty, but for Edwards. Whenever we debate aviation in the House, we are waiting for somebody's report. What will happen when we have the Edwards Report? We shall debate it for a day when about a quarter of the Members who wish to speak will not be able to do so. The Edwards Report will follow the path of other reports, back to the Library, and we shall carry on. This time, we shall not be able to do so because development, invention and expansion will drive us forward. In this short debate we seek to prepare ourselves for the age which lies almost at our feet.
  Lured on by the hon. Gentleman, I have said many things that I did not mean to say and that were not initially in my mind. I am now wondering how to work in the speech which I have prepared. I believe in Government intervention. I like to think that the Government are always prepared to intervene in this industry, because in my experience Government intervention has always been good for the industry. I hope that the Government will continue their activity in the industry and that there will be a Government-patronised operating unit such as B.E.A. always functioning.
  I was glad to hear the Minister pay tribute to the B.A.C. 311. I hope that was an indication of the direction in which Government thoughts are turning and that the 311 will be the Government's choice for the jumbo jet age.
  What appeals to me about the organisaton of B.E.A. is that it has established excellent labour relations at all levels. This has been one of the great factors in B.E.A.'s success.

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  Knowing that there is another debate awaiting and that others wish to speak in this debate, I must leave the matter at this point. I congratulate my hon. Friend the Minister of State on the way in which he presented his Bill.
  6.35 p.m.
  Mr. Peter Blaker: I agree with the hon. Member for Glasgow, Govan (Mr. Rankin) that B.E.A. services are better than they used to be, but I doubt whether that quite answers the point which was made by my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue). I should like to have a word with the hon. Gentleman privately about how he gets this V.I.P. treatment at Heathrow, because his experience does not accord with mine. I can only think that the explanation must be that the hon. Gentleman is going through the V.I.P. channel.
  I was glad that my hon. Friend the Member for Woking (Mr. Onslow) raised the question of B.E.A.'s plans to go into the hotel business. This is an important subject and a new tendency on the part of B.E.A. We know that it has plans to go into the hotel business in a big way, because Sir Anthony Milward published in The Times on 21st January a piece headed
  "Why B.E.A. needs a hotel stake."
  This interesting article makes it clear that B.E.A.'s plans to go into hotels are ambitious. Moreover, it has an interest in the proposal to build a 1,000-bedroom hotel at Victoria Station.
  I do not claim that such a venture would be beyond its powers under the statutes. I simply question whether it is necessary or desirable for B.E.A. to go into the hotel-building business. If private enterprise is capable of doing the job without any disadvantages to B.E.A. in its primary rôle of running airlines, that would be a better way of doing it.
  In the article in The Times Sir Anthony said:
  "A full and comprehensive overall travel service means, inter alia, seeing that passengers are provided with suitable accommodation at destination points, and this in turn can mean booking, buying or building hotel rooms as the case may be … we would prefer to leave the running of hotels to hoteliers and their development to entrepreneurs, but we cannot afford to sit and wait and risk letting down our future passengers."
  726
  Sir Anthony refered also to the impending introduction of jumbo jets and, finally, to the great need, which he believed was not being met adequately, to provide modern, inexpensive hotel rooms.
  I want to explore why, to use Sir Anthony's words, the booking or buying of hotel rooms is not adequate and why it is necessary for B.E.A. to go into the business of building hotels. Have the airlines been seeking to persuade private hoteliers to build the hotel rooms which they believe to be necessary and which they do not think are being constructed? Have they explored the opportunities of encouraging private enterprise to do the job, as Sir Anthony himself says he would prefer to happen?
  My information, such as it is, suggests that they have not explored this possibility. I am told that no British hotel concern was approached about the 1,000-bedroom project at Victoria. I believe that at one time it was intended that Intercontinental Hotels of America should be associated with the development and that not only was no effort made to persuade British companies to go into the enterprise but that they were not even given an opportunity to come into the scheme, and that, indeed, one British hotel company received a brush-off when it approached the airlines.
  The article appears to assume that hoteliers are not aware of the impending arrival of the jumbo jet. Of course they are. It is very much in their minds. The Minister of State and I have had exchanges upstairs in Committee repeatedly in the last few weeks about hotel construction, and we are pleased that it is going ahead fast. There is a tremendous spate of building of new hotels, induced largely by the Government's new scheme for grants and the fact that it will expire before long. People are building hotels while the scheme is available.
  I wonder whether Sir Anthony is right in thinking that this job is not already being done by private enterprise or that if he chivvied private enterprise and tried to persuade the very efficient British hotel companies to do the job they would not be prepared to do it.
  Hon. Members opposite may ask—I am sure the hon. Member for Glasgow, Govan would—why should not B.E.A.

  727
  do the job of building hotels? The hon. Gentleman might point out that other airlines do it. They do; but that does not show that it is necessary or desirable for B.E.A. to do it or that these other airlines were right about their own interests. At any rate, it does not show that a wholly nationalised airline should be doing it.
  If the interesting suggestion floated by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) reflected the actual situation, if we had a national airline which had a substantial percentage of private equity capital, my anxiety about its intention to go into the hotel business would be very much reduced, but when we have a totally nationalised airline we should look at its intention to go into hotel business with a sceptical eye.
  This is, first, because the financing of these new hotel developments is going to be a burden on public funds. We all know the difficulty of raising public funds for capital purposes which Governments can experience. The second reason is that I believe that there is likely to be involved an element of subsidy in the construction of hotels by the nationalisd airlines. On 3rd April, 1968, my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) asked the then Minister of Transport
  "if she will give a general direction to the British Railways Board that no railway land should be disposed of, whether to a private firm or a nationalised industry, at less than the full market value."—[OFFICIAL REPORT, 3rd April, 1968; Vol. 762, c. 101.]
  This is relevant to the enormous and important scheme at Victoria Station. He received from the Joint Parliamentary Secretary the flat answer, "No". That cannot encourage those of us who are worried about the possibility that land might be provided by British Railways to the nationalised airlines at subsidised prices.
  My hon. Friend returned to the charge by asking the Minister of State, Board of Trade last July to ensure that, in so far as hotels to be built by nationalised airlines were built on land at present owned by the railways authorities, no special financial arrangements would be made. The Minister of State said that he would take note of that point. This
  728
  is surely a suitable opportunity, since he has been able to reflect on the question, to say something further in order to allay our anxieties.
  I have been talking of the possibility of a subsidy for the construction of hotels but there is also the question of a possible subsidy for running them. In his article, Sir Anthony Milward said:
  "Political circles sometimes get excited about the known ambitions of B.E.A. and B.O.A.C. to participate more and more in hotel ownership."
  I think that "ambitions" was perhaps a curious word to use when he had just disclaimed the desire to go into the hotel ownership business at all. He went on:
  "In particular it is suggested that it is unfair to private enterprise for nationalised coporations to use public money as capital for projects competitive with the private sector. This is a narrow view which completely ignores the obvious benefits …"
  to the economy of developing hotels. He added:
  "… all our hotels have got to pay."
  He regarded that point as disposing of the argument that there might be a subsidy in the running of the hotels.
  I hope the Minister of State may devote some time to the question of subsidies for the running of hotels. It is obviously true, as Sir Anthony says, that we need new hotel building, but why do we have to put public money into building or running them?
  Mr. Spriggs: The hon. Gentleman is asking why the Government should put money into the public sector of the hotel business, but he does not oppose the Government subsidising the private sector of the hotel industry. Would it not be fair to accept the principle of a little competition here and give a little to the public sector as well as to the private?
  Mr. Blaker: Perhaps it would be unwise for me to go far along the path the hon. Member for St. Helens (Mr. Spriggs) has opened up. Perhaps I can send him some of the speeches I have made in Committee upstairs on this point. In relation to subsidies for the private hotel sector, the short answer is that I should like to see the private sector treated on a par with other industries. It is certainly not being treated so at the moment. It is being heavily discriminated against.

  729
  I do not see how the public will be able to know whether there is a subsidy for hotels opened by B.E.A. Would it even be possible for this House to know whether a subsidy is paid to B.E.A. for hotels, whether for construction or running costs? Perhaps the Minister of State will tell us how this House, which has the job of looking after public expenditure, will know whether there is a subsidy. Even if there is no subsidy in a direct sense towards the running costs, it is surely impossible to believe that there will be equality of competition.
  In the past, speaking of B.O.A.C., the Minister of State has said that the fact that it is expected to make a return of 12½ per cent. on net assets is a guarantee against unfair competition. Perhaps the words "unfair competition" are rather emotive, so let us say, "equality of competition." When talking about B.E.A., it is not a question of 12½ per cent. on net assets. The Government White Paper of 1967 put the figure at 6 per cent., and the Minister of State said today, as I understood him, that the target which would be set in the period 1968–69 to 1971–72 would be 8 per cent. before charging interest.
  How could a hotel company in the private sector be satisfied to show a return of 8 per cent.—even assuming that B.E.A. achieved its target, for it is now reaching only 5 per cent? A private hotel pays interest on borrowed money of probably 9 per cent., together with Corporation Tax of 45 per cent., it has to pay dividends, and has to have some cover for its dividends in order to plough back money for future development. To the extent that B.E.A. is taking part in hotel development, the inevitable result is likely to be that its hotels will be able to charge lower tariffs, or that it will be able to develop hotels which a commercial concern could not afford to touch.
  There is a further point. The rate of return which B.E.A. is expected to make—6 per cent. if we are talking about 1967 and 8 per cent. if we are talking about the objective which the Minister has just explained—is presumably a suitable return for aviation, which is the primary objective of B.E.A., but is it necessarily a suitable return for a hotel enterprise? I do not think it is. The figures for hotels would, logically, be different from aviation figures. So, even
  730
  without taking into account that nationalised corporations have a bottomless purse, without taking into account that they have favourable arrangements for raising money and that there is no risk, for example, of their being subject to take-over bids, it is difficult to see how competition can be on an equal basis.
  On the assumption that my remarks may not persuade the Minister to give a directive to B.E.A. not to go into the hotel business, the possibility of which I must face, what will be the policy of B.E.A. in the running of the hotels in which it has an interest? Will it ensure, so far as it has the power to do so, that any consortium in which it joins for the purposes of hotel construction will offer the British hoteliers a fair opportunity to compete for the running of the hotel? Notoriously, this did not happen with the projected hotel at Victoria. British hoteliers are very worried about this. I understand that it is proposed to form a consortium of several European airlines, and it is fair that British hoteliers should ask that an equal opportunity on a fair basis should be accorded to them to participate in the running of hotels in this country in which British airlines have an interest.
  6.53 p.m.
  Mr. Russell Johnston: Inevitably, at this stage of a debate on a Bill which is largely non-controversial, most of the basic points have been covered. I seek not to reiterate those points but briefly to record from this bench our support and welcome for the Bill. I welcome particularly Clause 2, which provides for public dividend capital. My hon. Friend the Member for Orpington (Mr. Lubbock) argued for this as far back as November, 1962.
  Equally, the House accepts that it is to the benefit of the British aviation industry and of B.E.A. that we should be able to use the Trident. The first Tridents have been very successful, and there is every indication that the third will be an outstanding aircraft.
  The hon. Member for Woking (Mr. Onslow), in his wide-ranging remarks at the beginning of the debate, asked one or two questions about the Highlands and Islands services, to which I will briefly refer. We are awaiting the Edwards Report and, in consequence, it is perhaps unfair to tax the Minister

  731
  about any of these matters, since he will inevitably say, in the equally unfair fashion of Ministers, that he is unable to say anything until he is in a position publicly to comment on the report, which doubtless he has already seen and examined.
  I know that acute concern is caused by those sections of the B.E.A. network which run at a loss, and the situation on the Highlands and Islands sector is fairly critical. Last year the annual report of B.E.A. showed the loss in that sector to be £374,000. Leaving out of account any argument as to how exactly accurate this figure may be, the B.E.A. representative, Mr. Herring, was quite specific about it. At paragraph 197 on page 29 of the Minutes of Evidence given before the Select Committee on Nationalised Industries. Mr. Herring said:
  "We have accepted a figure—it has never been defined, but it is in the order of £300,000 a year—as a loss which we can contain very largely from profits elsewhere, but we certainly could not exceed it."
  If B.E.A. is reaching the position of being involved in a loss which it accepts as something which it cannot contain, we must ask how that loss will be paid for?
  I do not know whether the Minister will be able to comment on whether the principle which the Government have accepted in the Transport Act, 1968, for the railway system is a general principle which they are likely to apply to the airway network. I should not have thought there was a basic difference between the two services.
  I have not had the glorious experiences of the hon. Member for Glasgow, Govan (Mr. Rankin) of being whisked straight into aircraft, but I fly by B.E.A. probably more regularly than any other hon. Member to and from North Scotland. I make the journey very week, and sometimes two or three times a week, and I find that the overall standard of service and punctuality is extremely good. The people who complain most about B.E.A. are the sporadic users of the service which hit a bad time. They complain bitterly that they could not get on to the aircraft or that they were buffeted by the cross-winds at Turnhouse. This is hardly the responsibility of B.E.A., but may to some extent be the responsibility of the Minister. As one who uses the service regularly, I
  732
  appreciate the standard which is maintained by B.E.A., and I hope that the Bill will contribute to that standard being maintained in future.
  6.58 p.m.
  Mr. Stanley R. McMaster: I shall not detain the House for long as the hour is late and there is other business to be done tonight. I shall briefly refer to some matters to which I feel the Minister should pay particular attention. Like the hon. Member for Inverness (Mr. Russell Johnston), I, too, travel regularly by B.E.A., not between London and Scotland but to and from Northern Ireland. Generally speaking, I agree that the servise is of a high standard, though it must be said that one can experience difficulty on occasion.
  Only a week or two ago I booked a ticket by telephone. I was told that I should check in an hour before take-off, which seems a little excessive when one considers that the flight to Belfast takes only an hour. However, perhaps it turned out to be right, because I was a little delayed by traffic on the way to the airport. When I arrived, there was a short queue at the desk, but eventually I was able to check in. Due to delays in dealing with passengers who had arrived earlier, when finally I got my ticket I was left with barely 20 minutes in which to check in my luggage, and I found that my seat had been sold. The result was that I had to get another flight, though the notice on my ticket said that it was possible to check in up to 20 minutes before take-off. To round off the story, when I arrived at Belfast I found that my luggage had been lost. I must have got out of bed on the wrong side that morning. I drew the facts to the attention of B.E.A., and I received an apology. It may be that there is a little substance in the comments of hon. Members who have criticised the service.
  One or two shortcomings might be considered. First, there is the requirement to check in one hour before take-off. Then there is the fact that one finds only two clerks issuing tickets for the whole of B.E.A.'s domestic services. There are the same number in Belfast, which is a very much smaller airport. That does not appear to be paying proper consideration to the needs of passengers. One of B.E.A.'s aims is to provide a

  733
  fast city-centre to city-centre service. It is hardly consonant with that to have to check in the same time before takeoff that it takes to fly the 200 or 300 miles to a destination in Scotland or Northern Ireland.
  My hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) made the point that B.E.A. must keep up and improve its services. It might even be possible for it to introduce flights such as those between New York and Washington, where one can check straight on to a plane and thereby save half an hour. To persons like the hon. Member for Inverness and myself, travelling every week in both directions, half an hour saved on a flight represents a considerable amount of time.
  B.E.A. should remember that on many routes in the United Kingdom it has a virtual monopoly position. As a result of the activities of the Air Transport Licensing Board, very few licences have been given to its competitors. Being in a monopoly position, B.E.A. should take great care of its passengers. It has a special duty. It is not as though it is being pressed by competitors, and, therefore, it should take special care to see that complaints about lost luggage and discourtesy at airports do not arise. Some years ago British Eagle was given a licence to operate flights to Belfast, and British United Airways has now taken it over, but in both cases the licence was granted for only one or two frequencies a day. None the less, a viable service is provided, and it is noticeably better than that provided by B.E.A.
  B.E.A. and our whole airline policy would be improved if we allowed more competition on routes within the United Kingdom. Against that, it has been said many times that B.E.A. is in a special position in that a lot of public money is invested in the air corporations. Licences are hotly contested by the State corporations, and it is said that providing them to competitors would only reduce the profitability of B.E.A. and damage the taxpayers' position. However, I think that that begs the question, because it assumes that the same number of passengers will fly in any event.
  Where there is competition one normally finds improved standards and more advertising, both of which result in increased
  734
  traffic. In turn, increased traffic tends to reduce fares and provide more efficient services, and still more traffic is stimulated, As a result, a better market is created for British aircraft, and that assists in the design and production of new aircraft.
  A more liberal policy is required if air traffic is to be stimulated and if we are to improve the services rendered to the community. Those, after all, are the ultimate aims of this Bill, and Government policy, at the same time, should be to benefit our aircraft industry.
  My hon. Friend the Member for Liverpool, Garston spoke about vertical and short take-off aircraft. I am not so convinced as he is that it is possible for a vertical take-off aircraft to land in the centres of large cities. An aircraft of the size necessary to provide an economic service must carry at least 50 or 60 passengers, and it would require an enormous thrust to take off vertically. In addition, even though a considerable height can be attained with a vertical take-off before transferring to forward flight, the amount of noise created in lifting such an aircraft off the ground would be considerable, and it would require a greater area than is to be found in the docks, as my hon. Friend suggests.
  I was pleased to hear my hon. Friend mention the Short Skyvan, which is produced in my constituency, as one aircraft in which B.E.A. might take an interest. In that connection, the question raised by my hon. Friend the Member for Woking (Mr. Onslow) about the competition for a new airbus is one to which the Government should pay very special attention.
  It may be that there is a place for both the A300B and BAC311, but I am apprehensive that the Government's indecision about which of these aircraft to support is in danger of making us fall between two stools. Recently, the French and German Governments indicated that they are prepared to go ahead with the A300B, even if the British Government do not support it. That involves Hawker Siddeley withdrawing from the project. Hawker Siddeley has provided a great deal of capital for the development of the aircraft. It will be a tragedy for the British aircraft industry if we lose not only the participation, the employment and the development and design work

  735
  which this will provide, but also the benefit of that part of the design already contributed by Hawker Siddeley, which has done a great deal of work on the wings and the engine pods of the aircraft.
  There is also a danger that if Britain pulls out of the European airbus project we shall lose the engine contract. As long as we were one of the partners it was likely that the Rolls-Royce engine, the RB211, which has already been provided for the Lockheed airbus in America, would be installed in the A300B. But it has been suggested—I believe with some justification—that if Britain pulls out, the French and the Germans, with perhaps Italy also participating, will go on and use the American Pratt and Whitney engine, the competitor of the Rolls-Royce engine. These are important considerations. If France and Germany go ahead, the question remains whether B.A.C. can produce the B.A.C. 311 and whether there is a slot for both aircraft. The A300B would have a sure market in France, Germany, and perhaps Italy, which would leave too small a market for the BAC Three-Eleven. I feel that the Government must come to an early decision on this vital question affecting the future of our aircraft manufacturing industry.
  7.12 p.m.
  Mr. William Rodgers rose—
  Mr. Speaker: Order. The Minister of State needs the leave of the House if he wishes to speak again.
  Mr. Rodgers: I ask the leave of the House to reply.
  We have had a useful and fairly wide-ranging debate. I am glad that it has remained on the business and affairs of B.E.A. and has not spread into the whole area which will no doubt be covered when we have the Edwards Report. A number of points have been raised about the need for more competition—for example, about the rôle of B.E.A. in the inclusive tour market. Those are matters which we shall have to discuss at that time.
  In preparing for this debate I thought that at this stage I might have to assume a defensive role. I am delighted to find that this is not the case. In particular, I am pleased at the tributes which have been paid to Sir Anthony Milward and
  736
  to all those who work for B.E.A. Although we may from time to time find some criticism of B.E.A., it is in fact a first-class air line, highly competitive and successful in many ways. No doubt its services can be improved. I share the view of the hon. Member for Belfast, East (Mr. McMaster) that where an air line has a monopoly it has a special obligation to try to maintain standards upon which competition might otherwise have an effect. By and large, I think that B.E.A. has been treated fairly and sympathetically this afternoon, and I am delighted that there is a general feeling that the provision in the Bill is right, given all the circumstances.
  The hon. Member for Woking (Mr. Onslow) was helpful in saying that some of the matters which he raised would have to be pursued in Committee. That is the appropriate time to deal with points of detail.
  Navigation charges have been raised by the hon. Member for Liverpool, Garston (Mr. Fortescue) and others. As there is a Prayer on this matter, that will be the appropriate time to go into greater detail.
  The new forms of aviation—VTOL and STOL—are likely, over a period, to make a real contribution. At the moment, as the hon. Member for Belfast, East has said, VTOL aircraft are exceedingly noisy and this problem will have to be overcome.
  It may be of interest to the hon. Gentleman to know that I flew in a Skyvan before it received a certificate of air worthiness. Ever since I have thought it a good plane which deserves to sell well.
  I have taken note of what was said by my hon. Friend the Member for Bristol, North-East (Mr. Dobson) about blind and automatic landing. I entirely agree that we must ensure that the lead which Britain has given at her airports in this respect is maintained.
  My hon. Friend the Member for Poplar (Mr. Mikardo) gave us a typically well-informed and thoughtful speech which was concerned, in a sense, with the philosophy of the policy upon which the Bill is based. I share his view, and the view of the Select Committee, that it is desirable, in the case of B.E.A. and other airlines, to isolate as far as possible the element of subsidy, to deal with it in a clean and straightforward way

  737
  without any blurring, and then allow the industry to carry on with its business in a proper commercial fashion. Anything else is likely to lead to inefficiency and to weaken morale.
  I think that my hon. Friend will agree that the real point is the fair price. Our discussions with B.E.A. concerned the fair price; in other words, the compensation to be paid to B.E.A. because it was not allowed to buy the aircraft of its choice? At that point many questions come into the equation.
  We considered various ways in which the Government's pledge could be honoured. Amongst others, we considered the courses favoured by the Select Committee on Nationalised Industries. Though it is not possible to quantify what the consequence will be of B.E.A. buying this aircraft at the end of the day we felt this was a fair and effective method. We hope that the delay, and the fact that the aircraft does not have the exact capacity which B.E.A. would like, will not loom large and, therefore, that the out-turn will be better than we now anticipate. However, we cannot be sure.
  The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) raised the question of the extra £12½ million. He said that it was coming at the end of the period in which the aircraft would be introduced. The Trident 3B is a new aircraft which will be coming into service in about two years. It will not be the precise size that B.E.A. wants. It would be wrong to assume that it will immediately have the earning power of the alternative aircraft had B.E.A. been allowed to buy it. These are matters of judgment and calculation.
  The hon. Member for Woking said that he would like more about the figures on which these decisions were based. It was a fair request and I shall do my best to meet it within the framework that he suggested of not unfairly impinging on B.E.A.'s commercial confidentiality. Whereas the expenditure of an airline can be fairly easily predicted for a number of years ahead, it is more difficult to forecast revenue. Revenue depends not only on the attractiveness of the equipment, but upon the growth of the gross domestic product, and the extent to which people change their habits and travel more. It depends, as my hon. Friend the Member for Poplar said in discussing the
  738
  factors which should be taken into account, on the fare structure—and that is not necessarily within our control. Many factors come into this difficult equation. The matter was looked at very carefully a year ago, and a best judgment was then formed. It would take a brave man to say that the out-turn will be precisely the same as we anticipated then or precisely the same as we might anticipate now.
  The hon. Member for Cirencester and Tewkesbury also entered into a very interesting discussion, with which I have a large measure of sympathy, on the crucial question of the relationship of publicly-owned airlines to the manufacturing industries. It is a very complex problem upon which I find it difficult to be dogmatic. One's first instinct is to say that an airline which is expected to operate commercially should be free to buy the aircraft that it wants. But apart from the balance of payments considerations, which can be exaggerated, there is the whole question of the British aircraft industry and whether a British airline should be so free, irrespective of the consequences to British manufactures. We then get on to the further stage and ask, should not the industry seek to build aircraft for which there will be a world market? But here, in a highly competitive field, they are naturally looking round for the airlines which are most likely to provide them with business.
  In future, there should be a continuing dialogue, so far as there has not been one in the past, between the airlines and the industry and there should not be too rigid a position in which the airlines say what they want and the manufacturers provide the planes which, in their own judgment, will not pay their way by sales in the world. There are many sophisticated elements in this problem, so I will do no more for the moment than note what the hon. Member says and agree that this should be taken into account in future.
  The hon. Member for Garston and the hon. Member for Inverness (Mr. Russell Johnston) mentioned the Highlands and Islands services, as also did my hon. Friend the Member for Poplar when referring to the general problem of subsidy. I agree that the present position is somewhat anomalous, in that B.E.A. has accepted the considerable responsibility of carrying a deficit on its

  739
  Highlands and Islands operations. As the years go by, the view may be taken either by the House or by the Government that this is a service which should be isolated and dealt with, as my hon. Friend suggested, in the way which we have adopted for the railways. However, for the present, B.E.A. takes the view that this is an obligation which is proper for it to undertake and which has desirable implications for the rest of its network.
  I should issue a cautionary word here, if we are looking to the future. We should assume, because of the nature of airline operations, that there will be some routes which turn out to be uneconomic but which an airline, whether nationalisec or independent, believes that it should try to operate. Certainly, in the United States, apart from the routes which are subsidised by the C.A.B., most of the airlines say that, for purposes of their own, they accept an obligation to fly on uneconomic routes. The House would be wise to await the Edwards Committee's Report before deciding what the future structure should be, both in terms of the serving of uneconomic routes for social or economic purposes and, for that reason, where the Highlands and Islands fit in.
  The hon. Member for Blackpool, South (Mr. Blaker) raised a number of questions about competition in the hotel business. If we consider that the nationalised industries are here to stay, we must be sure not to place them in an unreasonable position by denying them a right to diversify into fields closely related to their other activities. There is a reasonable requirement to ensure that competition is fair. But it would be defeating the purposes of allowing them to operate commercially if they were told that they could not, for example, enter the hotel market.
  We have to be consulted about any major investment in hotels, and the criteria we would apply is the present one of at least an 8 per cent. d.c.f. return. We have control of major capital expenditure, so at the end of the day it would be for Parliament to discuss and to decide whether the scale of investment in hotels by B.E.A. was right.
  It is misleading to talk of B.E.A. as an owner of hotels. Its investment in hotels in the whole of Europe over the next five years is estimated at about £3 million.
  740
  The intention is that most of the capital will be provided from other, mostly private, sources. Private interests will have an adequate opportunity to participate.
  On the hotel at Victoria, I note what the hon. Gentleman said, as I am sure B.E.A. will, but firm proposals have not yet been made and we shall have an obligation to consider them when they are made.
  Mr. Ridley: I am sure that the hon. Gentleman will agree that there should be absolutely separate and properly presented accounts of such business. He would undertake that B.E.A. or any other nationalised industry which carries on an ancillary activity of this sort will publish completely independent accounts of it, would he not?
  Mr. Rodgers: I would certainly assume that B.E.A. would not conceal the outcome of its investment. As has been said, B.E.A. accounts are very detailed and helpful. I wish that all airlines, public and private, were prepared to set so much information on record. As a general principle, that is the direction in which we should increasingly move. So there are proper safeguards for fair competition for B.E.A.'s investment.
  The hon. Member for Garston spoke feelingly about the rôle of public airlines in a mixed economy. He was a little unfair to Sir Anthony Mil-ward, who was simply pleading for recognition of the fact that what we want is the growth of British civil aviation and that whether it is in the public or the private sector should not cloud the desire for growth.
  It is true that some snide remarks have been made from time to time—although I am glad to say not today—about B.E.A., yet it provides a substantial service. Certainly I have come across no criticisms of the private sector from the nationalised corporations. In the long run, I do not know where the line will be drawn. This is essentially something upon which the Edwards Committee will report, the Government will decide, and the House will debate. In principle, we want to see the growth of civil aviation. I assume that it will be a growth of a mixed sector, but in that mixed sector B.E.A. will have a continuing and very important rôle to play.

  741
  I hope that the Bill will receive its Second Reading and will then pass smoothly through Committee to the Statute Book.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  AIR CORPORATIONS [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to make new provision in relation to the finances of the British European Airways Corporation, it is expedient to authorise—

  (1) the remission, on such terms as may be provided in that Act, of any obligation of the Corporation to make payments under section 42 of the Finance Act, 1956, section 3 of the Air Corporations Act, 1962 or section 8 of the Air Corporations Act, 1967 in respect of sums advanced under those sections before 1st April, 1968;

  (2) the transfer to the Treasury, on such terms as may be so provided, of all rights and liabilities of the Corporation in respect of stock issued before 1st April, 1968 under the Air Corporations Act, 1949 or any enactment repealed by that Act and the treatment of that stock as if it had been created and issued under the National Loans Act, 1968;

  (3) the payment out of the National Loans Fund of any sums required by the Treasury for making payments to the Corporation under transitional provisions of the said Act of the present Session relating to the matters mentioned in paragraphs (1) and (2) above;

  (4) any increase in the sums payable out of moneys provided by Parliament which is attributable to any provision of the said Act of the present Session for applying section 14 of the Air Corporations Act, 1967 to the Corporation;

  (5) the payment into the Consolidated Fund or the National Loans Fund of any sums required to be so paid by virtue of any provision of the said Act of the present Session.—[Mr. William Rodgers.]

  OVERSEAS RESOURCES DEVELOPMENT BILL
  Order for Second Reading read.
  7.30 p.m.
  The Minister of Overseas Development (Mr. Reg Prentice): I beg to move, That the Bill be read a Second time.
  The Bill has two main purposes. The first is to raise the borrowing limits imposed on the Commonwealth Development Corporation by previous legislation—that is, both the overall borrowing limit and the limit of Government borrowing—so that the Corporation can continue to take on new commitments that otherwise would become impossible some time in the early part of next year at its present rate of operation. The second purpose is to remove the existing limitations on countries in which the C.D.C. can operate so that with the consent of the Minister of Overseas Development it can operate in new countries whether they are in the Commonwealth or not.
  To put the Bill in the context of the aid programme as a whole, I should make clear that it does not provide any extra resources for development. The money lent by the Government to the C.D.C. within the terms of Clause 1 must, of course, be found within the total sums voted for the aid programme in each year. In 1969–70 we expect to provide £10 million for the C.D.C. out of the total aid programme of £227 million. I point out in passing that the total aid programme is not yet reaching the 1 per cent. target to which we pledged ourselves at New Delhi last year, and neither Britain nor most other aid donors are reaching that target or are likely, on the specific demands yet made, to reach it in the next year or two. This is a subject on which I think none of us feels any complacency. I repeat, as I have said on many occasions, that I do not think that either this country or any other leading Western nation is yet playing its full part in co-operating with developing countries in their struggle to raise the living standards of their people.
  Also in passing I take the opportunity to welcome the fact that on today's Order Paper there is a Motion in the name of my right hon. Friend the Leader of the House to establish a Select Committee on these matters. It would not be in

  743
  order to pursue that at length, but this is a good development for the Department and for the aid programme, and I extend best wishes to all hon. Members who have agreed to serve on that Select Committee.
  The Commonwealth Development Corporation is widely recognised as a very successful and very efficient part of the development effort. This view, which has been expressed many times, was put on record by the Select Committee on Estimates when it reported to the House on 23rd October, 1968. I shall quote from the conclusions of the Committee as printed on page 25 of the report. The Committee quoted the late Sir Andrew Cohen as having given evidence in which he said that the C.D.C. was probably
  "as efficient a form of aid as exists in this country or anywhere in the world",
  a view which I know the World Bank also holds. The Committee said:
  "This is high praise indeed, but your Committee believe it to be well-founded."
  The Committee went on to develop reasons why it thought the C.D.C.'s operations are as successful as they are, and said:
  "Your Committee are convinced that the expansion of the work of the Commonwealth Development Corporation should be one of the chief priorities of the future aid programme."
  I accept that view. I think the C.D.C.'s operations should expand, and certainly it is my intention that they should do so within the limits imposed by the overall aid programme.
  In 1967–68 Government advances to the C.D.C. amounted to £9·2 million. In the current year it is aimed that they should be £10 million, and I hope that next year the amount will go up to £11 million. These are modest but worth while increases within a programme which is not expanding overall, and this illustrates the priority that we attach to this work. I am glad also to be able to tell the House that in this financial year we are planning to make some extension of the percentage of the money loaned to the C.D.C. subject to the seven-year waiver of interest. In the financial year which has just finished, 1968–69, this waiver of interest applied to £5 million of the total of £10 million, and in the year 1969–70 it will be £6·5 million of the £10 million.
  744
  The Corporation was set up under the Overseas Resources Development Act, 1948. Originally it was the Colonial Development Corporation operating exclusively in the colonies. Later its rôle was enlarged to become the Commonwealth Development Corporation with power to operate in countries that had become independent from 1948 onwards. Its purpose has always been recognised as to assist economic development in the countries in which it operates. It is a corporation which does not have share capital. It depends mainly on loans from the Government, but also to some extent on market borrowing, and it has the duty to pay its way taking one year with another. In other words, it has the task of combining a real understanding of development needs in that it must identify projects of the greatest development value with the need to have a degree of business expertise and organisational efficiency so as not merely to make the best of development potential involved but also to carry out its other duty of balancing its accounts one year with another. I think that all those who have examined its operations over the years will agree that it has succeeded in this important task.
  The techniques which the Corporation has used have varied considerably; sometimes it has been by way of lending money; sometimes by taking ordinary shares in an enterprise in a developing country; very often by carrying out its own projects or projects in partnerships with organisations and overseas companies; and sometimes with the World Bank and subsidiaries of British banks; and in one case even with a district council in Kenya.
  The scope of the work can be divided as follows: about half the activities are in the field of public utilities such as water supplies and power supplies, and included in that category are a number of important housing projects. About half of the remainder is in agriculture and half in industry with particular emphasis on basic industries such as mining, the fertiliser industry, the cement industry and industries of that sort; and there has been growth in the hotel industry and other aspects of tourism.
  One of the great values of the Corporation's work is that it has particularly

  745
  favoured projects in which it can work in association with the people of the country concerned. We have seen examples in which C.D.C. capital has been employed alongside local capital and C.D.C. managers have been working alongside local managers and local entrepreneurs. This has had a multiplying effect and has given scope to employment of local capital and local sources of ability in management and specialised skills which might not have been able to operate separately. I pay tribute to the C.D.C's activity especially in management and the very important work it has done in training local personnel in all kinds of jobs, including management at various levels.
  Quite apart from the success of the enterprises themselves, they are helping to fill a serious gap in the development programmes of many of the countries concerned. All of us who have studied these problems recognise the chronic difficulties of training and education in vocational subjects in so many developing countries. In order to tackle those problems a number of different techniques must be used. It is relatively easy to bring people away to attend courses in colleges, universities and so on. It is not too difficult sometimes to bring them from developing countries and attach them to firms and organisations in this country or in other developed countries, although this is not being done as extensively as one would like. But the most valuable form of training is on the job in their own country, in their own environment, gaining experience that they can use as time goes on.
  This kind of training is available through the C.D.C.'s operations. For example, the two major mortgage companies that it formed in Malaysia are now staffed entirely by local people. The very successful hotel it started in Nigeria is also now almost entirely staffed by local people. There are a number of examples in Africa and elsewhere of enterprises now entirely managed by local people. The typical C.D.C. success story is one in which the management has passed by stages to people in the country concerned, and where very often the ownership of assets has also been transferred by stages.
  One very good example is the Lobatsi abattoir in Botswana, built and opened by the C.D.C. in 1954. It took steps to
  746
  help develop markets in this country and other European countries for the export of carcases from what was then Bechuanaland. It later associated the Bechuanaland Government with the enterprise, and also associated with it a trust representing local cattle farmers. In February, 1966, after reaching a new record level of the export of 150,000 carcases in one year, it handed the enterprise over to a new State corporation in Botswana, although it left the C.D.C. money there for the time being as a loan, and agreed to provide a manager for a further three years. This is an example not merely of a successful enterprise but of local people being associated from the beginning and gradually taking over more and more the ownership and control of the enterprise.
  I could take a long time quoting success stories. I shall refrain from doing so because many hon. Members want to speak. But I should like to quote one example from the Corporation's activities in housing, because not many development agencies are yet operating in housing at all. But housing is a very important part of development, and the work that has been done by the C.D.C. is of particular value here. As one example, in Jamaica it went into partnership with an insurance company to form the Caribbean Housing Finance Corporation and provided finance for home ownership, which I am told has now extended to 4,300 families in and around Kingston, living in three major housing estates and several smaller ones built by local building firms with the encouragement and co-operation of the C.D.C.
  Anyone who knows Kingston and its grave housing problem will realise what an important contribution this is. I understand that the houses have been built at a cost which brings them within the reach of the manual workers, which is very important. I am advised by the C.D.C. that it hopes to extend this kind of operation to many of the smaller countries of the Eastern Caribbean. This will be a most important development when it takes place.
  I only wish that success stories of this kind could be better known. One of the most depressing aspects of this whole subject—and I speak not merely of C.D.C. development but of development generally—is that the full spotlight of

