Sitting of 4 February 1969

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  BRIGHTON CORPORATION BILL
  (By Order)
CITY OF LONDON (VARIOUS POWERS)
(By Order)

GREATER LONDON LOCAL RADIO AUTHORITY BILL
(By Order)
LONDON TRANSPORT BILL
(By Order)
WALSALL CORPORATION BILL
(By Order)
WELLAND AND NENE (EMPINGHAM RESERVOIR) AND MID-NORTHAMPTONSHIRE WATER BILL
(By Order)
WEST BROMWICH CORPORATION BILL
(By Order)
WOLVERHAMPTON CORPORATION BILL
(By Order)
YORK CORPORATION BILL
(By Order)
GREATER LONDON COUNCIL (GENERAL POWERS) BILL
(By Order)
LUTON CORPORATION BILL
(By Order)
Second Reading deferred till Tuesday next.

PETITION

  Bearsted Memorial Maternity Hospital, Hampton (Closure)
  Mr. Gresham Cooke: I have to present to the House a public Petition against the closure of Bearsted Memorial Maternity Hospital near Hampton Court in my constituency. The Petition was started in November, shortly after the proposed closure was announced, and it was com-
  182
  pleted in December. It carries 7,888 signatures.
  The Petition sheweth,
  Whereas it has been announced that the Bearsted Memorial Hospital being a maternity hospital in Hampton serving the residents of the constituency of Twickenham including Teddington and Hampton, and the constituencies of Esher, Spelthorne, Kingston upon Thames, Feltham, Richmond and Barnes, and Heston and Isleworth, surrounding the hospital, is to be closed, that such action will cause great inconvenience to the public it serves and to the staff of the hospital, requiring patients to go many miles at considerable expense for treatment which is their right under the National Health Service.
  Wherefore your Petitioners pray that the Bearsted Memorial Hospital continue as a hospital dealing with maternity cases under the National Health Service.
  And your Petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.

ORAL ANSWERS TO QUESTIONS
  PUBLIC BUILDING AND WORKS

    Building Materials (Import Substitution)
    Sir G. Nabarroasked the Minister of Public Building and Works what economy in imported building materials occurred in 1968 as a result of the policy of import substitution; and what further progress he estimates for 1969.
    The Minister of Public Building and Works (Mr. R. J. Mellish): The practical possibilities of import substitution in building materials are limited, and changes are unlikely to take place quickly. No significant change can be demonstrated in respect of 1968, but I am continuing to encourage the use of home-produced materials, and savings in the use of imports, whenever these steps are practicable and economic.
    Sir G. Nabarro: Is the right hon. Gentleman aware that that oft-repeated statement now smacks of pious exhortation, with tiny results—[Laughter.] Mr. Speaker, may I have some protection against Easington?
    Mr. Speaker: Order. The hon. Gentleman must not interrupt himself.
    Sir G. Nabarro: When I have quietness, I shall proceed. [HON. MEMBERS: "Oh."] The Minister's statement smacks

    183
    of pious exhortation and, as we have said for twelve months now that we propose to proceed with a policy of import substitution, would it not be reasonable to expect some results at an early date instead of pious exhortation?
    Mr. Mellish: I find the hon. Gentleman extraordinary in many respects. He asks me for information. I do not know why he does, as I gather that he has a printer in the Midlands who can tell him everything.

    Building Control Licensing
    Sir G. Nabarroasked the Minister of Public Building and Works what effects he has measured in recent months of the ending of building control licensing; whether he is now satisfied that all home-produced building materials are abundantly available; and if he will make a statement.
    Mr. Mellish: It is still too early to assess the impact of the suspension of building licensing. The situation will remain under review. No national shortage of major home-produced building materials is envisaged during 1969.
    Sir G. Nabarro: Why was this expensive Aunt Sally set up at all? After two years of blathering, the right hon. Gentleman abolished it. Is it not a fact that he now finds that he can do well without it? Why is he so enamoured of this form of control?
    Mr. Mellish: I did not set it up personally. I am the one who abolished it.
    Mr. W. Baxter: There is a serious aspect to these two Questions. Has my right hon. Friend given serious consideration to copper substitution in the building industry, since he must be aware that the present cost of copper is almost prohibitive in building? Is not greater research required so as to give better substitutes for copper?
    Mr. Mellish: My hon. Friend is right, and I accept that there is a serious point behind the Questions. Copper is mainly used for piping in plumbing, as hon. Members know. Research is now being done into the production of alternative materials to copper in domestic plumbing systems and into ways of economising in the use of copper. Thin-wall copper
    184
    tubing is coming into fairly widespread use.
    Mr. Chichester-Clark: Is the right hon. Gentleman aware that there is beginning to be concern in the industry about mounting stocks of bricks, especially in view of the Government's announcement that housing starts are likely to be lower than last year?
    Mr. Mellish: I do not see how that necessarily links up with the Question on the Order Paper. The brick makers themselves have made no representations to me, but in view of what the hon. Gentleman has said I will discuss the matter with them.

    Constitution Hill (Lighting)
    Mr. St. John-Stevasasked the Minister of Public Building and Works whether he will make a statement on the lighting installed on Constitution Hill.
    The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. Charles Loughlin): Early last year, my right hon. Friend informed the House that the old gas lamp standards in this road would be retained and that experiments would be carried out to determine how the best standard of lighting with electricity could be achieved. A suitable solution was eventually found, and the necessary conversion work to the old standards was completed last September.
    Mr. St. John-Stevas: While being grateful for what has been done by the Minister in preserving us from the horror of concrete lamp standards, may I ask the hon. Gentleman to do something about the sodium lighting, which blinds and dazzles everyone using that beautiful approach? Will he provide an æsthetic Magna Carta for Constitution Hill?
    Mr. Loughlin: I would not risk saying that I could introduce an æsthetic Magna Carta for Constitution Hill, but I think the hon. Gentleman accepts that my right hon. Friend has done everything possible to meet every objection in the conversion scheme, and the degree of illumination at the moment has the approval of the road traffic authorities.
    Mr. McNamara: Is my hon. Friend aware that many people who go home from this place in the evening by way

    185
    of Constitution Hill are much impressed by the improvement in the lighting which has been possible even with the retention of the old standards?

    Naval Dockyards (Review)
    Mr. Juddasked the Minister of Public Building and Works whether he will make a statement on the implications for his Department's personnel in Portsmouth of the Government's review of the future of naval dockyards.
    Mr. Mellish: No, I cannot anticipate my right hon. Friend's forthcoming statement on Defence.
    Mr. Judd: Is my right hon. Friend aware that his last visit to Portsmouth did a great deal to clarify the Ministry's policy towards the existing labour force? Can he assure us that there will be the fullest consultation again following the announcement in the White Paper next month about the future of the naval dockyards?
    Mr. Mellish: I am obliged to my hon. Friend for his comments on my visit. I found both our people and those of the M.O.D. first-class and doing a fine job. I promise them the full consultation they have a right to expect.

    New Houses (Condensation)
    Mr. Dalyellasked the Minister of Public Building and Works what is his assessment of the work done for his Department at Royal Aircraft Establishment, Farnborough, on condensation in recently-built houses.
    Mr. Loughlin: Condensation is not a suitable problem for investigation at the Royal Aircraft Establishment. The Department is discussing other possibilities with the Ministry of Technology: these include structural studies, new materials, the control of engineering services and the effects of sonic bangs.
    Mr. Dalyell: What steps are being taken to publicise this work in the trade? Would not some kind of handbook be a suitable way?
    Mr. Loughlin: I appreciate that there is a problem of dissemination of information on condensation problems. The Department and the other bodies concerned do what we can to make the
    186
    information widely available. Within a few weeks we shall publish a handbook for designers to deal with condensation and for the trade as a whole.
    Mr. Costain: I congratulate the Parliamentary Secretary on his new appointment and wish him a happy if short stay in it. Is he aware that the National Federation has produced a useful handbook and a pamphlet? Will he do what he can to get them circulated among local authorities?
    Mr. Loughlin: The hon. Gentleman will accept that there is a great deal of co-operation between the industry and us. Where the Department's services are required by the industry for dissemination of information of all kinds, we are willing to consult with the industry if it approaches us. I would add that my occupancy of my new position may be much longer than the hon. Gentleman thinks.

    Land Commission (Scotland)
    Mr. W. H. K. Bakerasked the Minister of Public Building and Works what is the total cost of the acquisition by the Land Commission of offices and other accommodation in Scotland to date; and what annual rentals are paid for such other premises held on lease.
    Mr. Mellish: No properties have been acquired in Scotland for the Land Commission. The annual rental and service charges for leased premises currently occupied by the Commission amount to some £17,000.
    Mr. Baker: In view of the lack of activity of the Land Commission in Scotland, is not even that figure disproportionate in the disbursement of public funds? Will not the right hon. Gentleman reconsider the whole thing by bringing the Land Commission to a speedy conclusion?
    Mr. Mellish: I understand that on Thursday there is to be a full scale debate on the Land Commission when no doubt we shall hear a great speech from the hon. Gentleman.
    Mr. Hector Hughes: Is it not improvident to concentrate the Land Commission and other offices in the thickly populated parts of Scotland, where rents are dear, instead of spreading them more

    187
    evenly up in the North-East, particularly Aberdeen?
    Mr. Mellish: I take note of that, but as a southerner one has to be very careful in this House in saying anything about what one should do in Seotland.

    Steam Boilers
    Miss Quennellasked the Minister of Public Building and Works how many steam-boilers his Department maintains on behalf of his own or other Government Departments.
    Mr. Loughlin: About 4,500.
    Miss Quennell: What steps is the hon. Gentleman taking to ensure that the employees of his Department engaged in servicing these 4,500 boilers are exempt, through his Department, under Section 37 of the Industrial Injuries Act, 1961, from any claim to liability should they be injured during the course of their duties?
    Mr. Loughlin: I accept that we have exemption from liability under Sections 32–34 of the Act, but I assure the hon. Lady that we try to keep the maintenance of these boilers in accordance with the Act. We have regular inspections and, in addition, there is constant supervision to ensure that employees are not injured. I appreciate that the hon. Lady has a case here, but I assure her that we do our best.

    Local Authority Design Work Figures
    Mr. Waddingtonasked the Minister of Public Building and Works whether he will take steps to ensure that in future in the case of local authority and private architects' drawing offices the level of design work for building entering the production stage will be expressed in quarterly figures; and if he will make a statement.
    Mr. Rossiasked the Minister of Public Building and Works whether he will now make a statement on the latest statistical survey of design work for building entering the production drawing stage, details of which he has received.
    Mr. Mellish: I shall explore with the local authorities the possibility of changing the local authority design figures
    188
    from a four-monthly to a quarterly basis. Quarterly collection involves some difficulties for the local authorities, which is what led to the present arrangement. But now that valuable initial information has been collected I hope by some simplification of returns to get over these difficulties. This will put the series on the same basis as that published by the R.I.B.A.
    Mr. Waddington: While I thank the hon. Gentleman for that reply, which is most welcome and should make life a lot easier for us in future, I hope that he will not forget the Question which brought up this matter in the first place and will bear in mind that many of us are still concerned at the level of the present work as revealed in his Answer of 3rd December.
    Mr. Speaker: Order. Supplementary questions must be questions.
    Mr. Mellish: I thank the hon. Gentleman for his Question. After his previous Question and my supplementary answer to it, I saw that there was a weakness in the arrangement. I have explained some of the difficulties encountered, but the hon. Gentleman and I both have the same objective in this.

    Construction Industry (Metric System)
    Mr. Costainasked the Minister of Public Building and Works how many projects using metric dimensions his Department has sent out to tender.
    Mr. Loughlin: None in the United Kingdom, Sir. In accordance with the programme published by the British Standards Institution for the change to metric in the construction industry, the Department began on 1st January, 1969, to design most of its new projects in metric dimensions, except where construction work is expected to start before 1st January, 1970. Overseas, we use metric dimensions in those countries where it is the established practice.
    Mr. Costain: This is a welcome decision. Does the hon. Gentleman appreciate that in many countries where the metric system may appear to be used—for example, Zambia—the imperial method is still being learned by artisans?

    189
    Could this be designed both ways if we must go metric?
    Mr. Loughlin: Where the imperial method is common practice we will check to see whether it is practicable, and where we introduce the metric system we will try to ensure that there is no possibility of a design going wrong simply because there is no conversion to imperial standards.

    Prince of Wales (Investiture)
    Mr. Emrys Hughesasked the Minister of Public Building and Works what expenditure he is incurring in connection with the investitute of the Prince of Wales at Caernarvon Castle.
    Mr. Mellish: There is no alteration to the net figure of £55,000 which I gave to my hon. Friend on 22nd July last.—[Vol. 769, c. 6.]
    Mr. Hughes: Is my right hon. Friend aware that this expenditure on Caernarvon Castle for the investiture will involve a considerable amount of building labour—plumbers, builders and so on—for one day's celebration? Since 35,000 people in Wales are without water closets, including 2,000 to 3,000 in Caernarvonshire, will he consider recommending that this ridiculous, absurd, mini-coronation be postponed and priority be given to people who have no sanitary accommodation?
    Mr. Mellish: If he is talking about the financial aspects, and if my hon. Friend will only for once in his life do his sums right, he will find that we are going to make a great deal of money out of this expenditure.
    Mr. St. John-Stevas: Would the Minister not agree that while there is an argument for having no investiture and an argument for having a splendid investiture, there is no case at all for having a mean one?
    Mr. Mellish.
    Mr. Fred Evansasked the Minister of Public Building and Works what is the total sum of public funds allocated through contracts for work in connection with the investiture of the Prince of Wales; and what percentage of this money has gone to contracts with firms in Wales.
    Mr. Mellish: So far seven contracts have been let to a total value of just over £80,000. Five of these are to Welsh firms to a value of just over £44,000, including one to Remploy for chairs to be manufacturers by disabled persons in Welsh factories. The remaining two contracts are for specialist work for which there are no Welsh firms available. A number of other contracts are still under consideration and, wherever possible, will be given to firms in Wales.
    Mr. Evans: While thanking my right hon. Friend for that information, may I asked whether he is aware that, quite apart from the question of the acceptability or otherwise of the investiture to the Welsh people, there is considerable criticism of the degree of expenditure incurred? Can he tell the House whether any further benefits may be expected to accrue to the Welsh economy from the investiture?
    Mr. Mellish: I do not think that there can be any doubt that this investiture will bring a great deal of tourist trade to Wales, more probably than it has ever had. My Department, for example, is working in this matter. We will sell chairs, investiture medals, seats on the moats, etc., from which we expect not less than £100,000. This is an investiture which, apart from the arguments about whether it should be held, is something out of which the Welsh people will do extremely well, and I am delighted that it is being held.
    Sir Knox Cunningham: Can the Minister give any estimate of the number of visitors who will be brought to Wales and the amount of money they will bring in as a result of the investiture?
    Mr. Mellish: I cannot give numbers, except to say that those responsible, the Tourist Board and the rest are, I understand, overwhelmed with requests, from abroad in particular, for hotel accommodation and such things. They are absolutely swamped with inquiries.

    Metrication Board
    Mr. Speedasked the Minister of Public Building and Works whether he will now announce the name of his Department's representative on the Metrication Board.
    Mr. Loughlin: I have nothing to add to the answer given by my right hon. Friend the Minister of Technology to the hon. Members for Sheffield, Hallam (Mr. J. H. Osborn), and Glasgow, Cathcart (Mr. Edward M. Taylor) on 29th January.—[Vol. 776, c. 1296–8.]
    Mr. Speed: Is the hon. Gentleman aware that his plans for metrication of the construction industry in three years' time could be jeopardised by the lack of instruction and education, largely due to the cuts in further education now taking place? Could he speak to his right hon. Friend the Minister of Education about this?
    Mr. Loughlin: That is a rather different question from the one on the Order Paper. My right hon. Friend will note what the hon. Gentleman says.

    British Standard Time
    Mr. Speedasked the Minister of Public Building and Works whether he will arrange for his National Consultative Council to study the impact of British Standard Time upon the construction industry.
    Mr. Donald Williamsasked the Minister of Public Building and Works what further representations he has received from the National Federation of Building Trades Employers about British Standard Time and the experience of building employers of its effect; and what reply he has sent.
    Mr. Mellish: At the request of the N.F.B.T.E. the effects of B.S.T. will be discussed at the next meeting of my National Consultative Council for Building and Civil Engineering which will take place on 19th March, 1969.
    Mr. Speed: Will the right hon. Gentleman confirm that nearly all sections of the construction industry, to say nothing of the general public, are opposed to B.S.T.?
    Mr. Mellish: I can confirm that in particular the N.F.B.T.E. is certainly bringing to my attention what it regards as the disastrous effects of B.S.T. It is putting forward a paper making its case conclusive, from its point of view. When that happens, I shall most certainly approach my right hon. Friend the Home Secretary and present its views.
    Mr. Williams: I am glad to hear the Minister make this statement. May I assure him that all building employers are totally against British Standard Time?
    Mr. Mellish: I accept that, certainly in the construction industry, I have heard nothing but complaints about B.S.T. Having said that, let us not lose sight of the argument that there is another point of view from people in other industries.
    Mr. Heffer: If my right hon. Friend finds that the evidence is so overwhelming that there should be a change, would he give us an assurance that he will draw this to the attention of the appropriate Minister with a view to having the three years cut down to at least one year, which is what many of us suggested?
    Mr. Mellish: I can give this assurance, that after my meeting on 19th March, when I hope I shall see statistical evidence produced by the employers—and I very much hope that the unions will help in this matter—I will see my right hon. Friend the Home Secretary and put the case as strongly as I can for the industry I represent.
    Miss Harvie Anderson: Will the Minister accept, since he is hesitant through being a Sassenach in this matter, that B.S.T. is an even greater disaster in Scotland? Will he make special representations for advice from those concerned north of the Border?
    Mr. Mellish: Yes, I give an undertaking to the hon. Lady that I will take that into account.

    Selective Employment Tax
    Mr. Donald Williamsasked the Minister of Public Building and Works whether he will now make a further statement on the impact of Selective Employment Tax on the construction industry.
    Mr. Mellish: I have nothing to add to the reply I gave to the hon. Member for Torrington (Mr. Peter Mills) on Tuesday, 3rd December, 1968.—[Vol. 774, c. 1220–2.]
    Mr. Williams: Will the Minister give us an assurance, on behalf of the industry for which he bears some responsibility, that he will make representations to the Chancellor to remove this impost,

    193
    which is running at the rate of £120 million a year, from the industry? Is he aware that it also increases the cost of the average house by £150?
    Mr. Mellish: The hon. Member knows that all taxes are extremely unpopular, but this one has a particular unpopularity. The Reddaway Committee has been set up and the industry is now able to make its representations. We must await the result of that inquiry.