  747
  publicity is applied only to the occasional failure and that success stories are not sufficiently well known in countries like ours. The world Press could find that in these activities there are stories to be told of great human interest in terms of their impact on people's lives as well as in terms of the success of those who have managed and organised them.
  The Bill is short, simple and straightforward it has two main purposes. Clause 1 raises the limits within which the C.D.C. can borrow. There are, and will continue to be, two relevant limits. First, there is the limit to what can be borrowed from the Government. The figure I am giving here is the sum outstanding. In other words, it is the figure arrived at by taking the total borrowed, less the total repaid. That limit, which now stands at £130 million, is raised under Clause 1 to £205 million, and the Clause also contains the power for this to be raised by statutory order to £240 million. The order would require an affirmative resolution of the House.
  There there is a higher total limit, which represents the total sum that it can have outstanding. That is the amount it has borrowed from the Government plus any medium or long-term borrowing on the market. The present sum is £150 million, which is to be raised to £225 million, with the power to extend it by order to £260 million. Without these extensions the Corporation would probably reach its existing limits quite early next year. With the extensions, it will have sufficient cover for its likely operations for up to seven years without using the power to make an order, and probably about 10 years if one takes the higher figures that could be brought about by using the statutory instrument power.
  Clause 2 removes the existing geographical limits on the operations of the C.D.C. In 1948 the Overseas Resources Development Act confined its operations to the colonies. The 1959 Act empowered it to operate in an independent territory but only where the approval of the Secretary of State had been given for a specific project while the territory was still a colony. This was a very limited power to continue operations after independence.
  748
  A larger change was made in 1963, when the title was changed to the Commonwealth Development Corporation. The Corporation was empowered to operate in Commonwealth countries that had become independent since 1948. This still excluded large parts of the Commonwealth, particularly India, Pakistan and Ceylon, and it also excluded developing countries outside the Commonwealth.
  It is absolutely right that we should be making this change at this time. This country's rôle in assisting development is not confined to the Commonwealth. Part of our bilateral and part of our multilateral aid goes to non-Commonwealth countries. Although most of our programme remains in the Commonwealth for perfectly sound reasons, our aid programme generally is part of a world-wide effort, part of the relationship between the developed and developing countries. Therefore, it is logical that the C.D.C., as one of the most important instruments of that programme, should be able to operate in non-Commonwealth countries.
  The Clause empowers the Minister of Overseas Development to direct the C.D.C. to seek his approval for any new country in which it wishes to operate, and it also empowers him to attach conditions to any such approval. I intend to activate that power if and when Parliament sees fit to pass this legislation, but it will be the same power as already exists and operates for independent Commonwealth countries. It is no different from that and will operate in a similar way.
  I wish to make it clear that, as I see the future, the C.D.C. will remain very much Commonwealth-orientated for a long time. Most of its activities for the foreseeable future will be in the Commonwealth; any activities outside the Commonwealth will form only a small proportion of the whole. For that reason I see no reason whatever to change the name of the Commonwealth Development Corporation. Any change of name would be regretted by those who have admired it over the years, and it would be a pity to think in terms of making any change of name.
  What could well happen is extension of its activities to non-Commonwealth countries which geographically are close

  749
  to Commonwealth countries in which the Corporation already operates and in which its regional staff already has relevant experience. The regional staff of the C.D.C. is one of the sources of its strength. It has decentralised a good deal of its responsibility to regional offices, which work very effectively.
  The chairman of the C.D.C., Lord Howick, when giving evidence to the Estimates Committee on 30th April, gave some examples of the way in which this extension may take effect. He said that it might be appropriate to work in the Sudan, or Ethiopia, where conditions would be in some respects similar to East African countries where the C.D.C. already operates or, similarly, it might be worth while to work in Thailand, which has certain similarities with Malaysia where the C.D.C. already operates.
  The Estimates Committee suggested that the C.D.C. should play a part in the Indian sub-continent. The Clause would remove any legal barriers to this, but I think it unlikely that this will be practicable in the future. There would be formidable problems in terms of finance and manpower if the C.D.C. were to make a significant contribution in countries such as India and Pakistan. There would be many problems involved before it would be able to contemplate that.
  Mr. Eldon Griffiths: Could the Minister make it clear that the reason for extending the functions beyond Commonwealth countries, presumably to adjacent or similar territories, is primarily that that aid is necessary as a consequence of activities taking place in the Commonwealth countries? I am anxious that he should meet the criticism that money is being denied to certain members of the Commonwealth while being provided to nonmembers of the Commonwealth.
  Mr. Prentice: There would be circumstances in which activities in Commonwealth countries were also activities in non-Commonwealth countries. For example, there might be a communications system in a region which overlapped a number of countries. Then this idea would certainly apply. I do not, however, wish to give the impression that operators in certain non-Commonwealth countries would be confined to that kind
  750
  of example. There might be good reasons within the normal criteria of the C.D.C. for operating in non-Commonwealth countries in order to help a development there, and because its experience and resources were suited to a particular need. It could then seek the Minister's leave to operate in another country. This would be a feasible proposition.
  It runs in parallel with the fact that our Government aid programme is no longer confined to the Commonwealth. We give aid to non-Commonwealth countries, just as other European countries provide aid to Commonwealth countries. This is a proper development.
  Subsections (3) and (4) of Clause 2 are consequential on the two main purposes which I have mentioned. Therefore I do not propose to take up the time of the House on Second Reading in discussing them. Any points can be raised at future stages of the Bill.
  I commend the Bill to the House. It will enable the C.D.C. to continue the very good work to which I have referred and to which so many tributes have been paid. The success stories which I and others have quoted as they affect C.D.C. over the years have been made possible only by the people involved. All concerned in these matters would pay tribute to those who have served on the board and to the staff of the C.D.C. at all levels for the work which they have been doing and are continuing to do in this remarkable organisation.
  One of the remarkable features of the organisation is that ever since 1950 the C.D.C. has had only two Chairmen, Lord Reith from 1950 to 1959 and Lord Howick from then until the present. The organisation itself, the developing world and we in this country owe a great deal to the devoted work of those two remarkable men. The House will want to see C.D.C. go on to further success in the future. I believe that this Bill when it becomes law will help it to do so.
  7.56 p.m.
  Mr. Bernard Braine: Before I address myself to the Bill, I hope the House will permit me to join with the right hon. Gentleman in welcoming the setting up of the new Select Committee on Aid and Development. I am sure that it will prove a most

  751
  effective instrument in spreading understanding of what aid and development are all about, while acting as a spur to the Minister and his advisers. I look forward eagerly to the work of this new body.
  I am sure the whole House will be grateful to the Minister for his clear explanation of the Bill and of the activities of the Corporation. We on this side of the House give our support to the Bill and we should like to join in the tribute with which the Minister ended his remarks to the chairman, the members of the board and to the staff of what he truly described as a remarkable organisation.
  I have watched the C.D.C. almost from its inception. Over the years I have been more fortunate than most in this House to see it actually in operation in many different parts of the world. Indeed, on looking through the Corporation's last annual report I was amazed at the number of projects which it began, or in which it had a share, that I have actually managed to see at first hand. These included the abattoirs and cattle ranches in Botswanaland; a cement works in Zambia; the famous copper mine at Kelenbe and the cement works at Tororo, which I confess I have been round twice; housing schemes financed through building societies in Kenya, Malaya, Borneo and Jamaica; and the splendid forestry project, which owes so much to the work of Lord Howick himself when Resident Commissioner in Swaziland, which laid the foundation of a successful pulp industry in that country, and also irrigation and railway developments there too.
  I am glad to be reminded—I say this in all modesty—that when I was an Under-Secretary at the Commonwealth Relations Office I had a hand in authorising the building of the Swaziland railway, which is opening up for that country massive mineral exports. I have seen many more projects which have been successfully sold off to private enterprise and are now flourishing in the hands of the people of the countries concerned.
  I agree entirely with the Estimates Committee when they concluded last year that this great public corporation had fully justified the trust placed in it. I agree with them and with the remarks attributed to the late Sir Andrew Cohen,
  752
  whose death was such a great loss to the work of overseas development, that the C.D.C. provides as efficient an instrument of aid to developing countries as any in the world. I am sure that is absolutely true.
  It had its early difficulties when it was known as the Colonial Development Corporation and it had to learn from experience. But the point is that it did learn from experience. I agree, therefore, in accordance with the principle that it is always wise to build upon success, that we should make it possible for the Corporation to expand its activities and to bring its very remarkable fund of expertise to more countries. There are a number of reasons for saying this. I do not believe that aid should be regarded purely as a philanthropic exercise. If it is to be effective it must be designed to help the developing countries help themselves so that at the end of the day they stand on their own feet.
  As the Estimates Committee remarked, there are four aspects of the Corporation's work which are particularly valuable. First it decentralises its work so that the full responsibility for aid management is given to the man in the field. One cannot conduct overseas development by remote control. No two developing countries are alike. This is why increasingly private companies operating overseas have switched from the branch type of organisation, which at the turn of the century was the general rule, to the locally-registered company with local participation.
  Mr. John Tilney: No thanks to the Chancellor.
  Mr. Braine: I was seeking to avoid making any partisan observation of that kind, but as my hon. Friend said it seems an unfortunate fact that British overseas enterprise, as it moves towards this twentieth century conception of partnership is penalised by the Chancellor for doing so. Perhaps my hon. Friend will raise that later if he can keep within the rules of order.
  The success of the C.D.C. owes a great deal to the flexibility of its organisation. The second reason why its work is so valuable is that it attaches much importance to the training of local people foi management. I was delighted to hear the

  753
  hon. Gentleman laying great emphasis on training. This is a valuable contribution to development. What is more it is appreciated by the developing countries. A quotation from Mr. Tom Mboya, known to many of us, was given in evidence to the Estimates Committee. He said:
  "The vital thing you,"—
  that is the C.D.C.—
  "do for us to is to train our young men actually on the job, so they become practical managers. I do not know where else we could get that."
  Thirdly, there is the essential link provided by the Corporation between public and private investment, and fourthly, because of its non-political status, it seems to find it easier to deal with the authorities in developing countries than Her Majesty's Government.
  What is particularly attractive to my hon. Friends and myself is that the Corporation, at a time when aid management is under much fire and there is some evidence of wastefulness, is required to act on a businesslike basis. It spreads its investments over a wide range of projects essential to developing countries, such as water supplies, transportation, housing finance; it provides capital for the development of agriculture, ranching, mining and the introduction of basic manufacturing.
  I turn now to the provisions of the Bill. I have no comment to make on the extension of the Corporation's borrowing powers. What is proposed seems eminently sensible. The provision should be adequate for the next five to seven years, and it is always open to the Corporation to ask for more capital if it can justify the need. But we should consider, Land I have a feeling that hon. Members on both sides may wish to do this, the relationship between the C.D.C. and OUT total aid effort. It is astonishing but true that this type of development aid not only has no adverse effect on our balance of payments—an argument often used here and in other donor countries for limiting aid—but the very reverse.
  It is worth reminding the House of the facts. In comparing its performance with other forms of British overseas investment, the Corporation says in paragraph 11 of the Reports and Accounts for 1967 that
  754
  "… the C.D.C.'s revenue from its projects and investment was of the order of 6¼ per cent. on a total investment of £114 million without making any allowance for the quite considerable part of that investment which was represented by projects in the development stage and thus not as yet revenue earners. Remittances back to the U.K. in respect of revenue profits and capital realisations again more than balanced new overseas investment from U.K. On top of this U.K. exports were stimulated by an estimated £13·7 million."
  It goes on to say that the activities of the C.D.C. were responsible for stimulating an additional £45 million worth of overseas exports, without taking account of the large import saving attributable to local industries that C.D.C. investment is supporting.
  This really is development, and it is development which is highly profitable to the British economy. I doubt whether a different story will be told for 1968. Since it is clear that every penny we invest in C.D.C. is well invested, it begs the question whether a higher proportion of our total aid effort ought not to be directed into this particular channel, profitable as it is to Britain and immensely valuable as it is to the developing countries.
  Here, I think, it would be appropriate to mention that the Overseas Development Institute, a body all of us interested in aid have come to respect very much, has made a serious criticism.
  In a statement issued on Monday the O.D.I. says that:
  "The feature about the C.D.C. most open to criticism is the manner of its financing in relation to the ceiling on aid expenditure. Advances to the Corporation count as part of the aid ceiling but repayments to the Treasury are not deducted. This is the case with all aid loans but there is an important difference between normal aid loans and advances to the C.D.C. Nearly all normal aid loans are given on soft terms and the value of repayments is therefore lower than the value of the original loan. In the case of C.D.C. however … the Treasury gets back all of its money together with a full commercial rate of interest. The rate of interest is in fact the rate at which the Government is able to borrow the money plus a small margin. No loss therefore falls upon Her Majesty's Government and it therefore seems so wrong to count the out-payments as aid without making allowance for the receipt of repayments. Only the difference between these two constitute genuine expenditure. The effect of the present procedure is to exaggerate Britain's aid expenditure. This effect will be increased as the C.D.C. operations expand as recommended by the Estimates Committee and approved by the Minister."

  755
  This is a justifiable criticism of our aid statistics. I cannot help feeling that we need to look again at the way in which we present the actual outlay of money for the purposes of development, including the indispensable contribution made to development by private investment. It does not make much sense to count a grant for an overseas Government to buy, say, buses in this country as aid yet to exclude the investment a private company may make in building a factory overseas in partnership with local interests or the local government to make the buses there.
  The second investment may be of far greater value, a more effective way of helping a developing country than the first; yet the first is included in the aid statistics, as I understand it, and the second is not. As the O.D.I. says, the picture presented is confused and confusing. I hope that the Minister will consider this; perhaps the Parliamentary Secretary can say something about it tonight. I hope that the Minister will consider how the picture can be improved. We on this side are not solely concerned with how good the figures look and what proportion they represent of the gross national product. What the C.D.C. does with so little strain on the balance of payments may be vastly more valuable to a developing country than grants of money, or even the provision of technical assistance as such which is wasted because of poor aid management in the field. It is not the money that matters, it is the results achieved.
  One can at least say of the C.D.C. nowadays that it operates successful ventures or that it is operating new ones which will acquire their own momentum, training local people in the difficult but indispensable art of management, creating a demand for local components and services. In the process, as the figures I have quoted show, it is stimulating demand for more British exports.
  In January I had the good fortune to meet Monsieur André Philip, the distinguished Frenchman who heads the Development Centre of O.E.C.D. in Paris. He told me that in his view the most pressing need in most developing countries now, especially where there has already been considerable investment in infrastructure, was investment in a large
  756
  number of small enterprises; that this was the way to broaden the base of the economy, stimulate real growth and get wider participation in it by the people of the developing countries.
  I was most interested to hear what the right hon. Gentleman had to say about participation. I agree with his approach to this problem, but people should be enabled in the developing countries themselves to participate. This can be done only by investment in a large number of relatively small concerns. I am delighted to see that C.D.C. investment has been recently increasingly directed to projects which involve association with and the support of people collectively and individually in the countries where it operates; projects such as smallholder schemes of agriculture grouped round a commercially-run organisation, the kind of thing many of us have seen run so successfully in Israel; development companies which give investment help to the small local entrepreneur. This is the right approach.
  I turn to the second provision in the Bill, the extension of the Corporation's operations to the whole of the Commonwealth and also to foreign countries. I welcome this, but with some reservations. The extent to which we are increasing the Corporation's borrowing powers does not indicate to me that it will be able to branch out in a great many directions all at once. On the contrary, if the Corporation follows the path it has trod so successfully thus far it will be cautious in venturing into too many new territories. It is right for the Corporation to be given an opportunity to operate for the first time in India, Pakistan and Ceylon if it so wishes and if circumstances are favourable. I understand some of the difficulties here, but after all, it is only by an historic accident that these three countries acquired Dominion status before the Colonial Development Corporation, as it was then, came into being.
  If we pass the Bill the Corporation will be able to operate in any part of the Commonwealth, though I believe the spirit of Parliament's intention is and must continue to be that it operates only in those countries which are at an early stage of their economic development and where this is also in line with essential British interests. As perhaps the right

  757
  hon. Gentleman will have sensed by what was said by hon. Gentlemen behind me, there is so much development to do inside the Commonwealth, to which most of us still give conscious preference in our minds, that there is really no need to operate outside it. I support the right hon. Gentleman however, for there is, I think, a case for empowering the Corporation to operate in territories which were formerly part of the British Empire, places like Sudan and the Cameroons which as a result of the chance of history are now outside the Commonwealth.
  I believe too that there is a case for operating in a country like Ethiopia, because of its close proximity to Kenya, Uganda and Tanzania where the Corporation is already well established. This, perhaps, is the answer I would give to my hon. Friend. Although such an investment may not be directly related to an enterprise of a similar character in neighbouring Kenya or Uganda, nevertheless the whole East African region is moving towards a natural economic grouping_ Moreover, Ethiopia is a country that I know as well as any in Africa, and it has enormous potential. It would like very much to attract British investment. I believe, therefore, that it would be a good thing if the C.D.C. were to seek to take a modest hand in development there. Having said that, however, I was glad to hear the right hon. Gentleman say, in effect, that there would be no wild rush into foreign ventures while there are needs in the Commonwealth remaining unsatisfied.
  Mr. Eldon Griffiths: There are so many things requiring action in the Commonwealth that preference ought to remain. As the hon. Gentleman has rightly said, where there is a regional complexion in relation to Commonwealth countries that is right; but that is not what Parliament is being asked to say. We are being asked to say the Corporation can go anywhere under the sun, and I should have thought it was reasonable that where it goes entirely outside of former or present British interests the Corporation should come back to the House and ask for permission.
  Mr. Braine: I have two comments to make on that. First, I added a very important qualification, that the test should be the advancement of British interests;
  758
  that is to say, that as our resources are scarce we should apply them where they are most effective to the needs of developing countries but at the same time should have regard to our own long-term commercial interests. I believe that this is certainly what our constituents expect of us. The other comment I would make is that the Bill gives the Minister power to give a direction to the Corporation should it have a sudden rush of blood to the head and desire to move into a foreign country in which it has not operated before. The Minister can give the Corporation a direction requiring it to obtain his approval before operation in any country other than a colonial territory; and he may attach conditions to that approval.
  The Minister is an eminently reasonable man and the Corporation hitherto has shown great judgment and caution on the one hand and a suitable sense of adventure on the others. I do not believe that this is anything we need to worry over, for there is a safeguard. What is the new Select Committee to do but to subject matters of this kind to far closer scrutiny than has been the case before?
  It occurs to me, finally—and I agree entirely with the right hon. Gentleman here—that there is no need to change the name of the Commonwealth Development Corporation. It is a good name. It is a name which has an aura of success around it. But there might be some difficulty if the Corporation were to operate under this name in certain countries. It may well he that I am exaggerating the danger but, as we all know, nationalisms—some of which are not very far away from us—are very sensitive nowadays. Presumably, if the danger ever arose a formula could be found whereby the Corporation could operate, if necessary, through an appropriately named subsidiary. Perhaps the Parliamentary Secretary will make some comment on that when he comes to make his reply.
  Let me once again say that we on this side warmly welcome the Bill. We acknowledge the splendid work that the chairman, board and staff of this Corporation have done up to now. We hope that with the increased funds now made available they will be able to continue the good work of helping developing countries in the Commonwealth, and now perhaps a few outside it, to overcome

  759
  the problems of poverty and to speed growth of their economies. I, too, commend the Bill to the House.
  8.20 p.m.
  Mr. Frank Judd: Not for the first time, it is a great pleasure to follow the hon. Member for Essex, South-East (Mr. Braine), who has an extremely constructive approach to the subjects which we discuss during these debates. We have noted that the hon. Gentleman is to be a member of the new Select Committee, and I think that the tone of his remarks augurs well for the constructive way in which the Committee will go about its very important task.
  I, too, should like to start by congratulating the Commonwealth Development Corporation on its outstanding record, and the way in which it has combined first-class commercial principles with a high sense of social responsibility and has not been hesitant about experimenting in new forms of development. Some would claim that the fact that the World Bank has at last become interested in supporting agricultural products is a result of the example of the C.D.C.
  What has always impressed me from the limited amount of the Corporation's work that I have been able to see at first hand is the high standard that it sets in all aspects of its projects. Not many months ago I was able to see some of its work in Swaziland. I was able to visit one of the sugar estates there under the control of the Corporation. This combination of high standards was to be seen in the new techniques being pioneered, the exemplary conditions within the mill itself, and, perhaps as important as any of the technical activities in the project, the high standard of housing for the employees in the scheme, and the excellent recreational amenities, setting a good example to others in the same sphere of work.
  While in Swaziland I was able to visit the Vuvulane irrigated farms, and I saw how the Corporation, in trying to avoid the danger of over-emphasis on capital-intensive operations about which some of us have certain reservations, had gone in for labour-intensive rural development by setting up these farms, both 16 and 8 acre smallholdings for Swazi farmers based on sugar cane growing, and also
  760
  five rather larger farms, of 60-acre size, for Swazi farmers. Both in this project of rural development and in the sugar estate itself the calibre of the Corporation's staff was impressive, and that cannot be over-emphasised.
  As my right hon. Friend has emphasised, the Bill foresees potential expansion in the work and sphere of operations of the Corporation. I believe that this makes good sense, because integrated regional economic development is essential for progress in most developing countries. Where this can be achieved by going beyond the formal boundaries of the Commonwealth as such, this will obviously be in the interests of the Commonwealth countries within which the C.D.C. may already be operating.
  We note with some relief, however, that there is to be an element of political control over new areas of activity, and that the Minister is to be able to exercise his guidance. I think that we would all want to put on record our concern that wider political considerations should not be forgotten.
  There are attractive elements in regional development in Southern Africa, but I am sure that we would want to see the Minister restraining—I am not suggesting that it would be forthcoming—any tendency by the Corporation to go for economically attractive projects in areas with which we cannot have much political sympathy. For example, we would not at this juncture want to see C.D.C. schemes operating in Portuguese territories of Southern Africa.
  On the other hand, while still looking at Southern Africa, it is worth noting that Botswana is a country to which we would like to see the C.D.C. give urgent attention in order to increase its activities. Recent mineral surveys in Botswana have revealed great potential wealth, and I think that there is an excellent opportunity for the Corporation, amongst others, to provide the sort of co-operation which will enable that country to develop its economy and its potential wealth without becoming more dependent on the Republic of South Africa than it already is—to an alarming degree.
  We know that the C.D.C. is expected to produce a respectable return on capital, but there are certain limited spheres in which a waiver is exercised. I should

  761
  like the Minister to comment on that area of possible work which must sometimes fall between a reasonable rate of return on capital and a complete waiver and whether there is any chance of exercising more discretion and more flexibility about projects of that kind.
  I shall also be interested to hear what the Minister has to say about any initiatives which may have been taken by the C.D.C., or by himself, to persuade other developed Commonwealth countries to become involved in providing capital for the C.D.C., because, if we are talking about Commonwealth co-operation and development, this is something that deserves attention, and one would like to see some of the other more fortunate and well placed Commonwealth countries looking at the possibility of action of that kind.
  I propose to refer now to the background against which we must judge the success of the C.D.C. From debates on the aid programme we know that there was a cut in January, 1967, from £225 million to £205 million, a cut of approximately 10 per cent. There was the fact that the Minister was removed from his rightful place, as some see it, in the Cabinet. There was the impact of devaluation on the aid programme. More recently, there were statements by the Chancellor of the Exchequer and the Secretary of State for Economic Affairs which indicated that we cannot see any move forward in the size of the aid programme in the next few years. Against that it is argued that, despite public pressure, the Government resisted the temptation to cut the aid programme still further after the impact of devaluation.
  But in connection with the C.D.C.—and here I echo some of the things said by the hon. Member for Essex, South-East—I think we have to recognise that perhaps it has been misleading that the Government, and indeed their predecessors, have so frequently presented the aid and development programmes in gross terms. The fact is that since 1960 the G.N.P. in Britain has risen by 60 per cent., or about £15,000 million, but during the same period there has been a decrease in our net aid programme from about £151 million in 1961 to what I calculate to be about £148 million in 1968. Against that background, it was interesting that the Estimates Committee said last year that
  762
  "Legislation should be introduced to extend the sphere of operations of the Commonwealth Development Corporation to India, Pakistan and Ceylon, and thereafter the proportion of the aid programme provided by way of loans to the Commonwealth Development Corporation should be considerably increased."
  It is understandable that in his observations the Minister should later have said:
  "The Minister notes the Committee's view that it is desirable that the proportion of the aid programme provided by way of loans to the C.D.C. should be increased. This is already in hand. The funds which are being made available to C.D.C. in 1968–69 are greater than in 1967–68 and it is the Minister's intention if circumstances permit to make a further increase in 1970–71".
  What are the facts? The Corporation is in reality self-financing. In spite of this, the Government like to count the advances which they make to the Corporation as part of an aid programme with no deduction for repayment and interests. Is it right that their payments should count as aid, with all that that means to the general public, in the popularly accepted sense, when they come back with full interest? In 1967, the Corporation drew £7·8 million from the Government but repaid £8·3 million—£2·8 million capital and £5·5 million interest. In 1966, it drew £7·2 million and repaid £9·9 million—£5·6 million capital and £4·3 million interest. In 1965, the two flows were approximately equivalent.
  This is a very different sort of operation from the welcome new trend in the Government's general approach to overseas aid and development whereby it emphasises the importance of interest-free loans if there is to be genuine assistance as part of an aid and development programme. The Corporation had something to say about this in its 1965 Report and Accounts:
  "Whether the C.D.C.'s activities are regarded as part of overseas aid or as overseas investment with some flavour of aid as C.D.C. itself would maintain, clearly they have to be justified more than ever in present circumstances in relation to their impact on the U.K. and sterling area balance of payments."
  That was written in 1966 at the time of reconsideration of the refinancing of the Corporation. Until 1965 there had been no formal aid ceiling and, therefore, no restriction on the amount of money which the Corporation could draw from the Government within the overall limit each year. At that time, advances were not voted annually by Parliament.

  763
  In view of the new situation, why should we not, when we are considering this Bill, ponder the possibility of making the Corporation a revolving fund? It could use its return on investments for further investment without money passing through the Government's hands. The Government could, if need arose, increase the resources of the Corporation with extra funds as they increase, if they wish, contributions to, for example, the International Development Association. Such contributions would not, strictly speaking, be grants, for if the recipient organisation were wound up the money would be repayable.
  I know that when one puts forward this sort of suggestion, the response comes—if not from the Minister, then from other Government Departments of which we can think—that it is contrary to the principles of British financial policy. This is absolutely no answer to my suggestion, which would result in more realistic figures of the British aid programme being quoted to the public and the world.
  I conclude by again congratulating the Commonwealth Development Corporation on its outstanding achievements to date, but at the same time begging the Government no longer to claim the work of the Corporation as part of an aid programme, with all that that means in the public eye. Why not regard it as a perfectly reasonable form of enlightened overseas investment with mutual benefits to all?
  8.34 p.m.
  Sir George Sinclair: I have followed the hon. Member for Portsmouth, West (Mr. Judd) before in debates on this subject, and I find myself very much in tune with the plea he has made that another look should be taken at the classification of the operations of the C.D.C.
  I join in the general welcome which has been given from this side of the House to the new provisions, which follow swiftly on the recommendations of the Select Committee on Estimates. The Explanatory and Financial Memorandum contains this note of caution; it says that the Bill
  "is not expected to lead to a significant acceleration in the rate of investment in the near future".
  764
  I am sure that this is right, at least for a year or two. The success of the Corporation, as I see it, in recent years has been achieved by building steadily on its range of experience in different areas. If after the Bill becomes law it is invited to operate in countries in which it has no previous experience, it will no doubt wish to begin with some caution. As the Corporation gains experience in the new areas of operation, I hope that the Government of the day will welcome a sharpened increase in the pace of the Corporation's new investment where this could be useful and profitable.
  I come to the subject of the classification of the Corporation's operations as aid. I have some doubts whether money advanced to the Corporation should be classified by the Government as part of their aid programme and, therefore, be subjected to the overall aid ceiling. In this I share some of the doubts expressed in the recent note by the Overseas Development Institute. In support of this I quote two passages from a rather more recent document of the Corporation than that used by my old-fashioned friend from Portsmouth, West. This is the current edition of a pamphlet called "Partners in Development". The first passage, under "Terms of reference", says:
  "In general, C.D.C's task is to work as a commercial organisation, investing its funds in development schemes for the promotion or expansion of economic projects that will not only help to increase the wealth of the territories but will also yield a reasonable return on the money invested."
  Again, speaking of its investment methods the Corporation says:
  "The Corporation does not offer aid: it offers investment in the development of resources."
  It could not be clearer.
  I doubt, then, whether it is appropriate to classify C.D.C. overseas investment as aid. After all, the Corporation has to raise its money at commercial rates. The Minister said that over new investment, at any rate for the time being, there has been a part waiver of interest. Is it a matter of principle to waive some of the interest rate, or is it a device to help the Corporation over a time of extremely high interest? I hope that the Parliamentary Secretary will clear up that point, because otherwise there is a departure from principle.

  765
  The Corporation is obliged under its Charter to operate on a commercial basis. Yet its annual returns on investment, as the hon. Member for Portsmouth, West said, have not hitherto been shown in the Government's tables as an offset against the annual investment. The C.D.C. claims to supply finance and management at the invitation of Governments of developing countries, and to be partners in management and to be partners in development. This is not aid. I doubt whether such investment should be included in our aid figures. What I have no doubt about is that such investment by the C.D.C. is one of the most valuable forms of practical help which flow from Britain to developing countries. There are great advantages in this to Britain as well as to the receiving countries. It is a transaction of common interest and this is not a bad relationship between two countries, one of which may be developed and the other developing. It is a good and natural relationship of common advantage.
  Perhaps I should run again quickly over some of the advantages to the receiving countries of the C.D.C.'s operations. First, the projects are taken only at the express invitation of developing countries. I disagree with some of the phrases used in this debate about "deciding" to invest. It really amounts to considering requests from countries to invest in them. That is the rôle of the C.D.C. Second, there is joint planning between the C.D.C. and the receiving countries. This is very important because the two sides are associated right from the beginning in the working out of the project. Third, there is training in management and, often, help with technical training. Finally, the C.D.C. works as often as possible in partnership with local organisations.
  But to me one of the most important parts of the work of the C.D.C. is that it is bringing modern methods of production and marketing into the rural areas and has been particularly successful in its smallholder schemes. Above all, the major contribution of the C.D.C. is that its projects have been by and large overwhelmingly successful and have helped to create new wealth in the countries which have welcomed the C.D.C.
  For Britain, the C.D.C. has achieved a reasonable return on investment. As
  766
  my hon. Friend the Member for Essex, South-East (Mr. Braine) said, the investment has stimulated our exports and especially our exports of equipment. This applies very greatly to the financing of the infrastructure works in the developing countries. It may not be aid but it is certainly a civilised exchange of benefit to the common advantage. In my view, it represents a really good mature relationship.
  I welcome the provisions in the Bill to extend the area of operations of the C.D.C. even beyond the Commonwealth. I am glad that the right hon. Gentleman has given an assurance, however, that the extension beyond the Commonwealth will be only marginal. The needs and opportunities for this sort of investment within the Commonwealth are so enormous that I doubt whether the C.D.C. has the capacity to expand rapidly yet into other areas. I do not think that in future we should continue the C.D.C. entirely as a Commonwealth operation because there will be areas in the world where there will be opportunities for good investment with good returns to the receiving country and good returns to our country which will strengthen our economy and thereby our ability to help our own Commonwealth. We should not neglect opportunities where the C.D.C. form of investment is particularly attractive to the receiving countries and also gives a good return to us. It does not deprive us; it helps us. But I hope that the efforts will be overwhelmingly confined to Commonwealth countries, where the C.D.C. has a steadily growing record of successes.
  In Africa there is still a wide opportunity for investment. There are opportunities for useful and profitable operations in countries so far untouched by C.D.C., countries in Africa to which C.D.C. has not hitherto been allowed to go; for example, in the former French territories, where C.D.C. experience in neighbouring territories of the Commonwealth countries may be highly relevant. Such an initiative, if sought by the Governments of those countries, would follow the recent pattern of French investment in former British territories. I am thinking of the French construction of the new international airport in Ghana. If the Government of Cameroon sought new investments from C.D.C., the Corporation

  767
  would now be free to build on its past successes in a country part of which was administered by us as a Trust territory.
  The Caribbean area, as was shown by the debate on Anguilla, is crying out for further development, and here I hope that the C.D.C. will be able to expand fairly rapidly, because its experience is already fully tried out and has proved to be relevant and profitable both to us and to the receiving islands.
  There are other areas where C.D.C. has been remarkably successful—for example, in Malaysia and Singapore—and it may well be that there are friendly countries—I think Thailand has been mentioned—where investment opportunities would be open to us and where C.D.C. would be welcome. It would help to improve the prosperity of an area in which we have a major interest. The prosperity and tranquility of the area is of interest to us and all our partners in the area, and if we can make a contribution through C.D.C. we should do so.
  In addition to this, the Bill, following the recommendation of the Select Committee, would add India, Pakistan and Ceylon, from which C.D.C. has formerly been excluded. We should not take fright at the immense needs of India and Pakistan. The opportunity there for new investment is vast, but in many sectors of the economy they want money only. They are already capable of providing their own management throughout a great range of their economy. Perhaps these two Governments of India and Pakistan, faced with the urgent and immense task of increasing still faster the productivity of their rural areas, might wish to discuss with C.D.C. the new techniques that C.D.C. has developed for assisting local groups, especially groups of smallholders, to modernise their production and marketing. This is where in most developing countries economic advance is most urgent and important.
  We have heard something of the recent spectacular advances made in the production of food in Pakistan and India, especially in the larger farms in irrigated areas, advances which have been made possible by better seed, more fertilisers, better cultivation and better irrigation. It would be strange if C.D.C.'s successful experience elsewhere in helping farmers
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  at the peasant level to increase their production could not be modified to local conditions and help to speed the process of production in rural India and Pakistan. If the C.D.C. were to be invited by one or both of those Governments to consider the possibilities, I am sure it would require time for the very careful preliminary surveys of the social and other factors in those areas in which it might be asked to operate.
  Finally, I want to join in the tribute paid from all sides of the House to the leadership and the staff of the C.D.C. I would couple with them however, their partners and associates in the territories in which they are operating, because they are partners in development.
  8.55 p.m.
  Mr. A. H. Macdonald: So far, we have listened to four panegyrics in favour of the C.D.C., and certainly I have no wish to be behindhand, because I am sure that those tributes are fully deserved.
  I hope that I shall not strike too discordant a note if I venture to offer one or two criticisms of the Bill, though I hope that I shall be no more than a devil's advocate, because, at bottom, I wish the Bill well.
  In some ways, I regret that it comes before us today. It might have been more convenient and helpful if it had come before us in a month's time or possibly two months' time. As many hon. Members have said, the C.D.C. is a commercial enterprise operating on commercial principles. When we consider its affairs, it is highly relevant to have before us the latest possible statement of its balance sheet and accounts.
  All that I have been able to find is the Report for 1967, which I see was made available in May, 1968. If this discussion had taken place a month hence, it may be that we would have had available the up-to-date balance sheet and accounts, which would have made our discussion more realistic.
  Operating on the latest figures available, the first point to which I want to call attention is that, in paragraph 9 of the 1967 Report, the C.D.C. remarks that there was at that time £28 million of undistributed commitments; in other