    Building Industry (Economic Development Committee)
    Miss Harvie Andersonasked the Minister of Public Building and Works when he proposes to attend a meeting of the Economic Development Committee for the building industry.
    Mr. Mellish: I am always willing to attend a meeting of either construction industry E.D.C. if it seems appropriate for me to do so.
    Miss Harvie Anderson: Would it not seem particularly appropriate since this body has been without a chairman since September 1968? Is he aware that it would be very welcome news if we were to have an announcement of a new chairman or alternatively were to be told that the whole thing was to be scrapped?
    Mr. Mellish: The chairmanship of the E.D.C. is a very difficult job and we must take care that the right man is appointed. I am sorry that a chairman has not yet been appointed. I attended a meeting of the two E.D.C.S last year. I understand that they are due to meet again in March.
    Mr. Chichester-Clark: Is it not rather discreditable on the part of the Government that there is no chairman so far? Is not the truth of the matter that the Government have set up so many boards and committees that businessmen and professional men simply have not the time to serve on them?
    Mr. Mellish: That is a gross overstatement—as usual. The majority of these E.D.C.s, including these two in particular, have done and can do a first-class job of work. We are having difficulty over the appointment of a chairman. He must be the sort of person acceptable to
    194
    the industry. It would be wrong for the Government simply to say, "This is the man to do the job". There have to be consultations, and these are going on.

    Departmental Forms and Statistics
    Miss Harvie Andersonasked the Minister of Public Buildings and Works what progress he has made since the month of December, 1968 in minimising the duplication of Departmental forms sent to building contractors asking for statistical information; and whether he will make a statement.
    Mr. Kenneth Bakerasked the Minister of Public Building and Works whether he will now announce his proposals for rationalising and reducing the amount of statistical information required by his Department from building contractors under the Statistics of Trade Act, 1947.
    Mr. Loughlin: New-style industrial statistics are being planned by inter-Departmental teams under the general direction of the Central Statistical Office, and some 150 industries in the economy are being consulted over the next few years according to a prepared time-table. Negotiations with the first of the building materials industries have started. Discussions with the construction industries will begin early next year.
    Miss Anderson: While thanking the hon. Gentleman for some rather vague hope, I am bound to say that the complications in the reply did not give me a great deal of confidence. There are at least three Departments concerned—[HON. MEMBERS: "Question."]—is that not a fact?
    Mr. Loughlin: I ought to congratulate the hon. Lady on getting the question in. I am sorry that the Answer has not satisfied her. I can assure her that it was designed to give her a clear picture of what is going on and to show our attempts to get this new statistical system operating as quickly as possible.
    Mr. Baker: Is it not possible to get this new statistical set-up before 1970? At the moment every building company has to make an employment statistics return to three Government Departments. Cannot all this be done through one Government Department?
    Mr. Loughlin: As I said, we are dealing with new statistical methods for many industries. These statistics are designed to be of assistance not merely to the Government but to the industries. We are developing the system in consultation with them. I accept that we have to try and ensure that there is no unnecessary duplication in the information supplied to us. If one looks at the Questions on the Order Paper it will be seen that we really need more statistics.
    Mr. Chichester-Clark: But could not the hon. Gentleman find out why the Inland Revenue, the Board of Trade and his Department all want separate forms filled up in connection with these employment figures?
    Mr. Loughlin: We shall do what we can to have the minimum duplication of statistics. It may well be that in certain circumstances they are required for different Departments. However, I assure the hon. Gentleman that we have examined this matter carefully and we think the timetable is about right.

    Contracts (Smaller Firms)
    Mr. Kenneth Bakerasked the Minister of Public Building and Works how many contracts for new construction work were let by his Department in 1968 to building firms employing between 100 and 500 men; and what percentage they represented of the total number of contracts let by his Department.
    Mr. Mellish: This information cannot be obtained without the expenditure of a disproportionate amount of staff time.
    Mr. Baker: Would the Minister care to reconsider his Answer? If he published this information, it would, I think, allay some of the fears and suspicions, which are probably unfounded, that medium building companies are not getting a fair crack of the whip.
    Mr. Mellish: The hon. Gentleman cannot have it both ways. On a previous Question he bitterly complained about the amount of statistics. Then he asks what he regards as an honourable question and wants more information. I am simply saying that there is a limit, which I think we have reached, in asking many of these firms for the sort of information which the hon. Gentleman wants.
    Mr. Costain: We enjoy the right hon. Gentleman's little bit of humour about the statistics, but does not he realise that the medium builder is having a very tough time at the moment? [Laughter.] I do not know why hon. Members should laugh at the plight of the small builders. In selecting tenders, would it not be well for his Department to give some encouragement to small firms?
    Mr. Mellish: The hon. Gentleman knows only too well that one of the reasons why smaller and medium builders are in trouble is that some of the very large firms are doing far more of the work than they used to do. The point about information is perfectly fair and I should be prepared to make the effort to get the information, but I resent the fact that, when I try to obtain information, questions are asked by hon. Members opposite in which they complain about the amount of staff I am employing to get it.

    Registration of Builders (Forbes Inquiry)
    Mr. Costainasked the Minister of Public Building and Works whether he will name the members of the Forbes Committee on the registration of builders; and how many times the Committee has met to the latest convenient date.
    Mr. Mellish: The members of the Forbes Inquiry are:—

    Mr. H. H. V. Forbes, Q.C. (Chairman)

    Mr. L. F. Wigdor, Managing Director of Tunnel Refineries Ltd.

    Mr. E. Haynes, President of the Bakers' Union.

    Mr. P. D. H. Stock, Chief Estate Officer, I.C.I. Ltd.

    Sir Sidney Ford, M.B.E., President of the National Union of Mine Workers.

    The two assessors are:—

    Mr. Eric Segrove (N.F.B.T.E.).

    Mr. A. E. Soones (N.F.B.T.O.).

    The Inquiry will hold its first meeting later this month.
    Mr. Costain: The Chairman was appointed in September and only today the Minister announces that the first meeting of the Committee is to take place. Would he hurry the Committee to get on with its job?
    Mr. Mellish: That is ungrateful. This is something which has been talked about in the industry for years. At least I have set up a Committee to look into the possibilities. We have appointed the Chairman. Various parts of industry have had to be consulted. We have an impartial Committee and we have the two assessors. I should have thought that the hon. Gentleman might have said, "Well done, bravo."

    Plywood
    Mr. Allasonasked the Minister of Public Building and Works what studies he has made of the effect on the construction industry of current import restrictions on plywood.
    Mr. Mellish: My Department is in close touch with the Board of Trade which is responsible for plywood. Practically none of the plywood used in the construction industry is made in this country. So far there is no evidence that the operation of the imports deposits scheme which covers plywood is causing any disruption of essential industries. There is no shortage, and stocks are plentiful. I will continue to watch the situation.
    Mr. Allason: But since this is a vital material for the construction industry, is it not absolutely crazy to put difficulties in the way of its import?
    Mr. Mellish: I have not heard from the industry that there are difficulties. I do not know where the hon. Gentleman gets his information from.

    Museums
    Mr. Allasonasked the Minister of Public Building and Works what is the current building cost of providing museum space per square foot.
    Mr. Mellish: Between £9 and £13, depending on the use of the building. If land has to be bought or if there are abnormal site circumstances, the cost would be higher.
    Mr. Allason: Will the Minister give an undertaking that he will not destroy any museum space at Tring or elsewhere until he is absolutely satisfied that there is no alternative use for the museum building, bearing in mind that every London museum is short of space?
    Mr. Mellish: The hon. Gentleman should come and discuss this matter with us. There is another point of view which is completely contrary to that about which he wrote a letter in The Times. The present building is in a very bad condition. It is 60 years old. It is not adequate. The museum trustees are in full accord with what we are doing. If we adopt an alternative method, it will cost more. I invite the hon. Gentleman to come to my Ministry and discuss this matter.
    Mr. Wellbeloved: Will my right hon. Friend take this Question seriously? There is need to make certain that there is adequate museum space for any phantom printing proofs which the hon. Member for Worcestershire, South (Sir G. Nabarro) may one day produce.
    Mr. Channon: First, could the Minister tell us how much of the present building at Tring it is proposed to demolish? Secondly, what would the extra cost be to public funds if the plan of my hon. Friend the Member for Hemel Hempstead (Mr. Allason) about building on fresh land were adopted?
    Mr. Mellish: I understand that the present floor space is about 20,000 sq. ft. We cannot use land which is nearby because it is in the Green Belt; and there are other restrictions. I understand that there has already been an inquiry into the Ministry scheme, which has the approval of the local planning authority. I cannot give the extra cost, but I am prepared to write to the hon. Gentleman and to give him full details, which he has every right to ask for.