  769
  words, transactions which it had entered into and presumably signed contracts for but in respect of which no disbursements had been made. In the context of the figures which we are discussing, £28 million seems to be a fairly substantial sum. However, the C.D.C. says that it does not regard it as large, and I am glad to see the measure of confidence that it displays. If we had the 1968 figures before us, no doubt we would see a similar figure outstanding at present.
  To draw a parallel, when I served on the housing advances panel of a local authority, I remember that we used to have undistributed commitments at the end of any financial year, which is quite normal to any financial organisation. But we found it very difficult to handle those undistributed commitments when we were operating on the basis of getting annual loans from the Public Works Loan Board.
  The C.D.C. also used to operate on this annual loan basis But if I understand the position correctly, it has now moved away from the old concept of an annual basis. Indeed, in paragraph 9 of its report it refers to what I understand to be more of a four-year rolling programme. Therefore, it is possible that the Explanatory Memorandum may be a wee bit misleading in that it continues the concept of annual loans.
  The important point arising out of this has been referred to by other hon. Members, namely, that the loans to the C.D.C. come within the overall ceiling of the total aid programme. My right hon. Friend made it clear, to my great regret, that there is to be no overall increase in the total aid programme. Assuming that this form of finance is aid—I recognise that some hon. Members dispute that—this increase presumably will mean some reduction in the other forms of aid that we make available. In particular, if this £28 million of undistributed commitments is called upon in large part rather sooner than might be expected, I fear that the reduction in other forms of aid will be appreciably greater than we might have supposed.
  Hon. Members have offered thoughts to the House on whether advances to the C.D.C. should be considered as aid. I have nothing to add to the arguments that they have advanced. The Government evidently consider them as aid. I distinctly
  770
  regret that this improvement in the position of C.D.C. means a reduction elsewhere. Subject to that, I welcome Clause 1 proposing an increase in the limit of the borrowing powers under which C.D.C. operates.
  I like to think that part of the money that we make available to developing countries—I will not again venture into the argument whether it is aid—takes the form of hard money, because I think that this helps to stimulate efficiency. If they can cope efficiently with hard money, it shows that they are soundly based and can efficiently use any soft money that is made available.
  I am less enthusiastic about Clause 2. I cannot help feeling that we are seeing too much of a good thing here. It was not clear to me from my right hon. Friend's opening remarks why we are embarking on this extension. I share the view of hon. Members who, in interventions and speeches, have remarked that there is still plenty to do within the Commonwealth, the sphere in which C.D.C. currently operates.
  I suppose that this extension is based upon the recommendation put forward recently by the Estimates Committee. I regard its report in almost every respect as thoroughly admirable, and it made interesting and useful reading; but I thought that this particular recommendation was something of a blemish on what I otherwise highly praised.
  The Estimates Committee went to India and Pakistan. On its return it recommended that there should be an increase in aid, or money, to India and Pakistan. I cannot help feeling that there was an element of special pleading in it. I wonder what the Estimates Committee would have said if it had gone to Nigeria, Mauritius or even Anguilla. I wonder whether it would have come back with a slightly different conclusion.
  Mr. Braine: I think that the hon. Gentleman is being a little unfair to the Estimates Committee, because if I remember rightly, it came back from India with some trenchant criticisms of the way in which aid had been used for particular projects and it was against that background that the Committee recommended that the C.D.C., with its wealth of expertness, might be encouraged to move into that field.
  Mr. Macdonald: I am coming to the question of expertise, but if I have been unfair to the Estimates Committee, I am grateful to the hon. Gentleman for correcting me. Even supposing that its recommendation is correct, the Bill goes a great deal further because it permits the C.D.C. to make investments in the whole world. Restrictions in the Bill will operate only if the Minister thinks that they should, and although the present Minister has said that they will, we might have expected restraint the other way around, with the C.D.C. unable to invest in these other places unless the Minister says so. At the moment, it may invest unless he refuses and that is unfortunate.
  The C.D.C., which was created in 1948, has built up a magnificent body of expertise by its slow and patient development and I hope that I am not pessimistic in feeling that there may be a danger of its being dissipated, if it is spread too widely.
  One of the great merits of the C.D.C. is that it trains local people to assist in the management of its enterprises, but I am also advised that, although it does a lot in training, its enterprises lose many of those trained people, because, as Mr. Mboya has said, there is no other way of training them. When C.D.C.-sponsored organisations train these managers, they later move on. There needs to be continuous training, with some ex-patriates taking part.
  Paragraph 8 of the 1967 Report mentions certain difficulties for expatriates in Commonwealth territories but I hope that the success of C.D.C. shows that these difficulties can be largely overcome, because, in those territories, the Corporation is known and the circumstances of those expatriates are understood. If they go in large numbers to other territories where they are not known, these difficulties may increase. I welcome Clause 1, but I should have liked the increase in the finance, without the large extension in the area under Clause 2. There is plenty to do in the exisiting Commonwealth.
  I hope that I am not out of order in assuming that this debate is an opportunity to review the work of the C.D.C., to which I pay tribute.
  In its Report for 1967 it refers particularly to the affairs of the Central Africa
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  Power Corporation where money was made available but, because of the difficulties in Rhodesia, only half was repaid. Half was guaranteed by the Government of Zambia and that was paid, but the other half was guaranteed by Rhodesia and has not been paid. As the two Governments had given cross guarantees, the C.D.C. called on the Zambian authorities to make good the total repayment. In doing so it was acting in accordance with its brief as it is a commercial organisation. I have no criticism to make of that, but here we are setting up a commercial organisation which in some senses was apparently cutting across the political policy of the Government.
  I wonder if I detected in the increasing waiver of interest which my hon. Friend rather proudly announced a departure from commercial principles hitherto laid down. I wonder whether the opportunity should have been taken to deal with these circumstances in this Bill. I thought it a little unfortunate that the C.D.C., operating on a commercial basis, came down on the Government of Zambia for the full amount of the money. Although it was in no sense the fault of that Government, it had to make good the full amount. I would have expected that some opportunity would have been taken in this Bill to introduce safeguards against that kind of thing. Subject to that, I welcome the proposals of the Bill.
  9.7 p.m.
  Mr. John Tilney: I had some sympathy with the words of the hon. Member for Chislehurst (Mr. Macdonald) when he said that he thought the money might be spread too widely. He spent a certain amount of time on the £28 million of undistributed commitments. I have always felt that because the C.D.C. takes risks the capital should be equity capital. It has always struck me as wrong to rely on loan capital when one is taking risks all the time.
  Although my hon. Friend the Member for Dorking (Sir G. Sinclair) said that the C.D.C. had been overwhelmingly successful, I remember the time when under the first chairman success was very far away from the C.D.C. and vast sums of money were lost by not so good management. Risks have to be taken either in agriculture or in industry.

  773
  I was much interested to hear what was said by the hon. Member for Portsmouth, West (Mr. Judd). He and I not long ago were discussing the problems of Africa with various American congressmen and senators and, inter alia, the subject of aid to that great continent. I was interested in what the hon. Member said about the effect which C.D.C. projects in agriculture have had on World Bank thinking. I have no doubt that some developing countries in the past have not given enough attention to agriculture. India certainly was one of those in its first development programme, whereas Taiwan, before it started its industrial burgeoning, saw that its agriculture was in order. This is a matter of great importance to such countries.
  The hon. Member for Portsmouth, West thought that we might call on other Commonwealth countries for some capital for the C.D.C. This would bring the Commonwealth together more, and anything we can do to bring it together and establish the Commonwealth idea much more widely throughout the world is good. That is why I regret that to a slight extent the Bill is going away from the Commonwealth, and why I should like to see some form of Commonwealth aid scheme under the Secretary-General.
  But I very much welcome the raising of the limit. I agree that the C.D.C. is a great success story and that it helps our balance of payments. There is a strong argument that this should be regarded, just as private investments should, as a form of aid overseas but as being in quite a different position from Government grants. It is nonsense to lump them together as aid, because we benefit. Our balance of payments gains from the C.D.C. to a considerable extent, as my hon. Friend the Member for Essex, South-East (Mr. Braine) pointed out.
  I believe in private enterprise, in risk-taking and in partnership, and that aid should not be purely a philanthropic enterprise. It is a good thing if they are mixed up as much as possible. I pay my tribute to the management of Lord Reith and Lord Howick and the present managing director, because they have done a first-class job.
  It is sensible to have a partnership. My hon. Friend the Member for Essex, South-East referred to partnership and
  774
  the importance of companies registered in the developing country rather than having a branch. I do not want to make a party point, but it is very unfortunate that our present fiscal policy is in favour of branches and against public companies sharing in partnership with local capitalists overseas. Unfortunately it now pays to have branches rather than a partnership company, either with British capitalists or local capitalists, whether they are pension funds or local tycoons. I believe such partnership is a very good thing. I happen to believe in the capitalist system. What one wants to see is the local company quoted on the local stock exchange in Lagos, Accra or wherever it may be. That is the sort of development we want to support.
  I strongly recommend a small brochure produced by the West Africa Committee in the City of London, entitled, "Foreign Investment—its rôle in the development of Commonwealth West Africa", because of the four precepts for investment it lays down—investment capital, technical skills, enterprise and natural resources. It speaks of:
  "Investment Capital—available from savings on a scale sufficient to leave a surplus after maintenance requirements in the private and public sector."
  One of the problems of developing countries is that there is very little left over once what is already there has been maintained both in the public and private sector. The brochure next mentions:
  "Technical Skills—to apply investment capital with economy and effectiveness, conserving it conscientiously."
  That is all the more reason why bodies like the C.D.C. should bring people to this country for training, or, preferably, in their own enterprise build up the local technicians in knowledge of worldwide techniques.
  The brochure also speaks of:
  "Enterprise—the intellectual force which provides the will, flexibility and inventiveness to adapt the best systems and experience of the world to local problems and situations."
  That is self-explanatory. Finally the document mentions
  "Natural Resources—which are valueless until extracted and processed."
  Natural resources, either mineral or agricultural, cannot be tapped without capital, expertise and hard work.

  775
  I have a suspicion that some hon. Members opposite always imagine that one must have an infrastructure and that automatically private enterprise will follow it. This is not really so. Some private enterprise has come about—with the exception of power, which one must have—before roads have been built—but the opposite is often the case. One remembers the big roads which were built by the French in Dahomey, but Dahomey remains one of the poorest countries in Africa. There private enterprise has not followed the infrastructure.
  Mr. Eldon Griffiths: Is not the point that infrastructure does not mean to underdeveloped countries what it means to us? The word "infrastructure" ought to mean different things in different countries.
  Mr. Tilney: I agree. So often many developing countries want to enjoy the infrastructure which we have. They are not prepared to put up with something which is not quite alpha-plus. There are good beta-plus organisations in existence, and there comes a time when they have to accept the good rather than the best.
  I believe that equity investment is better for many countries than Government loans which have to be repaid. Private enterprise investment does not have to be repaid year by year. It receives a return only if it makes a profit. The risk is taken, preferably in partnership with the local people.
  I regret to some extent that the Minister has seen fit in this Bill to go beyond the Commonwealth. I accept that the Sudan was a condominium largely run by this country, I accept that we have great friends in Ethiopia, and in Thailand, but I am frightened that some other Government, for political rather than economic reasons, may say to the C.D.C. "We should like to start in such and such a country." This is a dangerous argument if one goes beyond the purely economic reasons for investment. Capital is in short supply thoroughout the world. Only £10 million is available, which is not much for the Commonwealth, and once one goes outside it, I fear that the investment will be thinly spread.
  One understands that aid will be going wider than the Commonwealth. The Minister said that, for the time being,
  776
  he will not consider India, Pakistan and Ceylon, although in fact they may be eligible. I urge him to listen carefully to the suggestion made by my hon. Friend the Member for Essex, South-East, that one should not use the Commonwealth Development Corporation in a foreign country since it would demote its title. I wish to support the Commonwealth as much as possible, but if it becomes accepted as the title of a body which may operate in any country, then the whole concept of Commonwealth is denigrated to some extent. If the C.D.C. is expected to operate in Thailand, in the Sudan, or elewhere outside the Commonwealth, I urge the the Minister to consider the use of a subsidiary company.
  I welcome the Bill. It is a small part of the aid programme. I would like it to be bigger, as I would like the private enterprise share to be bigger, even though we have to reduce government-to-government loans. Along with all other hon. Members I commend the Bill.
  9.20 p.m.
  Mr. Evan Luard: I am sorry to have to add to the discordant notes mentioned by my hon. Friend the Member for Chislehurst (Mr. Macdonald). I understand the reasons why this Bill has been so wildely welcomed, and it is not my intention to vote against it. I have considerable reservations about it, not so much for what it is in itself, but because of some of the trends which it represents within the aid programme. One point which I do welcome, that which has been mainly regretted in the debate so far, is the provision in Clause 2 that it is no longer relevant or meaningful to make a distinction between a former colonial territory of this country and other territories.
  I welcome the abandonment of that distinction for two reasons. From a purely economic point of view, it is often a total nonsense to draw a rigid boundary just where the previous boundary of our colonial empire happened to run. In many cases it is much better to think of projects in a sub-regional context, for example to think of the whole area in West Africa regardless of where the former colonial territories had their boundaries, or in South-East Asia, and many other parts of the world.

  777
  I also welcome this because at the moment there can sometimes be quite artificial imbalances between the amount of aid available to a particular territory, according to whether it is a member of a former colonial empire. It is increasingly important that we consider the aid programme as far as possible in a global context when considering the distribution of aid in the world as a whole, and in a regional or sub-regional context in considering the economic environment of a particular aid programme.
  I come now to my points of reservation. I do not want anything I say to be considered as being criticism of the Commonwealth Development Corporation, because I echo the words of appreciation and praise for the technical expertise with which it does its work, which is so important in considering the aid projects generally. I have three points to make. Three years ago in the admirable White Paper on aid which the Government produced an undertaking was given that we would increasingly concentrate on aid on soft terms.
  In doing this we give a lead, to some extent, to the world as a whole, which has recently been re-echoed in many quarters. The United Nations has passed a Resolution on this, U.N.C.T.A.D. has done so and the World Bank has laid increasing stress on aid on soft terms. The aid given through the C.D.C., in so far as it can be called aid, is not aid on soft terms. Unlike other speakers, I regret the recommendations made by the Sub-Committee of the Estimates Committee and the Committee as a whole that we should lay increasing emphasis on aid through the C.D.C. in our future aid programme for this reason, although, again, I recognise the very good reasons it gave in favour of this, and that is because of the type of aid it represented, and because of the very efficient way it is managed.
  It is impossible to consider in a rational way a particular proposal for an increase in one kind of aid without knowing what proportion it is of our aid programme as a whole and what proportion it will represent in future of our total aid programme.
  I am very much afraid, and I would welcome comments on this by my hon. Friend in replying tonight, that this represents part of the trend within our aid programme not to give as much
  778
  emphasis to soft loans as was suggested in the White Paper three years ago. That White Paper emphasised in particular not merely soft loans but interest-free loans. This is an essential element in our aid programme, something to which, no doubt because of our difficult balance of payments system, we have not been able to give sufficient attention in our aid programmes in the last few years.
  The second reservation I wish to make is that another trend within aid of programmes as a whole which has been increasingly commended by international organisations has been the trend towards a greater volume of multilateral aid. Our own proportion, although it has been slightly increased recently, is still not much more than one-eighth of our total aid programme. This is very small compared with that of many other countries. Many have undertaken to give a very large proportion of their aid in future in multilaterial forms. Several countries, including the United States and the Scandinavian countries, give a large proportion in this form and other countries of Western Europe are proposing to give a large proportion of aid in multilateral form so long as they can receive sufficient assurance that there will be adequate management and control in the way aid is used. I entirely accept that this is an essential condition.
  I am afraid, however, that this Bill, if extended to other legislation in the future, may portend that we are continuing to give a very large proportion of our aid in bilateral form, or at any rate not through multilateral agencies as a whole. I agree with my hon. Friend the Member for Chislehurst that the terms of a Bill of this kind make it difficult for the House as a whole to have any control over the proportion of aid which goes in any particular form. It gives an authorisation which will enable the Corporation in future to extend its activities in a particular way; but it gives no indication of how much this extension will be in any particular year and what proportion the extension will be of the aid programme as a whole in any particular year. Again, I regard this as a dangerous trend within the programme.
  The final point I wish to make concerns the question of repayments. It is already true that a considerable proportion of the value of our aid programme is lost

  779
  so far as the developing countries are concerned because of the volume of repayment they have to make. The volume of repayments on this particular form of aid is very high. Such aid is given in purely commercial terms at very high interest rates, which means that over future years it will add very considerably to the repayments by the countries we are attempting to assist. Already some countries are paying in repayments almost as much as they are receiving in aid; and we are adding to this burden in future by proposing now to give a substantial—though not a very large—proportion of our aid programme in this form. I do not say that for these reasons we should not approve the Bill. I very much appreciate the skill with which the C.D.C. undertakes its activities. But it would be wrong to fail to consider a particular measure of this kind in the context of our aid programme as a whole and its implications for that programme. I believe that it is with these considerations in mind that the House will consider this Bill.
  9.28 p.m.
  Mr. Eldon Griffiths: I, too, welcome this Bill, which can be described as a slightly bigger drop in a somewhat wider bucket. One of the most difficult tasks of government is deciding between competing, often conflicting, claims on public expenditure. Certainly there is no more difficult field than having to decide on the relative merits of spending at home and spending abroad. Equally, as Members of this House, there is no more difficult task than representing, as is one's duty, the views of one's constituents and at the same time seeking to make a judgment on what is best for the country. Very often there is great difficulty in both these judgments, and I think that this Bill pre-eminently illustrates both.
  In welcoming the Bill, I wish to represent the view of my constituents, and I believe the views of constituents of most hon. Members. I want to put it very plainly, because it is a nettle which needs to be grasped. In this Bill we are extending the Corporation's borrowing powers from £150 million to £250 million. Yet simultaneously in my constituency it is necessary for the Government to cut down the borrowing powers of local councils.
  780
  We are asked in this Bill to provide the means of improving roads, hotels, wells and many other things in a whole range of foreign countries—and clearly this is right. But at the same time our constituents have to face the fact that expenditure on some of their roads, schools and wells has to be cut down.
  I put this plainly to the House so as to illustrate the fact—and it is a fact—that at the moment foreign aid is unpopular. Most hon. Members will have had the experience over the last year or so of going to constituency after constituency and finding puzzled and sometimes bewildered people, who ask how it is that we are able to spend money abroad whilst apparently bankrupting ourselves at home. This is the paradox, and it is a difficult one for ordinary people to understand.
  In my constituency—and I am bound to represent this in the House—people inevitably draw a contrast between increasing the proportion of foreign aid on which no interest will be charged for seven years, while at the same time in Bury St. Edmunds, Newmarket, and many other places, interest rates, far from being waived, are actually being pushed up. I sympathise with the Minister, because in these circumstances I realise how difficult it must have been for him to get the Bill through the Cabinet or through whatever other process of government he has to go, before bringing it before the House. I congratulate the right hon. Gentleman on his achievement.
  A few months ago when I was part of a Parliamentary delegation to the United Nations, I remember speaking to Lord Caradon. He told me how proud he had been to tell many of the underdeveloped members of the United Nations that at a time when the British people were being forced to reduce their standard of living and to go without many things we were able still to increase the proportion of money that we were to spend on foreign aid. I congratulate the Minister on that achievement. It is something of which our country can and ought to be proud.
  Mr. John Cordle: I want to get this clear in my own mind. I thought the Minister made it clear, and indeed that

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  our Front Bench did, too, that this was not a question of straight aid but a sophisticated method of lending money overseas through a private enterprise body.
  Mr. Griffiths: I am sure my hon. Friend will agree that the net effect is the same. It is to allot more of the financial resources of this country for expenditure on development in other places.
  Mr. Braine: My hon. Friend's general remarks about aid are correct. We are discussing a Bill to increase the borrowing powers of an organisation, which I am sure the Minister will agree is a good sound investment for this country in that it yields a net return of 6¼ per cent. on the money invested and induces a large volume of British exports. His strictures do not apply to this form of economic activity.
  Mr. Griffiths: My hon. Friend need not worry; I shall in the end come down on the side of the Bill. I feel, for all that, that it is necessary to illustrate that we have here what the public is bound to conclude is an increase in help for others at the expense of themselves. My hon. Friend with his great wisdom, may say that that is not so, but we are politicians and we must face the fact that in our constituencies people are not as well informed as he and the Minister. My point stands. We need to explain it to our constituents. If we wish to increase foreign aid, as I do, we must sell it to the people, which is not easy at this time.
  There are many ways of improving the assistance which we give abroad. For example, it would be very much better if we could stabilise commodity prices. During the 1950s the under-developed parts of the world lost more in the drop of commodity prices than they gained out of all the aid they obtained from the advanced world. Another improvement would be to reduce world interest rates. We would all like to do that. They hit hardest of all at the under-developed nations we seek to help. We could also improve the character of our aid if less of it were tied and if more of it were multilateral. It would help even more if we could contain inflation in the Western world.
  782
  I wish to ask the Minister a question. The net effect of the Bill is to increase the amount of money directly available on Treasury account to the Commonwealth Development Corporation from £10 million to £11 million a year, an increase of 10 per cent. In the last 18 months we have had a devaluation of 15 per cent. I hope that the Minister who is to reply will be able to tell me that there is an increase in real terms. Does the £11 million referred to in the Bill represent an increase in real terms to the receiving countries? If it does not, we are involved, not in an increase, but in a marginal decrease.
  I come now to the details of the Bill. Like the hon. Member for Chislehurst (Mr. Macdonald), I regret that we have before us the Report and Accounts of the Commonwealth Development Corporation only for 1967. That is not good enough. We should have the Report and Accounts for 1968 before we pass the Bill. Probably the reason is that normally these accounts are printed in May and we are now only in April. But I do not see why the Minister could not have persuaded the Corporation to give the House the last available accounts before he brought in the Bill.
  I support Clause I wholeheartedly because it provides more money. That is what I want. I am less sure about Clause 2, because having marginally increased the size of the drop, we are apparently greatly increasing the size and width of the bucket. The question of the dilution of aid over a wider area is very difficult. I recognise the Minister's point. It would be foolish to refuse to the Corporation power to expend money in those countries which are immediately adjacent to, or which are regionally or organically part of, those Commonwealth countries to which we are contributing. It would be absurd for example to separate from one another countries in the Horn of Africa on the ground that one was Commonwealth and the other not.
  Nevertheless, I think that the Parliamentary Secretary should say a little more about the terms of reference which the Corporation will be given. Clause 2(2) empowers the Minister to
  "give directions to the Corporation requiring it to obtain his approval … before performing functions in or in relation to any country or territory to which the principal Act applies.…".

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  Can we be told that the Minister will be very sparing in his agreement to Corporation proposals that go greatly beyond the old and the new Commonwealth?
  In the case of Anguilla, no longer—technically at least—Her Majesty's territory, there could be no question but that it would be appropriate for the Corporation to help. If, however, the Corporation were to propose help to Rumania, that would be a case where the Minister should in no circumstances give his approval. What we need from th Treasury Bench is a rather more clearly defined general direction as to how Ministers see the problem of extending the responsibilities of C.D.C.
  I agree with my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) that the old Commonweath conception has value. It has value in the world. Above all, it has value to the people of Britain. It is much easier for anyone who is in the business of selling our constituents on the need for aid if they believe that the aid is going to the Commonwealth with which they identify themselves—at least, some of them do—rather than going to a miscellaneous collection of foreign countries whose need may be great but with which the British people have very little historical affinity.
  If the jam is thin, the Corporation in the past has spread it very well. I only hope that it will not have to spread it so thin that it ceases to taste so sweet.
  I make these further suggestions which I hope will be considered in Committee. First, I hope that, as the Minister said, there will be much more training on the ground in recipient countries. I should like to feel that the Corporation will encourage more young people from Britain to go out and perform that training, because not only is that good for the recipients, it is even better for those who give.
  Secondly, I hope that we can achieve a somewhat better co-ordination between the activities of the Corporation and those of other countries' aid giving bodies. At the moment the world is strewn with Governmental aid givers. This is a good thing, but frequently they overlap, and sometimes there is waste because of duplication. All of us have seen examples of this.
  784
  I am most impressed by a suggestion which was made by Miss Barbara Ward to the effect that a great deal of information—on techniques of improving food production and in helping under-developed countries—is available in Washington, in London, and in Paris, but is not known in all three places. It is necessary for new techniques that have been learned by one country, for example, in improving fishing or silviculture, to be made known among all the giving nations. This is a field where the computer can be of considerable value in information retrieval among the various aid programmes so that some of the overlap can be avoided.
  Thirdly, I hope that in his general power to give directions the Minister will consider one or two areas which are of special importance to Britain. I am sure that we have a special responsibility for the Caribbean, as my hon. Friend the Member for Dorking (Sir G. Sinclair) so eloquently said. I was recently in the Cocos Islands. Water there is 1s. a gallon. We should be able to get that price down and I hope the C.D.C. will consider this. In the Cayman Islands too there is real need for additional help.
  I end with the thought that if foreign aid or Commonwealth aid through the C.D.C. or anything else is to succeed, it will succeed because the British people, our constituents, have been persuaded that it is in the best interests of this country. We have a selling job to do. I believe that job can partly be done on the basis of our balance of payments but very much better done on a wider frame.
  The problem of my generation has been the threat of aggressive war, first, from Hitler's Germany and then from Stalin's Russia. It may be, thanks to the thermo-nuclear bomb, that the threat of aggressive war is now disappearing. I pray that this is so. But I believe that the nuclear threat is being replaced by another—the rise of the barefoot people, already some 2,000 million strong. Having thrown off the old empires of Europe, they find themselves still subject to the even older tyrannies of poverty, ignorance and disease yet they are reaching for their place in the sun. They find that they have achieved independence but are still not free. They

  785
  are more subject, if anything, to the old tyrannies than they were before.
  This is the line of argument to strike a chord in the British people. Particularly can it strike a chord among the young. In supporting the Bill while criticising it in part, I hope that the right hon. Gentleman, the Government and all right hon. and hon. Members will try to sell the idea of foreign aid to our people not solely in terms of the balance of payments or as something into which we are chivvied by the United Nations or even by our Methodist clergy. I hope that they will do it on the wider frame that the problem of tomorrow is to bridge the gap between the poor and the rich and to see that this gap is not widened by the fact of race and colour. If we sell it in this larger frame, I believe that the British people will respond.
  9.48 p.m.
  Mr. John Cordle: The eloquent speech of my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) has covered a great deal of ground, and the House will be grateful to him for drawing attention to the difficulty of selling overseas aid to one's own constituents. It is right to say that one could approach the problem by making it clear to one's constituents that, although the C.D.C. has its finances from the Government, it is nothing more nor less than a commercial undertaking which is using those funds to the benefit of the country.
  Perhaps a clearer definition could be made of how the C.D.C. functions, and greater publicity given to it throughout the country in more simple terms. I have no reservations about the Bill. It should be welcomed and acted upon and given every possible help and scope. I hope that no difficulties will stand in the way.
  I have the rather old-fashioned idea of believing that the more we give overseas the greater will be the return.
  "… for whatsoever a man soweth, that shall he also reap."
  We sow overseas additional funds by foreign investment. We shall get our returns in due course—and they are profitable returns. It has been said that aid helps our balance of payments, and during these difficult days I think that
  786
  it can maintain a stability for our overseas investment and future well being.
  This evening we have heard the success story of the C.D.C., and about the amazing achievement that has taken place in a short time, and we have heard, too, of its failures. We now know that it has proved itself worthy and has won its spurs. This country and the countries in which it operates have a great deal of confidence in it.
  Many excellent suggestions have been made and I should like to make one or two. In the old days trade followed the flag, but nowadays trade follows sensible investment and the application of commercial "know-how". Wherever C.D.C. gets a footing it is showing that it can run its affairs efficiently and profitably.
  Several times in the last six months I have visited Nigera. I have stayed in hotels run by the C.D.C., and I have seen what has been done for agriculture, the industrial bank and the housing programme, both in the North and in the South. All these are splendid developments. The C.D.C., as I say, is the spearhead of business in Nigeria. We have heard of the developments that have taken place in Botswana, Lesotho and Swaziland, and of those that are taking place in Malawi.
  I ask the Minister to consider a wider scope of activity for C.D.C. As a businessman I have seen the success of C.D.C., and I wonder whether a service could be rendered to businessmen. They no longer sit at their desks expecting business to come to them but must go out to seek business overseas. Such a service would be of great benefit. The businessman cannot always fall back on trade missions and the commissions which are set up; he wants information from people who are thoroughly experienced and who know the territory. The C.D.C. has a special advantage here in its experience in the initial stages of getting a project off the ground, and advice in these matters to a businessman overseas would be invaluable.
  The Ford Foundation, with its vast financial resources, recently set up a conference to look into the development and reconstruction of Nigeria after the war. This suggests to me that money would be well spent if such conferences could be sponsored and undertaken by C.D.C. in countries in which it is operating.

  787
  The Board of Trade has sponsored many successful exhibitions in various parts of the world. The recent exhibition in Beirut of hospital installations and equipment paid off extremely well, and resulted in much business in the Near East. Such exhibitions sponsored by C.D.C. in Commonwealth countries would provide an extra outlet for exports and so help our balance of payments. I fear that I may be wandering away from the Bill, but to secure the best results from the C.D.C. a sound long-term appraisal of potential markets will be needed if it is to continue its highly profitable life. This is one way in which it can further its cause as it grows. We all hope that it will.
  In the context of taking reasonable commercial advantage of the opportunities provided by our aid to developing countries, it should be noted that the equipment and consumer goods which we are able to provide possibly contribute as much to the development of their economies as straightforward capital investment. Therefore, we shall not only do ourselves a service by expanding more and helping the balance of payments, but we shall make a valuable contribution to the countries concerned.
  Those of us who travel to the underdeveloped countries realise that they want a short cut to the standard of living which we in the West take for granted. The markets are wide open for development both in the provision of goods such as the more sophisticated household luxuries, motor cars, electrical appliances and equipment and for establishing manufacturing plant with the required construction and machinery. Again, all this will not be bread thrown upon the waters not to return.
  No one is more delighted than I am that the C.D.C. is doing so much in partnership with the developing countries. As I have said, in Nigeria it leads the way with the best hotels. In joint enterprise with Dorman Long, it has substantial interests in Nigerian housing, in both the north and the south. It provides support for the Industrial Development Bank and other major commercial interests.
  I welcome the Bill, but I would remind hon. Members that we must show more
  788
  initiative and energy in capitalising on the goodwill and expanding economies resulting from our aid overseas.
  9.58 p.m.
  The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Albert Oram): We have had a short but most useful debate on what is a short and most useful Bill. I will try to make my reply short and useful as well. If I were to attempt to reply to all the points which have been raised, I am afraid that I would detain the House longer than it would wish.
  Hon. Members on both sides have been almost unanimous in their praise of the C.D.C. My hon. Friend the Member for Chislehurst (Mr. Macdonald) and my lion. Friend the Member for Oxford (Mr. Luard) sounded some critical notes, but did so only in the context of speeches which in general were welcoming the Bill. There was unanimous support for its two main proposals.
  The praise which has come is the more important and valuable since in many cases hon. Members have spoken from first-hand experience of C.D.C. projects overseas. I am sure that their experience is most valuable to the House in assessing whether or not we ought to extend the powers in the way that the Bill proposes.
  I want first to deal with one or two of the points made about Clause 1, which contains the main financial proposals. The hon. Member for Essex, South-East (Mr. Braine) said that the money provided through the C.D.C. gets good value in development terms. He said that it was good value not only in the overseas country where the money is invested but for Britain as well in terms of aid to overseas countries which is not costly from the balance of payments point of view. The hon. Gentleman quoted a very useful passage from the 1967 Report of the Board in illustration of that fact. I had in mind to quote it myself, but it is not now necessary. It is true, as has been illustrated—
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That the Proceedings on the Overseas Resources Development Bill may be entered

  789
  upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Charles Grey.]
  Question again proposed, That the Bill be now read a Second time.
  Mr. Oram: I was agreeing with the hon. Member for Essex, South-East that C.D.C. operations are good value for the overseas Government and in terms of our balance of payments as well. This raised a query in a number of the speeches to which we listened, namely, whether, because there was an advantage to the British balance of payments situation, it was appropriate to include C.D.C. finance in aid statistics.
  I am sure that hon. Members will not wish me to go into the many sophistications about statistics on aid which were raised. However, I should make one or two points in this connection as the hon. Member for Essex, South-East raised the example of vehicles being sent overseas being included in aid, whereas private investment overseas for the construction of vehicles would not be included in aid. I accept his point, but, with respect, it was a little confusing, because we might have in mind two sets of aid statistics. The British aid statistics which my Department publishes cover the amount contributed from Budgetary sources. That is quite right. It does not include private investment for the construction of vehicles overseas, but it is included in U.N.C.T.A.D. and D.A.C. statistics. That is why the hon. Gentleman's illustration, though homely and interesting, did not add to the clarity of the discussion.
  The hon. Gentleman referred to return flows not being taken account of in aid statistics. In the statistics published by my Department, though we count as aid all that goes out from Budgetary sources, we also publish in a separate table the return flows, so that it is easy to do the arithmetic, even though it may be disputed whether we are right in claiming all outgoing funds as true aid.
  The introductory point of the hon. Member for Liverpool, Wavertree (Mr. Tilney) concerned the financial proposals. He raised the point, which used to be raised often in debates about the C.D.C., whether it ought to have the benefit of equity capital rather than loans, I recognise his point, but I hope that he will
  790
  recognise, as the Board does, that to some extent this problem has been overcome by the operation of the waiver of interest. If the hon. Gentleman looks at paragraph 10 of the 1967 Report, he will find the Board's expression of view on this subject. It does not accept that it meets the whole equity problem, but it recognises that it goes some way towards meeting the problem that the hon. Gentleman, and earlier the Board, had in mind.
  Secondly, I should like to deal with some of the points raised about the second main proposal of the Bill to extend the territorial scope of the C.D.C.'s operations.
  A number of hon. Members queried whether it was not unwise to take the whole world into the scope of the C.D.C. and they saw a danger of a loss to the Commonwealth countries. It is not the intention of the Corporation or of my right hon. Friend that these new powers will alter radically the fundamental commonwealth orientation of the Corporation or that there should be a sudden and rapid expansion into a great number of foreign countries. The approach will necessarily be cautious and any extension will need the Minister's approval.
  My hon. Friend the Member for Chislehurst got this a little wrong. He thought that it was the other way round and that the Corporation could operate in these other countries unless the Minister refused his approval. In fact, he will need to give his approval positively.
  One smaller point, which was raised by the hon. Member for Essex, South-East and the hon. Member for Liverpool, Wavertree was about the use of the word "Commonwealth" in foreign countries. This point is well recognised, and their suggestion of operating through a subsidiary with another name is already in the minds of those who will have to operate these powers.
  The hon. Member for Dorking (Sir G. Sinclair) asked whether the waiver of interest was a matter of principle or simply an expedient to help the Corporation through a period of particularly high interest charges. Both are true. There is the principle that we wish to enable the Corporation to undertake projects which it could not otherwise do on ordinary commercial terms, but this does not exclude the fact that it is also to

  791
  provide some relief during a period when the burden of interest rates is particularly high. So I do not agree with him that it was one or the other.
  Some general aid matters were raised, outside the strict scope of the Bill, but which are relevant to its background. My hon. Friend the Member for Portsmouth, West (Mr. Judd) vigorously raised the question of the volume of aid and of whether or not it was advancing in absolute terms or in proportion to the growth of the national income. He also mentioned statistics, with which I have already dealt. My hon. Friend's name is among those who will serve, if the House agrees, on the Select Committee to deal with my Ministry's affairs and I shall be very surprised if he does not raise this matter. Indeed, I shall be a little disappointed and I shall certainly not discourage him from at least raising it, although some of the answers that he gets may seem at times a little discouraging.
  My hon. Friend the Member for Oxford also raised a number of general aid matters which he will not expect me to answer in detail. I assure him that the Bill does not imply a reversal of policy in respect of soft terms of aid which our Ministry brought in some years ago and has operated since. Nor is there any reversal of our policy in respect of multilateral aid. The proportion of our aid programme which is dispersed through multilateral agencies has increased over the last five years from 8 per cent. to 15 per cent. That is something which I am sure he welcomes and which I am sure hon. Members opposite welcome. I assure him that his fears are groundless.
  The hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) made me a little nervous when he opened his speech by putting forward the views of his constituents. I was very glad that, in the kindest of ways, he dissociated himself from the views of his constituents. This is not the only matter on which his constituents are mistaken.
  Mr. Eldon Griffiths: I do not think the hon. Member can get away with that. Far be it from any hon. Member to dissociate himself from the views of his constituents. Let us say that I take them into account.
  Mr. Oram: The hon. Member took them into account, but he went on to give us a speech which we all greatly admired. He put his finger on a very important problem that all of us who favour aid worry about. That is how to get the need for aid across to our constituents. I am sure that if his constituents, my constituents, and other hon. Members' constituents read his speech they will learn a great deal about the need for aid and how their disappointment in domestic terms, say about road programmes or school programmes, which, although advancing are not advancing as fast as we would wish, is as nothing to disappointments in the vast problem of poverty with which we, the Commonwealth Development Corporation and all aid givers are attempting to wrestle.
  The hon. Member tried to set me a poser by asking me to do the mental arithmetic of setting £11 million or £10 million against the effect of devaluation. I shall not attempt it here because I assure the hon. Member that the C.D.C. operates in a great variety of countries, some of which have devalued and some have not. Devaluation is 18 months behind us and an even greater statistical effort would have to be made than the one which I tried to avoid earlier in my speech.
  The hon. Member for Wavertree, when talking in general aid terms, made a point about private enterprise and infrastructure. He suggested that hon. Members on this side of the House put too much faith in infrastructure as a means of attracting private enterprise to developing countries. If the infrastructure is right it is essential and it is a means of attracting private enterprise into developing countries. I agree with the hon. Gentleman that mistakes can be made, and that it is not inevitably the case that infrastructure development produces the right kind of results in terms of private enterprise. But I think that he was posing the problem in too stark a way.
  I should like to conclude with one or more general observations about the work of the Commonwealth Development Corporation. To me, one of the most interesting and valuable aspects of its work is the way in which it acts in partnership with other operators in development. It

  793
  is flexibile in the methods of investment it employs. In some cases it has projects which it wholly owns on its own account, but it goes into business with a great variety of other aid and development operators in the way my right hon. Friend described in opening.
  I particularly welcome, as I am sure does the hon. Member for Dorking, who referred to the need for agricultural development, the fact that in a number of interesting cases the C.D.C. acts as a partner with the International Development Association. The lending terms that I.D.A. can offer, combined with the easier terms that the C.D.C. can offer as a result of the policies that our Ministry operates, mean that they can go into projects, particularly agricultural projects, that they might not otherwise be able to enter. I shall quote the Kenya Tea Development Authority.
  Perhaps even more important than that fact, that it has an interesting variety of partners as investors, is the fact that it enters into partnership with the people and Governments of the countries where it operates. Here I would give just two brief quotations from the Report of the Kenya Tea Development Authority to illustrate this. It says in paragraph 1 on page 64:
  "An important feature of the Kenya Tea Development Authority's Board membership is the election of growers' representatives through a three-tier structure of divisional district committees and provincial tea boards."
  Later it says:
  "Six factories started up by the Authority are now each owned by a public company to enable the smallholders to subscribe for shares and so participate in the ownership of the factory which processes their leaf."
  I am sure that this kind of drawing in of the peasants, the smallholders who are helped by the nucleus estates that the C.D.C. operates, is a most valuable feature of its work.
  One could quote a similar example in Swaziland, where the C.D.C. does the central operations, the irrigation, the crop research, and running the sugar factory, which enables the smallholders surrounding that nucleus to improve their standards of agriculture and their standards of living. The C.D.C. has gone further, and is helping to set up co-operatives on both the purchasing and marketing side, and I am sure that this draws the peasants into a most helpful operation.
  794
  These, then, are some of the aspects of the work of the C.D.C. which appeal particularly to me. Other hon. Members have welcomed other aspects of the work of the Corporation. That is why I am sure that we shall all be very happy in readily giving assent to the Bill and providing the wherewithal and the powers to enable the work of the C.D.C. to be extended.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills.)