    Building Materials and Components (Testing)
    Mr. Kitsonasked the Minister of Public Building and Works what agencies have been used by the Agrément Board to test new building materials and components other than the Building Research Station.
    Mr. Rossiasked the Minister of Public Buildings and Works what is the present relationship between the Agrément Board and the Building Research Station for the testing of new building materials and components; and whether he will make a statement.
    Mr. Mellish: The Building Research Station acts as a technical agent to the Agrément Board in developing methods of testing and assessment for new products and in carrying out tests on products submitted to the Board for certification. The Forest Products Research Laboratory, the Fire Research Station, the University of Aston, Yarsley Research Laboratories and Messrs. R. H. Harry Stranger have also been employed by the Board on significant pieces of test work.

    Serial Tendering
    Mr. Kitsonasked the Minister of Public Building and Works whether he will make a statement on the progress of his Department's experiments in serial tendering.
    Mr. Loughlin: Following the recommendations of the Banwell Committee, six experimental serial programmes have now been organised in my Department. Arrangements have been made to monitor and evaluate progress on these programmes. These are all large scale projects and the arrangements will continue throughout the whole building process.
    Mr. Kitson: Will not the hon. Gentleman consider implementing the recommendation of the Banwell Committee?
    Mr. Loughlin: I think that before we start considering the recommendations of the Banwell Committee we should get this experiment off the ground first.

  MINISTRY OF POWER

    Shipbuilding Industry (Steel Prices)
    Mr. Edward M. Taylorasked the Minister of Power what representations he has received from the shipbuilding industry regarding the price of steel; and what reply he has sent.
    The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): My right hon. Friend has received a copy of the representations addressed to my right hon. Friend the Minister of Technology on behalf of the Shipbuilding and Shiprepairing Council, and has noted them.
    Mr. Taylor: Is the hon. Gentleman aware that there is serious concern that the industry, with knife-edge prosperity created by recent legislation, might be threatened by this increase in steel prices,
    200
    which comprise 20 per cent. of the costs of the yards? Is he further aware that this is particularly serious in the case of yards like Clydeside, where we can build sophisticated ships and where an increase, which was not an overall increase but a specialist increase, would have serious effects?
    Mr. Freeson: As the hon. Gentleman knows, the proposed price increases have been referred to the National Board for Prices and Incomes, which is examining them, and the shipbuilders will be submitting evidence. I also understand that the Iron and Steel Consumers' Council will be looking at the proposals. It is open to the shipbuilders to submit evidence to the Council as well.
    Mr. James Hamilton: Is my hon. Friend aware that there is grave concern in the steel construction industry about this increase, which will have a very serious effect on our exports which are urgently required to help the balance of payments?
    Mr. Freeson: I am aware of the concern expressed on this proposal by the shipbuilders. It is for the N.B.P.I. to give very careful consideration to it. On the question of the relationship between the two industries, apart from these price increases, they have had discussions together on possible co-operation, and I hope that they will continue them.
    Mr. Patrick Jenkin: Will the Minister draw to the attention of the N.B.P.I. the undoubted fact that the price schedules published by the British Steel Corporation show a substantially greater increase in those products like plate and heavy steel sections where there is no competition than for special steels and similar products where they are in competition with the private sector?
    Mr. Freeson: I have no doubt that the shipbuilders will draw the attention of the N.B.P.I. to that kind of representation as well as to all other views which they have on this matter.

    Dungeness B Power Station
    Mr. Eadieasked the Minister of Power to what extent he expects the delay and increases in capital and generating costs now arising at the Dungeness B nuclear power station to recur in the costs of the later advanced gas-cooled reactor stations.
    Mr. McGuireasked the Minister of Power what effect he expects the difficulties now being experienced at the Dungeness B nuclear power station to have on the costs of the Hinckley Point B nuclear station.
    Mr. Freeson: The Central Electricity Generating Board has assured my right hon. Friend that the recent mechanical engineering difficulties at Dungeness B are specific to that station and have no implication for the other advanced gas-cooled reactor stations.
    Mr. Eadie: Will my hon. Friend agree that we hear far too much about mechanical breakdowns of power plants in this country? Would he not further agree that every time a question is asked on power stations the case is strengthened for an independent investigation into power costs, as outlined by the Select Committee on Science and Technology?
    Mr. Freeson: The last part of the question has already been met by the studies which we have undertaken, and are undertaking, in the Ministry into the construction of power stations and bringing them into commission. On the implication of this question and answer and the previous question and answer on the position between nuclear power and conventional stations, it would be wrong to draw any conclusions on this because difficulties of the same kind are experienced with conventional stations and with nuclear power plants.
    Sir H. Legge-Bourke: In view of the considerable attention given by the Select Committee on Science and Technology to the Dungeness B building, will the hon. Gentleman now see whether we cannot have full comments from the Government on that report in relation to Dungeness B, and, in particular, in view of the changed circumstances arising out of A.P.C. who are doing this work?
    Mr. Freeson: That is another question. It is not particularly germane to the Ministry of Power and concerns a number of Departments. It is not for me to answer that question.

    North Sea Gas
    Mr. Eadieasked the Minister of Power if he will give authority to the National Coal Board to plan for an
    202
    additional 12½ million tons of coal, in the light of the amended figure of the landing of North Sea gas.
    Mr. Freeson: I would refer my hon. Friend to the reply I gave to him on 10th December last.—[Vol. 775, c. 198.]
    Mr. Eadie: Would not my hon. Friend agree that an announcement of an increased demand for coal would do something to restore the flagging morale of miners?
    Mr. Freeson: As has been said on previous occasions, and as recently as yesterday, by my right hon. Friend, there is nothing in the White Paper or in any other action of the Government which would restrict the N.C.B. from selling more coal if it is able to produce it. If it is able to go above the figures which have been forecast for the future we shall be pleased.
    Mr. Lubbock: Will the Minister say whether it is possible that additional amounts of coal will be supplied to the Gas Council following the recent accident to the rig in the North Sea?
    Mr. Freeson: There are bound to be adjustments from time to time irrespective of particular incidents of that kind, but we have no reason to believe that this will have a long-lasting result and that there will be a need for a change in strategy on the rundown of coal consumption in the gas industry. Quite apart from natural gas consumption, a rapid switch to oil was being made before.
    Dame Irene Ward: May I ask the hon. Gentleman whether his Department will fight for any of the policies of back benchers, including making representations and fighting for us against the rise in steel prices?
    Mr. Freeson: That is another question.

  COAL

    Smokeless Fuels (Prices)
    Mr. Edward M. Taylorasked the Minister of Power what is the average price charged for smokeless fuel for domestic use in Scotland; and what is the average price in England and Wales.
    Mr. Freeson: There is such variation in the prices as between different smokeless fuels, individual retailers and towns and cities in different parts of the country, mainly reflecting transport costs, that it is not practicable to give accurate averages.
    Mr. Taylor: As previous questions and answers have shown that in Scotland we pay 20 per cent. more for gas and £1 a ton more for coal, is the Minister scared to find out this information because of the figures which would be revealed, and why is there not a uniform price for smokeless fuels when there are so many smokeless areas?
    Mr. Freeson: I am not scared of giving information which is available. I hope the hon. Gentleman will accept that on every occasion when he has asked questions of this kind I have sought to be as helpful as possible in providing the information. My original answer stands, that there are too many wide variations in the price of smokeless fuel to give accurate averages.

  FOREIGN AND COMMONWEALTH SECRETARY (SPEECH)
  Mr. St. John-Stevasasked the Prime Minister whether the speech of the Foreign and Commonwealth Secretary at The Hague on 8th November, 1968, regarding European policy represents Government policy.
  The Prime Minister (Mr. Harold Wilson): Yes, Sir.
  Mr. St. John-Stevas: What has the Prime Minister done, therefore, towards convening the conference of Heads of European Governments which the Foreign Secretary proposed on that occasion? Will he confirm the truth of the report in The Times that he has a secret scheme for launching a federation of European countries—so doubtless he will be seeking the Presidency?
  The Prime Minister: In reply to the first part of the question, the hon. Gentleman will remember that the last time I answered this question I said that this matter should be further pursued at the Luxembourg conference of the W.E.U. This conference is taking place later this week and my right hon. Friend the Foreign and Commonwealth Secretary
  204
  will be there. There is nothing to add to what I said on that point. In reply to the second part of the question, I have seen statements and speculations in a number of newspapers, starting in a French newspaper, on the lines suggested by the hon. Gentleman. There is nothing whatsoever in that speculation.
  Mr. David Howell: Did not The Hague speech to which we are referring contain an undertaking to increase technological collaboration with Europe? How is this to be reconciled with the attitude Britain appears to be taking to the European airbus project as reported this morning in the newspapers?
  The Prime Minister: There is nothing incompatible in the attitude which we are taking to the airbus project with what was said at the time. With regard to technological co-operation in general, the Government have always stressed that the real hope of European co-operation is in industrial technological co-operation to make us less dependent upon technology from across the Atlantic. It does not mean that we have to commit ourselves to every costly adventure in space co-operation.
  Mr. Jay: Whatever we may think of airbuses, would the Prime Minister agree that the Government have no authority from this House, or indeed from the electorate, for proposing to take the United Kingdom into any sort of federal state whether in Europe or anywhere else?
  The Prime Minister: My right hon. Friend will remember that when we debated these matters rather less than two years ago, I made it plain that it was certainly not our policy. These stories, stemming from an article in the French newspaper L'Express, are entirely without foundation.
  Sir G. de Freitas: Is the Prime Minister aware that many of us who applauded the Foreign Secretary's speech at The Hague conference have been very much disappointed at the lack of Government initiative since then?
  The Prime Minister: My right hon. Friend will be aware that immediately following that speech I said that the right place to pursue this would be at the Luxembourg conference. That takes place this week. We were not able to

  205
  have the conference earlier than the time for which it was fixed.
  Mr. Thorpe: While the Prime Minister supports the speech which was made by the Foreign Secretary, may we take it that he does not associate himself with the remarks made at the same conference on the same occasion by the Leader of the Opposition, when he said that it would be wrong to seek to isolate France by creating new institutions without her?
  The prime Minister: I am not responsible for the statements of the Leader of the Opposition.