  OVERSEAS RESOURCES DEVELOPMENT [MONEY]
  Queen's Recomendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to raise the limits on borrowings by and advances to the Commonwealth Development Corporation and to extend the area of operation of the Corporation, it is expedient to authorise any such increase in the sums falling to be paid out of or into the Consolidated Fund or remitted in pursuance of the Overseas Resources Development Act 1959 or paid out of money provided by Parliament in pursuance of section 10(3) of the National Loans Act 1968 as is attributable to provisions of the said Act of the present Session—

  (a) increasing to not more than £260 million the amount which may be outstanding at any time on sums borrowed by the Corporation otherwise than temporarily;

  (b) increasing to not more than £240 million the amount which may be outstanding at any time by way of advances made to the Corporation by the Minister of Overseas Development;

  (c) applying the said Act of 1959 to additional countries and territories.—[Mr. Harper.]

  OVERSEAS AID
  Select Committee appointed to consider the activities of the Ministry of Overseas Development and report thereon:
  Committee to consist of Sixteen Members:
  Sir Frederic Bennett, Mr. Bernard Braine, Mr. Henry Clark, Mr. Donald Coleman, Mr. Andrew Faulds, Mr. Tony Gardner, Mr. Philip Goodhart, Miss

  795
  Margaret Herbison, Mr. Terence L. Higgins, Mr. Frank Hooley, Mr. Frank Judd, Mr. Cranley Onslow, Mr. Laurence Pavitt, Sir George Sinclair, Mr. James Tinn, and Mr. David Winnick:
  Power to send for persons, papers and records; to sit notwithstanding any adjournment
  796
  of the House; to adjourn from place to place; and to admit strangers during the examination of witnesses unless they otherwise order; and to report Minutes of Evidence from time to time:
  Eight to be the Quorum of the Cornmittee.—[Mr. Harper.]

  NURSES (PAY-AS-YOU-EAT SCHEME)
  Motion made, and Question proposed. That this House do now adjourn.—[Mr. Harper.]
  10.20 p.m.
  Mr. E. S. Bishop: Although I am pleased to have the opportunity tonight to raise the situation which arises from the pay-as-you-eat scheme which is now operative in our hospitals and affects student nurses, I am sorry that such a discussion should have been considered necessary. In the past few days the Royal College of Nursing, the National Council of Nurses in the United Kingdom, and the Student Nurses Association, which is the profession's own student body, have received protests from all parts of the country after the pay-as-you-eat system became operative on 1st April.
  I can summarise the situation by saying that the nurses pay-as-you-eat issue is concerned not only with currant buns, but also with current problems. It is more concerned with pie than with pie in the sky. I should say at the outset that, although there has been a general welcome for the principles of the scheme, experience so far has shown that the £106 repaid for the board and lodging charge for resident students, and the living out allowance of £66 a year for non-residents, results in many thousands of students and pupil nurses finding the allowance inadequate. In effect they have suffered a pay cut.
  The nurses want adequate allowances and are entitled to them, but their income is insufficient for them to absorb the extra charges without real hardship. Few people realise that after deduction of Income Tax, National Insurance, superannuation and lodging allowance, if resident, the first-year student nurse has only £5 15s. a week, out of which she has to buy food in the hospital, pay for her shoes and stockings, which she can use on duty only, as well as having to pay for her other needs. The second-year student is only 7s. a week better off. The third-year student receives only £6 10s. a week. She has to pay £30 a year in Income Tax. No wonder the Nursing Times says
  798
  "Their adolescent devotion to an ideal of service is being grossly exploited by the nation."
  What do we expect from our nurses? We have to ask that question before we know what they may expect of us. There has been no change in the basic requirements since Florence Nightingale published her incomparable work on nurses called "Notes on Nursing" some 110 years ago.
  She deplored the view that it requires nothing but disappointment in love or an incapacity for doing other things to turn a woman into a good nurse. She claimed then, and it is true today, that a nurse should be sober, honest, truthful, trained in the habits of punctuality, quietness, trustworthiness, personal neatness, able to manage the concerns of a large ward or establishment, trained in treating wounds and injuries, performing minor operations day and night, managing helpless patients, moving them, changing them, taking temperatures and much else. She says that these and many other principles must be constantly applied.
  Today, as the House knows, the student nurse not only has to do all these things; she has to prove that she has the very rare blend of moral, spiritual, physical, intellectual and idealistic resources to match the requirements, basic since the time of Florence Nightingale, and that she also has the ability to grasp and apply the enormous advances in medicine, science and technology in a space age environment. These are the things we ask of student nurses and the nursing profession, and most would agree that we are never let down in our demands.
  These are quite considerable demands to make of any human being and it is greatly to the credit of what many would agree is the first-rate set of teenagers we have today that there has been no shortage of people coming forward to train as nurses, and that the real problem so far has not been recruitment but the retention of student and pupil nurses. In the Report of the National Board for Prices and Incomes, No. 60, issued last year concerning the pay of nurses and midwives, we read that wastage is still about 34 per cent. per year. It goes on to say that there is also reason for thinking that it may be more difficult to maintain the present level of recruitment in future.

  799
  Between 1968 and 1975 the size of the relevant age group, that of girls reaching the age of 18, will show a continuous decline. To the present problem of retaining nurses there may be added the problem of attracting recruits. Paragraph 45 of the Report makes recommendations that form the basis of the Ministry N.M.C. Circular 148 which has asked employing authorities to bring the new arrangements into force. The Circular revises the present system of living-in charges and since 1st April student nurses have been asked to pay for their board and lodging separately instead of having a lump sum deducted from their pay.
  The new scheme has been welcomed in principle, because the objective, and it is a good one, is to enable the student nurse to have the freedom to spend the money as she wishes. We can talk about freedom to do something only if people have enough resources to exercise that freedom. This is all very well, but the increase in pay designed to cover the costs is not sufficient to pay for charges imposed for the food in our hospitals. All over the country matrons are militant, their students are nursing grievances and in some hospitals babies are not the only ones up in arms.
  The pay-as-you-eat scheme has given us food for thought everywhere. Let us look at the situation in the country. Taking my own county, Nottinghamshire, there are hospitals there needing nurses for beds which cannot be used because of a lack of staff. We recognise that in many places there has been a deterioration in some of the conditions. Miss Eve Bendall, the principal of the School of Nursing at the Hospital for Sick Children in Great Ormond Street, whose responsible leadership in publicising the shortcomings of the new scheme and the injustices of it, is appreciated, claims that a nurse eating in the hospital seven days a week will have to pay £3 for meals for which the allowance is only £1 18s. Many Members have had representations on this, and have been insistent on making representations to the Government and the Ministry on these points. These include my hon. Friend the Member for Fife, West (Mr. William Hamilton), my hon. Friend the Member for Huddersfield, West (Mr. Lomas), my
  800
  hon. Friend the Member for Halifax (Dr. Summerskill) and my hon. Friend the Member for Chesterfield (Mr. Varley). There are many others who would support my plea and who would have joined in the debate, but for the time.
  My hon. Friend the Member for Chesterfield has been making representations to the Minister and the matron of the Chesterfield Royal Hospital, Miss Elizabeth Horton, whose protest was supported by my hon. Friend, claims that Britain's nurses have been sold down the river. Those are rather strong words, but to some extent they are justified. In Sheffield, some student nurses are claiming that they have to live on bread and jam for many meals. At Sutton in Surrey, officials of the St. Helier Hospital Group, where, incidentally, one of my daughters is a student nurse, have protested to the Minister that nurses could be £1 a week out of pocket and have asked for the loss to be made up.
  Sister Patricia Veal, of the United Nurses Association, claims that nurses are threatening to strike. Many hon. Members will wish me to say that we deplore her irresponsible and deplorable claim that the shortage of cash is making some nurses act immorally. That is an unwarranted reflection on an honourable profession and should lead to many dissociating themselves from her views and her activities in this campaign.
  Mrs. Pat Williams, secretary of the Student Nurses' Association of the Royal College of Nursing, who has led the campaign on behalf of student nurses throughout the country, claiming that nurses are being exploited and that the real problem is for the country to decide their status. This is the crux of the matter, for student nurses are really apprentices and in any industry would be paid an adequate rate for the job. There is no justification for low pay and poor conditions, even if student nurses are classified as students.
  Today we have seen the headlines in the Press reflecting the views of Dame Muriel Powell, matron of St. George's Hospital, who has been adamant in leading the resistance of matrons throughout the country. She claims that student nurses working on the morning shift usually have breakfast around 6.30 and by 9.30 are often hungry as well as

  801
  thirsty and yet have to pay for tea and coffee. I understand that in a debate in another place a few days ago, Baroness Serota, Minister of State, Department of Health and Social Security, admitted that the estimated cost of meals to nurses did not cover the item of refreshment. Will a student nurse have to act inappropriately by not paying for refreshment, or will she have to pay for refreshments which, during a week of duty, will add considerably to the hardship experienced? We need clarification of this now.
  Was annual leave excluded from the calculations when allowances for rebate for board and lodgings charges for annual leave have been allowed by previous agreements? Student nurses in particular depended on this help towards their holidays which they could not otherwise afford. Dame Muriel Powell says, and I agree with her, that it should not be considered irrelevant to take into account the contributions made by student nurses to superannuation, insurance and Income Tax, for they remove a large slice from the gross training allowance to all students.
  I ask the Minister to investigate urgently the variation in the price of meals charged in hospitals throughout the country, for the implementation of Circular N.M.C. 148 must result in lower standards of catering, with the alternative of student nurses going without adequate meals, or suffering severe financial hardship.
  Further, will he take immediate action to ensure that student nurses get at least £1 a week rise, as urged by the Royal College of Nurses? If this rise is not paid at once, we should consider backdating it to 1st April. I hope that the rumours in some of the newspapers of the possibility of their getting 10s. a week more are not true, because we ought to ensure at least £1 a week to cover the extra cost of food. I urge a review of the position of student nurses who are the main labour force of our hospitals. Without their help, and let us not forget the help of overseas students, our hospital services would collapse.
  I ask my hon. Friend to consider whether the amount of time spent in the wards means that students do not get enough time for study. There are allegations
  802
  that they are often inadequately supervised with their heavy responsibilities by day and by night. If they were treated as students they would get concessions equivalent to the rise they need, and it may be better for nursing. If, however, they are workers—or apprentices—they should get the rate for the job. We cannot as a nation have it both ways.
  In some ways I consider that the pay-as-you-eat crisis has spotlighted the injustices and the problems of the nursing profession, and that the whole structure needs review at all levels as recommended by the Salmon, Platt, and other reports. Pay and conditions' problems will result in restricted recruiting, which in turn will result in shortages at higher levels, even at tutor level, for some schools of nursing are kept going by using unregistered tutors.
  We know that our nurses are dedicated to their task, but I often wonder why dedicated people are thought to eat and drink far less than those not so dedicated. Nurses work with religious zeal, and unless we act quickly they will recall the parable of the feeding of the five thousand. To quote St. John's Gospel, they will be thinking of the phrase:
  "Gather up the fragments that remain, that nothing be lost."
  I believe that the words of Dame Muriel Powell today on behalf of the Association of Hospital Matrons in asking for a review of the rôle of the Whitley Council with regard to pay and conditions echoed the views of people in many parts of the country.
  At all levels the staffs of hospitals have been most responsible and moderate, and I warn the Government, on behalf not only of student nurses but of the profession, of the danger of more militant leaders taking over their affairs unless reasonable and long overdue claims are met.
  Mr. Kenneth Lomas: May I, on behalf of the National Union of Public Employees, which recruits many nurses, tell the House that the union has said that if any hospital authority overcharges nurses it will take the most militant action against that authority? Does my hon. Friend agree

  803
  that, rather than join breakaway unions, the best interests of the nurses would be served by their joining the appropriate trade union so that they can be adequately represented on the Whitley Council through all the trade union machinery?
  Mr. Bishop: I am sure the House agrees that that is the best and only way for the nurses to rectify their grievances.
  I conclude by saying that the mainspring of mercy which keeps our nurses and our hospitals ticking over with dedication and with duty will recoil with force against those who exploit them, whether by intent or by indifference. For our sakes, and for their sakes, we must not let that happen.
  10.37 p.m.
  The Minister of State, Department of Health and Social Security (Mr. David Ennals): I thank my hon. Friend the Member for Newark (Mr. Bishop) for having raised an issue which has caused a good deal of concern in the country and among many of his hon. Friends. I thank him, too, for raising it in a humane way, and for speaking on behalf of the nurses. I think that he deserves their thanks.
  I assure my hon. Friend not only of the general sympathy of my Department for the magnificent work that is done by nurses in our hospitals, but of my own special interest. At an early stage in my life I spent three years in hospital, and I formed such an admiration for our nurses during that time that whenever I look at any issues in which their interests are involved I am inevitably biased in their favour. I endorse my hon. Friend's tributes to the work done by our nurses, and I am glad that he referred to nurses from overseas, because they make a considerable contribution to our hospital services.
  My hon. Friend mentioned pay and allowances of student nurses. He will, I am sure, be aware that the second stage of the new increases came into effect only in January this year. The present dispute arises, not from the Government's refusal to agree to improve pay and conditions for nurses, but from a concession made as part of the most recent agreement. The National Board for Prices and Incomes, following a joint recommendation of the two sides of the
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  Nurses and Midwives Whitley Council, carried out a comprehensive review and published its report in March, 1968.
  The Government accepted that the pay proposals contained in the report were consistent with incomes policy and commended them to the Whitley Council for negotiation. So far as student nurses were concerned, the effect of the recommendations on pay was that first-year student nurses received a 9 per cent. increase in their training allowances, while second- and third-year students received a 14 per cent. increase. The increases were to be paid in two stages, 4 per cent. back-dated to 1st October, 1967, and the remainder to be paid from 1st January, 1969.
  At the time of a nil norm and a 3½, per cent. ceiling, both the Board and the Government recognised that exceptional treatment for nurses was called for within the terms of incomes policy.
  Moreover, in addition to the increases in the training allowances, the Board recommended other substantial improvements in the pay and conditions of service of student nurses. These included the introduction of special rates of training allowance for students in general training over 25 years of age, the increase in the mental "lead" from £50 to £100 per annum for students undertaking psychiatric nurse training, and the extension to students for the first time of special duty payments for duty at night and at weekends. Previous to that, they had a real case that they were being exploited.
  The Board also considered the question of residence and payments for board and lodging. It accepted that there was a case for compulsory living in for first-year student nurses, but said that the aim should be to give them, after their first year, a choice between living in and living out. It said that if there was to be a real choice, there must be a revision of the existing system of living-in charges, the objective being to give the student nurse freedom to spend her money as she wished.
  This reflected the views of the Staff Side of the Whitley Council, expressed over a number of years, that a system of payment for meals as taken should replace the system of fixed annual charges. Nurses had complained in the past for a considerable time because the deduction

  805
  of an annual charge meant that, apart from rebates for certain authorised absences, they were having to pay for their meals whether or not they actually took them. When they went out to eat, or took days off, they felt they were being diddled because they had already paid for their meals. I think that they had a very good case.
  As a first step to meeting the wishes of nursing staff generally, a system of pay-as-you-eat was introduced for nonresident nursing staff early in 1967 and was gradually implemented in most hospitals. It was introduced without difficulty and seemed to be generally welcomed. As it has a bearing on what I have to say later, I should explain that it was made quite clear at the time that the system was based on the provision of reasonable basic meals at the standard charges agreed by the Ancillary Staffs Council. These charges, which, of course, include an element of subsidy, amount at present to 6s. 7d. for four meals a day. In addition to the basic meals, alternative meals or snacks are provided in some hospitals at suitable charges which are determined locally.
  In making its recommendations on resident student nurses, the National Board for Prices and Incomes said that a system of payment for meals as taken should be introduced for them and that in future the only charge which should continue to be deducted at source should be a combined charge for lodging and personal laundry. This charge would be relatively small, as a realistic price for meals actually taken during a normal year would amount to about £100. The Board, in fact, set the charges for lodging and personal laundry for student nurses at £50 per annum, with a reduction to £25 per annum for first-year student nurses, in recognition of the fact that they are generally compelled to live in. I might say that these recommendations were known as long ago as March, 1968, and the Whitley Council gave advance warning in a circular dated 12th December, 1968, that they proposed to make the charge, where practicable, on 1st April, 1969. In neither case, to my knowledge, was any objection raised.
  The Nurses and Midwives Whitley Council, the Staff Side of which, of course, comprises organisations representative of all grades of nurses and midwives,
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  accepted the Board's recommendations. It also accepted the level of charges for lodging and personal laundry recommended by the Board and agreed that the previous board and lodging charge should be reduced by £106 to allow student nurses to pay for their meals as taken. It is important to realise that £106 is a net amount, because there has been some misrepresentation of the agreement by staff who claim that the £106 which the resident student nurse will have available to pay for her meals will be reduced by income tax and superannuation contributions. This is not so.
  Non-resident student and pupil nurses formerly were allowed free meals on duty. The Board recommended that this privilege should be abolished. At the same time it recommended that a living-out allowance of £50 should be introduced so that second- and third-year students could have a real choice between living in and living out. The Whitley Council agreed that the figure should be £66 so as to leave a net figure of just over £50 and thus ensure that no student was worse off than under the old system of free meals on duty. The new arrangement was one of many changes made to give greater freedom to the student nurse. It is all part of the long overdue process of treating as adults these girls who have to shoulder such heavy responsibilities. I am sure it was a wise decision.
  But the main problems seem to have arisen among the resident student nurses. The first is the claim that £106 is not enough. The answer is quite simple. This is the cost if hospitals supply meals at the standard charges which have been nationally negotiated. No one is saying that £106 would be enough if nurses had to pay for all their meals outside.
  I mentioned earlier that when the arrangements for pay-as-you-eat for nonresident staff other than students and pupils were introduced in 1967 it was made clear that the system was based on the provision of reasonable basic meals at the standard charges agreed by the Ancillary Staffs Council. The new Whitley agreement simply extends this system to resident nurses.
  In negotiating an agreement of this nature, a Whitley Council obviously has to have regard to the arrangements which are reasonable for the average nurse. This applies in particular to the average

  807
  savings which are likely to be made by a nurse through annual leave, off-duty absences of various sorts and generally through not taking every meal in the hospital every day of the week throughout the year. Four meals a day is a reasonable provision and there is no reason why student nurses should go hungry. It is possible, of course, that if a nurse is given the freedom to spend her money as she wishes, she will choose to spend less—or more—on food than she did under the fixed-charge system, but if she is to be given the choice it is a matter for her to decide.
  But there does seem to be clear evidence that some hospitals are not providing basic meals at the agreed standard prices. This is the cause of the present feeling, brought to the House tonight and to the country by demonstrations and statements of one sort and another.
  It really is essential that hospitals do provide meals at the standard rates. Following the recommendations of the Whitley Council, which met on Tuesday, we are writing tomorrow to hospital authorities insisting that the provision of meals at the agreed rates is an essential feature of the new arrangements and that, if meals are not being provided on this basis, they should be so provided without delay.
  We do not know how many hospital authorities have yet implemented the new system of charges for meals but it seems probable that it is not more than half. The Whitley agreement operated from 1st April or as soon after as was practicable.
  The Whitley Council deliberately chose the date of operation of 1st April rather than 1st January, when the new salary scales came into operation, largely in order to give plenty of notice of the introduction of the new system. The circular issued in December setting out the new rates of pay gave advance warning of the introduction of the new system. It would appear that communication at hospital level has not in all cases been as good as it might have been and that in some cases this warning was not passed on to the staff concerned. There are clear lessons to be learnt from this. Communication is an essential part of good management.
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  The other reason for delaying implementation was that it was realised that the first month of operation would be a particularly difficult time since the full board and lodging charge would be deducted from the pay for the last month under the old system and the nurses would have to pay for a month's meals before receiving a pay packet with deductions at the lower rate. It was thought that the difficulties on this score would be greater immediately after Christmas than at other times. In order to alleviate this particular difficulty the Health Departments authorised hospital authorities to make reasonable advances of pay for up to three months.
  It is hoped that all hospital authorities which have not yet implemented the new arrangements will do so in full consultation with the staff. The importance of consultation and of salary advanced is mentioned in the letter we are sending out tomorrow. I hope that action on these points will greatly improve the situation.
  One other problem that has arisen concerns the arrangements for tea or coffee served on the wards. Those of us who are regular visitors to hospital wards know that the kettle is usually on the boil, and in my view the cup that cheers is often as necessary for the nurse as for the patient. But strange as it may seem, when the Whitley Council negotiated the new agreement no account was taken of the fact that tea and coffee were supplied free to the resident nurses. This matter has been brought before the Whitley Council this week.

  The Whitley Council, which met on Tuesday, reaffirmed its belief in the principles of pay-as-you-eat and was right to do so. But it is examining a number of the problems that have arisen and is meeting again on 13th May.
  In the meantime, I believe that the action we are taking in seeking the immediate co-operation of the hospital authorities should go a long way to put things right. But let me add that the 'situation will not be improved if some of the absurd and sometimes shocking accusations made by so-called militants are repeated. I agree with the intervention of my hon. Friend the Member for Huddersfield, West (Mr. Lomas)—that the thought that one can best achieve one's purpose by breaking away from

  809
  the trade union which acts on one's behalf is not the way to success. It would be a pity if the nurses' cause, which is a good one, were to be prejudiced by irresponsible statements and actions.
  10.45 p.m.
  Mr. Lomas: I am grateful for the opportunity to say a few words on behalf of the nurses who are enrolled in my union, the National Union of Public Employees. I am glad that, from what has been said, it would appear that, from now on, nurses will not have to pay more for meals than the scale laid down by the Whitley Council Agreement. It would seem that the Department has
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  accepted its responsibilities to ensure the agreement is honoured. It recognises that it is responsible for the recruitment of nurses and, above all, that nursing is no longer just a calling or vocation that people went into because it was right but a profession entitled to good pay and conditions.
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at nine minutes to Eleven o'clock.

EDUCATION AND SCIENCE
  Sadlers Wells Opera Company and Royal Opera House
  Sadlers Wells Opera Company and Royal Opera House
  Teachers (Mature Entrants)
  Teachers (Mature Entrants)
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  Teachers (Graduates)
  Part-Time Further Education
  Part-Time Further Education
  School Secretaries (Pay)
  School Secretaries (Pay)
  Medical Students
  Medical Students
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  Stoke-on-Trent and Keele University (Medical School)
  Students, Pembroke (Further Education Grants)
  Students, Pembroke (Further Education Grants)
  Northern Region Colleges of Further Education (Apprentices)
  Northern Region Colleges of Further Education (Apprentices)
  Teachers (Gliding Courses)
  Teachers (Gliding Courses)
  Football (Report)
  Football (Report)
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  Football Crowds (Behaviour)
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  National Association of Schoolmasters (Durham Dispute)
  National Association of Schoolmasters (Durham Dispute)
  Burnham Committee (N.A.S. Representation)
  Burnham Committee (N.A.S. Representation)
  Scottish Universities
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  Mature Students (Grants)
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  Initial Teaching Alphabet
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  Primary Schools (Building Programme)
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EMPLOYMENT AND PRODUCTIVITY
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  National Industrial Disputes Officer
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MINISTRY OF DEFENCE
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  Coal Mining Machinery (Imports)
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Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Derby.

WAR PENSIONS AND ALLOWANCES
LORD FRASER OF LONSDALE: My Lords, I 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 the Prime Minister's indication in January, 1968, that the uprating of war pensions and allowances could be considered in the autumn of 1969 is still in the minds of Her Majesty's Government; and whether it is the intention of Her Majesty's Government to uprate war pensions and allowances before the end of 1969.]
BARONESS PHILLIPS: My Lords, the answer to both parts of the Question is, "Yes".
LORD FRASER OF LONSDALE: My Lords, may I ask the noble Baroness whether a statement about this matter was first made to Parliament or outside in the country; and, secondly, whether the Chancellor made provision for this expenditure in his Budget? Because he did not mention it.
BARONESS PHILLIPS: My Lords, I am sorry I cannot give the noble Lord a direct reply to the first part of his supplementary question, but I will of course find out and let him know. I think we can assume that the Chancellor certainly included this; and, of course, the timing is the same as in the case of the other increases in pensions—in other words, in early November.
LORD DRUMALBYN: My Lords, does the noble Baroness mean to imply that the Chancellor intended that it should be included, or is she telling us that he did in fact include it? I was in
546
the other place at the time, and I have no recollection of his mentioning it.
BARONESS PHILLIPS: My Lords, I think I said that I assumed it. I should prefer to check this point before I make a categorical reply. Perhaps the comforting thought is that the increases are going to take place in any case. Perhaps I am being too naïve, but is it very important when they were announced if they are now to be a fact?

POST OFFICE AIR LETTER FORMS
3.8 p.m.
LORD FRASER OF LONSDALE: 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 why the Post Office is still selling narrow foolscap air letters, which are not as convenient to use in a typewriter or a file as were the earlier quarto forms.]
LORD BOWLES: My Lords, the current air letter form lends itself better to handling in mechanised sorting offices than the old-style one.
LORD FRASER OF LONSDALE: My Lords, should we be slaves to mechanisation to this extent? Is the noble Lord aware that every typist in Britain finds this new air letter form inconvenient in her typewriter and in her file? It requires buying a special carbon. Among others, there are quite a number of blind typists who find it inconvenient. May I also ask the noble Lord whether he is aware that the old form allowed 10 per cent. more typing space than the new one, and will he revert to it?
LORD BOWLES: My Lords, first of all, I do not think we can all be slaves to typists, either. The position is that I made inquiries. There are a certain number of blind typists in the Post Office, and they find no difficulty in this method at all. What they have to do, as the noble Lord probably knows, is to fix their margin stop so that when they are getting towards the end of the line they know when to start the next line. The

547
shape was changed by reason of international regulation, and it conforms with the Post Office preferred (P.O.P.) range. The all-round sealing is essential now—it could not be done on the old forms—so that there is no choking of the machines which are cancelling the stamps on these air mail letters which are going through the machines at 20,000 an hour. The old forms were ballooning and expanding because they were going through at speed. It was therefore quite likely that every ten minutes or a quarter of an hour these machines would have to be stopped so that a mistake could be put right.
LORD FRASER OF LONSDALE: My Lords, is the noble Lord really saying that the machines of to-day can deal only with foolscap and not with quarto?
LORD BOWLES: My Lords, I did not say anything of the kind. I said that this was an international convention, by which we are bound.
LORD TREFGARNE: My Lords, can the noble Lord say whether the Government made any representations about the difficulties of this new size of air letter when the international regulations were arrived at?
LORD BOWLES: No, my Lords but we are going to Tokyo in November of this year and we are going to make some representation along those lines then.
LORD STRANGE: My Lords, arising from his reply, may I ask the noble Lord whether there is also an all-round sealing on the stamps which go through and which have a mark across them—the 5d. stamps—which I understand the computer picks out? I hope your Lordships will excuse the length of this interruption, but I understand that if you put some gum arabic across a 4d. stamp it goes through as a 5d. stamp. Is that right?
LORD BOWLES: My Lords, we are talking about air mail letters at the moment, and not about 4d or 5d. stamps at all.

EXPORT OF EWE TEGS
LORD NUNBURNHOLME: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what action has been taken by the Minister of Agriculture, Fisheries and Food to prohibit the export for slaughter of the best ewe tegs, which should be retained in Great Britain to maintain and increase our breeding flocks.]
LORD BESWICK: My Lords, Her Majesty's Government have no plans for prohibiting the export trade in fat sheep, which has helped to strengthen the market to the benefit of our producers and has brought in valuable foreign exchange. No figures of the numbers of ewe tegs exported are separately available, but this trade should not adversely affect our production objectives, since those which are being sold for slaughter abroad would, if they had been retained in this country, most probably have been used for meat rather than kept for breeding next season.

INTERMEDIATE AREAS: HUNT COMMITTEE'S PROPOSALS
3.11 p.m.
THE LORD PRIVY SEAL (LORD SHACKLETON): My Lords, if it is convenient to the House, I rise now to inform your Lordships that the Report of the Committee under the chairmanship of Sir Joseph Hunt is being published to-day, and copies will be available in the Printed Paper Office after 3.30 p.m. I should remind your Lordships that the Hunt Committee was concerned with considering the situation in particular areas other than development areas where the rate of economic growth gives cause, or may give cause, for concern. A Statement is being made in another place this afternoon, but it is a very long one and I wonder whether it would meet the convenience of the House if I did not repeat it to-day but, following this brief statement, circulated it with the OFFICIAL REPORT. I should stress that we always firmly reserve the right of your Lordships to have repeated here

549
Statements that are made in another place, but they do sometimes complicate our lives.
Following is the Statement:
"I should like to make a statement on the Report of the Committee on the Intermediate Areas under the Chairmanship of Sir Joseph Hunt which is published today.
"As the Report touches on the interests of so many parts of the country my statement will be somewhat lengthy and I apologise for this.
"The Committee was appointed in September, 1967, and Sir Joseph Hunt and his colleagues have prepared a very full report on a subject of great complexity. The Government warmly appreciate the Committee's work.
"Its principal conclusions and recommendations are as follows:—

(i) The whole of the Yorkshire and Humberside and the North West Regions should qualify for an entirely new 25 per cent. building grant not linked to the creation of new jobs. They should also qualify for training grants and direct training assistance on the same basis as in the development areas.

(ii) In selected growth zones within these Regions there should also be Government estates and factory building with supporting investment including link roads.

(iii) For these two Regions and in the Notts./Derby and North Staffordshire planning sob-divisions there should be an 85 per cent. grant for derelict land clearance as in the development areas. The clearance programme should be speeded up in all these areas and in the development areas.

(iv) The industrial development certificate control should be relaxed throughout the country by raising the exemption to 10,000 square feet.

(v) The Merseyside development area should be de-scheduled and treated on the same basis as the rest of the North West Region.

Four members in three Notes of Dissent have expressed reservations about some of the Committee's findings
"The Government have considered these recommendations against the
550
background of our assessment of general prospects for the regions in the recently published Economic Assessment to 1972, in the context of our regional policy as a whole and within the need to limit public expenditure.
"We are convinced that it is necessary to retain for the development areas and special development areas a large margin of preferences in assistance to industry. Although the massive increase in Government preferential assistance to industry—for these areas—from some £30 million in 1964 to over £260 million—is making a vital and growing contributions to overcoming their still serious structural problems, none of these areas is yet ready for de-scheduling. The Government do not propose therefore to accept the Hunt Committee's recommendation for the de-scheduling of Merseyside.
"Against this background we have considered carefully on the one hand the Hunt Committee's arguments for spreading limited resources over the whole of the two Regions concerned and on the other hand for concentrating these on a few areas where present and prospective needs are greatest. We have concluded that the better course is to concentrate assistance to industry with an employment link on a strictly limited number of smaller areas. For this reason, we have not been able to accept the Hunt Committee's proposal for a general building grant.
"The Government consider that the selection of areas to be given assistance to industry must be governed strictly by criteria of need, especially the level and character of unemployment and numbers of unemployed, the incidence of high net outward migration and the real scope for industrial growth.
"I turn now to our proposals.
" Assistance to Industry: Areas
"In indicating the areas to which in our view these criteria most clearly point I must emphasise that I describe them in broad terms. We shall take fully into account any further views of the Regional Economic Planning Councils. Consultations with them will be completed and the precise boundaries of these new intermediate areas will be announced after the Whitsun Recess. Thereafter we will bring forward

551
the necessary legislation as quickly as possible.

"These areas are:

The Yorkshire coalfield area,

The Erewash Valley area of Derbyshire,

Parts of Humberside,

The main industrial areas of North East Lancashire, east of the proposed New Town,

A substantial part of South East Wales,

Leith,

Plymouth.

"We have considered the problems of other areas, but we have concluded that these problems do not at present justify the use of financial incentives to divert industry to them.
"Assistance to Industry: Measures
"We propose to seek powers to make available to these intermediate areas certain assistance under the Local Employment Acts. This will not include the loans and grants, for general purposes, which are made in the development areas on the advice of the Board of Trade Advisory Committee. What it will include is:

(i) Grants at 25 per cent. of factory building costs.

(ii) Government built factories (both custom built and advance factories) on the same basis as in the development areas;

(iii) The full range of development area training grants and other training assistance together with assistance for the transfer of key workers.