  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  Mr. Martenasked the Prime Minister when he will next take the chair at a meeting of the National Economic Development Council.
  The Prime Minister: Tomorrow, Sir.
  Mr. Marten: All of which goes to show that this was a very well-timed Question. As the Prime Minister may be aware of the anxiety in this House about the non-publication of the planning document which has been discussed with N.E.D.C. will he give an assurance that it will be published whether or not there is disagreement about the content or about any other matter?
  The Prime Minister: A well-timed supplementary question too. As I told the House following the N.E.D.C. conference at Chequers, it is the view of Her Majesty's Government that the document, after suitable amendment in consultation with the N.E.D.C. may well be published, but we would want to hear the views of industry about it. That is the position which I and my colleagues will take up at the meeting tomorrow. My fellows members of "Neddy" will be well aware of the strong feelings expressed on all sides of the House on the question of publication.

  ACCIDENTS, FIRE AND DISEASE
  Mr. Archerasked the Prime Minister whether he will take steps to coordinate the responsibilities of respective
  206
  Ministers for the prevention of accidents, fire and disease in various forms of employment.
  The Prime Minister: My right hon. Friends already work closely together on these matters.
  Mr. Archer: Is my right hon. Friend aware that, for the last five years for which we have figures, factory accidents rose by 60 per cent.? Does he not agree that a possible factor is that responsibility for industrial safety is divided among at least six Ministers, none of whom regards it as his or her prime responsibility?
  The Prime Minister: I am aware of the figures quoted by my hon. Friend, and I share his concern. I do not believe that it is due to the various Departments concerned having other duties. It is right that their duties in respect of safety, welfare and health should be co-ordinated with their wider functions. However, my hon. Friend will be aware not only of the views expressed at the Trades Union Congress last year largely supporting his views, but that it will be our intention to take the opportunity in our proposed new safety, health and welfare legislation which is to be promoted in due course by my right hon. Friend the First Secretary of State to deal with some of these demarcation problems.
  Mr. Pavitt: Does my right hon. Friend recall that successive Labour Party conferences have called for the establishment of an occupational health service? Will he call together the six Ministers with a view to implementing this proposal?
  The Prime Minister: My hon. Friend will be aware of what has been said in this House by me and by other Ministers, and of the problem arising from the overall shortage of doctors. But this does not arise from the main Question where I feel that, with the resources available, co-ordination between Ministers is adequate.
  Mr. Doughty: Is the Prime Minister aware that the enforcement of any regulations that exist and any further regulations that are to come depends almost entirely upon the factory inspectors, and that, in the very difficult circumstances in which they have to work, they are doing an excellent job?
  The Prime Minister: Yes. I am sometimes asked about the increase in the numbers of civil servants. The hon. Gentleman should be glad to know that one reason for the increase over recent years has been the rise in the number of factory inspectors for which hon. Members in all parts of the House have called.

  PRESIDENT NIXON (MEETING)
  Mr. John Fraserasked the Prime Minister when he plans to meet President Nixon to discuss matters of common concern.
  The Prime Minister: The House will have noted reports that President Nixon is hoping to visit Western Europe in the near future.
  For our part, as I told the House last week, we should be delighted to welcome the President to London. I have had some exchanges with him on the subject of a possible visit but am not yet in a position to make an announcement.
  Mr. Fraser: Does my right hon. Friend agree that one of the matters of common concern for discussion should be the maintenance of freedom in Europe? Since it is unthinkable that this Governernment should not follow the recommendation of the Consultative Assembly on the subject of Greece, will my right hon. Friend seek assurances from President Nixon that America will use her influence in doing everything possible to get a restoration of freedom in that country?
  The Prime Minister: I would remind my hon. Friend that the United States is not a member of the Council of Europe, and the recommendation that he has in mind came from Strasbourg last week. That will be a matter which will have to be considered by us all. I do not think at this stage that it would be appropriate to speculate about the subjects for discussion with the President, wherever the meeting takes place.
  Mr. Turton: Can the Prime Minister confirm that President Nixon will come to Britain directly after seeing President de Gaulle?
  The Prime Minister: At this stage, I cannot say what the President's movements
  208
  will be. The House will have noted reports of these matters, and we are in close touch on this question. But I am not in a position to indicate a possible timetable, if the reports are finally confirmed.
  Mr. Heffer: Reverting to the point raised by my hon. Friend the Member for Norwood (Mr. John Fraser), is it not clear that, while the United States is not a member of the Council of Europe, it is an essential part of N.A.T.O., and therefore it is very important that this matter should be discussed in view of the rôle of N.A.T.O. to maintain democracy? Will my right hon. Friend discuss this matter of Greece with President Nixon when he comes to this country?
  The Prime Minister: Yes, Sir. My hon. Friend's concern has been supported fully by many hon. Members on all sides, and he will remember what I have said on the matter. It is too early to say whether it will be a matter for discussion with the President, and it is not usual, so far in advance, to outline the possible agenda.
  Sir D. Renton: When the Prime Minister sees the President, will he reiterate the unbounded admiration felt by Her Majesty's subjects for Colonel Borman and his colleagues?
  The Prime Minister: I cannot think of a more appropriate moment for the right hon. and learned Gentleman to put that question. I shall be severely out of order if I explain what I have in mind. But I join with the right hon. and learned Gentleman in expressing to Colonel Borman, who, shall I say, is visiting this country, the great admiration of all of us in this House and all of those whom we represent for the intrepid feat that he and his colleagues accomplished over Christmas and our delight at his safe return and his visit to this country.
  Hon. Members: Hear, hear.

  GOVERNMENT ADMINISTRATION
  Mr. Bruce-Gardyneasked the Prime Minister what further proposals he has for reducing the size and cost of his administration.
  The Prime Minister: I have nothing to add to my reply to the hon. Member on 5th December, 1968.
  Mr. Bruce-Gardyne: Is not this the first Government in our history whose size is dictated by the need to vote down their own back benchers? Is £600,000 a year not a grossly excessive sum for the taxpayers to have to pay for this army of placemen? Will he recall telling the House a year ago that the number of civil servants must be frozen? In view of the increase of 3,000 since then, was that a lightly given promise?
  The Prime Minister: I did not quite hear every refinement of the joke in the first part of the hon. Gentleman's question. It sounded suspiciously like one that I made 12 years ago from the benches opposite, though, I thought, not quite so felicitously expressed.
  With regard to his reference to the size of the Civil Service, there is a Question down about that with regard both to the current year and the future year. I think that it is due to be dealt with next week, and I am looking forward to answering it. I am sure that the hon. Gentleman will look forward to hearing it.
  Miss Herbison: Since the hon. Member for South Angus (Mr. Bruce-Gardyne) represents a Scottish constituency, can my right hon. Friend tell him how many of the extra civil servants are doing a useful job in attracting new industry to Scotland, and how many of them are being used to help old people in Scotland as they have never been helped before?
  The Prime Minister: I would require notice of the question to give details, but an element in the increase in the number of civil servants over recent years has been the reforms carried through by my right hon. Friend when she was Minister of Social Security, with special reference to the abolition of the National Assistance Board and the introduction of a scheme for supplementary benefit.
  As for attracting jobs to Scotland, I have noted some alarming statements by Opposition spokesmen both in the House and outside which suggest that they might secure a marginal saving in the number of civil servants as a result of a very sharp reduction in the effort to bring work to Scotland.
  Mr. Younger: Can the Prime Minister tell us how many of these extra civil servants are employed in taking S.E.T. out of the pockets of the people of Scotland?
  The Prime Minister: Not without notice, Sir. But, even without notice, I can tell the hon. Gentleman that the Opposition's alternative to that—a variant of the value-added tax—would mean the addition of 23,000 tax inspectors and Customs and Excise officers, most of them of a highly skilled level, with the certainty that there would be a much bigger increase in the cost of living than has been promoted by the Selective Employment Tax.
  Mr. Arthur Lewis: In view of the correspondence that the Prime Minister has had with the hon. Member for West Ham, North—[HON. MEMBERS: "Where is he?"]—can he explain why hon. Members are now having to wait five, 10 and in some cases 12 weeks for replies to letters when they used to get them answered in two or three weeks?
  The Prime Minister: For the answer to his question my hon. Friend might look at the correspondence that I have been having with the hon. Member for West Ham, North. I should make it clear that his assiduity in correspondence is equal to his assiduity in putting down Questions. However, I might perhaps inform him that, despite that, it has not led to an increase in staff. It has led only to an increase in overtime.
  Mr. Shinwell: I draw my right hon. Friend's attention to the original Question about the size of the Administration. Has it occurred to him that it might save him a great deal of trouble—and even the Parliamentary Labour Party—if he increased the size of his Administration?
  The Prime Minister: I am very well aware of the views of my right hon. Friend and other young members of the Parliamentary Labour Party on that matter. But my right hon. Friend, who follows these matters with very great care, will have noticed that in the mergers of the Foreign and Commonwealth Office and the Colonial Office, two successive mergers, we now have, excluding our representative at the United Nations, seven Ministers compared with ten in the three Departments under my predecessors.
  Sir Knox Cunningham: Has not this Administration achieved a world record for size and for pay?
  The Prime Minister: No, Sir. The hon. Gentleman will be glad to know that it

  211
  would not need a single extra Minister or a single extra civil servant to ensure one man, one vote in his constituency.
  Sir Knox Cunningham: On a point of order. Is it in order for the Prime Minister—[HON. MEMBERS: "Yes."]—who is elected on the same universal adult franchise as I, to query my position when the only difference between us is that I have twice as many electors as the right hon. Gentleman?
  Mr. Speaker: Order. This is interesting, but not a point of order.