"The date from which firms will be eligible for this assistance will be announced later.
"We agree with the Hunt Committee that industry in the intermediate areas should be encouraged particularly in places which have real scope for growth. The studies made by Regional Economic Planning Councils have attached importance to the development of suitable growth zones and we will take Councils' views fully into account.
"There will be some additional expenditure on roads in the selected areas and proposals for the provision of new housing associated with industrial
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growth will be encouraged. There will also be an enlarged national programme for derelict land clearance for schemes certified by the Board of Trade as contributing to the development of industry in the area. For the North West and the Yorkshire and Humberside Regions, as a whole, in the areas selected for assistance to industry and in the North Staffordshire and Notts./Derby planning sub-divisions, we intend to seek power to make available to local authorities a capital grant of 75 per cent.
"I turn now to i.d.c. policy.
"The industrial development certificate control is operated flexibly and with sensitivity to industrial and local circumstances, but it remains essential to relate its operation overall to the priorities of our regional policy, particularly to the needs of the development areas. The Board of Trade will continue to operate the i.d.c. control so as to give the development areas and the new intermediate areas general priority. In the rest of the North West and the Yorkshire and Humberside Regions, the control will continue to be administered liberally except in the congested parts or places otherwise unsuitable for industrial expansion.
"We do not accept the Hunt proposals that the general exemption limit should be increased from the present levels to 10,000 square feet or that all control should be removed from moves to overspill towns. But we do see the need for a more flexible policy for such moves where planned development may be held up if the flow of industry to overspill towns from an exporting area is impeded. It certainly is our intention that all approved schemes for new and expanding towns should be properly supported by employment opportunities.
"When these measures are in full operation their cost will amount to nearly £20 million a year. This will be met out of the very substantial and growing sums being spent on assistance to industry in the development areas. Even so, expenditure in the development areas will remain very high and they will of course retain a very large and continuing preference over the rest of the country including the new intermediate areas.
"The work of the Hunt Committee and their proposals for the new intermediate areas which have flowed from its Report mark an important new stage in the development of Regional Policy. We are pressing on with the recovery of the development areas. We are responding flexibly to the changing needs of the different parts of the country. We will continue to seek, through our Regional policy to serve the interests of every region and of the whole country."

CUSTOMS DUTIES (DUMPING AND SUBSIDIES) BILL [H.L.]
Returned from the Commons, agreed to.

LAW OF PROPERTY BILL [H.L.]
3.13 p.m.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD CHAMPION in the Chair.]
Clause 1 agreed to.
Clause 2 agreed to.
Clause 3 [Rent while tenancy continues by virtue of s. 24 of the Act of 1954]:
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 1:
Page 2, line 40, leave out from ("section") to ("subsection") in line 42.
The noble Viscount said: This Amendment relates to the question of the interim rent that is to be paid after a certain time while the court is deciding whether or not it is going to grant a new lease to the tenant who has applied for it, either by himself or in opposition to his landlord's attempt to get him out of the premises. The Law Commission Report on this matter dealt with this subject in paragraphs 22 to 26. They reject various methods of dealing with this
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matter and come down in favour of these words in paragraph 25:
"It is our view that any change in rent should operate only prospectively"—
that is all right; that is what tae Bill says—
"and that the market rent should be only one of several factors, including the rent payable under the current tenancy, to be taken into account in arriving at what is a fair rent in the circumstances."
In their draft Bill the Commission use the words "fair rent"; but this Bill, in subsection (1) of this clause, uses the words:
"a rent which it would be reasonable for the tenant to pay"
At no time do the Law Commission explain why they consider that the rent under the old tenancy should be taken into account and I do not think that the noble and learned Lord the Lord Chancellor explained it in his explanation of the Bill on Second Reading. As I understand the position, it is thought right that the interim rent should be possibly below the final market rent that is to be fixed by the court, or by agreement if a new lease is agreed; and that, of course, is right, because the interim rent is probably a rent which is going to last only for a comparatively short time. Equally, however, the probabilities are that if a situation has arisen where there is dispute and the matter is going to the courts it is because the rent under the old tenancy (which goes on until an application of this sort is made to the court or the matter is agreed) is below what is now the market rent. One of the difficulties has always been—and this is recognised by the Law Commission—that it pays the tenant to hang on and to keep litigation going as long as possible, because he will then remain in the premises at a rent which is rather below the market rent.
One of the great merits of this Part of the Bill is that it contains some provisions that are to the benefit of the landlord and others that are to the benefit of the tenant. This balance seems to me to be a very proper one which we should at all times seek to maintain. However, I do not understand why the tenant is being given what in this case seems to me to be more than preferential treatment. There is no question that the interim rent would be fixed on the basis of a long-term rent at the current market value for some period of say, seven or fourteen years; because subsection (3)

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says that it should be based on a tenancy from year to year—and that would be, in all probability, a lower rent in any case, than the long-term one. During the interim period, therefore, the tenant will be getting from the court a rent lower than the one which would ultimately be fixed if a new tenancy were granted. This seems to me to be enough.
The difficulty about requiring the court to have regard to the rent payable under the terms of the tenancy—that is, the old tenancy—is that one does not know what regard the court is going to have to it and one does not know in what way the court is going to have regard. Such rent is almost inevitably lower than the current market value in the circumstances in which it will come before the court. What one would like to know—at any rate, if this matter is to remain in the Bill—is why the court should have this regard. Is it supposed to take into account special hardship for the tenant if he says that he cannot afford, during the interim period, to pay a higher rent than he has been paying before? He has of course the right to refuse to take the new tenancy on the terms which the court thinks fit if he finds the rent too high. It may be that this is what the noble and learned Lord has in mind. I think we need an explanation and, since there is this provision pegging the interim rent to a year-to-year basis rather than a long-term one, it seems to me that there is concession enough here. This Amendment would simplify the matter, would take out another matter of dispute on the interim rent valuation in the court and probably not do any harm to either side —which is what I wish to ensure. I beg to move.
THE LORD CHANCELLOR: I know the difficulties of the noble Viscount and I am not complaining in any way at all, but the Second Reading was on March 27 and all these Amendments were put down in the course of yesterday afternoon, though I think one Schedule appeared only this morning. While I am not complaining, I may say that I had to leave the very interesting debate in your Lordships' House yesterday to change and go to Windsor Castle, from which I got back at a quarter past one this morning; I have had a Cabinet meeting all the morning, and therefore if I am more
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incoherent than usual I hope that the Committee will understand.
I hope to be able to meet a number of the points which have been raised by the noble Viscount's Amendments, but not, I think, this one; though, as I understand it, he really wants only an explanation. The reference to current rent was deliberately inserted by the Law Commission with a view to lowering the level of the interim rent. It is designed to introduce a discretionary element which will make it easier for the court to fix an interim rent without recourse to expert evidence and so assist in reducing the expense of the proceedings. In so far as the interim rent will not usually be the full market rent it may also discourage applications which always add to the tasks of the court and the expense of the parties in cases where the difference between the current rent and the market rent is not very great.
Another reason for resisting the Amendment is that under Section 36(2) the tenant has a right to decline to accept a new tenancy where he cannot afford to pay the rent. He has no such right in respect of the interim rent fixed under the new clause, nor would it be possible to give it to him. As the noble Viscount rightly said, this is a clause which is intended to be in the landlord's interest and to the detriment of the tenant, I think absolutely rightly, because it was found—not, I think, in many cases but in some cases—that the tenant was spinning out the proceedings. Under the existing legislation the new rent under the new lease does not become payable until the court has decided the issue; decided that the tenant is entitled to a new lease and at what rent and on what terms the lease is entered into. The object of this clause is therefore to discourage tenants from spinning the matter out, by providing that the landlord can go to the court to ask for an interim rent to be paid. But it was never intended that this should be done upon valuers being called on both sides.
If a landlord thinks that a tenant is likely to delay the proceedings he can apply at once for an interim rent, probably before either of them has instructed valuers, and it was, and is intended that the court should take a rough and ready view. It sees what is the existing rent and what sort of figures are

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going to be argued upon as the market rent. If I say that it takes a "pot shot", that is perhaps putting it rather too colloquially; but it is intended that these should be simple proceedings. If, literally, the court could not look at the existing rent, it might fix a rent which was lower than the existing one. I do not see why it should not take the existing rent into account. It sees what the tenant is paying at the moment; it sees the areas of dispute over the market rent and fixes something between the two which it thinks would be reasonable as an interim rent. For those reasons I suggest to the Committee that the new subsection is properly drawn and is intended to achieve what the Law Commission say.
On page 27 of their Report the Law Commission say:
"The purpose of this sub-clause is to provide for a `fair' rent and to remove any incentive for the tenant to prolong the proceedings"—
and so on. Then they say:
"The fact that regard must be had to the rent under the present tenancy and that the fair rent must be fixed as on a yearly tenancy may be expected to produce a lower figure than the full rent which will eventually be fixed for the new tenancy, if any. It is for the landlord to invoke this position if he thinks fit. Unless the present rent is substantially below the current rental value, it may not benefit him to do so."
I hope, therefore, with that explanation, that the noble Viscount will be prepared to withdraw his Amendment.
VISCOUNT COLVILLE OF CULROSS: I am grateful to the noble and learned Lord and I think that the point he makes about the lack of necessity to call valuers at this stage is one of great importance. It is obviously sensible that you should not get into a large valuation dispute on this interim rent. The difficulties that arise on valuation on the fixing of the final rent are often formidable and go on for days, and one certainly does not want to have that on the interim basis.
I wonder, however, whether the court is having its attention drawn to all the things that are relevant to make its "pot shot" or rough and ready estimate. The old rent may have been fixed a very long time ago, or a substantial period ago, and one of the matters which would seem to me to be at any rate of interest to the court, when it is, seeking to fix a rent on a year-to-year basis for the interim
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period, is the valuation list; because unless that has got very much out of date it ought to have the rent fixed on a year to year basis on the statutory hypothesis for rating it is true, but at any rate it would be of some good. It would therefore be the very thing that the court would like to look at.
I do not know what the effect would be—whether in fact the valuation officers do fix a figure under the statutory hypothesis which is much lower than the market figure in some of these cases. However, it might be worth pursuing, because if one wanted to give the court a rough and ready reckoner it is perhaps as well to have something other than the old out-of-date rent, something much more up-to-date for it to look at. I would therefore commend the noble and learned Lord to consider that point and to see whether there is anything in it. Meanwhile, I think his explanation is otherwise satisfactory. Certainly regarding the purpose of this provision it is satisfactory to me. For the moment I should like to consider the matter and at this stage I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clause 4 [Termination of sub-tenancy by head landlord]:
3.28 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 2:
Page 3, line 13, after ("section") insert ("or the tenant has requested a new tenancy under the next following section")
The noble Viscount said: This also is not a very large point. I apologise to the noble and learned Lord the Lord Chancellor for the lateness of these Amendments, but I myself have been receiving advice and that has not come in very quickly either. A new subsection is being added to Section 25 of the Act by Clause 4 of this Bill, and I would commend my Keeling Schedule to the Committee so that your Lordships can see the context of this matter. It cannot be seen from the Law Commission's Report because they do not, I think, print this particular section—yes, I see now that they do, but they do not print the next one. The position is that the landlord is being put into an immediate relationship with the sub-tenant of his tenant

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where he has given notice to his tenant to try to terminate the tenant's interest.
What will have happened is that the landlord has let the property, a business property, to a tenant, and very probably that tenant has sub-let part of it to a sub-tenant. In the normal course of events, as the law stands at the moment, the landlord is in no direct contractual relationship with the sub-tenant and so he can get at the position only through the tenant. He cannot serve the notice on the sub-tenant as well so that the whole matter may be dealt with at the same time. This is being put right by the new subsection (7) in Clause 4, but the converse position is not covered. Under the existing Act of 1954 the landlord can give notice to quit to the tenant; but the tenant can also, under Section 26, request a new tenancy from the landlord. It may not happen so often, but the possibility is there, and I think that it should be provided for.
That situation is not covered by the new subsection (7). If instead of the initiative coming from the landlord it comes from the tenant, and the tenant asks for the new tenancy, the landlord is still in the old position, which applies now in every case, whereby he cannot get into any direct relationship with the tenant's sub-tenant. The matter would have to go to court, as I understand it, simply as an application contested between the tenant and the landlord. If the landlord succeeded in resisting the tenant's request for a new tenancy, he would then have to start all over again with the sub-tenant. That is exactly what the new subsection (7) is intended to avoid where the landlord starts the process. I suggest to the noble and learned Lord that for the sake of neatness and good common sense it ought to be applied the other way round as well, so that there is a direct relationship at whichever end the matter starts. It is with that intention—although I am perfectly prepared to be told that I have not got the drafting right—that I put down this Amendment.
THE LORD CHANCELLOR: There is a point here which is already receiving the consideration of the Law Commission. Clause 4 is designed to enable a landlord who is terminating the business tenancy of his tenant at the same
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time to terminate a business sub-tenancy of part of the premises. The Amendment would enable him to do so not only where he has himself terminated the mesne landlord's tenancy but also where the mesne landlord's tenancy is coming to an end by effluxion of time but the mesne landlord has served a request for a renewal. In principle, it seems right that the landlord should be able to do so where he is intending in any event to bring the mesne landlord's tenancy to an end by countering the mesne landlord's request by a notice refusing him a fresh tenancy. At present he cannot do so because Section 26(4) of the 1954 Act prevents him from giving any notice to terminate the current tenancy after he has received a request for a new tenancy and Clause 4 does not help. The noble Viscount's Amendment, however, is too wide. It would operate even where the mesne tenant is certain to obtain a fresh tenancy, and could result in the head landlord being able to terminate a sub-tenancy and possibly negotiate the terms of a fresh lease with the sub-tenant at a time when the premises are let to and will continue to be let to the mesne landlord. The point is being sympathetically considered by the Law Commission. There are serious technical difficulties, but if a means can be found to meet this situation I would undertake to put down an Amendment at a later stage or in another place.
VISCOUNT COLVILLE OF CULROSS: No doubt the Committee will find that answer very satisfactory, but there is one thing I should like to say to the noble and learned Lord. We have here an opportunity to amend Part II of the Landlord and Tenant Act 1954. I do not suppose we shall get an opportunity again for quite a long time, and if we have a point that ought to be covered it is essential that it should be done in this Bill. It does not in the least matter whether it is done in this House or in another place so long as the bus is not missed and we do not find that there will have to be further amending legislation at some other time. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [Exclusion of provisions of Part II of the Act of 1954 by authorised agreement]:
3.33 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 3:
Page 4, line 17, leave out ("and") and insert ("or").
The noble Viscount said: I beg to move Amendment No. 3. This may be a point which is so minor as to be almost nonexistent, but whereas most of the variations from the Law Commission's recommendations have been explained, this particular one has not; and in their drafting I do not think that they make quite the same provision. I should have thought that the new provision is in the alternative and not bound together and that in this case "or" is a more suitable word than "and". If the noble and learned Lord convinces me that "and" is right, I do not suppose that it will be the end of the world. But I thought that these might be circumstances which were not likely to occur at the same time and that one would want to divide them up rather than join them together.
THE LORD CHANCELLOR: This Amendment, of course, is entirely a point of drafting. My first impression was that the noble Viscount was right, but the draftsman has persuaded me that this is not so.
Perhaps I had better repeat what he said. It is apparently intended to emphasise that the powers of the court to authorise agreements under paragraphs (a) and (b) of the new subsection (4) of Section 38 are separate. The word "and" does not have the effect of requiring the court to exercise both powers, since it is a condition of the exercise of each power that it should be preceded by a joint application of the parties concerned. Insertion of the word "or" would suggest that the powers conferred by paragraphs (a) and (b) are alternative powers at the court's disposal on any application. In fact, in cases where the application is made under paragraph (a) the order must be made in accordance with that paragraph; and, if it is made under paragraph (b), the order must be made under that paragraph. The new subsection lists powers, and grammatically
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it is right to use "and". I do net suppose that the heavens will fall whatever happens but that is the advice I have received, which I feel I ought to accept.
VISCOUNT COLVILLE OF CULROSS: I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 6 shall stand part of the Bill?
VISCOUNT COLVILLE OF CULROSS: I should like to take this opportunity, since the points I made on Second Reading were answered by the noble and learned Lord very fully and most courteously by letter, to deal with a point in Clause 6 which he made to me and which perhaps he would be so kind as to confirm. I asked what the functions of the court would be under this clause, since it appears that applications will be joint, both parties being in agreement, and on the face of it one would think that the court was simply being used to rubber stamp what had already been agreed. This is a rather disheartening thing for the court, and not perhaps a very useful function.
The noble and learned Lord told me that he thought the main function c f the court would be to ensure that the consent of the parties was genuine and had been arrived at freely. It might want to know what advice the parties had sought and received, and then to see that the terms of the agreement were prima facie in the interests of both of them. He pointed out, as the Law Commission do, that under the Housing Act 1961 there are similar cases in which the court has to look at and approve agreements. It might be of use to practitioners, and even to county court judges, if they knew what the Government had in mind in bringing forward this particular provision. I do not think it is very clear in the Law Commission Report, and if that indeed is what the noble and learned Lord thinks, it might be useful if he could confirm it now.
THE LORD CHANCELLOR: Yes: I am happy to confirm what I told the noble Viscount is the intended object of this clause, so that the Committee will know exactly what is in mind.
Clause 6 agreed to.
Clause 7 [Grant of new tenancy in some cases where section 30(1)(f) applies]:
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 4:
Page 4, line 44, after ("of") insert ("any part of").
The noble Viscount said: This is an obscure point, but again one which I raised on Second Reading and on which the noble and learned Lord was kind enough to answer me. It is clear from the Law Commission Report that they are seeking a medium course in relation to the sort of case where a landlord's objection to giving a new tenancy is on the ground of Section 30(1)(f) of the 1954 Act, where he says that he intends to demolish or reconstruct the premises or a substantial part of them, or to carry out substantial work on the holding, and could not reasonably do so without obtaining possession of the holding. The position has emerged in the courts that where a landlord wants to obtain possession of part of the holding only if he is to reconstruct that part, nevertheless the courts are not allowed to regrant to the tenant a new tenancy of part, allowing the landlord only to reconstruct the other part, even though both parties would not be averse to that course taking place if the powers were there. The clause in the Bill allows this to happen.
It appears that two things happen here: that simply access and facilities are given, and that is all the landlord should reasonably want; or, alternatively, there is a specific provision whereby the tenant can be given a new tenancy in regard to part of the tenancy. The Law Commission equally have rejected another proposition, although I think that others may not agree with them on this. It appears that this is a slightly controversial matter. I think that I would agree with the Law Commission that where the property is going to be wholly reconstructed the tenant ought not to have an opportunity to come back at the end of the reconstruction period and get a tenancy of what will be, in effect, a completely new building. That is not intended to happen, as I understand it, either by the Law Commission or, since this is their drafting, in the Bill. Nevertheless, it seems to me that the wording of this clause is a little wide.
The noble and learned Lord invited me, if I was worried about it, to see what
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I could do by way of amendment, and he said that he would consider anything that I put down. I do not think it is the easiest point in the world, and I found it an extremely difficult thing to do. I would, if I may, put the point back to the noble and learned Lord in this way. It seems that I am not alone in thinking that an awkward tenant could say to the court under Section 31A (a) (this is the first paragraph in the inserted section in the 1954 Act) that he is perfectly prepared to give the landlord facilities which would, in effect, enable him to rebuild the whole of the building; he could retain possession in some notional form, by keeping some stores in the basement or something of that sort, and he would be able to present to the court a case on the facts which would allow to happen what the Law Commission and the Bill propose should not happen. He will be able to make a nuisance of himself in this way.
It may be that the courts would eventually hold that possession in this context would not be satisfied, if he simply had something in the basement, and that his scheme whereby access facilities would be granted for a reconstruction was not in the spirit of the Act. But I do foresee litigation, particularly if there is an awkward tenant who takes the view, contrary to mine, that the new Bill ought to have given him the right to have a rebuilt new building and a tenancy of it. There seems to be an opportunity here that might be taken by some people which could waste a great deal of time, because of the argument about what access, what facilities, how much of the premises would be retained by the tenant, whether the landlord could do this or that without getting possession of a passage or a staircase, and a tremendous amount of argument going up to the Court of Appeal on a point of law, and possibly coming to your Lordships' House later in an appellate capacity.
I suggest that this is a point, not where we differ in any way, but where a little more restrictive wording might be apposite, so as to make it quite clear that this paragraph is not intended to allow the tenant to get back by a side-wind into a substantially new building after it has been rebuilt. It is in order to ask once more whether those who are so much better at drafting than I am will look at

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it, to see whether they can do something about it, that I have put this Amendment down. I know it does not have the right effect, but it gives me the opportunity to raise the point, and I should be grateful if the noble and learned Lord would comment upon it. I beg to move.
THE LORD CHANCELLOR: I will certainly look at this again and discuss it with the noble Viscount, but I do not think this Amendment would achieve anything. Under paragraph (a) of the new Section 31A a landlord will not be able to obtain possession for purposes of reconstruction if a tenant agrees to make facilities for the work of reconstruction available and the landlord, given those facilities, could reasonably do the work without obtaining possession of the premises. The Amendment would alter this only to say that the landlord could reasonably carry out the work without obtaining possession of any part of the holding. In the context of the clause this Amendment does not seem to achieve any purpose. Section 30(1)(f) of the Act gives the landlord a right to possession where he cannot do the work without obtaining possession of the holding. For this purpose the holding is indivisible. If the landlord needs to take possession of any part of the premises in order to do his work, then he needs possession of "the holding". The addition of any part of the holding is therefore otiose. Where the landlord's requirements can be sufficiently met by possession of part of the holding the tenant's remedy lies under paragraph (b) of the new Section 31A, which enables him to seek a new tenancy of other parts of the holding of which the landlord does not require possession.
I thought the noble Viscount probably had in mind the point that he raised on Second Reading, but the Amendment would not achieve this objective. However, as I have said, I am quite prepared to consider the point further with him.
VISCOUNT COLVILLE OF CULROSS: As I said, I found this an extremly difficult point, but there are those who are more skilled than I am and who have considered it over a longer period. It may be that they will be able to think up something suitable. I am very grateful for the offer of the noble and learned
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Viscount. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 agreed to.
Clause 9 [Saving for tenant temporarily out of occupation]:
On Question, Whether Clause 9 shall stand part of the Bill?
3.46 p.m.
VISCOUNT COLVILLE OF CULROSS: I should like to raise a point on Clause 9. This is another of the Second Reading subjects. The noble and learned Lord told me that he thought it might be; useful in a few cases, but probably would not be of very wide application. If I may respectfully say so, there is rather more wrong with it than that. The Law Commission on page 14 of their Report set out the problem, and they refer to the two cases of Caplan v. Caplan. At the beginning of paragraph 45 they say:
"We consider that the position should be clarified by specifying what is required to satisfy the condition of occupation."
The point is that there has been some dispute about the position of the tenant when he is out of occupation of the premises of which he is seeking a new tenancy, either at the date when he originally makes the application to the county court or any other court, or some time after that, but before the court finally hears the case, or at the time when the court hears the case.
Clause 9, in its new Section 38A put into the 1954 Act, says that it is all right if the tenant is not in occupation between the time when he makes the application and the date when the court actually deals with the matter at the hearing. That is my understanding of it. But that is not the problem that the Law Commission set about solving. I do not think that anything in Clause 38A really helps. They go on to say this at the end of paragraph 45:
"We consider that the Act should specify what conditions must be satisfied in respect of occupation; and those conditions should be that the tenant is in occupation of the premises for the purpose of his business at the time of the order as well as at the time of the application, the intermediate period being irrelevant."

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That is, broadly speaking, what is put in the clause. The second case of Caplan v. Caplan came before Mr. Justice Cross, and I should like to tell your Lordships what he said about it. He said:
"Take this example. Suppose that a tenant in occupation for business purposes applies for a new tenancy. The landlords oppose the application and succeed in the court of first instance. The tenant then lodges notice of appeal but his solicitors tell him that the chances are not very rosy and it is extremely likely that the landlords will be upheld in their objection and he will at long last have to give up possession. It seems to me to be not unreasonable for a tenant in those circumstances to say: `Well, I must secure my way of retreat. I must make sure: I must preserve the good will of these premises, and I must give continuity of employment to my staff. I cannot risk staying on here and being suddenly turned out. I am going to take some other premises, to which I will transfer temporarily—possibly for ever, but possibly only temporarily—my staff and my stock.'"
I interject here to say that as I understand it that is precisely the position that this new clause is intended to provide for and allow to happen. I go on with the quotation:
"'Those premises '"—
that is the new ones—
"'are admittedly not as nice as the ones from which I am being turned out. If I succeed, as I hope, in this appeal, I will go back. Of course, if I fail, I cannot go back and I must go on in the new premises.' I think that on those facts"—
the facts are that the tenant went—
"I would be very loth to hold that the physical arrangement of occupation disentitled or deprived the tenant of his rights under the Act, and a fortiori I think that would be so if he left a quantity of stock on the premises."
Mr. Justice Cross says that in those circumstances if the tenant actually went altogether, and even more so if he left his stock, in both cases with the intention of returning if he got the new tenancy from the Court of Appeal, then he would for the purposes of the old law, under the existing 1954 Act as it stands, still be in occupation. I do not think that the definition of "occupation" or "sufficient occupation" has been clarified for the purposes of this legislation.
If Mr. Justice Cross is right—and I have the greatest possible hesitation in suggesting anything to the contrary—then there is no need for this because the sort of situation that is being envisaged—where the tenant wants, to safeguard his business, to find a "bolt-hole", an
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alternative premises to which to go in case he loses his application in the county court or on appeal—is already covered. He does not lose his rights, and the courts have already said so. In those circumstances, and in the light of the fact that the noble and learned Lord himself said to me that he did not think this would be of very wide application, is it not merely going to complicate the issue? The law has been sorted out, at any rate in the court of first instance; and I should have thought that that decision of the Chancery Division was probably satisfactory and all that anybody sought to achieve in putting in Clause 9 of this Bill. I would therefore ask the noble and learned Lord to consider whether this cannot be left out altogether, because it does not do what the Law Commission suggested should be done.
THE LORD CHANCELLOR: With respect, I should have thought that it did. The Law Commission's Report was made after seeing the two Caplan cases and referring to them, and they then consider what the various alternatives are. They say:
"It is unreasonable, we think, to expect a business tenant to wait in effect until the last three months of his current tenancy before he looks for other premises, and unrealistic to suppose that he will necessarily find suitable accommodation in that time. On the other hand, if at the date of the hearing he has in reality moved his business to new premises, he should not be entitled to a new tenancy which in all probability he would assign immediately. We do not think, however, that it would be appropriate to introduce a subjective test in respect of the tenant's intentions in the event of a new tenancy being granted. Nor do we think it would be a satisfactory solution of the difficulty if, as has been suggested, the current tenancy were to be continued for six months instead of three months after final disposal of the application; for where there is no difficulty in finding new premises, the tenant would normally wish to move as soon as possible, and it would be onerous upon him if the tenancy were continued for another six months. Alternatively, it has been suggested, the court could be given power to extend the period in section 64; but we think it inadvisable to introduce into the provisions of the Act relating to time any element of uncertainty. We consider that the Act should specify what conditions must be satisfied in respect of occupation; and those conditions should be that the tenant is in occupation of the premises for the purpose of his business at the time of the order as well as at the time of the application, the intermediate period being irrelevant."
That is precisely what the clause does. I do not know whether it will apply in

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many cases. One can see that it is not easy to provide the right solution which will achieve the right result in what may be a very wide variety of circumstances. I am certainly willing to consider it again. The clause really does exactly what the Law Commission recommend. Whether there should be some further definition of what "occupation" means is of course another matter, and certainly I am quite prepared to consider that.
VISCOUNT COLVILLE OF CULROSS: Before we leave this matter, may I make this suggestion to the noble and learned Lord? He read out this sentence:
"We do not think, however, that it would be appropriate to introduce a subjective test in respect of the tenant's intentions …".
It is not a question of introducing it; it is here already. It is quite inherent, I think, in the judgment in the second Caplan v. Caplan case that the intention of the tenant to come back, whether or not he leaves his stock—the circumstances in which he thought he had better play safe and go to the other place, at any rate on a temporary basis—is exactly what is intended to go to the question of occupation. That is what the Law Commission say should not happen. Therefore it seems to me that, very far from making it more plain, we have a Report here which throws doubt upon the appropriateness of the subjective test, but simply uses in the new section of the Act the word "occupation", which must be defined, presumably, in the terms that the court has already decided "occupation" should be defined. Therefore, I think that confusion is going to be worse confounded, and. I should be very grateful if the noble and learned Lord would look at that point again.
Clause 9 agreed to.
3.55 p.m.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 5:
After Clause 9 insert the following new clause:
Saving for members of a group of Companies for the purposes of section 30(2)
('. After subsection (3) of section 42 of the Act of 1954 there shall be inserted the following subsection:—
"(4) The transmission of the landlord's interest from one member of a group to another member shall not, for the purposes of subsection (2) of section 30 of this Act, be taken to be the purchase or creation of that interest."')
The noble Viscount said: This is a point which I think bears short consideration. Your Lordships will see that in Section 42 of the Act of 1954—and again I would refer your Lordships to my invaluable Keeling Schedule, as I hope your Lordships will find it to be, where I set out that clause and there is no necessity to look at any other clause—there are various provisions dealing with groups of companies. Under subsection (2), where there is a tenancy of premises which is held by one member of a 3roup of companies, if the group is then re-organised arid the tenancy goes into the hands of another member of the group, that does not affect in any way the rights of the tenant under this particular protective set of provisions. In other words, they are really treated as the same tenant for the purposes of the 1954 Act, Part II.
The same does not apply if the landlord is a member of a group of companies. Although this may not by any means always have any great effect, it is relevant when one looks at Section 30(2), which says:
"The landlord shall not he entitled so oppose an application on the ground specified in paragraph (g)"—
which is that he wants it for himself or partly for himself—if, briefly, he has acquired the property within the last live years. As I understand the situation, if there were a group of companies who owned properties which were let to business tenants, and the group of companies wished to re-organise themselves in a perfectly proper way, which had nothing whatever to do with this legislation, it could be that they would, for the sake of some internal efficiency or some matter of that sort, wish to transfer the freehold of these let business premises from one company to another; but if they did not get the protection with which my Amendment provides them they would, by doing that, I think, under subsection (2) of Section 30, deprive themselves of certain rights which they would otherwise have under Section 30(1)(g).
I can see no possible object in distinguishing between groups of companies as landlords and groups of companies as tenants for this purpose. It would seem to me to make for flexibility of business without in any way harming the interest of the tenant in trying to oppose an application to get him out on the ground that the landlord wished to occupy the

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premises for himself, if the group of companies were to be considered as one, both when it is landlord and when it is tenant. It is for that purpose that I put down this Amendment, which I hope will commend itself to the Committee as being pure common sense and doing no harm to anyone. I beg to move.
THE LORD CHANCELLOR: This is a perfectly good point, which had already been reported to the Law Commission and which they are in fact considering. I will not re-state the point because the noble Viscount has explained it with his usual clarity. It is simply a question of getting the Amendment right. I am told that in some respects his Amendment is defective, but if he will withdraw it I have no doubt that we can agree an Amendment for a later stage of the Bill.
VISCOUNT COLVILLE OF CULROSS: I am very much obliged to the noble and learned Lord. His reply is a surprise to me, and an agreeable one. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clauses 10 to 12 agreed to.
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 6:
After Clause 12 insert the following new clause:
Amendment of Part II of Landlord and Tenant Act 1954
". In accordance with the provisions of this Part of this Act, Part II of the Landlord and Tenant Act 1954, as respects cases to which it applies as amended by this Part of tris Act, shall have effect as it is set out in Schedule (Part II of the Landlord and Tenant Act 1954 Reprinted with Amendments) to this Act with the Amendments made by the Agriculture Act 1958, the Finance Act 1959, the Rent Act 1968 and this Part of this Act (and the omission of repealed provisions)."
The noble Viscount said: This Amendment goes with a truly fabulous piece of printing which stands in my name as Amendment No. 11. It was a subject which was discussed on Second Reading, and I think I had certain support in the House for the view that, with the number of Amendments that are likely to be, or indeed will have been, made by this Bill to Part II of the Landlord and Tenant Act—and now we are promised two more —there would be something to be said
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for reprinting the whole of that Part of the Act as it is amended.
To this, certain objections have been taken because Part II is not entirely self-contained since some other Parts of that Act have to be read with it. If after this Bill is passed one wanted to look up to see what the law is going to be, or is, at that time, as I understand it would be necessary to refer to the Bill and the Law Commission's Report because that is the only place where the text is set out in full. One might want the Halsbury amended texts, because there have been those other Amendments in the Rent Act, in the Finance Act 1959 and in the Agriculture Act 1958—although that would probably be in the Law Commission Report. You would also want the old 1954 Act, because the Law Commission's Keeling Schedule reprints only those sections of the 1954 Act which have been amended. As I have already taken the opportunity to point out to the Committee, when one is considering this matter even in this House on this short Committee stage, one wants to refer to parts of the Act which are not printed anywhere except in my Schedule.
It is not only Members of this Committee who have been good enough to support me; I have had some support in a letter from the Law Society, who say that if it is reprinted in this way, with all the Amendments which have been made since 1954, it will be an advantage to practitioners as well. They are the people who will want to use this a great deal. But they are not by any means the only people, because as was said, I think, on the Second Reading debate, one of the great merits of the 1954 Act has been that it has worked so well that a lot of cases have never had to be disputed at all but have simply been settled between landlords and tenants, with the advice of their valuers on whatever the new rent ought to be. I do not believe that most businessmen are in possession of large quantities of up-to-date legal text books on the law of landlord and tenant; I do not believe they have the two volumes of Woodfall, or Mr. Justice Megarry's book. I do not think they usually line their bookshelves even with the annual Halsbury Statutes, let alone the "noter-up" in which the amended texts occur.
I should have thought that it really was the duty of Parliament, when we are making major Amendments to an extremely widely used piece of legislation, that rather than leave it to the admirable work of public enterprise, we should ourselves include a Schedule in the Bill so that from the moment it comes into force —before the text books come out but still useful thereafter—we have the whole text set out as amended. Then people can see what we are doing. Surely they will then say that Parliament is at least taking a little trouble to try to make the law comprehensible to the man in the street and available to him, without having to go into a library or purchase extremely expensive text books, to have explained to him in a form which he can understand it, the text alone, let alone what it means.
Here it is printed, and I hope that the Committee will consider it a good thing to put it into the Bill. My introductory clause is drawn from this source and from that. It may or may not be the right way to introduce a Keeling Schedule, but I hope that it will serve its purpose. I would very much commend to the Committee this method of dealing with the matter, particularly in view of the fact that the noble and learned Lord the Lord Chancellor is about to do the same for his Amendment which is next on the Marshalled List. I beg to move.
THE LORD CHANCELLOR: This is frankly a point which I should have liked to have more time to consider, because as the noble Viscount's Schedule consists of about 18 pages, naturally it took the printers some time to produce and it was not available until this morning. I have been in Cabinet all the morning and then at certain other meetings which started at 1.45 p.m., so I have not had much time to think about it. I am reluctant to oppose any Keeling Schedule because I am a great Keeling Schedule enthusiast. However. I think I must report what I am told about this.
It is, of course, very long, and the relevant sections of the 1954 Act are already set out with the amendments recommended by the Law Commission in Appendix 2 to their Report. It is true that a few further alterations have been made to their recommendations but
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Members of the House should have no difficulty in taking account of this. The only justification for the Schedule would therefore be to assist the professsions after the Bill is enacted. But Lord Colville's Schedule is likely to do more harm than good. Part II of the 1954 Act is not self-contained, and of course it is only Part II which he is setting out in the Keeling Schedule. The provisions governing chains of landlords of business premises, which are important to an understanding of Clause 4 of the Bill, and even more so of the noble Viscount's proposed Amendment No, 2, are in the Schedule 6.
The provisions concerning jurisdiction and particularly those relating to interim continuation of tenancies are in Part IV. Without the latter the scope and effect of Clause 3 is hardly intelligible. Provisions for compensation for possession obtained by misrepresentation, numerous special provisions concerning the rights of Government Departments as landlords or tenants and some definitions of terms used in Part II all appear in Part IV. It would be doing the profession a disservice if, through the reprinting oil. Part II as amended, any members were misled into believing that the Schedule contained all the law relevant to business tenancies. The wording of the Amendment, which says that Part II of the Act as respects the cases to which it applies shall have effect as set out in the Schedule, is particularly prone to mislead in this way. It would not even be satisfactory to schedule Parts II and IV of the 1954 Act because Part IV also contains many provisions concerning Part I and ought not to be divorced from that Part.
It is also questionable whether as a matter of general policy large parts of, or whole Acts, should be scheduled to amending legislation. The publication of amended Acts is best done by way of consolidating Acts. It is a matter for speculation how far the professions rely on the texts of Statutes in a complex field like business tenancies where no reliable conclusions can be drawn without reference to case law interpretations. Probably practitioners rely far more on text books. The scheduling of amended Acts in Keeling Schedules would also set an ominous precedent. The actual volume of Statutes last year already reached an all time record in both size and cost (over 2,500 pages, costing