RHODESIA (MINISTERIAL RESPONSIBILITY)
The following Question stood upon the Order Paper:
Mr. JOHN FRASER: To ask the Prime Minister whether he will make a statement on the changes he has made in Ministerial responsibility for Rhodesia.
The Prime Minister (Mr. Harold Wilson): With permission, I will now answer Question No. Q9.
I announced on 16th October that, following the merger of the Foreign and Commonwealth Office, my right hon. Friend the Commonwealth Secretary had been appointed Minister without Portfolio and that he would, for the time being, be available to take such Ministerial action as might arise from the talks in H.M.S. "Fearless". He so acted in the follow-up discussions in Salisbury.
Now that the immediate follow-up to the "Fearless" negotiations has been completed, I have decided that it is undesirable to continue separate Ministerial responsibility for what is an integral part of the Foreign and Commonwealth Office and, accordingly, my right hon. Friend the Foreign and Commonwealth Secretary will now have undivided responsibility for all the work of the combined offices, and he and other Foreign and Commonwealth Office Ministers will answer Questions in this House accordingly.
My right hon. Friend the Minister without Portfolio, will in future, like his predecessors in that and similar posts, carry out a wide range of duties as a non-departmental Minister, including chairmanship of Cabinet Committees, as
212
may be assigned to him from time to time. His great experience and knowledge of the Rhodesian problem will be available in the advice he will be free to give at all times and will be invited to give at all times to my right hon. Friend and to his Cabinet colleagues.
Mr. Fraser: Does this rearrangement mean that, in the Prime Minister's judgment, the "Fearless" terms are now not likely to be operative? In view of the extra time at the command of the Minister without Portfolio, will he be able to organise a diplomatic assault on Portugal, which is the one nation providing a block against the operation of sanctions against Rhodesia?
The Prime Minister: All diplomatic endeavour will now be in the hands of my right hon. Friend the Foreign and Commonwealth Secretary.
Concerning my right hon. Friend the Minister without Portfolio, the decision does not involve any judgment on my part in relation to the "Fearless" terms. The position is exactly as stated to the House before Christmas and, indeed, in the report to the House on the Commonwealth Prime Ministers' Conference. They are on the table, and we are prepared to have further discussions within the ambit of the "Fearless" proposals.
But I think it would be for the convenient working of the Department, with which my right hon. Friend the Foreign and Commonwealth Secretary agrees, and, indeed, of the House, that we should now end that temporary arrangement that was made. Should there be discussions at any future time, if it was thought fit, my right hon. Friend, in view of his past experience in these matters, would be free to be involved in them, but there is no immediate sign of such discussions.
Mr. Heath: While accepting that Rhodesian policy must be part of an integrated foreign and Commonwealth policy, is it really satisfactory that the Foreign and Commonwealth Secretary, with all the burdens which we know are upon him at such a time, should have to devote his attention to trying to find a solution to the Rhodesian problem?
If the Minister without Portfolio is to be available for talks at any future date, is it not more sensible for him to

213
keep in day-to-day touch with the situation and to use his experience and abilities creatively to try to find a solution?
The Prime Minister: It is possible that the right hon. Gentleman underrates the extent (o which my right hon. Friend the Foreign and Commonwealth Secretary has been fully involved in the Rhodesian problem before "Fearless", during the "Fearless" period and, indeed, after "Fearless". There is, and need be, no change so far as that is concerned.
I do not think that it now devolves on either of my right hon. Friends, to use the right hon. Gentleman's phrase, to try to find a solution to the Rhodesian problem. It is widely recognised that the "Fearless" terms do represent a solution available to the Rhodesians. The next move must come from them.
Mr. Paget: Is my right hon. Friend aware that those of us interested in the Rhodesian problem welcome what he has said about the Minister without Portfolio being available for negotiations when they start again, because that Minister has done a great deal to overcome the barriers of personal distrust which were one of the main troubles in the earlier negotiations?
The Prime Minister: I thank my hon. and learned Friend for what he has said. I am not indicating that if there were Ministerial talks—and there is no sign at the moment—it would be my right hon. Friend the Minister without Portfolio. But, as I have said, he would be available if my right hon. Friend the Foreign and Commonwealth Secretary felt that that was the right way in which such discussions, which are extremely hypothetical at the moment, should be conducted. He might prefer, say, one of his colleagues in the Foreign and Commonwealth Office.
Mr. Heath: May I press the Prime Minister on the impression that he has given that the Government's only responsibility is to sit still and wait for initiative from the other side? The right hon. Gentleman has stated that there are certain spheres in which the Government are prepared to consider and to work out other solutions, particularly concerning the second check on the blocking quarter and on the composition of the institutions there with the blocking quarter? Will
214
he, therefore, accept that it is the Government's responsibility to work for solutions in the spheres in which he agrees that alternatives can be considered?
The Prime Minister: I am not quite sure what the right hon. Gentleman is suggesting. I think that he would agree that no one could have done more than we have during the "Fearless" period, and since, to see whether there was a basis for agreement. Having failed to get that basis, we have left it on the table so that it can be picked up again. But, as the right hon. Gentleman will recall, I told the House that we offered a number of alternatives to the Privy Council form of external check in the discussions on board "Fearless".
Subsequently, the Minister without Portfolio offered another alternative form, which was not an external check but an internal check. This was dismissed at the time, as my right hon. Friend reported to the House. I feel, after some years' experience of this, not least the high hopes raised by the "Fearless" talks, that we would make more progress if, just once in a while, we received alternative proposals from the other side instead, all the time, of having to go back and say, "All right, you do not like this formulation", and regarding it as our duty to alter the formulation. If we could be told what formulation would be acceptable, we would look at it.
Mr. Winnick: Though many of us are opposed to the "Fearless" offer, may I ask the Prime Minister whether he still stands for what he said to the House a few weeks ago, namely, that there will be absolutely no further concessions on the "Fearless" offer? Also, could he clear up precisely the matter of the messages which have been coming from Salisbury? Have they been some kind of offer to the various suggestions which have come from Whitehall?
The Prime Minister: I stand by what my right hon. Friends and I have said on the matter and what was said to the Commonwealth Prime Ministers' Conference. We have always been willing to examine alternative ways of dealing with outstanding problems. Not only the external check or the extra-Parliamentary check, or whatever kind of check it is called, was causing difficulty in the talks

215
in Salisbury, but the Minister without Portfolio reported to the House a whole series of other vitally important problems on which agreement was not reached.
We are always ready to look at those to find alternative means. We cannot accept a settlement which is less effective in providing the guarantees of the six principles than the "Fearless" proposals. It may vary in certain ways, but it cannot be less effective, nor would the House want us to put forward less effective proposals.
It is best that the recent messages are left as confidential, but it is the case that we have had no alternative plan. I think that some newspapers in Salisbury have suggested that an alternative plan has been sent, but no such plan has been received by us.
Mr. Hastings: In view of reports that Mr. Smith is unaware, or does not accept, that any suggestions for an alternative to the Privy Council proposals have come from Her Majesty's Government, may I ask the Prime Minister to explain precisely what these are?
The Prime Minister: I am not aware of Mr. Smith being ignorant about these questions. I am not responsible for Press reports on these matters, because I reported to the House during the debate on Rhodesia, following the "Fearless" talks, a number of alternatives to the Privy Council proposals which I put forward. If the hon. Gentleman turns his mind back, he will remember what these were at the time.
Following that, when my right hon. Friend visited Salisbury in November, as he later reported to the House, he put forward yet an additional alternative, a purely Rhodesian alternative, based on a referendum of separate races. These are all alternatives. There have been a number of them. What we have not had is any willingness to consider any of them.
Mr. Thorpe: Is the Prime Minister aware that those who have a very high regard for the qualities of his right hon. Friend are relieved that he is no longer to be retained as a messenger boy between the Prime Minister and Mr. Smith? Is he further aware that many of us feel that there is no need for a full-time Minister to open the post from Salisbury
216
to see whether Mr. Smith wishes to persist in his rebellion, or to accept terms which, in the view of many of us, are far too generous as it is?
The Prime Minister: I thought that some of the terminology of the right hon. Gentleman's question fell a little below his usual standard, and was less than fair to my right hon. Friend, who has never been a messenger boy, but a fully responsible member of the Cabinet who was involved in the "Fearless" and the Salisbury talks, in addition to carrying a very much wider responsibility in other spheres. Nor does my right hon. Friend open the post.
In answer to the question by my hon. Friend, I can say that so far there has been no post to open.
Mr. Wyatt: Is not the Prime Minister treating the Minister without Portfolio rather badly? As he is one of the most able of the Government's Ministers, would not it be better to give him something to do, instead of standing around without a portfolio?
The Prime Minister: I know that there is sometimes disappointment among those who stand around without portfolios. I am able to assure my hon. Friend that that disappointment is not shared by my right hon. Friend, who has a very full-time job to do following the tradition of these non-departmental posts in connection with the duties which have been assigned to him.
Mr. Sandys: Am I right in thinking that the Prime Minister's earlier reply indicated that he had recently received a communication from Mr. Smith? Can the right hon. Gentleman say something about that?
The Prime Minister: The right hon. Gentleman is right in recognising that there have been Press stories from Salisbury that we have received a communication from Salisbury. I said that I did not think that it would be helpful—indeed it would be to the contrary—to the general basis on which the "Fearless" talks were conducted if I were to indicate what it said, though I read a pretty full account, under a Salisbury dateline, in one of the newspapers this morning.

217
Nevertheless, the position is as I have said. There has been no plan whatsoever, no alternative proposal sent to us from Salisbury. In view of the fact that there were public statements in Salisbury not long ago that such a plan had been devised, and it was even suggested that it had been sent, the House ought to know that we have not received such a plan or such proposals.
Sir Alec Douglas-Home: I should like to follow up the question asked by my right hon. Friend the Leader of the Opposition. There are at least two alternative plans to the use of the Privy Council. One is the possibility of a treaty, another is the plan lately put forward by Sir Albert Robinson, the former High Commissioner in London. May we have an assurance that these two possible alternatives are being studied by the Secretary of State for Foreign and Commonwealth Affairs?
The Prime Minister: The idea of the treaty was stated as long ago as 1965, as the right hon. Gentleman knows, just before U.D.I. We had discussions about it. It was turned down by the then Rhodesian Government, and, in any case, agreement was reached between us on one point. It is not so much the form of the treaty as what will be included in it, and the means for enforcing it. The treaty was not pursued on board the "Fearless". It was not acceptable as the alternative here.
There is the interesting proposal of the distinguished Rhodesian, referred to by the right hon. Gentleman. I think that we are getting to the point, having put forward so many proposals ourselves and tried them out, that it might be useful if we had some indication from the Rhodesians of what they might be interested in studying so that we can study it further.
Mr. Alexander W. Lyon: Who, under the new arrangement at the Foreign and Commonwealth Office, will be responsible for conveying the deep regret which we all feel at the death of one of the greatest men in Southern Africa, Dr. Eduardo Mondlane, to the people of Mozambique?
The Prime Minister: I think that my hon. Friend will rightly feel that all of
218
us regret the death of Dr. Mondlane, and the pursuance there, or in any other part of the world, of assassination as a means of helping to solve—if that is the right phrase—political difficulties.
The answer to my hon. Friend's question is that all these matters fall within the sphere of my right hon. Friend, the Foreign and Commonwealth Secretary.

SELECT COMMITTEE ON SCOTTISH AFFAIRS (NEWSPAPER ARTICLE)
Mr. Speaker: Mr. Emrys Hughes. A point of order.
Mr. Emrys Hughes: Mr. Speaker, I wish to draw your attention to an item of news in today's Glasgow Herald. I am not sure whether this comes under the heading of privilege. I am prepared to accept your guidance. I have given you private notice of this matter.
There is in this paper, which has a wide circulation in Scotland, a long news item entitled:
"Scottish Select Committee under Fire. Fears that 'safe' Labour M.P.s will be chosen."
I do not desire to read the whole of this item, but it is to the effect that before the end of the week the Leader of the House is to announce the names of the members of the Select Committee which is to inquire into the Scottish Office. The list contains the names of hon. Members on both sides of the House who, it says, are being selected for this Committee.
I submit that if that is true it is discourteous to the House that, through a Scottish newspaper, and before the matter has been brought to the notice of the House, the names of the members of this Select Committee are made known.
It is very important that these Select Committees should, from the beginning, have unbounded public confidence. The allegation in this article is that the Committee has been packed on the Labour side by safe Members, three of whom are Parliamentary Private Secretaries. I do not wish to comment on this, but it is essential that the people of Scotland should feel confident that this Committee is not being packed with what I call Right-wing hon. Members of the Labour Party.
Mr. Speaker: Order. I am seized of the point of order, but we cannot discuss, on this point of order, the merits of the structure of the Committee. The hon. Member is calling attention to the fact that a newspaper has published an account before the House is aware of it. That, I take it, is his point of order.
Mr. Emrys Hughes: I will cut it short, Mr. Speaker.
I should like the assurance of the Leader of the House that there has been no leak from his Department or from the Scottish Office and none from the office of the Patronage Secretary. We are entitled to this assurance, so that the appointment of Select Committees will be done according to the precedent of the House.
Mr. Speaker: Order. The question of leakages or non-leakages is not a matter for Mr. Speaker, but one which the hon. Gentleman must raise with the Leader of the House.
Mr. William Hamilton: I believe that it is true that all the copies of the Glasgow Herald have disappeared from the Members' Tearoom and I understand that it has been done on the authority of a Minister of the Crown. Would you inquire, Mr. Speaker, whether the newspapers have been so withdrawn, and by whom and on whose authority?
Mr. Speaker: If the facts are as the hon. Gentleman says, I will certainly look into the allegation which he has made. I did not know that the newspaper was so popular.
Mr. W. Baxter Mr. W. Baxter rose—
Mr. Speaker: On the same issue?
Mr. Baxter: This is another point, Mr. Speaker, with regard to the question of persons from either side of the House to sit on this Select Committee.
Is this not completely out of order, when there is an Amendment on the Order Paper to the official Motion that a Select Committee should be set up? The Amendment is in the names of my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) and myself and is more or less to the effect that the members of the Select Committee shall be appointed by Members of Parliament for Scotland. If, perchance, the report
220
in the Glasgow Herald is true, it would presuppose that the selection of Members for the Select Committee had been made by the Leader of the House and the Chief Whip, or the Whips' Office, and neither one nor the other of those can, or has a mandate to, speak for the people of Scotland or for hon. Members for Scotland. I would hope—
Mr. Speaker: Order. I am seized of the hon. Member's point. He must not speak to his Amendment now. He must raise this issue either at Business Question time on Thursday or when the Motion to set up the Select Committee, together with his Amendment, is before the House.
Mr. Edward M. Taylor: Before you probe too deeply into the affairs of the Glasgow Herald and this story, Mr. Speaker, would you bear in mind the principal problem which the Committee of Selection will have, that very few Labour Members for Scotland will be here for very long?
Mr. Speaker: That is not a point for me.
Mr. English: Further to the original point of order. May I suggest that you can certainly rule, Mr. Speaker, that it is not a matter of privilege for the Press to print what is obviously true? We all know that, in practice, members of Select Committees are selected, whether rightly or wrongly, by the two Chief Whips on either side. It is surely not a matter in which the privileges of the House should be raised against the Press publishing what is the truth.
Mr. Speaker: The question of privilege has not been raised with the Chair.
Later—
Mr. Emrys Hughes: I wish to raise a different point of order. You will recollect, Mr. Speaker, that when I approached you this morning I discussed with you a question of privilege. After our discussion you suggested to me that the matter should be placed before the Leader of the House, that I should inform him and that he would no doubt be prepared to make a statement. I have informed the Leader of the House and I understand that he is prepared to make a statement. May we have it now?
Mr. Peart: My hon. Friend did write to me immediately on the subject, Mr. Speaker. He is dealing with a report in the Press which I can neither confirm nor deny. In the end, the question of the appointment of hon. Members to a Committee is a matter for a Motion on the Order Paper. There is no such Motion. I shall certainly look into the matter and shall be prepared to make a statement on Thursday.