575
£11 10s. 0d.). It is at least arguable that many purchasers of the Statutes who may not be particularly concerned with the 1954 Act would prefer legislation confined to essentials.
Perhaps the noble Viscount will take all that into account. As I have said, I have had little time to think about it. I have always conceived that the primary purpose of a Keeling Schedule is to help the legislators because then, instead of having to look backwards and forwards in existing Acts to see exactly what has been left out and what has been put in, they have only to look at the Schedule where they see that the things that have been put in appear in bold type and the position is plain.
In drafting a Keeling Schedule, I have never yet persuaded the draftsmen—and I have never really understood why—to put in italics what has been left out. They take strong exception to that, although I think it would be an improvement. Its main purpose is to make it easier for Members of Parliament so that they do not have to look backwards and forwards between the three existing Acts and the present Bill in order to see exactly what the effect is of leaving out certain words and putting in others. In a sense we hardly need that here because of the Report of the Law Commission and because of the Schedule already contained in the Law Commission's Report; although when it comes to the rewriting of Section 84 in the Amendment which I am coming to, it seemed to me that a Keeling Schedule would be of assistance. As I have said, I am somewhat reluctant to oppose any Keeling Schedule, but I daresay the noble Viscount would like to consider the points to which I have referred. I should like further time to think about it myself, if he would withdraw his Amendment now.
VISCOUNT COLVILLE OF CULROSS: Of course I do not want to rush the noble and learned Lord in any way, and I will concede that there is something in what he says about increasing the size of the Statute Book. On the whole I do not think my Party have been responsible for that over the last year or so, but nevertheless perhaps it is better to argue about that on another occasion. Where I think the noble and learned Lord, with
576
the greatest respect to him, is quite wrong is in saying that Keeling Schedules are of use only, or mainly, to legislators.
During the last Session the Town and Country Planning Act was widely amended, and among the things that were done was a wide amendment of the purchase notice procedure, which is highly technical and exceedingly difficult to follow. A certain amount of rewriting was done, and I followed it when I was dealing with the Bill on Third Reading in this House. Since then I have had to consider this professionally. I think it has now come out, but for quite a long time there was no source in which the ordinary practitioner who had to advise clients could find a proper reprint of this material. It just was not available. One had the new Act, which was not at that stage even annotated, and then one had to put it together in one's encyclopedia or reference book, with the bits of the old Act, and one scratched this out and put other bits in for reference, and added little bits on slips of paper, which were stuck on and flapped over the top. By the time all this was done and one had put it all in the wrong place and covered oneself with glue one was much further in the dark than one was in the first place. If you have a Keeling Schedule you do not have any of that. The Bill is passed into law; there printed with it is the law as it now stands.
I entirely accept that if there is something wrong with my reference to the cases to which this Part of the 1954 Act, as amended by this Part of the Bill, in the substantive clause, applies, that can be changed. I took that from one of the noble and learned Lord's own Acts passed in 1966, but perhaps it is not suitable here. It is not simply for Members of this House and another place, or indeed for the practitioners, that this is brought in: it is introduced for members of the public who want to see this up to date. You only want two books, the 1954 Act (because there has not been much change to the rest of that) and my Keeling Schedule, and you have then got it all together. It would require a lot of to-ing and fro-ing and fitting the clauses of this Bill into the 1954 Act otherwise to get any clear picture.
I hope that the noble and learned Lord will take this back and add the power of

577
his eloquence to what has been said already, in the hope that perhaps after we have left out one set of parentheses and two little figures which were photographed from the Law Commission's Report which I did not mean to be included here, it will be possible to have this in the Bill. Is that an information which the noble and learned Lord wishes to pursue at this stage?
THE LORD CHANCELLOR: There may be a case for an extra-statutory publication. if the 1954 Act is amended when the Bill has been passed, it can be considered for discussion with the Stationery Office.
LORD WILBERFORCE: May I add one small point to what the noble Viscount said, as one who supported the Keeling Amendment on Second Reading? I think one has also to take into account who has benefited by this type of schedule, and it is the courts, and particularly the county courts. When one is faced with a question of construction one cannot face a judge with a textbook. It greatly helps those who have to construe these not very simple enactments if all they have to do is turn up a consolidated document like this.
Of course there is some validity in the point that Part II is not self-contained and one has to look out for other references, definitions or clauses in the rest of the Act, but it is a very minor technical problem which can easily be met, as the noble and learned Lord has met it in relation to Section 84, by saying that it takes effect subject to any other enactments or anything else in this Act which has to do with the matter. To say that is not to diminish in any way the usefulness of a self-contained Part II. You take out the 1954 volume of the Statutes and look at the other parts of the Act so far as they bear on the matter. I hope the noble and learned Lord will look at it again.
THE LORD CHANCELLOR: I will certainly.
VISCOUNT COLVILLE OF CULROSS: At the risk, therefore, of having to ask the printer to print this Amendment again for the Report stage, I temporarily beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clauses 13 to 21 agreed to.
Clause 22 [Compensation in certain cases for loss due to undisclosed lane charges]:
VISCOUNT COLVILLE OF CULROSS VISCOUNT COLVILLE OF CULROSS moved Amendment No. 7:
Page 11, line 28, after ("charge") insert ("and had previously searched in the relevant register or index in respect of the relevant table").
The noble and learned Viscount said: On account of the execrable nature of my handwriting, the last word in this Amendment should not be "table" so much as "title", but I do not think it very much matters, because I merely wanted an opportunity to invoke from the noble and learned Lord the Lord Chancellor an explanation of the point I made about this matter. It is, of course, a different subject altogether. It relates to compensation for those who find, among other things, that because the search for a root of title is now to be statutorily shorter, there may be some charge on the land they buy of which they did not know anything and could not reasonably be expected to know anything, because, also, it was not under the right name in the register. That relates to the way in which the registers are drawn up. not by reference to the land concerned but by reference to the name of the person who put the charge down.
I raised the point that if one was going to get compensation one must have carried out a proper search. It was only an invitation to people to be slovenly in relation to conveyancing if they were to get compensation for something that turned up which they should have found but did not because they did not take the trouble. The noble Lord says that the matter is dealt with by the provisions of Clause 22(i)(c), but I thought it was so important that it ought to be explained for the benefit of practitioners and others who might come across it and might like to consider it while the Bill was before Parliament. I therefore put down an Amendment to give the noble and learned Lord a chance to explain it in public as he has done to me in private. I beg to move.
THE LORD CHANCELLOR: This matter is already covered and the Amendment is unnecessary. As the clause stands, no claim can be made in respect of a charge registered against an estate owner who is a party to any transaction

579
or otherwise connected with any event appearing in the title documents (subsection (1)(c)). It follows that a land charge which would be discovered on a search against the name of any such estate owner cannot in any event give rise to a claim under the clause. It is therefore immaterial whether such a charge has or has not in fact been discovered. The clause gives compensation only in respect of charges which such a search would not reveal. But a purchaser wishing to search the register would not have the means to know about the names of any other persons. He could search the register only by reference to the names appearing from the relevant title documents. There is no reason, therefore, to think that an express obligation to search the register of the kind suggested by the Amendment would lead to the discovery of any land charge in respect of which claim can be made under the clause. If for some extraneous reasons the purchaser in fact has knowledge of the existence of other estate owners (against whom he could search), then he is likely to have knowledge also of the transaction in which they were concerned and accordingly be disqualified from claiming in respect of that transaction by his actual knowledge under subsection (1)(b). The Amendment would add nothing of value to what is already in the clause.
There is also a serious technical objection to the Amendment. The clause applies to compulsory acquisitions by whatever procedure (subsection (9)(c)). Some of these, like acquisitions by a general vesting declaration under the Land Commission Act, take place without any investigation of title. This is clearly contemplated by subsection (10)(b) which refers to the title which a purchaser would hypothetically have been entitled to require. An obligation to investigate title and make searches would make it impossible for acquiring authorities using these expedited acquisition processes ever to make a claim. I hope that with that explanation the noble Viscount will be content.
VISCOUNT COLVILLE OF CULROSS: Yes. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 22 agreed to.
Clauses 23 and 24 agreed to.
4.19 p.m.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved Amendment No. 8:
After Clause 24 insert the following new clause:

LAW OF PROPERTY BILL [H.L.]

  PART IV RESTRICTIVE COVENANTS
  Powers of Lands Tribunal and court in relation to restrictive covenants affecting land
  25.—(1) In section 84 of the Law of Property Act 1925—

  (a) for the words "The Authority herein after defined" in subsection (1), and for the words "the Authority" wherever else they occur, (which now refer to the Lands Tribunal) there shall be substituted the words "the Lands Tribunal"; and

  (b) there shall be made the further amendments provided for by subsections (2) to (6) below;

  and accordingly section 84 shall have effect as it is set out in Schedule 2 to this Act with the amendments made by section 52(1) of the Landlord and Tenant Act 1954 and by this section (and the omission of repealed provisions), subject however to any other enactments affecting the operation of section 84 and to subsection (8) below.
  (2) In section 84(1)(a) after the word "that" the second time it occurs, there shall be inserted the words "in a case falling within subsection (1A) below", for the words "the reasonable user" there shall be substituted the words "some reasonable user" and the words "without securing practical benefits to other persons" shall be omitted; and after section 84(1) there shall be inserted as new subsections (1A), (1B) and (1C):—
  "(1A) Subsection (1)(a) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Lands Tribunal is satisfied that the restriction, in impeding that user, either—

  (a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value to them; or

  (b) is contrary to the public interest;

  and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification.
  (1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Lands Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas, as well as the period at which and context in which the restriction

  581
  was created or imposed and any other material circumstances.
  (1C) It is hereby declared that the power conferred by this section to modify a restriction includes power to add such further provisions restricting the user of or the building on the land affected as appear to the Lands Tribunal to be reasonable with the relaxation of the existing provisions, and as may be accepted by the applicant; and the Lands Tribunal may accordingly refuse to modify a restriction without some such addition."
  (3) In section 84(2), in the phrase "is affected" in paragraph (a), and in the phrase "is enforceable" in paragraph (b), there shall in each case be inserted after the word "is" the words "or would in any given event be"; and at the end of section 84(2) there shall be added the words:—
  "Neither subsections (7) and (11) of this section nor, unless the contrary is expressed, any later enactment providing for this section not to apply to any restrictions shall affect the operation of this subsection or the operation for purposes of this subsection of any other provisions of this section."
  (4) In section 84(3) in the phrase "any local authority" there shall be inserted after the word "any" the words "government department or".
  (5) After section 84(3) there shall be inserted as a new subsection (3A):—
  "(3A) On an application to the Lands Tribunal under this section the Lands Tribunal shall give any necessary directions as to the persons who are or are not to be admitted (as appearing to be entitled to the benefit of the restriction) to oppose the application, and no appeal shall lie against any such direction; hut rules under the Lands Tribunal Act 1949 shall make provision whereby. in cases in which there arises on such an application (whether or not in connection with the admission of persons to oppose) any such question as is referred to in subsection (2)(a) or (b) of this section, the proceedings on the application can and, if the rules so provide, shall be suspended to enable the decision of the court to be obtained on that question by an application under that subsection, or by means of a case stated by the Lands Tribunal, or otherwise, as may be provided by those rules or by rules of court."
  (6) In section 84(11) after the word "nor" there shall be inserted the words "subject to subsection (11A) below"; and after section 84(11) there shall be inserted as a new subsection (11A):—
  "(11A) Subsection (11) of this section—

  (a) shall exclude the application of this section to a restriction falling within subsection (11)(a), and not created or imposed in connection with the use of any land as an aerodrome, only so long as the restriction is enforceable by or on behalf of the Crown; and

  (b) shall exclude the application of this section to a restriction falling within subsection (11)(b), or created or imposed in
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  connection with the use of any land as an aerodrome, only so long as the restriction is enforceable by or on behalf of the Crown or any public or international authority."

  (7) In section 38(3) of the Requisitioned Land and War Works Act 1945 (under which section 84 of the Law of Property Act 1925 does not apply to a covenant obtained under the Defence Acts, so long as the covenant is enforceable on behalf of the Crown) for the words "any covenant obtained under the Defence Acts" there shall be substituted the words "any restriction created or imposed under the Defence Acts or under section 13 (acquisition of land for oil installations) of the Land Powers (Defence) Act 1958", and for the words "the covenant" there shall be substituted the words " the restriction".
  (8) This section applies to restrictions whether subsisting at the time it comes into force or created or imposed thereafter, but—

  (a) the coming into force of any provision of this section other than subsection (5) shall not affect proceedings then pending; and

  (b) subsection (5) shall not come into force until such date as the Lord Chancellor may appoint by order made by statutory instrument, which shall be laid before Parliament after being made."

  The noble and learned Lord said This Amendment is a long one which raises an entirely new question on a new Part of the Bill, so I am afraid I shall have to trouble the Committee with a full explanation of it. It extends and clarifies the jurisdiction of the Lands Tribunal under Section 84 of the Law of Property Act 1925 to modify or discharge restrictive covenants and makes consequential and other minor amendments to Section 84. A new Schedule to be inserted in the Bill as Schedule 2 sets out Section 84 of the 1925 Act as amended by the new Clause 25. The Amendments to Clause 27 and the Title of the Bill are consequential on the clause. The new clause implements, with modifications, the recommendations on the powers of the Lands Tribunal contained in Propositions 9(a) and 11 of the Law Commission's Report on Restrictive Covenants (Law Com. No. 11), enlarges the powers of the court to issue declaratory judgments in accordance with a recommendation in Proposition 10(b) of the Report, and corrects certain anomalies and makes certain improvements in provisions of Section 84 which are not referred to in the Report.
  The present law relating to restrictive covenants and its defects are summarised in paragraphs 7 to 26 of the Law Commission's Report. A restrictive covenant

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  may be defined as an agreement made between neighbouring landowners which enables one of them to impose a specific restriction on the use of the other's land and is intended to remain in force between subsequent owners of the relevant land after the parties to the agreement have ceased to own their respective interests in it. Paragraph 15 outlines the jurisdiction conferred by Section 84 on the Lands Tribunal to discharge or modify restrictive covenants and on the High Court to make declarations as to their effect. Paragraphs 20 and 25 criticise the provisions of Section 84 relating to the Lands Tribunal as they have come to be construed, on the ground that they afford insufficient scope to the Tribunal to exercise its jurisdiction, and paragraph 26 suggests that the jurisdiction should be enlarged on the lines indicated in Proposition 9 of the Report.
  Details of the current judicial interpretations of Section 84 are given in the notes to Proposition 9. Broadly, the power to modify or discharge can be exercised on four grounds:

  (i) that the restriction has become obsolete;

  (ii) that the continued existence of the restriction would impede the reasonable user of the land without conferring any practical benefits on any persons;

  (iii) that all concerned have agreed, and

  (iv) that the persons who benefit from the restrictions will not suffer any harm.

  These grounds have been strictly interpreted, so that in practice it is rare for a restriction to be modified or discharged unless it is obsolete or of no value to the persons entitled to enjoy its benefit. In consequence, the development of land is often either frustrated by restrictive covenants or carried out in breach of them. Sometimes excessive sums have to be paid to obtain release from covenants which are reflected in inflated prices charged for the developed land when it comes to be sold.
  Proposition 9 of the Law Commission Report recommends that the Lands Tribunal should have power to modify or discharge a restrictive covenant which is of value to those benefiting from it, if it impedes the reasonable use of the land so as to be contrary to the public
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  interest and if money can be adequate compensation for the loss of its benefit. The Proposition also specifies various factors which the Lands Tribunal should consider when exercising its jurisdiction it should be empowered to direct inquiries to be made of Government Departments.
  The Lands Tribunal is hampered in the exercise of its powers by uncertainty as to the extent to which it can decide questions of law. Proposition 11 of the Law Commission Report recommends that whilst substantive legal questions concerning the validity or Enforceability of covenants are to be determined by the court, the Lands Tribunal should be empowered (subject to a right of appeal to the court on points of law) to decide who is to be entitled to be a party to the proceedings in order to object to an application for modification or discharge.
  The declaratory jurisdiction of the court, conferred by subsection (2) of Section 84, is of particular importance because, unlike other declaratory orders of the court, orders made under this provision are, by Section 84 (5) binding on everyone and do not bind merely the parties to the proceedings. They operate in rem. It is recommended in Proposition 10 (b) that the power to make such binding declarations should be exercisable in relation to the future effect of restrictive covenants.
  Besides giving effect to these recommendations of the Law Commission the clause also corrects a few defects in the operation of Section 84 and its application. Obsolete terms or references are brought up to date only where this can be done by a simple substitution. The clause does not seek to achieve any modernisation or general amendment of a more far-reaching kind because that would involve rewriting language which has been the subject of much judicial interpretation and is familiar to the legal and surveyors' professions. An attempt has been made to do so, but it was not welcomed and has been dropped.
  I ought to say a word about the new subsections. Subsection (1) substitutes "the Lands Tribunal" for "the Authority" throughout Section 84 and introduces the substantive Amendments contained in the clause. The subsection also provides that the amended Section 84 is to have effect as set out in Schedule

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  2 to the Bill. Paragraph (a) of the subsection substitutes" the Lands Tribunal "for" the Authority " throughout Section 84. Jurisdiction to modify or discharge covenants was in 1925 conferred on "The Authority", meaning the Official Arbitrators appointed for purposes of the Acquisition of Land (Assessment of Compensation) Act 1911. Their jurisdiction was transferred to the Lands Tribunal under the Lands Tribunal Act 1949. Paragraph (b) and the concluding words of the subsection are machinery designed to bring the Amendments to Section 84, and the new Schedule 2, into effect. The concluding words also preserve the effect of existing enactments affecting Section 84, notably enactments which exempt particular types of restriction wholly or partly from the operation of the section (for example, Section 19 (6) of the Land Commission Act 1967, Sections 5 (2) (b) of the Forestry Act 1967).
  Subsection (2) substitutes the words "some reasonable user" for" the reasonable user" in the existing subsection (1)(a) of Section 84 and inserts three new subsections in the section: first, to widen the power of the Lands Tribunal to modify or discharge restrictive covenants; secondly, to specify certain factors which the Tribunal are to take into account in the exercise of these wider powers; and thirdly, to ensure that the Tribunal's power to modify restrictions includes the power to substitute other restrictions. The change of the wording of the existing subsection (1)(a) from" a reasonable user " to some reasonable user" will have a material effect. It will no longer be necessary for a person seeking to have a covenant discharged to show that the restriction impedes all reasonable use of the land, but only that some other use which is also reasonable will be impeded.
  Where it is shown that some reasonable use would be impeded by a restriction, the new subsection (1A) of Section 84 provides additional grounds upon which the Lands Tribunal can discharge or modify that restriction. It may do so if the restriction is either not of substantial value or contrary to the public interest and if money would be adequate compensation for the loss of the benefit. The new subsection implements the recommendation in the first part of paragraph
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  (a) of Proposition 9 in the Law Commission's Report. At present restrictions are rarely discharged under the second limb of Section 84(1)(a), partly because the paragraph is interpreted as requiring the Tribunal to be satisfied that the use proposed by the applicant for discharge or modification is the only reasonable use, and partly because it is also necessary to show that the covenant confers no practical benefit (in which case it will usually be obsolete or capable of discharge by agreement and so dischargeable under the remaining provisions of Section 84(1)). Under the new subsection (1A) the Tribunal is enabled to discharge or modify a restriction impeding reasonable user not only where it is of no value, or even of no substantial value, but also where it is of substantial value but its discharge would be in the public interest. The term " public interest "is not defined. It will be left to the Tribunal to hold the right balance between public and private interest where they conflict. In doing so the Tribunal is required to have regard to planning, considerations by the new subsection (1B).
  The new subsection (1B) of Section 84 requires the Lands Tribunal, in determining whether a reasonable user is impeded and in the exercise of its powers under the new subsection (1A), to take into account a variety of factors, including planning policy as evidenced by the planning authority's development plan for the area and any known or published policy or directives for the grant or refusal of planning permissions. The subsection, which implements the recommendations in the second part of Proposition 9(a) of the Law Commission Report, is designed as a guide and not as a directive to the Tribunal which will be able to take other matters into consideration and give them such weight as it thinks appropriate.
  The new subsection (1C) of Section 84 provides that the Tribunal's power to modify a restriction includes a power to substitute other restrictions as a condition of the modification. The subsection is inserted at the request of the Lands Tribunal to resolve a doubt whether the Tribunal's powers include a power of substitution. The imposition of an alternative restriction is often essential to do justice between the parties, as where a restriction of user for residential

  587
  purposes only is replaced by use for non-industrial purposes thus letting in business but not factory use. The subsection does not authorise the imposition of positive obligations (like an obligation to screen off new buildings) but will not prejudice the practice of the Lands Tribunal to impose such positive obligations in appropriate cases. Doubts on the validity of such obligations cannot be resolved until the enforceability of positive covenants has been regulated by Statute.
  Subsection (3) makes two changes in Section 84(2). First, it enables the court to make a declaration as to whether in the event of specified happenings land would be affected by a restriction or the restriction would be enforceable and, if so, by whom. Secondly, the subsection provides that subsections (7) and (11) of Section 84 (which exempt certain restrictions from the operation of the section) and any provisions in other Acts which disapply the section shall not exempt the restrictions to which they relate from the declaratory jurisdiction of the court under Section 84(2).
  In empowering the court to make declarations regarding future situations, the subsection implements the recommendation to that effect in Proposition 10(b) of the Report. By virtue of Section 84(5), such declarations will be binding on all persons, whether parties to the proceedings or not. The Amendment will assist developers who want to know in advance of proposed development what restrictions may be enforceable against them. In extending the jurisdiction of the court under Section 84(2) to cover restrictions exempt from the section, subsection (3) corrects an apparent anomaly. It cannot have been intended to exempt the relevant restrictions not merely from the jurisdiction of the Lands Tribunal to modify or discharge them but also from the jurisdiction of the court to make binding declarations as to their validity or enforceability.
  Subsection (4) enables the Lands Tribunal, in exercising its jurisdiction under Section 84, to direct inquiries to be made of Government Departments. The subsection implements the third paragraph of Proposition 9(a) of the Report. Though expressed in general terms, the Amendment is designed to complement the Tri-
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  bunal's existing power to direct inquiries of local authorities and is primarily aimed at eliciting information concerning planning circulars or directives issued by the Ministry of Housing and Local Government.
  Subsection (5), which introduces a new subsection (3A) to Section 84, requires the Lands Tribunal to give directions as to the persons who may oppose an application for modification or discharge. Such a direction is not to be appealable, but where the direction involves taking a view on any legal issue on which the court has jurisdiction under Section 84(2), the new subsection (3A) enables the proceedings to be suspended, in accordance with rules for that purpose, in order that the court's decision may be obtained. The subsection implements Proposition 11 of the Report with certain modifications and is designed both to preserve the existing jurisdiction of the court to determine issues of law and at the same time to ensure that the Lands Tribunal can for practical purposes decide who are to be parties to the proceedings before them without trespassing on the court's jurisdiction.
  The subsection aims to dispel the doubts raised by the decision of the Court of Appeal in Re Purkiss' Application [1962] I.W.L.R. 902, as to the extent to which the Lands Tribunal can decide who is entitled to oppose an application, where that question involves, as it often will, a decision as to the validity of a restriction or who is entitled to the benefit of the restriction. The subsection expressly enables the Tribunal to decide who may oppose an application, but requires rules to be made for the proceedings to be suspended, with a view to obtaining the determination by the court of any questions of law underlying the Tribunal's decision. By leaving rules to govern the detailed provisions, both on the circumstances in which proceedings are to be adjourned and on the method of reference of legal points to the court, the subsection provides a flexible machinery. It is intended that Lands Tribunal Rules will require the Tribunal to refer legal issues to the court whenever a party so requests and will give the Tribunal a discretion to do so of its own motion.
  Subsection (6) amends subsection (11) of Section 84 which sets out restrictions in favour of the Crown which are exempt

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  from the Lands Tribunal's jurisdiction. The subsection limits the duration of exemptions accorded to restrictions imposed for the benefit of the Armed Forces or for certain civil aviation purposes. By virtue of paragraph (a) of a new subsection (11A) to be inserted in Section 84, restrictions (not affecting aerodromes) imposed for the benefit of any of the Armed Forces are to be exempt only so long as the restriction remains enforceable by the Crown; by virtue of paragraph (b) of the new subsection (11A) restrictions affecting aerodromes or imposed for civil aviation purposes are to be exempt only so long as the restrictions remain enforceable either by the Crown or by any public or international authority.
  The subsection corrects an anomaly inherent in Section 84(11) whereby restrictions created or imposed for defence or civil aviation remain exempt even when those purposes are no longer applicable: for example. because the benefited land has been sold to a private individual for residential or agricultural purposes. Section 84(11) is brought into conformity with Section 38(3) of the Requisitioned Land and War Works Act 1945 (itself amended by subsection (7) of the clause) which exempts from the operation of Section 84 covenants obtained under the Defence Acts
  " so long as the covenant is enforceable by a Minister against the persons for the time being entitled to the land adversely affected thereby."
  The provision made in paragraph (b) of the new subsection (11A) for restrictions affecting aerodromes or imposed for civil aviation purposes ensures that these remain exempt so long as they are enforceable either by the Crown or by a public or international authority. This provision covers the cases in which, for instance, a military aerodrome is sold to a local authority for use as a civil aerodrome, a civil aerodrome is sold to the Ministry of Defence, or air traffic control installations are transferred to an international organisation. In such cases the restrictions remain exempt notwithstanding the failure of the precise purpose for which they were imposed.
  The subsection does not amend references to the Commissioners of Works and the Air Navigation Act 1920 in Section 84(11) despite the fact that they
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  are obsolete. The Commissioners' functions are now exercisable by the Minister of Public Building and Works and the Air Navigation Act 1920 has been superseded by the Civil Aviation Acts 1949–1968. The reference to the Commissioners is retained because most, if not all, of the restrictions imposed for the protect ion of Royal Parks and Gardens under statutory powers were in fact imposed by the Commissioners, so that reference to them is necessary in any event and under the rules of interpretation they will be taken to include reference to their successors. The reference to the Air Navigation Act 1920 is retained because many existing restrictions were imposed under that Act and because the pro visions authorising these restrictions are not exactly reproduced in the current legislation, so that a simple substitutional amendment is not possible without the risk of including inappropriate restrictions. The possibility of a more elaborate up-to-date reference to current legislative provisions is, however, still being considered by the Departments concerned.
  Subsection (7) amends Section 38(3) of the Requisitioned Land and War Works Act 1945, whereby covenants obtained under the Defence Acts are exempt from Section 84. The amendment substitutes for any covenant obtained under the Defence Acts" the words "any restriction created or imposed under the Defence Acts or under Section 13 of the Land Powers (Defence) Act 1958" and makes a consequential change.
  The amendments serve a dual purpose. First, restrictions imposed in connection with the acquisition of land by the Minister of Power for oil installations under powers conferred by Section 13 of the Land Powers (Defence) Act 1958, are brought within the exemption. Section 13 enables the Minister of Power to acquire, (i), land for the construction of oil installations necessary for the defence of the realm; (ii), land on which there are oil installations which were Government war works; and (iii), any right restrictive of the user of land essential to the enjoyment of the land acquired under the section. The last-mentioned rights may be acquired by agreement, but they are closely akin to restrictions acquired under the Defence Acts, and subsection (7) accordingly brings them within the ambit of the exemptions conferred by

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  Section 38(3) of the Requisitioned Land and War Works Act 1945. Secondly, the amendment, by referring to "restrictions" instead of "covenants ", is intended to silence any possible argument that restrictions created by methods other than contracts under seal (like informal contracts or deeds poll) are not exempt.
  Subsection (8) provides that the provisions of new Clause 25 are to apply to all restrictions within the ambit of Section 84, whether created before or after the clause comes into effect. Pending proceedings are not to be affected except by the procedural provisions of subsection (5), which is to come into effect on a date appointed by the Lord Chancellor. The remaining provisions of the clause will come into effect three months after the Bill becomes law, in accordance with Clause 27(2). In providing that new Clause 25 is to apply to restrictions created before the clause comes into force, subsection (8) follows recommendations in Propositions 9(a) and 11(d) of the Law Commission's Report. An "appointed day" provision is needed for subsection (5), to ensure that adequate time is available for the drafting of the rules of procedure required under that subsection. The subsection follows standard practice in not permitting substantive changes of the law to affect pending proceedings, but the procedural provisions of subsection (5) are to be applied to such proceedings as soon as they come into effect.
  I know that many of your Lordships have been anxious to see legislation of this kind for some time, and I am glad that the opportunity has been afforded in the course of this Bill. I apologise to the Committee for having been so long in introducing this new clause, but I know that very often a full explanation given at the time, and which is on record, may save Amendments which are really designed to elicit what is behind the clause. So I thought that in the end it might save time if I made a full statement in moving this Amendment. I beg to move.
  4.41 p.m.
  VISCOUNT COLVILLE OF CULROSS: There may be other noble and learned Lords who would like to speak on this subject, but perhaps I may say a few
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  words first. I am sure that the noble and learned Lord the Lord Chancellor is quite right in having given to the Committee a full explanation of this new clause. A great deal of what he said does not appear in the Law Commission's Report; indeed, some of the material is altogether new. I should be surprised if any great dispute arose on subsections (6), (7) or (8) of the new clause that he is proposing, but I would say a few words about the earlier parts. Perhaps the easiest thing to do is to look at the noble and learned Lord's Keeling Schedule, and deal with the bits that are printed in heavy type.
  The Committee will know that there are really two forums before which these matters of restrictive covenants are dealt with: the Lands Tribunal and the Chancery Division. I must say that I am always much too frightened to go to the latter, though I sometimes go to the former. The role that they each play is quite different, and is retained as quite different in this new modification of the law. The first thing that occurs is the widening of the power of the Lands Tribunal. I heard what the noble and learned Lord said about putting right the drafting of Section 84 itself. I do not know who it was that he asked, but had he asked some of those who perhaps go more frequently to the Lands Tribunal than to the Chancery Division I think he would have found that the words in the proviso to Section 84(1) about compensation are not perhaps so straightforward or so well understood as he may have been told by some others.
  No doubt he has thought of those who practise there, but the truth of the matter is that, apart from some very exceptional cases indeed, it is now so well known that under the present law the Lands Tribunal does not give compensation at all, because it can only modify the covenants if they are of no use to anybody and therefore, of course, no question of compensation arises, that nobody in recent years has ever bothered to look at all at the words relating to compensation, or so I venture to suggest. Now it is going to become extremely difficult, because an entirely different situation will arise whereby, although the Lands Tribunal can examine the value of covenants, it will have a different jurisdiction to override them, among

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  other things, in the public interest; and for that it is going to be able to pay compensation in suitable cases.
  The new subsection (1A) says that "Subsection (1)(a) above authorises the discharge" in certain circumstances," and that money will be an adequate compensation". Is the noble and learned Lord sure that the provisions about compensation in the proviso to subsection (1) are really clear? They are tied up with all sorts of restrictions and difficulties, and, if we are going to have an entirely new system whereby a much greater field is being taken into account by the Lands Tribunal, I should have thought that we ought to make quite sure that the rules as to the availability of compensation are not too closely bound to terms which were useful only in relation to the older and much more restricted form of jurisdiction. There is no new provision in the proposals in this new clause which increases the discretion of the Lands Tribunal about the things that it can take into account when assessing compensation and that sort of thing, and I should have thought that this ought to have been looked at again because the whole thing has been in a state of desuetude for a very long time.
  The second point which I should like to raise comes under the new subsection (1B). As I have always understood the situation in the past, one of the things that the Lands Tribunal has made quite clear is that it does not very much matter what the local planning authority has said about the use of the land in granting planning permission: the Lands Tribunal is going to look at the question in the light of the situation arising under the covenant. You can go there and tell them to your heart's content that you have planning permission for a block of flats 563 feet high, but they will not modify a covenant which says that the land shall not be occupied by more than one house unless they do so within the terms of the covenant and in the context in which the covenant was imposed.
  All that goes. The new subsection (1B) is a major change which allows them to take into account, for the first time, the development plan, and, indeed, a pattern of individual permissions that have been given. This is immensely important on questions like density—" How many houses should there be on this site
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  although there is a covenant which says that there shall only be two?", or" How many flats?" and questions of that sort. I think there is a danger here—I may be wrong but I put this forward for consideration—that one is going a little too far. if the Lands Tribunal is allowed to say that the covenant can be discharged because it is contrary to the public interest, and it then looks at an actual planning permission that has been given for a site which is in conformity with a development plan which says that when the area is re-developed the density shall be 140 persons to the acre and sees that there has been one other planning permission for an individual curtilage to be redeveloped in this way, it may well be that we shall swing too far the other way. We shall cease to take account at all of the character of the area which the covenant sought to set up.
  People have bought their houses in this area—not only the people next door; it may be people from outside who are not enabled to benefit from the specific covenant. Perhaps their land was sold at slightly the wrong time before the covenant was first imposed. Nevertheless, they are, I think, sometimes entitled to a little of the consideration in the public interest as well. There are peon le who have gone there because it is an area of low density development I am basing this to a certain extent on the sort of case that I have met, but it is applicable in other spheres as well—and it may well be that the Lands Tribunal, in view of the words of this Amendment, will start to think that it is no longer at all important to take into account the context of the covenant. The only thing it has to do instead is to see whether or not it approves of the view taken by the local planning authority. I should not think that this is what the noble and learned Lord and those who advised him really want.
  Probably what is wanted is a mixture of the two concepts. Do not rule out the local planning authority's view—let us give that its proper role in the consideration—but, equally, do not let us go overboard on it. Let us also take account of what the covenant could have been intended to achieve and what, indeed, it may have achieved in preventing redevelopment over a rather long period of time. I should like to see a balance

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  of that sort, which may not occur in the administration of this particular phraseology.
  I have no comment to make about subsection (1C), particularly having heard that it is put in at the request of the Lands Tribunal itself. It seems to me entirely sensible. The last point which I should like to raise is on the new subsection (3A). There has been no doubt at all that since the decision of the Court of Appeal in the Purkiss case, what has happened in the Lands Tribunal is that those who wished to apply for the modification or removal of restrictive covenants have been told that, for the purposes of that hearing in the Lands Tribunal—not necessarily anywhere else —they have simply got to accept that everybody who turns up to object is entitled to the benefit of the covenant. Sometimes, of course, they win, and sometimes they do not. But at least there is one thing that is quite clear at the moment: nobody spends any time at all in the Lands Tribunal going into questions of whether or not land is benefited, whether or not the covenant has been annexed, whether or not there is a building scheme, whether or not the people have bought with an express assignment of the covenant, and all the highly technical matters of that sort which the Court of Appeal have said ought to be dealt with by the Chancery Division and which always are dealt with by the Chancery Division.
  I am a little afraid that when the new procedure which is adumbrated here comes into force—and it will of course be extended when the Lands Tribunal Rules and the Rules of the Supreme Court are produced—the Lands Tribunal may in fact spend a great deal of time on these preliminary points, which will in the end have to go to the Chancery Division anyway under the case stated procedure. I think it is a little unfair on the Lands Tribunal, but the Court of Appeal indicated in the Purkiss case that perhaps the people to deal with these technical points of covenant law were the High Court of Justice, and not some of the members of the Lands Tribunal. I do not know whether or not that is justified: I am sure that they would deal with it extraordinarily well.
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  The fact of the matter is that I feel that this matter may have to be gone over twice, because people will not accept what the Lands Tribunal have said, and they will want a case stated to go to the Chancery Division under the adjournment procedure in Section 3A. That will be a waste of time. One has to balance this against the question of whether or not the present system, which accepts everybody who turns up as being a proper objector and entitled to the benefit of the covenant, prevents covenants being revoked or modified when they otherwise would be. Does the presence and the objection of those persons, whether or not they are entitled, in fact stop the proper use of land? I just do not know. I do not know in how many cases the balance has turned on what has been said by an objector who if one had sorted the thing out beforehand one would have discovered had no right whatever to be there. I think that is really the point. If one is going to find that a great deal more time is going to be spent on this without any substantive difference in the answer, except in so far as the powers are changed, then I wonder whether this is a good thing to do.
  I simply put this point forward, but I should very much like to consider it further. I have to some extent, but I think it is something which ought to be discussed. I should like to go on discussing it, but since this is really a Second Reading debate I do not propose to go into any further detail at this particular juncture. However, I think it is something which ought to be returned to, and that we ought to consider again at the next stage of the Bill; and I hope the noble and learned Lord will not mind if I put down some Amendments on this in due course.
  4.54 p.m.
  LORD WILBERFORCE: I shall endeavour to keep my observations on this Amendment shorter than the Amendment itself, but there are one or two things I should like to say about it. The noble and learned Lord the Lord Chancellor, in introducing the Amendment, referred to the fact that at a previous stage it had been sought to deal with this matter by means of a comprehensive new provision which would start again and clean the whole thing up. One must agree—and I

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  think the noble and learned Lord probably agrees—that as a matter of technique, that would be a very much better way of dealing with this section than that which has been found possible, because we are here dealing with a fairly old provision into which a number of new enactments are being poured; and I certainly share some of the doubts expressed by the noble Viscount who has just spoken whether the old bottle will really hold this new vintage which has been put into it.
  However, one must agree, having seen, as I had an opportunity of seeing, the earlier draft, that as a matter of substance what is here suggested is very much better and more practical than what was contained in the earlier proposition, and I would certainly give my recognition to the extent to which the noble and learned Lord has consulted expert opinion in Lincoln's Inn and elsewhere, and has, I think, obtained their substantial agreement to what is in this Amendment. So with some reluctance, which I would imagine is probably shared by those advising the noble and learned Lord, I would be prepared to accept the way in which this has been done; namely, by taking the structure of the existing section and doing the best one can with it.
  I have one or two observations on the provisions which are now inserted into it. First of all, subsection (1A). I am using, as the noble Viscount did, the Keeling Schedule, which we have so conveniently got. As a matter of drafting, I wonder whether it would not be preferable to divide that into two, because, as the noble and learned Lord the Lord Chancellor pointed out, there are really four cases in which restrictive covenants can be modified, not three. Paragraph (a) is really separable into two quite separate cases. One is where it is obsolete, and the other is where some reasonable user is impeded. The case for doing that becomes very much greater now that one has the new subsections (1A) and (1B), which deal with the second limb of Section 84(1)(a), and not with the first, and therefore as a matter of convenience, I should have thought it would be much more easily understood if the second limb of (1)(a) were made into a separate provision. However, that is only a matter of presentation, although
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  I would suggest possibly not an unimportant one.
  More significant, perhaps, is to be sure that we understand the extent to which the Amendments to the second limb of (1)(a) together with the new subsection (1A), really go. The noble Viscount pointed out some of the changes, but they really are very radical. The existing power to modify restrictive covenants under the second limb was limited to the case where "the reasonable user " of the land would he impeded without securing substantial benefit. That has been replaced by "some reasonable user", any reasonable user, which is very much wider; and, as regards the benefit to the owner,. it now has to be "benefits of substantial value", which one gets from (1A)(a). In addition to that, as pointed out under the new subsection (1B), the Lands Tribunal is given very wide powers to take into account
  " the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions …".
  I think one has to face the fact drat this makes such a substantial inroad into existing restrictive covenants that the whole nature of them is really changed to the detriment of the persons now entitled to the benefit of them, and I do not think it is very easy to see that from the way in which this is presented. When one looks simply at Section 84(1)(a) or the first Amendment, it does not look as if very much amendment is being made, but when you add it all up one sees how very substantial the inroad into this particular kind of right is.
  Coming to (1C), I should like make two points. I quite agree with the thought behind it, that if you are modifying restrictions or taking them away it may be a good idea to give power to put some new restriction on. But I have doubts as to whether the machinery as suggested here is sufficient to do the work. When one is modifying a covenant or removing it, there is subsection (5) of this section, which goes on to say what the effects of the discharging or modifying or dealing with a restriction is, and says it is binding on all sorts of persons, whether they are parties to the proceedings or not. But I do not find anything comparable, which does the same thing, in relation to a new restriction on user or on

  599
  building on the land affected which is introduced by the Lands Tribunal under (1C), and I should have thought that it would be desirable to add something which spells out what the effect on the owner of the land and on the persons entitled to the benefit is to be if such a new covenant is introduced. It is quite easy to say that it shall take effect as a new restrictive covenant which is binding on all persons, and so on, perhaps capable of registration as such. But it seems to me that at the moment it is left in the air under (1C).
  As to the drafting of (1C), I must say that I find the language in the fourth line of that subsection a little curious. It reads:
  "…as appear to the Lands Tribunal to be reasonable with the relaxation of the existing provisions, …"
  I suppose that what is meant is "to be reasonable having regard to the relaxation of the existing provisions " or "… as compared with the relaxation". But I should not have thought that "to be reasonable with the relaxation" was tight enough. I suggest that the noble and learned Lord might look at that again.
  I have no comment on the rest of the clause. It goes rather far; its presentation is not ideal; but the subject is an important one, and I think the noble and learned Lord was right to introduce it, even at this late stage. But I would join in commending to him reconsideration of it in one or two respects both in substance and in drafting.
  THE LORD CHANCELLOR: I am grateful to the noble and learned Lord and to the noble Viscount for the consideration they have given to this clause. I will take into account the three points that the noble Viscount made: first, on compensation and the proviso; secondly, whether the new subsection (1B) leaves things too open to the Lands Tribunal; and, thirdly, how far the new subsection (3A) may lead to people going over everything twice. As the noble and learned Lord, Lord Wilberforce, knows, I should have preferred to introduce something on a larger scale dealing with the whole of positive covenants or land obligations. As he also knows, an attempt was made to do so; but unfortunately
  600
  it foundered. And difficulties are being experienced on the second attempt, even by the chief draftsman himself. It is no doubt a very difficult subject. But I will carefully take into account all the observations which the noble and learned Lord, Lord Wilberforce, was good enough to make with a view to seeing whether or not Amendments should be made at a later stage.
  On Question, Amendment agreed to.
  Clauses 25 and 26 agreed to.
  Clause 27 [Short title, commencement and extent]:
  THE LORD CHANCELLOR: This Amendment is purely consequential; but there is an error in the printing of the Marshalled List. It is intended to except only subsection (5) of the new clause. I should have thought that the (5) would have come after the word "section". But I am told that it should read " Powers of Lands Tribunal Court in relation to restrictive covenants affecting land) (5) " I beg to move.
  Amendment moved—
  Page 15, line 25, after ("Act") insert ("except section (Powers of Lands Tribunal and Court in relation to restrictive convenants affecting land)") (5). —(The Lord Chancellor.)
  On Question, Amendment agreed to.
  Clause 27, as amended, agreed to.
  Schedule I agreed to.
  TIIE LORD CHANCELLOR: I beg to move Amendment No. 10, which is simply the Keeling Schedule reprinting Section 84 as amended
  Amendment moved—
  After the Schedule insert the following new Schedule:

  SCHEDULE
  LAW OF PROPERTY ACT 1925 SECTION 84 REPRINTED WITH AMENDMENTS
  [In this Schedule words inserted by the Bill are printed in heavy type.]
  84.—(1) The Lands Tribunal shall (without prejudice to any concurrent jurisdiction of the court) have power from time to time, on the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction (subject or not

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  to the payment by the applicant of compensation to any person suffering loss in consequence of the order) on being satisfied—

  (a) that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Lands Tribunal may deem material, the restriction ought to be deemed obsolete, or that (in a case falling within subsection (1A) below) the continued existence thereof would impede some reasonable user of the land for public or private purposes … or, as the case may be, would unless modified so impede such user; or

  (b) that the persons of full age and capacity for the time being or from time to time entitled to the benefit of the restriction, whether in respect of estates in fee simple or any lesser estates or interests in the property to which the benefit of the restriction is annexed, have agreed, either expressly or by implication, by their acts or omissions, to the same being discharged or modified; or

  (c) that the proposed discharge or modification will not injure the persons entitled to the benefit of the restriction:

  Provided that no compensation shall be payable in respect of the discharge or modification of a restriction by reason of any advantage thereby accruing to the owner of the land affected by the restriction, unless the person entitled to the benefit of the restriction also suffers loss in consequence of the discharge or modification, nor shall any compensation be payable in excess of such loss; but this provision shall not affect any right to compensation where the person claiming the compensation proves that by reason of the imposition of the restriction, the amount of the consideration paid for the acquisition of the land was reduced.
  (1A) Subsection (1)(a) above authorises the discharge or modification of a restriction by reference to its impeding some reasonable user of land in any case in which the Lands Tribunal is satisfied that the restriction, in impeding that user, either—

  (a) does not secure to persons entitled to the benefit of it any practical benefits of substantial value to them; or

  (b) is contrary to the public interest;

  and that money will be an adequate compensation for the loss or disadvantage (if any) which any such person will suffer from the discharge or modification.
  (1B) In determining whether a case is one falling within subsection (1A) above, and in determining whether (in any such case or otherwise) a restriction ought to be discharged or modified, the Lands Tribunal shall take into account the development plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in relevant areas, as well as the period at which and context in which the restriction was created or imposed and any other material circumstances.
  (1C) It is hereby declared that the power conferred by this section to modify a restriction includes power to add such further provisions restricting the user of or the building on the land affected as appear to the Lands
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  Tribunal to be reasonable with the relaxation of the existing provisions, and as may be accepted by the applicant; and the Lands Tribunal may accordingly refuse or modify a restriction without some such addition.
  (2) The court shall have power on the application of any person interested—

  (a) to declare whether or not in any particular case any freehold land is, or would in any given event be, affected by a restriction imposed by any instrument; or

  (b) to declare what, upon the true construction of any instrument purporting to impose a restriction, is the nature and extent of the restriction thereby imposed and whether the same is, or would in any given event be, enforceable and if so by whom.

  Neither subsection (7) and (11) of this section nor, unless the contrary is expressed, any later enactment providing for this section not to apply to any restrictions shall affect the operation of this subsection or the operation for purposes of this subsection of any other provisions of this section.
  (3) The Lands Tribunal shall, before making any order under this section, direct such enquiries, if any, to be made of any government department or local authority, and such notices, if any, whether by way of advertisement or otherwise, to be given to such of the persons who appear to be entitled to the benefit of the restriction intended to be discharged, modified, or dealt with as, having regard to any enquiries, notices or other proceedings previously made, given or taken, the Lands Tribunal may think fit.
  (3A) On an application to the Lands Tribunal under this section the Lands Tribunal shall give any necessary directions as to the persons who are or are not to be admitted (as appearing to be entitled to the benefit of the restriction) to oppose the application, and no appeal shall lie against any such direction; but rules under the Land Tribunal Act 1949 shall make provision whereby, in cases in which there arises on such an application (whether or not in connection with the admission of persons to oppose) any such question as is referred to in subsection (2)(a) or (b) of this section, the proceedings on the application can and, if the rules so provide, shall be suspended to enable the decision of the court to be obtained on that question by an application under that subsection, or by means of a case stated by the Lands Tribunal, or otherwise, as may be provided by those rules or by rules of court.
  (5) Any order made under this section shall be binding on all persons, whether ascertained or of full age or capacity or not, then entitled or thereafter capable of becoming entitled to the benefit of any restriction, which is thereby discharged, modified or dealt with, and whether such persons are parties to the proceedings or have been served with notice or not.
  (6) An order may be made under this section notwithstanding that any instrument which is alleged to impose the restriction intended to be discharged, modified, or dealt with, may not have been produced to the court or the Lands Tribunal, and the court

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  or the Lands Tribunal may act on such evidence of that instrument as it may think sufficient.
  (7) This section applies to restrictions whether subsisting at the commencement of this Act or imposed thereafter, but this section does not apply where the restriction was imposed on the occasion of a disposition made gratuitously or for a nominal consideration for public purposes.
  (8) This section applies whether the land affected by the restrictions is registered or not, but, in the case of registered land, the Land Registrar shall give effect on the register to any order under this section when made.
  (9) Where any proceedings by action or otherwise are taken to enforce a restrictive covenant, any person against whom the proceedings are taken, may in such proceedings apply to the court for an order giving leave to apply to the Lands Tribunal under this section, and staying the proceedings in the meantime.
  (11) This section does not apply to restrictions imposed by the Commissioners of Works under any statutory power for the protection of any Royal Park or Garden or to restrictions of a like character imposed upon the occasion of any enfranchisement effected before the commencement of this Act in any manor vested in His Majesty in right of the Crown or the Duchy of Lancaster, nor (subject to subsection (11A) below) to restrictions created or imposed—

  (a) for naval, military or air force purposes,

  (b) for civil aviation purposes under the powers of the Air Navigation Act, 1920.

  (11A) Subsection (11) of this section—
  (a) shall exclude the application of this section to a restriction falling within subsection 11(a), and not created or imposed in connection with the use of any land as an aerodrome, only so long as the restriction is enforceable by or on behalf of the Crown; and
  (b) shall exclude the application of this section to a restriction falling within subsection (11)(b), or created or imposed in connection with the use of any land as an aerodrome, only so long as the restriction is enforceable by or on behalf of the Crown or any public or international authority.
  (12) Where a term of more than forty years is created in land (whether before or after the commencement of this Act) this section shall, after the expiration of twenty-five years of the term, apply to restrictions affecting such leasehold land in like manner as it would have applied had the land been freehold:
  Provided that this subsection shall not apply to mining leases.—(The Lord Chancellor.)
  On Question, Amendment agreed to.
  THE LORD CHANCELLOR: This Amendment is purely consequential. I beg to move.
  Amendment moved—
  In the Title, line 5, after ("charges") insert ("to make further provision as to the powers of the Lands Tribunal and court in relation to restrictive covenants affecting land;").— (The Lord Chancellor.)
  On Question, Amendment agreed to.
  Title, as amended, agreed to.
  House resumed: Bill reported with the Amendments.

ROYAL ASSENT
THE LORD CHANCELLOR: My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Customs Duties (Dumping and Subsidies) Act,

Glasgow Corporation (Superannuation &c.) Order Confirmation Act,

Barnsley Corporation Act.

EXPERIMENTS ON BIRDS
5.6 p.m.
LORD SOMERS LORD SOMERS rose to ask Her Majesty's Government whether the experiments on birds, described in the Daily Telegraph of March 26, are likely to have any benefit on the community; and, if not, why the Home Secretary permitted them to be made. The noble Lord said: My Lords, I beg to ask the Question which stands in my name. In the Daily Telegraph of March 26 last there appears an account of an experiment on, I think it was, twelve chaffinches I had better read the account so that your Lordships will know what I am talking about:
"Experiments at Cambridge University in which chaffinches were artificially deafened, were undertaken to discover how the birds learned to sing, it was said yesterday.
" The tests at the sub-department of animal behaviour, a part of the Department of Zoology, are described as' monstrous' in the Shooting Times.
"Mr. Richard Porter, technical officer of the Royal Society for the Protection of Birds, said yesterday:' They were to find out if birds learned through hearing to sing or whether this ability is instinctive.
' I don't know what the findings were.'

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"As the experiments were done under a licence from the Home Office the Society did not condemn them, he said.
"'About twelve birds were involved. It is unfortunate of course. I know it has created a lot of bad feeling among the public.
'But we have problems a thousand times greater to contend with, such as birds being caught in oil slicks.'
"Nobody at the university laboratories in Modingley near Cambridge, would talk about the experiment yesterday."
That, I think, is all I need to read of it.
I think that one of the most surprising things about this account is that Mr. Richard Porter, the official of the Royal Society for the Protection of Birds, did not condemn the experiments, simply because they were done under licence from the Home Office. Either an experiment is worth while or it is not. Even the Home Secretary is only human and is capable of making mistakes, like any other human being. I do not think that the mere fact that it was done under licence should be a reason for not objecting to it. He went on, as your Lordships have heard, to talk about the problem of oil slicks.
I have said before in your Lordships' House that I have no objection to experiments on animals where those experiments are going to bring benefit to the health and well-being of the human race; but this one it seems to me was in a very different category. I am not going to deny Mr. Porter's statement that the problem of oil slicks is a much greater one, but the two problems are totally different. The menace of oil on the surface of the sea is very great and thousands of birds suffer every year as a result of it. None the less, its presence is accidental, though no doubt we should do a great deal more to prevent it from happening. The experiment we are discussing to-night, my Lords, was no accident. This was a deliberate, cold-blooded act. And to what purpose? Simply to satisfy idle curiosity. The human race will not be one iota the better off or the more healthy for knowing the answer to this question.
In any case, the answer has already been found. My noble friend Lord Cork and Orrery, who has told me that unfortunately he will not be able to be present in the Chamber for this debate, showed me a book written by a very eminent ornithologist, Heinroth, and I should like to read two paragraphs from
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that book. It is not a new publication; it was published in 1959.
"It has been shown that most of the true song-birds can imitate strange sounds, even though they have only simple songs themselves. Some of them learn their own songs by imitation, others do not. The song of the chiffchaff and grasshopper warbler is innate, as I found by raising them indoors. Even some of the birds with a very elaborate song can produce it without ever having heard it before—blackbirds and song-thrushes, for example. In the autumn a young hand-reared song-thrush weaves into his own practising all sorts of sounds he has heard from other birds, and the result is a stream of warbling gibberish."
My Lords, as a musician I can quite appreciate that and realise what the result is.
"But when spring comes, he produces distinct phrases which are quite recognisably thrush—though perhaps not very good thrush—and in which the borrowed sounds art: arranged into thrush rhythms.
"Chaffinches learn rather more of their song. Without any examples to listen to, they produce a song which sounds very unlike a wild chaffinch's but has some of the same rhythm. Normal chaffinches differ individually in the details of their songs; these details they learn from their neighbours in their first spring. One may say that they are handed on by tradition from generation to generation."
My Lords, that is a very authoritative account of how birds learn to sing and how they vary. Since that is already known, what is the purpose of this experiment at Cambridge; an experiment done in a far less humane way since the author of this book reared birds naturally from the egg, though keeping them in captivity of course, and did not deafen them or do anything like that? My Lords, I do not know very much about this experiment. I do not know how the birds were deafened so I cannot say how humane or inhumane it was. None the less, one has to remember that animals suffer a great deal more by instinct than by reasoning. The mere fact that they could not hear, that they were confined arid had not their natural freedom would be quite apparent to them by instinct, but not by reason.
As we all know, the Home Secretary is in a very difficult position. He has "cannon to the right of him", and "cannon to the left of him", and they are all volleying and thundering. On one side he has the scientists clamouring to do various new experiments, some of them very necessary ones and a great many more totally unnecessary. On the

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other side he has the animal protection enthusiasts who can sometimes, as I well know, be nothing short of fanatical. I should like to make it plain, my Lords, that I mean some of them—not all of them by a long shot—and a small minority at that. Unfortunately, it is the small and noisy minority that gets publicity in the Press and is heard about and read about. As I say, the Home Secretary is only human, and with all he has to cope with I should think it would be surprising if he did not sometimes make a mistake. I shall be interested to hear what the noble Lord, Lord Stonham, has to say about this subject. He has always been extremely patient with me when I have brought my problems to him and I sincerely hope that he will show that I have not been wasting your Lordships' time to-night. I shall listen with attention to what he has to say.
5.17 p.m.
LORD HURCOMB: My Lords, I am sure that all those interested in the proper treatment of wild creatures will be grateful to the noble Lord, Lord Somers, for having drawn attention to the range of problems, of which this is one. It is true that a good deal of uneasiness has been felt and expressed recently about the experiments carried out, with no control and on a large scale, by American investigators who deprived birds of water to see what would happen. They came to the conclusion that the birds had not died of thirst but of dessication. That distinction made no difference whatever to the birds, and I agree with the noble Lord, Lord Somers, that it makes very little difference to or confers very little benefit on anybody else. But I think that these particular experiments are in a different class.
I venture to think that the noble Lord, Lord Somers, goes too far and unduly narrows the field of scientific experiment when he makes as the test some direct benefit to the community—that is to say, to the human community. In the present case I should have thought it was a matter of very real scientific interest and importance to know how far birds' song is wholly innate and how far it is capable of being developed or learnt from various sources. Despite the authorities he has quoted I do not think that it would be
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agreed that those matters have yet been statisfactorily determined.
It may be difficult to see how far knowledge of this kind can be of immediate value in relation to human development, but may there not yet be much to be learned from the study of other animals in our efforts to understand the physical and neurological basis of our own potentialities by realising fully how these are developed? In this particular matter, birds are the obvious field for experiment, because, so far as we know, no other mammal except man has a potential of extending his vocalisation or imitating sounds emitted by any other animal. Therefore, if progress is to be made, it is essential to do it in relation to birds.
I understand that the experiments undertaken by Professor Thorpe were upon a small number of birds—some 20, I believe—which were completely anæthetised when part of their hearing was removed, and that was done under careful and properly understood techniques. It is also interesting to know that the effect upon the birds seems to have been entirely to their hearing. They behaved, mated and paired, and even brought up their young families, without any sense of difficulty, until the young birds reached an age when they depended upon clamouring for food to get this from their parents. At that point, of course, their parents, being unable to hear the clamour, did not make the ordinary responses. Perhaps I should mention one other point. These birds, having had their faculties impaired to some extent, were kept to finish out their lives under aviary conditions and were not let loose into the world where, of course, they would have been subject to many added risks through lack of hearing.
I venture to think that the licensing system, as administered by the Home Office in this kind of matter is very carefully and effectively administered, but no doubt that is a matter on which the noble Lord, Lord Stonham, will be able to give your Lordships some assurance. Apart from that, Professor Thorpe, with whom I am well acquainted, is not only a scientific investigator but also a keen bird lover and bird protectionist, and I am sure that none of the experiments carried out under his supervision would either be scientifically pointless or merely

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repetitive of something that is already well known or in any way would inflict unreasonable damage to the birds themselves.
Therefore, though in general I would share the uneasiness of the noble Lord, Lord Somers, at indiscriminate ill-directed experiments upon birds or any other creatures without a proper control, I feel that in this particular case the charge of inhumanity or cruelty, or just of a wasting of scientists' time, does not really lie against Professor Thorpe and his colleagues. Having said that, I would add that, as a protectionist, I think, that the noble Lord does a real service in reminding your Lordships and other people of the need for some proof, not that the results of these experiments will be directly beneficial to human needs, but that they have a scientific value and are not undertaken, like depriving the birds I mentioned of water, just to see what happens and then describe the result.
5.26 p.m.
LORD PLATT: My Lords, perhaps I should start by revealing the fact that I am a member of the Advisory Committee of the Home Office which has referred to it from time to time applications for experiments which are considered to be possibly undesirable for various reasons. Also as head of the Royal College, I have had to sign numerous applications for licences for animal experiments and I have also held such a licence myself. Whether your Lordships look upon these facts as a qualification for my speaking in this debate or as a declaration of interest, I leave to your Lordships.
I want to say at once that I have a built-in aversion to all animal experiments, though I completely accept that they are absolutely necessary to medical and scientific progress. Therefore, I share with the noble Lord, Lord Hurcomb, a very considerable sympathy with the point of view put forward by the noble Lord, Lord Somers, who questions the justification on ethical or scientific grounds for certain experiments. It is in this way that those of us who have the duty of granting licences and supervising the conduct of experiments are kept continually reminded of the responsibility of our task.
Animal experiments are of various kinds. They vary in severity from a mere prick to a major operation and from
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inflicting rather negligible and transient pain to depriving an animal of some essential faculty. Their purposes also vary, from those at one end of the scale directly concerned with the investigation of a specific illness to those at the other extreme, which are designed to reveal the underlying mechanisms of animal physiology and behaviour with a view to building up scientific knowledge, the value of which to the amelioration of man's suffering and handicaps may not at once be obvious.
It is clear that the experiments to which the noble Lord has directed our attention are well into the second category and do not lead at once to new ways of overcoming the handicaps of defective hearing and speech, though in the course of time they may help to do so. The noble Lord has asked whether the experiments are likely to be to the benefit of the community. If we accept that science, including medical science, cannot advance without the continuous exploration of basic mechanisms, then we cannot necessarily answer the question as at present framed, and perhaps this is because this is the wrong question.
One may ask then whether I am justifying all animal experiments simply because we cannot always tell in advance just what the benefit to the community may be. I would not assent to that, of course. I think that the discerning scientist knows, and that those who guide him should also know, whether the question to which he seeks an answer is basic and important to medical or biological science or whether he is merely contemplating a badly planned experiment unlikely to give more than an uncertain answer to a question of trivial importance. This I think is the question which should be asked in this particular case, and I myself would answer it in quite definite terms: that the experiments were designed to throw fresh light, not simply a repetition of knowledge already determined, and did in fact throw light upon fundamental questions concerning the relative importance of instinct and of learning in the development of vocal patterns of communication. As the noble Lord, Lord Hurcomb, has told us, these birds were not confined to artificial conditions. They were in an aviary with other birds, and the behaviour of the deaf birds was clearly not distinguishable from the

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behaviour of the other birds to any person who simply observed their behaviour in the aviary.
One must, even so, consider whether the severity of a certain experiment is too great to justify its use even if the aims are of importance biologically. I would say that here again I think we are on the right grounds in this experiment, which was so carefully controlled and supervised. Only a certain limited number of experiments have been performed, and Professor Thorpe tells me that there is no immediate intention of doing any more experiments of the same nature.
All those who know something of the history of science realise that the second category of experiment, that which is devised to throw new light on basic problems, may in the long run turn out to be of more importance to the community than the experiment in which the immediate gains and limitations are more obvious. I should like to end by quoting from what the great Michael Faraday said of his experiments on electro-magnetism and induced currents. He said:
"I have rather been desirous of discovering new facts and new relations depending on magneto-electric induction than of exalting the force of those already obtained being assured that the latter would find their full development hereafter."
He left it to others to find the applications of his work to all kinds of present day technology, including communications by submarine cable. For all these reasons, I believe that the experiments that we are considering to-day were justified, and that the Home Office were right to permit them. Nevertheless, I add to what the noble Lord, Lord Hurcomb, said my gratitude to the noble Lord, Lord Somers, for raising the point.
5.33 p.m.
THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM): My Lords, twelve weeks ago your Lordships declined to give a Second Reading to a Bill prohibiting the export of animals. In my speech, before advancing reasons why I thought that the Bill should be rejected, I gave what I thought was convincing evidence of my own love of animals and detestation of cruelty to those creatures that we wrongly call "dumb creatures". This did not protect
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me from a stream of sharply abusive letters. Indeed, one was so sharply abusive as to say: "I killed many men during the prohibition days in the United States and during the war. I am 70 years of age, and I would cheerfully kill you, as I have not much to lose." The stream of letters has now dwindled to a trickle, but it still continues even after such a lapse of time.
Every weekday, I suppose, for the past eight or nine months I have written letters to Members of Parliament who have written to me on behalf of their constituents asking what are the Government's intentions towards the implementation of the Report of the Littlewood Committee. I must have written some 200 to 250 letters of that kind. So I am acutely conscious of the great importance of this subject to the people of this country. The fact is that the British, to their credit, just cannot stand the unnecessary infliction of pain on animals. Nothing more quickly excites our anger; and I must confess that my own immediate reaction to the story in the Daily Telegraph, that some chaffinches had been deafened in an attempt to find out whether they learned to sing through hearing or whether they do so instinctively, was: who cares? Who wants to know?
I therefore join with other noble Lords in thanking the noble Lord, Lord Somers, for his public-spirited action in raising this Question, particularly as it gives me the opportunity to give the full facts, fairly and objectively, and in this way to remove, I hope, the anxiety which has been needlessly and unwittingly aroused. In the process, I hope to convince the noble Lord, Lord Somers, that when he said that this was a deliberate cold-blooded act, and asked to what purpose it was performed—was it simply to satisfy idle curiosity?—he was wrong; and that when he said the human race will not be better off for this experiment, he was also wrong. But that does not abate my gratitude to the noble Lord for raising the matter.
I want also to clear up some of the misunderstandings that appear to exist about the operation of the Cruelty to Animals Act 1876 under which experiments on living animals are at present controlled. I hope that noble Lords will forgive me if I deal with this at some

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length because, important as the particular Question that the noble Lord has raised is to all the people in this country, the whole matter of experiments on animals is of vastly greater importance, and something of this may be conveyed to people who are very anxious about it. In the course of their inquiry the Little-wood Committee found several widely held misconceptions about the Act and its administration, and they discussed these in some detail. Therefore, before turning to the actual experiments which are the subject of the noble Lord's Question, I should like to remind the House of the control that is exercised over experiments on living animals, and the purposes for which the Cruelty to Animals Act permits such experiments to be performed.
The Act regulates and restricts experiments calculated to cause pain to any living vertebrate animals. The restrictions imposed are designed to ensure that no animal under experiment suffers severe pain that is likely to endure or suffers avoidable pain of any kind. The Act does not define "experiment" or "pain", but for the better protection of animals the Home Office (and I am grateful to the noble Lord, Lord Hurcomb, for his kind words about the way my Department administer the Act) have interpreted these terms "experiment" and "pain" widely. Thus, in practice, any procedure upon an animal designed to find the answer to a problem—other than diagnosis in the course of ordinary normal veterinary practice—is regarded as an experiment; and it is considered to be subject to the Act if it presents even the risk of discomfort or interference with the animal's normal state of health or wellbeing. I think we shall all agree that this interpretation of "experiment" or "pain" could scarcely be wider than it is.
The Act lays down precisely the purposes for which such experiments may be performed—and I shall have more to say about this in a few moments. But first I would assure your Lordships that no person can perform an experiment without obtaining a licence from the Home Secretary. No applicant is granted a licence unless he is recommended by two persons holding offices specified in Section 11 of the Act. One of these must be the president of one of the
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learned societies named in the Act. The noble Lord, Lord Platt, indicated in his speech that he, as the President of the Royal College of Physicians, was one of those heads of learned societies, and he signs many such certificates; and the noble Lord, Lord Florey, in fact signed this particular certificate, as the President of the Royal College of Surgeons, I believe, which permitted this experiment. That is one. The other signatory must be the professor of a branch of medical science. This guarantees that licences are granted only to highly responsible, qualified people.
In any experiment performed under licence alone the law requires that the animal must during the whole of the experiment be under the influence of an anesthetic of sufficient power to prevent it from feeling any pain, and if pain is likely to continue after the effects of the anæsthetic has ceased, or if any serious injury has been inflicted, the animal must be killed before it recovers from the anæsthetic. Where these restrictions would necessarily frustrate the object of the experiment the Act provides for them to be relaxed at the discretion of the Home Secretary by virtue of one or more certificates to that effect given by the statutory signatories whom I have mentioned; that is, persons holding the offices required to sign applications for licence.
All places where experiments under the Act are performed are also required to be registered by the Home Secretary, and these premises are regularly visited, without prior notice, by one of the ten Home Office inspectors to ensure that the requirements of the Act are being properly observed. That is the general position.
I now turn to the aspect of this matter which bears particularly on the Question asked by the noble Lord, Lord Somers; that is, the purposes for which experiments may lawfully be performed. Subsection (1) of Section 3 of the 1876 Act is quite explicit. It says:
"The experiment must be performed with a view to the advancement, by new discovery, of physiological knowledge, or of knowledge which will be useful for saving or prolonging life or alleviating suffering."
Thus an experiment is permissible under the Act for the advancement by new discovery either of physiological knowledge or of knowledge which will be useful for

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saving or prolonging life or alleviating suffering. The pursuit of fundamental physiological knowledge is itself enough, without the need to demonstrate any evident or direct usefulness to mankind or animals to be sought from the experiment. The Littlewood Committee gave very careful attention to this point, and to the argument that Section 3(1) of the 1876 Act also implies that the Home Secretary is responsible for adjudicating—which again was implicit in the noble Lord's Question. He said twice (I am grateful to him for it) that the Home Secretary is only human. I say that he is very human indeed. But they gave particular attention to the question of the responsibility of the Home Secretary for adjudicating on the usefulness of a proposed piece of research. They concluded that the interpretation which we put on that subsection was undoubtedly correct, and they rejected the contention that the Home Secretary is responsible for inquiring into the likely value to be derived from specific experiments.
I do not want to keep your Lordships for too long, but it may be helpful if I remind you what the Littlewood Committee said in this context. They said—and I am quoting from their Report:
"It was strongly contended by witnesses for the Royal Society for the Prevention of Cruelty to Animals and by several correspondents that it was the clear intention of the Act that experiments should not be permitted unless they were essential to solve some specific problem of human or animal suffering. The Home Office has always acted on the view that the phrases"—
that is, the phrases I have just read out—
"describe alternative classes of purpose for which experiments are permissible. We have no doubt that this is the correct interpretation and that the Home Office is bound to allow experiments for the advancement of fundamental knowledge. … We noted that the Royal Society for the Prevention of Cruelty to Animals also took Section 3(1) to imply that the Secretary of State is responsible for adjudicating upon the usefulness of a proposed piece of research or for assessing the results of scientific work. … Home Office practice is to establish that each application for a licence or a certificate is for a class or purpose permitted by the Act. … If, however, the application prima facie satisfies the general requirements of the section, the Home Office has no further concern to assess the potential value of the proposed research or the results of past research."
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Thus the Littlewood Committee. There is no question whatever, therefore, that in the view of the Littlewood Committee my Department in these matters is pursuing absolutely and scrupulously the correct and proper procedure.
The Littlewood Committee also gave careful consideration to evidence presented about "unnecessary" experiments, so-called, and the need for imposing restrictions in any future Act on the performance of experiments not directly aimed at solving some specific problem of suffering. In paragraph 270 of their Report they said:
"From our study of the evidence about unnecessary experiments and the complexity of biological science we conclude that it is impossible to say what practical applications any new discovery in biological knowledge may have later for the benefit of man or animal. Accordingly, we recommend that there should be no general barrier to the use of animal experimentation in seeking new biological knowledge even if it cannot be shown to be of immediate or foreseeable value. On this principle we think the formula in subsection (1) of Section 3 should be retained."
So, my Lords, the Littlewood Committee, besides endorsing the established view that the present Act does not restrict experiments to those likely to have direct or foreseeable benefit to mankind or animals, recommended no change in the underlying principle. I invite your Lordships to ponder the wisdom of those conclusions and, in particular, the impossibility of predicting the practical benefits that may at any time, and often quite unexpectedly, be derived from what may appear to be pure research.
I have in my hand a letter, dated April 17, this month, from the Audiology Research Unit of the Royal Berkshire Hospital, Reading. It says:
"Dear Professor Thorpe,
"We are doing some work here at Reading on the effects of auditory stimulation before birth"—
of course, in talking about "before birth" it refers to human babies—
"and during the first weeks of life of both human beings and animals. One of our major concerns is to discover the effects of deprivation of auditory experience on the development of speech reception and language ability. I have read with great interest of some of your recent work and wondered if you would be kind enough to allow me to visit your Department to discuss techniques with you or your colleagues. If you can accommodate this venture perhaps you will be kind enough to suggest a convenient date."

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That is one example, which happens to have come into my hands this afternoon, of just one of the results.
In every field of endeavour, not least those of medicine and biology, practical advance would have been greatly retarded, and humanity deprived of many of its greatest benefits, without the constant and ever-increasing pool of knowledge which pure research has accumulated. My Lords—and I hope that the noble Lord, Lord Somers, will accept this—there is no question (I have been into this matter very carefully) but that the experiments involving the deafening of chaffinches constituted genuine scientific research. They were carried out at Cambridge University, as your Lordships have heard, nearly five years ago by Professor Thorpe working in conjunction with a visiting American professor.
Professor Thorpe is the Director of the Sub-Department of Animal Behaviour at Cambridge University. He is one of the most eminent zoologists in the country, and as such he was a member of the Brambell Committee which inquired into the welfare of animals kept under intensive systems of livestock husbandry. For that Committee Professor Thorpe produced a memorandum on The Assessment of Pain and Distress in Animals, which appears as Appendix III of the Brambell Committee's Report. It is a model of enlightened appreciation. I mention this merely to underline the fact that this project was carried out under the direction of a senior scientist who not only is one of the leading authorities in his field but, in the words of my noble friend Lord Hurcomb, is certainly very concerned about animals. Perhaps anything I have said on this subject is completely outshone by what Lord Hurcomb has said. I regard him as the doyen of bird lovers and bird protectors, and if he is satisfied in this matter then certainly I am.
LORD SOMERS: My Lords, may I interrupt the noble Lord? I quite agree with everything that he has said about my noble friend Lord Hurcomb, and I also agree that this was an absolutely genuine experiment, but I wonder whether the noble Lord would not agree with me that there may possibly be occasions on
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which it is better for us to remain ignorant.
LORD STONHAM: Possibly, my Lords, but this is not one of the occasions. The Press reports about these experiments—and I make no complaint about them—referred to their being performed to ascertain how birds learned to sing. To put it mildly, that was a very superficial description of the purpose. While the experiments were immediately directed at an ornithological problem in connection with Professor Thorpe's work on the ontogeny and vocal communication in birds, they were far from being merely of ornithological interest. They were in fact of wide biological importance in that they were designed to throw light upon the method of formation of neural templates in the brain. They were thus of fundamental importance to students of brain mechanisms. So far as is known, birds are the only animals, apart from man, which have the power of vocal imitation; hence the use of chaffinches in this particular experiment. In man, vocal utterances are monitored continuously by the ears. If the feed-back through the ears differs from that which the speaker utters, gross distortions of speech may occur. The occurrence of imitation in birds provides an opportunity to study the role of feed-back in vocalisation in a situation which, because of the stereotyped nature of birdsong, is much simpler than that in man.
The experiments gave a definite answer to the questions posed. The results were made known at a congress in 1966 and have since been published in ornithological publications. The answers were in fact these: the deafened adult birds continue to sing, but birds deafened as juveniles could not develop the overall song structure. The curious thing is that these experiments only came to the notice of the public because Professor Thorpe, in remonstrating wish an American ornithologist (as I think my noble friend Lord Hurcomb has suggested) for carrying out severe procedures on birds which provided no scientific information of value, contrasted this with his own very different procedure in 1964–65. I hope this disposes of any suggestion that Professor Thorpe was cruel.
In all, 20 chaffinches were used in these experiments. They were taken from the

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wild, some as nestlings and others as adult birds, under a licence—as I think the noble Lord said—issued under the Protection of Birds Act by the Nature Conservancy. They were rendered deaf by means of a minor surgical operation, carried out under full anæsthesia under the authority of a licence and certificate B granted under the Cruelty to Animals Act. Certificate B refers to an experiment carried out under anæsthesia, where the animal is not killed before it recovers from the influence of the anesthetic. The birds were therefore subsequently allowed to recover from the effects of the anæsthetic.
Both the report on the experiments which has been made by Professor Thorpe, and the observations of the Home Office Inspector (who has nothing but praise for the conditions under which the birds are kept) confirm that within a day or two of the operation the birds were entirely normal in their appearance and general behaviour and showed no signs whatever of suffering any pain or distress as a consequence of being deaf. As my noble friend Lord Hurcomb has said, they are mating normally, and producing fertile eggs, but because of their deafness they cannot themselves alone rear their young to final maturity. Deaf birds would, of course, be at a disadvantage in the wild in avoiding certain predators and would be unlikely to survive. For this reason none of the birds used in the experiment was released; as required by law, after the full results of the experiment were known, they were killed.
My Lords, before I sit down I would say that I deplore the fact that since the news story was published some individuals, who doubtless would call themselves bird lovers but whose conduct proves them to be the reverse, broke open the aviaries and released some doves and budgerigars. Unfortunately, some of these birds have already been killed by predators; all the remainder will either be killed by predators or will starve to death. I can only hope that other people who might feel inclined to take similar action will in future take the trouble to get the facts right first, as the noble Lord, Lord Somers, has done. These experiments were for a scientific purpose and they were properly carried out. They were successful in producing definite answers to the ques-
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tions posed, and the results of the work have been published. Since the series of experiments was completed in 1965, no similar experiments have been made by Professor Thorpe and he has no proposals to repeat them.

GIBRALTAR AND THE CASTIELLA PROPOSALS
5.57 p.m.
LORD MOYNIHAN LORD MOYNIHAN rose to ask Her Majesty's Government: Whether they intend to implement the United Nations resolution calling for the handing over of Gibraltar to Spain by October 1, 1969, and whether they will negotiate with the Spanish Government to find a solution based on the Castiella proposals. The noble Lord said: My Lords, I should like to start by saying once again, as I do when I address your Lordships on this subject, that I am not in any way speaking for the political Party on whose Benches I have the honour to sit.
This is a difficult and highly inflammatory subject. It is surely natural and correct that a subject which brings two peoples into conflict, the one side firmly thinking themselves to be defending basic human rights and the other defending its own territorial integrity, should be inflammatory. We in this country are in a no more enviable position since we hold the reins, as it were, of these two horses, each powerfully pulling in a different direction; and although passionate views are held by just about every Spaniard and just about every Gibraltarian, I am afraid that the subject seldom conjures up more than varying degrees of either apathy or jingoism, as the two extremes, among the people of this country. It seems that many people in this country would prefer to shut the door of the cupboard, leaving the problem inside and pretending that it did not exist. I, for one, have always believed that it would be possible to reach a compromise on this issue totally satisfactory to all the parties concerned if jingoism could be avoided and the realities of history and present conditions faced. It is with this in mind that I raise the subject again in your Lordships' House.
I think there are four points on which we may all find ourselves in reasonable agreement as a basis for this discussion this evening. The first point is that the

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Treaty of Utrecht is an outdated document. This cuts both ways, because Spain has many rights under the Treaty of Utrecht which really she should not be allowed to use, and which she does not use. For example, there are many racially prejudicial clauses in the Treaty of Utrecht. Also, under the Treaty Gibraltarians do not exist; and that, surely, we can all agree is not an ideal state of affairs. The reason for this, of course, is that the Gibraltarians were not there at the time the Treaty of Utrecht was signed, and surely we must all be just as concerned about their interests in this as about the interests of anybody else. That is the first point on which I would ask agreement from noble Lords in this House.
The second point may be slightly more controversial, but anybody who looks un-biasedly at the map of Europe must be forced to admit that geographically Gibraltar is part of Spain. The third point is that Gibraltar is the only remaining Colony on European soil, and this surely constitutes an undesirable principle. The fourth and last point on which I hope we shall all agree is that although the history of Gibraltar has been the scene of some of the greatest of British military prowess, of which we can all be extremely proud, the way this country has behaved politically throughout history on this issue has left a good deal to be desired.
I am sure that the noble Lord who is to answer me will make a large issue of the plebiscite which was conducted recently in Gibraltar. We all know of it, and we all know of the result. I said before it took place that it was a mistake, since it would reveal nothing about the views of the inhabitants of Gibraltar that was not already known and would further antagonise the Government of Spain. I am afraid that I was proved to be right. The other plebiscite which has taken place is the world plebiscite, the plebiscite of world opinion on this issue. And although I have the greatest respect for the debating skill of the noble Lords who will speak this afternoon I feel that it will tax them to the hilt to be able to explain away the figures as they were shown in the United Nations. The figures, of course, were that 67 countries voted for the return, or what is easily seen to mean the return, of Gibraltar to Spain, and 18 voted against it.
A great deal was made of the fact that a tremendous number of South American Spanish-speaking ex-Spanish colonies voted for the Spanish side; and this is indeed true. It is also interesting to see that all but three of the 18 votes cast for us were from our ex-Colonies or territories in which we had a vested interest. The only three non-committed countries that voted on our side were Sweden, Denmark and Liberia. Of the countries which used to be our Colonies, or in which we used to have a vested interest, 12 voted against us, whereas not one such ex-colony of Spain voted against her, and 13 of our ex-territories abstained, whereas not one of the ex-Spanish ones did. Many of our traditional allies abstained, presumably because they felt it impossible to vote for us and did not wish to embarrass us by voting against us.
But the strangest thing of all revealed by the United Nations vote was the strange bedfellows who voted against us. Is it not incredible that Spain should be supported by the Communist; that China should find herself in the same lobby as Cuba, and that the entire Arab world should for the first time in recent years be united in one lobby? If I might just remind your Lordships of the famous words of ex-President Eisenhower, he said that "to unite Arabs was like trying to nail a piece of jelly to the wall." We have managed to do this, against us.
I think it may be interesting for your Lordships if I recapitulate exactly what the resolution of the United Nations says. If you will bear with me, I will read it; it is quite brief:
"The General Assembly,
Having considered the question of Gibraltar,
Having heard the statements of the administering Power and the representative of Spain,
Recalling its Resolution 1514(xv) of 14 December 1960,
Recalling also its Resolution 2353(xxii) of 19 December 1967,

1. Regrets that the administering Power has failed to comply with General Assembly Resolution 2353(xxii);

2. Declares that the continuation of the colonial situation in Gibraltar is incompatible with the purposes and principles of the Charter of the United Nations and of General Assembly Resolution 1514(xv);

3. Requests the administering Power to terminate the colonial situation in Gibraltar no later than 1 October 1969;

4. Calls upon the Government of the United Kingdom of Great Britain and

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Northern Ireland to begin without delay the negotiations with the Government of Spain provided for in Resolution 2353(xxii);

5. Requests the Secretary-General to give the Governments of Spain and the United Kingdom of Great Britain and Northern Ireland any assistance they may require for the implementation of the present resolution, and to report thereon to the General Assembly at its twenty-fourth session."

My Lords, I think that resolution is perfectly explicit, and that is what these countries voted for.
A large number of red herrings have been drawn across the issue of Gibraltar. The first and most often heard is the political colour of the present Spanish Government. This is the subject often of even popular joking, and I would, if I might, very briefly quote Mr. Winston Churchill, who on May 24, 1944, said:
"I must say that I shall always consider a service was rendered at this time by Spain, not only to the United Kingdom and to the British Empire and Commonwealth, but to the cause of the United Nations.
"I have, therefore, no sympathy with those who think it clever, and even funny, to insult and abuse the Government of Spain whenever occasion serves."—[OFFICIAL REPORT, Commons. 24/5/44. col. 770.]
This is one cause on which Spanish people are totally and completely united, and any question about the political colour of the Government in power at present in Spain is totally irrelevant. May I quote from an article which appeared on May 18, 1968, in a magazine called the Tablet, by that well-known Spanish exile, Salvador de Madariaga, who of course does not normally agree with the Government in Spain. He wrote:
"The Spanish position now is that although legally the Rock is British, politically it must return to Spain; for such a purely legal concession (even overlooking the fact that it was exacted under duress) is no longer tenable in itself nowadays. Suppose a Sultan, in 1713, had extracted from another Sultan a right to receive one thousand maids a year for his harem: legally, this right would he indisputable; politically, no longer defensible. A nation nowadays can no longer occupy a patch of the territory of another nation in the geographical and historical conditions in which Britain occupies Gibraltar."
That is from an enemy of the Spanish régime.
It seems to me that there are two issues here. I should be very happy if the Minister, when he replies, would state quite clearly his position on this.
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The first issue would seem to be: should or should not the inhabitants of Gibraltar be handed over to a dictator? A second entirely different issue seems to me to be: should or should not Gibraltar be handed to Spain? I should like this cleared up now; and if the Minister will say that if the Government of Spain were a freely elected democracy the Government of Great Britain would then negotiate the issue of sovereignty, it would make it entirely clear one way or the other.
The next red herring, which is indeed directly connected, is the non-democratic nature of Spain. I do not wish to make an issue of this matter and I would pass it over lightly, but the question has arisen recently of the non-democratic nature of Gibraltar. It is a very great pity when one or two people who feel in a way that is different from the feeling of the majority of people in that place have their houses looted, their yacht burned and generally have their home made uninhabitable for them, their family and their children. Surely nothing worse than that has happened in Spain recently.
The third red herring is the question of Spanish belligerence, as it is called: the fact that England would like to negotiate but cannot in any circumstances negotiate under pressure. This clearly does not hold water, either. There is no Spanish pressure, to my knowledge, which has been applied and which is not clearly covered in the stipulations of the Treaty of Utrecht The next, and possibly the most serious of the red herrings, is the military arguments. I am not a military strategist and I can hardly deal with this subject, but it is dealt with in the Castiella proposals, and I should have thought that the ultimate solution to this question would be for Spain to become a member of NATO and for the base at Gibraltar to be a NATO base. It seems to me a logical conclusion.
A lot is made of the British nature of the people in Gibraltar. I will, if I may, recount shortly something that happened to me in a bar in the main street in Gibraltar not long ago. With ten or twelve other people, all Gibraltarians as I later verified, I was watching Sir Joshua Hassan addressing the people of Gibraltar on television. At the end

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of his speech, which was of course made in English, the people in the bar gathered round me earnestly to question me in Spanish as to what their Prime Minister had said, because none of them understood him. That is a true story. It is an interesting point, also, that during the riots of April 6 one of the most common catch phrases was, Sus mulas quien no soy Inglés, which means, "Anybody who is not English is a donkey". The interesting thing is the fact that it is always said in Spanish. In fact there are many Gibraltarians whose only English sentence is, "Vritee we are, Vritee we estay". Anybody with an intimate knowledge of Gibraltar knows that in fact the people there are far more basically Spandiards than they are British.
It is incredible to me that the same people who in this House and in another place have their speeches, which one can read in Hansard, dotted everywhere with references to United Nations resolutions, are the same people who are now up in arms over this one. It seems to me that we must clearly make up our minds. Either we are going to subscribe to the United Nations resolutions or we are not. We cannot subscribe only to the ones that suit us and not to the ones that do not. It seems that there is an eventual inevitability of the return of Gibraltar to Spain. I, as much as anybody in this House, have a genuine desire to protect the future of the Gibraltarians: the only difference is that I feel differently about how it should be done. I am convinced that if a negotiated settlement were to take place now the Gibraltarian would have every guarantee that he could possibly wish for. I am equally convinced that if this matter drags on, with no settlement, in the end the Gibraltarian will get nothing.
There are vast Spanish plans for the development of the Campo of Gibraltar and the Bay of Algeciras. There are plans to make it a free port of its own. There are plans to create new industries in order that they may totally withdraw the working force from Gibraltar. There are plans to turn it into a viable holiday resort. All these things will go ahead, and gradually Gibraltar will become less and less attractive and less and less habitable. And when this happens the inhabitants will drift away, one by one, family
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by family, and the Rock will be left with only the apes. I feel that it is of extreme importance that if we are going to take the attitude which we are taking, at least the Gibraltarians should be given the right of free entry into this, country. We are responsible for making Gibraltar uninhabitable—that is what is going to happen—and we are giving the Gibraltarians nowhere to go. Surely they should be allowed admission to this country.
If the Castiella proposals, with which I am sure your Lordships are all familiar, are unacceptable as a basis for negotiation—and nobody is insinuating that they should be accepted in toto—may I read to your Lordships the proposals which were made in an article in the Gibraltarian Chronicle on April 4, 1968, two days before the unfortunate riots, by the group of Gibraltarians who call themselves "The Doves". I defy anyone to say that there is anything controversial in this series of proposals. Here they are:

"1. Recognition of the Gibraltarian Community as the rightful inhabitants of Gibraltar.

2. The preservation of their existing citizenship of the United Kingdom and Colonies and, if Britain were to agree, United Kingdom passports and exemption from the provisions of the Commonwealth Immigrants Acts.

3. A freey elected Government with autonomy in all internal affairs, the qualifications of candidates and voters being that they must be of British citizenship.

4. An administration composed of British subjects exclusively.

5. A police force composed of British subjects exclusively.

6. Law courts from which there will be a final appeal to the United Kingdom, which will enforce British law as modified by the Gibraltar Legislature, and of which both the judges and advocates will be British subjects.

7. Freedom of thought, of religion, of belief, of speech, of association, the right to strike as an individual, a collectivity, or as a member of a freely constituted trade union.

8. The maintenance and improvement of existing social, educational, medical and hospital services run by British subjects.

9. Equality of all before the law, i.e. 'The Rule of Law'.

10. Defence and other interests of Britain in Gibraltar would be negotiated by Britain and Spain and we are assured by a British representative who formed part of Lord Shepherd's party on his recent visit to Gibraltar that defence interests are no obstacle to a negotiated settlement.

11. Gibraltar is to be granted a constitution which gives it complete and utter autonomy in law-making and law-enforcement guaranteed by

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the two parties of the Treaty—Britain and Spain, and if necessary UNO, in settlement of the decolonisation problem pending there.

12. The British flag would not for a split second be hauled down in Gibraltar. Gibraltar could also fly its own flag in recognition of the vested rights of the Gibraltarian and, as a symbol of the fact that the Gibraltar described above owes its origin to a new Anglo-Spanish Treaty, the Spanish flag would also be hoisted."

Is there anything terrible about that? Later in the same letter the writers add—and they are men of extreme honour; I know them all personally:
"We went to Madrid to ascertain whether they"
that is, these proposals,
"were acceptable to Spain and we were assured by the Foreign Minister, Senor Castiella himself that they were."
Surely on that basis there must be grounds for a negotiated settlement. We in this country are not with so many friends that we can afford to do without possible friends such as Spain. We shall not be giving up Gibraltar; we shall be turning the whole of Spain into our Gibraltar. Surely, we are two great peoples with so very much to offer each other that more efforts ought to be made to reach a satisfactorily negotiated settlement.
6.24 p.m.
LORD MERRIVALE: My Lords, when I put down my name to speak to Lord Moynihan's Unstarred Question I thought that we were being asked to consider the Castiella proposals. It seems that, in effect, we are being asked to consider the proposals of the "doves". I understand that initially there were five doves; then there were only four. So it does not seem that, in so far as we are concerned, we are really being asked to consider seriously the proposals of Señor Castiella.
My opening remarks in this debate will be to echo the warm words of welcome addressed to Admiral of the Fleet Sir Varyl Begg by Sir Joshua Hassan and Mr. Peter Isola on his arrival in Gibraltar last Thursday as the first naval Governor and Commander-in-Chief, when they also stressed the overwhelming importance of the link of Gibraltar with Britain. Also, the fact that for the first time in history a naval officer has been appointed to this important post may highlight the im-
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portance of Gibraltar to NATO from a naval point of view. Of course, the association of the Navy with the Rock dates back many a year. I think the new Governor has an important task in front of him for, as Mr. Peter Isola said last week, his period of office will see Gibraltar launch itself into a period of constitutional change and of Parliamentary democracy that it has not previously experienced. I think the new Governor—and I say this with respect—may even care to heed the following words taken from last week's El Calpense:
"Definitely, Sir Varyl, your main object if you want to help us is to neutralise the enormous influence of our pro-Spanish enemies in London."
Turning now to the subject of our debate this evening, I should like, if I may, to quote from the speech of the noble Lord, Lord Caradon, before the General Assembly on December 18 last. I apologise for quoting this speech, but it is most relevant and a very important speech, and I think this extract is important. The noble Lord, Lord Caradon, said:
"We believe in the principle stated in Chapter XI of the Charter that the interests of the inhabitants should be paramount; we believe moreover that the requirement in the Charter (to develop self-government; to take due account of the political aspirations of the peoples and to assist them in the progressive development of their free political institutions) meant what it said."
He went on to say;
"We see no cause to exclude the people of Gibraltar, a small but proud and brave people, from the protection of the fundamental provisions of the Charter. We believe that the policy adopted by Spain, directed against the people of Gibraltar, the policy of attempting by restriction and harassment to intimidate and coerce and harm the people has been misconceived and misdirected. Indeed by alienating instead of attracting the people that policy has militated against any positive progress."
My Lords, bearing in mind Spain's long record of restrictions against Gibraltar in the realm of withdrawal of Spanish labour, of curtailment of tourism, of frontier closures, of cancellation of trade, of over-flying bans, of harassment of merchant shipping, of social and cultural prohibitions, and of harmful political and psychological activities, it is certainly curious that we should be asked this evening by the noble Lord, Lord Moynihan, whether Her Majesty's Government will implement Resolution 2429 of December last, and whether Her Majesty's

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Government will negotiate with the Spanish Government to find a solution "based on the Castiella proposals".
Over the last four years, that is, in December, 1965, December, 1966, December, 1967, and December, 1968, resolutions appertaining to the "question of Gibraltar" have been adopted by the General Assembly with a total disregard for paragraph 2 of Resolution 1514 of December 14, 1960. That Resolution says:
"Declaration on the granting of Independence to colonial countries and peoples".
Paragraph 2 reads:
"All peoples have the right to self-determination; by virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development."
On this score, no conciliation whatsoever has been apparent on the part of the Spanish authorities, and to-day it would appear that the noble Lord, Lord Moynihan, is asking Her Majesty's Government to go back on their word—that is, Her Majesty's Government's word, as expressed by the noble Lord, Lord Caradon, when he said on December 18 last that it was a matter to be deplored that a number of delegations should have supported a proposition which they know "will not and cannot be put into effect."
I believe that the resolution which we are considering this afternoon was originally tabled in the Fourth Committee on November 21 last by Ecuador—and this is something to which the noble Lord, Lord Moynihan, referred—in the main by a number of Spanish-speaking countries.
LORD MOYNIHAN: My Lords, perhaps the noble Lord will correct that. I think that "in the main" points to a majority, and this was certainly not the case as my figures showed. It was "in the main" by non-Spanish speaking countries.
LORD MERRIVALE: My Lords, I suppose one could ask: how long is a piece of string? What I am referring to is the original resolution tabled before the Fourth Committee on November 21. I am not refering to the voting before the General Assembly. In view of this support of the Spanish-speaking countries, to which the noble Lord referred, I suppose it is no wonder that they agreed
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that Gibraltar should be handed over to Spain, over the heads of the people of Gibraltar and regardless of their wishes.
I hope most sincerely that the Minister will stand firm this evening, remembering that the resolution which was carried on December 18 last was considered by the noble Lord, Lord Caradon, to be a "dead end of one road". The road that now lies ahead is one which I trust will see an early publication of the Order in Council, incorporating the with Great Britain in the preamble; the early putting into effect of the constitutional changes; and an early General Election to hasten the process of decolonisation. I should like to ask the Minister whether he can be very specific when he replies, and say when the Order in Council will be tabled, when it will come into effect and when a General Election will be held. Can the Minister also confirm a statement in Time Times of July 25 last, that the word "colony" is to be removed from Gibraltar's passports, with Gibraltar remaining one of Her Majesty's Dominions?
Regarding the General Election, I should like to assure your Lordships that, according to information received, there is now absolutely no cause whatsoever for delaying it, as since early March of this year there has been complete agreement between the Parties on the electoral system to be adopted. I should like to take this opportunity to express my sincere appreciation to Major Gache, a well-known and esteemed Gibraltarian for his assiduity in keeping Members of Parliament au fait and up to date with constitutional and electoral matters affecting Gibraltar and its people. Before turning briefly to the question of the Castiella proposals, I should like to stress that so long as the introduction of the new constitutional arrangements is delayed, so long, too, will it appear that the future of Gibraltar and the security of its people are both still open to negotiation on an international plane.
Anyone who has followed the Anglo-Spanish dispute for any length of time knows that the Castiella proposals have only one object—the transfer of Gibraltar to Spain. Equally, he knows that Britain has declined to hand over Gibraltar, because to do so would be to betray two principles, which, in effect, Her Majesty's Government have, quite

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rightly said many times cannot be betrayed: first, that the interests of the inhabitants are paramount; and, secondly, that the people of Gibraltar have the right freely to express their own wishes as to their future. This they certainly did in September, 1967, whether the noble Lord, Lord Moynihan, approves of it or not.
Spain has claimed that the Anglo-Spanish talks of March, 1968, were unilaterally broken off by Britain. Surely those talks failed because of Spain's insistence on discussions only on the basis of Resolution 2353 of December, 1967, which would have meant the immediate handing over of Gibraltar; so that, in effect, there would have been absolutely nothing to discuss. It is interesting to note that during the discussions last December in the Fourth Committee and in the General Assembly delegations made compromise proposals, but no compromise proposal was acceptable to Spain.
In conclusion, therefore, I hope that the Minister will this evening categorically reject the proposals of the noble Lord, Lord Moynihan, and will also state categorically that Her Majesty's Government intend to usher in a new Constitution at the earliest possible opportunity, and a Constitution which, for the first time, will allow local domestic matters to be decided—not merely advised on—by locally elected members. They will thus be ensuring this process of decolonisation, and making it clear to Spain that there is nothing to negotiate until such time as the Gibraltarians themselves say that they wish to negotiate with Spain.
6.37 p.m.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT): My Lords, I suppose I should say in the normal way that I am grateful to the noble Lord, Lord Moynihan, for giving us an opportunity to examine this question. In a sense I am, in that it enables me to restate as clearly as I possibly can the policy of Her Majesty's Government in this respect. I accept that the noble Lord, Lord Moynihan, is sincere when he protests that he has the interests of the Gibraltarians at heart in all this,
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but I can only say—I hope without causing offence—that I think he has chosen a curious way of going about it.
Before I answer the noble Lord's Question specifically and categorically, perhaps I may take up one or two of the points which he made in his speech. He made the point, which I think is familiar to everybody who has followed this problem, that Gibraltar is geographically a part of Spain and should therefore be returned to Spain. I think that is the gist of one passage of his speech. Of course, if this were a valid argument, and if it were universally applied, we should have to do a great deal of redrawing of maps, and one of the places where we should have to redraw the map is in North Africa where, as the noble Lord will know, there are two Spanish enclaves. But I think this is really no more than a debating point, although a valid one, because in any event this so-called principle of territorial integrity is a very suspect one, and in my view gives way every time in international affairs to the overriding human factor in any problem of this kind.
We were also given by the noble Lord, Lord Moynihan, a great deal of insight into the way he looks at the United Nations' resolution. He analysed the votes and he told us that there had been a great majority in favour of this United Nations' resolution. I shall come to the resolution itself in a moment, but in any case I hope not to keep your Lordships too long. However, there is one thing I would say about any resolution of the General Assembly of the United Nations. As the noble Lord will know, it has the force of a recommendation only—no more—and when there is a conflict between a resolution of the General Assembly and the United Nations Charter (and there is such a conflict here, as was made clear by the noble Lord, Lord Merrivale) the Charter itself, in Article 103, provides that obligations under the Charter must prevail. I think there is no doubt that that is the case here, in that the resolution on Gibraltar, to which the noble Lord referred, is in direct conflict with our obligations under the Charter.
The noble Lord also mentioned the unofficial proposals made by the group of people called the "Doves" in Gibraltar.

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Of course, I make the point that these are not official proposals. There is no official confirmation that Senor Castiella, or any other member of the Spanish Government, will accept them. We are assured that they would; but these are unofficial proposals. Of course, we are not debating them tonight: we are debating particularly the Castiella proposals and the United Nations' resolution. But I would make it clear in this context that although we, Her Majesty's Government, are alone responsible for Gibraltar's external relations, any Gibraltarian or group of Gibraltarians is perfectly free to discuss their future unofficially with anyone, including the Spanish Government or Spaniards. They can discuss their future unofficially with anyone they please. They are, so far, free people, and it is no part of our policy to keep them apart from the Spaniards or to prevent them from making this kind of proposal. Indeed, we recognise the need to improve relations on the spot; and, as I shall underline in a moment, we have tried to impress this on the Spanish Government as well.
I should like to dismiss in a few words one irrelevant point (I am not suggesting that it was irrelevant in the context of the noble Lord's speech, but simply that it is dragged into this argument often), and that is our military situation in Gibraltar. Let me make it clear that Her Majesty's Government's policy in Gibraltar is based solely on the interests of the people in Gibraltar. It has no military considerations whatsoever.
There was one other point which I hope the noble Lord will not think too much of a debating point, but he quoted the authority, the admittedly eminent authority, of Salvador de Madariaga as supporting the argument that Gibraltar should be handed back to Spain. I am sure there may be some of your Lordships who ask whether it is not perhaps inconsistent, or at least easy, for Señor Salvador de Madariaga to suggest that the Gibraltarians should live under a régime under which he himself is not prepared to live.
My Lords, the noble Lord, Lord Merrivale, asked me to re-state firmly the Government's policy on this matter, and I shall do so. He need have no fear that we shall not stand firm on this issue. But before I tell him exactly how, per-
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haps I could answer the two questions which he specifically asked me. The first was about the Order in Council which will bring in the new Constitution. We have said, or it has been said in another place, that this Order in Council will come into effect before the Summer Adjournment, and that remains the position.
LORD MERRIVALE: My Lords, I am sorry to interrupt the noble Lord but that is rather vague, in that quite a number of weeks have elapsed since that was stated on March 17. Could not the noble Lord be a little more specific? I understand that there are rumours that the Order will be published about the first week in May. Is there any truth in that?
LORD CHALFONT: The noble Lord will, I hope, know me better than to suppose that I am going to confirm any rumours of that kind. I can only say —
LORD MERRIVALE: Can the noble Lord be more specific then?
LORD CHALFONT: I am sorry, but I cannot be more specific than to say that it is still our intention to bring the Order in Council into effect before the Summer Adjournment. I am afraid I shall have to ask the noble Lord to be patient for more detailed information than that. As for the General Election, I am afraid that this is perhaps equally unspecific; but we do expect it to take place early this Summer.
LORD MERRIVALE: I am very sorry to interrupt the noble Lord again, but could he then say whether the Order in Council will come into effect immediately it is laid?
LORD CHALFONT: That is one of those question which sounds as though it has a catch in it. All I can say is that we hope it will come into effect before the Summer Adjournment, so I hope that the question of the actual laying of the Order is of secondary importance.
Before I finish by reiterating our policy on this subject perhaps I may mention one point—the rather curious question put by the noble Lord, Lord Moynihan, when he asked: If the Government of Spain were freely elected, would we then be prepared to negotiate with it over the future of Gibraltar? The noble, Lord spoke of a series of red herrings in his

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speech. He even spoke of one red herring that would not hold water, which I should have thought was an occupational hazard in the herring's line of business. I think that his question is really the biggest red herring of all, because it is a hypothetical question that no one—no sensible politician—would ever be lured into answering.
But may I make one point on it. and it is this. I think it extremely unlikely that there will he much confidence at the moment in the minds of Gibraltarians that their affairs would be democratically handled if they agreed to pass under the present Spanish régime. I would go no further than that; but what I would say is that we are not concerned with the hypothetical case of what would happen if there were a freely elected Government in Spain. We are concerned with the present position, and, to answer the noble Lord's question directly, we have made it plain—and I will make it plain again —that the United Nations resolution (No. 2429) to which he refers, adopted by the General Assembly last December, is unacceptable to us. Whatever the figures of the voting may have been, and however adroitly he may analyse them, the resolution—and I am grateful to the noble Lord for reading it out to your Lordships' House; it saves me the necessity to do so—embodies what is to me the incredible proposition that by October 1 of this year the people of Gibraltar should be handed over, against their freely and democratically expressed wishes, to a Government which has deliberately harassed them and deliberately and continuously damaged their interests. I find that an incredible proposition.
To implement it, as I said before, would be to ignore our obligations under the United Nations Charter, which are, as the noble Lord, Lord Merrivale, has pointed out, to regard the interests of the Gibraltarians as paramount. I think that the sterile and unconstructive nature of last December's resolution is underlined by the fact that the Spanish Government rejected the possibility of securing an alternative resolution which might have enabled us to return to a course of conciliation and co-operation. It is not at our door that any failure of these discussions and negotiations can be laid.
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The noble Lord has asked in the second part of his Question whether we will negotiate with the Spanish Government on the basis of what he calls the Castiella proposals; that is to say, the proposals put forward by the Spanish delegation at the Anglo-Spanish talks on Gibraltar in 1966. We made our attitude to those proposals clear at the time, and it is indeed fully set out in the Command Paper that was presented to Parliament in that year. My right honourable friend the Foreign and Commonwealth Secretary explained our view that these were important and serious proposals which might go some way towards meeting the interests of the people of Gibraltar. But at the same time it was made quite clear to the Spanish Government that no radical solution was possible in the state of opinion which then prevailed in Britain and in Gibraltar itself and—and this is important—so long as the difficult situation on the spot existed.
May I interject here the point that in the referendum of September, 1967, which was a freely, democratically-held referendum, the people of Gibraltar, were given the option of passing to Spain under the terms of the Castiella proposals. They categorically rejected that option. So we pointed out to the Spaniards that the key to progress lies—it lay then and it still lies—in restoring friendly relations between the people of Spain and the people of Gibraltar; and we made certain proposals which were directed to that end.
My Lords, this is how we still look at this question. Anybody who is interested in seeing this dispute resolved in a way that is satisfactory to both Governments and acceptable to the Gibraltarians will obviously regret that the Spanish Government have ignored what we said to them in 1966. So far from setting out to improve relations between themselves and Gibraltar, they have acted in a way that has totally undermined confidence in Spanish intentions. Their campaign of harassment and pressure has been steadily intensified ever since, and the closure of the frontier in May, 1968—the last of a long series of actions of this kind—was in my view totally inconsistent with the concern which they professed to feel for the interests of the Gibraltarians.
LORD MOYNIHAN: My Lords, if I might interrupt the noble Lord, would he not accept that the closure of the frontier is indeed stipulated in the Treaty of Utrecht? That is one thing which the Government have never admitted, and it is there in black and white, I forget the exact words, and I do not have it in front of me, but it says that there shall be no land frontier between Gibraltar and the surrounding territories. So, in fact, they have done nothing except enforce the Treaty of Utrecht.
LORD CHALFONT: My Lords, I am sorry to quote the noble Lord back. He himself said in the course of his speech that the Treaty of Utrecht was outdated. I now understand him to be invoking the Treaty of Utrecht to justify —
LORD MOYNIHAN: My Lords, two wrongs do not make a right.
LORD CHALFONT: My Lords, that is a sentiment to which I can heartily subscribe; but I am not quite sure how it advances the noble Lord's cause. The fact about the frontier is that the Treaty of Utrecht could make it appear justifiable that the frontier should be closed in the purely juridical sense. But surely the noble Lord realises (even if we leave his point about the Treaty of Utrecht being out-of-date) what has happened since then. The commerce that has taken place across those frontiers, the hundreds of years of free commerce, which has been in the interests of the Spaniards and the Gibraltarians equally, makes it indefensible that the frontier should now be closed in the interests of some political aim. That is the view of Her Majesty's Government. It seems to me, as I say, quite inconsistent with the concern that the Spanish Government profess to feel for the interests of the Gibraltarians.
My Lords, the present dispute is not in anyone's interests. We regret that while the Spaniards sometimes say they are ready to safeguard the interests of the Gibraltarians, the Spanish Govern-
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ment are all the time wielding the big stick of political and economic pressure. Our policy must be to do what we can to persuade the Spanish Government to realise that they must take the first steps towards the creation of an atmosphere in which we can progress towards some kind of settlement. As my right honourable friend the Minister without Portfolio, Mr. Thomson, has said in another place, if at some future time it seemed that to hold talks with the Spanish Government would help the Gibraltarians and bring a solution nearer, we should use that chance. We are not rigid and inflexible about this. It is no part of our policy to keep the people of Gibraltar apart from those of Spain, nor to weaken the many traditional contacts between Gibraltarians arid Spaniards.
I hope that I may conclude on a constructive note by saying that in the light of what has been said in this House this evening, and in the light of the facts, I hope that when the Spanish Government consider these things they will perceive that it rests with them to get us away from the negative policy of pressure and mistrust, and that it is up to them to get us on the road which may one day bring a solution to this question.

MEDICAL BILL [H.L.]
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, on behalf of my noble friend Lady Serota, I beg leave to introduce a Bill to amend the Medical Act 1956, and for connected purposes. I beg to move that the Bill be read a first time.
Moved, That the Bill be now read 1a.—(Baroness Llewelyn-Davies of Hastoe.)
On Question, Bill read 1a, and to be printed.
House adjourned at six minutes before seven o'clock.