GOVERNMENT POLICY (QUESTIONS TO MINISTERS)
Mr. Shinwell: On a point of order. My point of order, of which I have given you notice, Mr. Speaker, is less controversial than the last with which you have dealt and I am not certain that it is a point of order.
I am seeking your guidance in a matter of some interest to hon. Members. It relates to Questions which are sent to the Table Office and sometimes rejected, for no doubt valid reasons.
A few days ago, I submitted a Question—I cannot discuss its merits—to the effect of asking the Prime Minister whether a speech made by the Chancellor of the Exchequer at Strasbourg last week represented Government policy. It was rejected, on the ground that, when Ministers go abroad, they obviously represent Government policy when they speak. That seems somewhat of a mystique to me, but, naturally, I did not want to quarrel with the Table Office.
Today, when I came to the House, I noticed on the Order Paper Question No. Q1, from an hon. Member on the other side, asking the Prime Minister:
"… whether the speech of the Foreign and Commonwealth Secretary at The Hague on 8th November, 1968 … represents Government policy ".
I went to the Table Office and asked why my Question had been rejected. I was told—I cannot understand the distinction and perhaps you might clarify it for me and others—that, if a Minister goes abroad to the Council of Europe and makes a speech, his speech cannot be questioned by hon. Members, but that if he goes to The Hague to address another conference, which may be quasi-official, his speech can be directed to the notice of the Prime Minister, who may be asked whether it represents Government policy.
222
I was also told—I think that I should tell the House this—that this is not contained in Erskine May, but is the practice of the House and has been, I believe, for some time. Yet I was not aware that it was the practice of the House. As I am baffled by this distinction, would you please clarify it for me, Mr. Speaker?
Mr. Speaker: I am grateful to the right hon. Gentleman for putting his points of order so courteously. I was advised of it just before I came into the Chair, and since I came into the Chair, I have received further advice from the Table on the issue which is raised. It is quite a fine point.
I have some sympathy with the right hon. Gentleman. He wanted to ask whether a statement by a Minister at the Council of Europe represented the policy of Her Majesty's Government. It is in order, from time to time, to ask whether the statement of a Minister represents the policy of Her Majesty's Government, but if the Minister is speaking at an official body on behalf of the Government, the Table argues that obviously his speech represents the policy of Her Majesty's Government. The Council of Europe is such an official body. The difference between that Question and the Question on the Order Paper which was allowed today is that the latter asks about a statement made by a Minister at The Hague, and whether it represents Government policy. The Hague meeting, however, was an unofficial meeting.
I have a note here, which I will read to the House:
"The distinction, I agree, is fine, but it is quite clear that the right hon. Gentleman is entitled to ask the Prime Minister whether public speeches made by Ministers at non-official gatherings, either in this country or abroad, such as the conference at The Hague, represent the policy of Her Majesty's Government. If, however, it is desired to ask about a speech made at an official conference, such as the Council of Europe, whose meetings are held pursuant to treaty, we must assume that the speech was made representing Her Majesty's Government. A Member cannot therefore, ask the Prime Minister whether such a speech represents the policy of Her Majesty's Government, since that is self-evident. He can, however, ask the Minister concerned directly about policy matters covered in his speech."
Mr. Shinwell: Further to that point of order. I am grateful to you, Mr. Speaker, for what you have said, but if a Minister

223
goes abroad to an unofficial meeting, whom does he represent? Himself? If he represents himself, who pays his expenses? If his expenses are paid by the Crown, surely we are entitled to ask Questions.
Mr. Speaker: I appreciate the right hon. Gentleman's question. But that would seem to be a reason for not asking a Minister a Question if he has attended even an unofficial meeting.
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): With your permission, Mr. Speaker, it might help if I comment. This is a difficult question. You have courteously looked into the matter and given your advice on the information you had received. This is a very fine point and is, I suggest, the sort of subject which should be looked into by the Select Committee on Procedure. I would certainly like that to be done.
Mr. Thorpe: Further to the point of order that has been raised and arising out of the remarks of the Leader of the House. It will be within your recollection, Mr. Speaker, that every time a Prime Minister, whatever the complexion of the Government, is asked whether the speech of a Minister represents Government policy, he always answers in the affirmative; that is, unless the Minister has been sacked before the Question was tabled, in which case matters would speak for themselves.
Since this method is used as an opportunity—a perfectly proper one—for hon. Members to seek wider elucidation of matters raised in a Minister's speech, and as this method is regularly used, I urge that the matter should be looked into, particularly since the distinction between the types of Question tabled on this subject is fairly thin.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. Question time is important and all sorts of new problems arise during Question Time. I am grateful to the Leader of the House for his comments. During the year a number of issues have been raised about Questions and I hope that the Committee on Procedure will take note of the advice of the Leader of the House and will look into
224
this and any other points concerning Question Time which interest hon. Members.

ROAD LICENCE FEE ALLEGATIONS (COMMITTEE OF ENQUIRY)
The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
In his reply yesterday to a Private Notice Question by my hon. Friend the Member for Lewisham, West (Mr. Dickens), my right hon. Friend the Chancellor of the Exchequer said that the implications of the allegations made by the hon. Member for Worcestershire, South (Sir G. Nabarro) that he had "irrefutable evidence" of a Budget leak were being examined so that a decision could be taken as to whether any further inquiry was needed, and, if so, what form it should take.
In view of the fact that the hon. Member for Worcestershire, South has neither withdrawn his allegations nor made available the evidence on which they were based, and, indeed is reported as having made further serious allegations, the Government have now decided that an inquiry should be made so that these charges of grave misconduct against unnamed individuals can be thoroughly investigated.
Hon. Members put forward yesterday a number of suggestions about the form which such an inquiry might take. In view of the fact that the allegations have been made by an hon. Member of this House, the Government have decided that the most appropriate way of carrying out this investigation would be to set up a Select Committee of this House.
The Motion to set up the Select Committee will be tabled after discussions through the usual channels later this week.
Mr. Heath: My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) indicated to the House yesterday that he would welcome an inquiry. As the Prime Minister made plain, the form of the inquiry, decided on by the Government and announced by the right hon. Gentleman, is the Prime Minister's responsibility.

225
Would the right hon. Gentleman answer three questions? First, is the Select Committee to be speedily set up, with the result that not only the necessary Motion will be laid before the House, but that, if the House so desires, it may be debated before the end of the week? Secondly, would I he right hon. Gentleman tell us what size of Select Committee he has in mind? Thirdly, will the question whether the Committee will sit in public or private be covered by the Motion, or left to the discretion of the Committee?
The Prime Minister: The right hon. Gentleman will know that we are ready to have discussions through the usual channels immediately about the establishment of this Select Committee, and to get the necessary Motion on the Notice Paper as quickly as may be, and certainly this week.
The size of the Committee is a matter for consultation. My view, though I am prepared to hear other views, is that it should not be too large and that perhaps it should be smaller than some Select Committees of the House. A membership of, perhaps, 10 or so might be appropriate; but, obviously, if it was widely felt that the number should be eight, 12, or a different figure, then that could be considered.
To answer the right hon. Gentleman's question whether the Committee will meet in private or in public, this must be a matter for the Select Committee itself to decide; that is, if the Motion setting up the Committee gives it freedom so to decide. Sometimes Committees of this sort are not free to decide, while at other times they are.
I suggest that the right thing would be, subject to consultation, that the Motion setting up the Committee should give it the usual authority to send for persons and papers, the usual authority to meet if the House is not sitting, to meet at any place of its choosing and to give it the maximum freedom of decision, whether it would hear evidence in public or in private or perhaps deliberate in private, and whether it should take any other decisions it felt right to take, having regard to its duties to the House which established it.
Mr. C. Pannell: I wonder whether my right hon. Friend can answer a question, or whether perhaps you will agree with
226
me about this, Mr. Speaker. This decision having been taken and announced, is not the matter now sub judice and should it not now become a matter which should not have public explanation through the means of communication, whether on the air or in the Press?
Mr. Speaker: I cannot rule that it is sub judice.
Sir G. Nabarro: While giving a general, but, in view of the Prime Minister's statement, qualified welcome to this decision— [HON. MEMBERS: "Why?"]—may I ask the right hon. Gentleman to appreciate that as I am a principal witness in the controversy I shall require that the proceedings be held in public if I am to be able to submit evidence fairly and properly. [HON. MEMBERS: "Oh?"] Will he take that into account, coming from a principal witness?
Secondly, will the Prime Minister bear in mind that the calendar unfortunately indicates that we are now within a matter of six or seven weeks of Budget day and that it would, therefore, be desirable to have the proceedings of this Committee expedited, held in public and in such a way that all of these budgetary considerations may be considered by the wider general public before the Chancellor's Budget statement?
The Prime Minister: I saw the hon. Gentleman on television last night.
Sir G. Nabarro: Good.
The Prime Minister: I am surprised and a little sorry that the hon. Gentleman has not given a general rather than what he calls a qualified welcome to what I have said.
The proceedings of the Committee, and, in particular, his question whether it will meet in public or in private, must be for the Committee to decide. The Committee will no doubt have in mind its duty to the House and also the views of the hon. Gentleman, who may, as he said, be one of the witnesses. I hope that he will make it clear that he is prepared to give the Committee his fullest assistance in its inquiries, and will not qualify that, as he did yesterday, by statements about his willingness to give evidence.
Mr. Lubbock: Is the Prime Minister aware that to use a Select Committee to

227
investigate matters touching the personal honour of an hon. Member has not been the practice since 1912, that the Royal Commission on Tribunals of Inquiry said in its Report of November, 1966, that the machinery was thoroughly discredited as a result of the Marconi scandal inquiry and that in future fresh machinery should be established, as was done under the Tribunals of Inquiry (Evidence) Act, 1921? Why has not the right hon. Gentleman chosen to use that machinery on this occasion?
The Prime Minister: I do not think that the hon. Member for Orpington (Mr. Lubbock) is entitled to say that this Committee is being set up to inquire into the personal honour of an hon. Member of this House. It is being set up to inquire into allegations which have been made covering a considerable number of individuals, public servants and others, and it is right that it should have full power to inquire into those allegations. Nor should any of us at this stage try to influence its final report.
I am well aware of what has become something of a convention, that because of the Marconi Committee no one any longer trusts a Select Committee of the House, we are told, to look into these matters with impartiality. But I cannot accept that view, even though it did have the authority, in one sense, of the Royal Commission on Tribunals. Indeed, there have been Committees of this House since the Marconi inquiry, which took place in very special circumstances—for example, the Select Committees which inquired into Budget disclosures in 1947 and into the conduct of an hon. Member of this House during the war.
This has been done so far as I am aware with no shred of suspicion of lack of integrity, or that it was done on party grounds. My impression, having presided over a Select Committee on very controversial matters, is that this has always been true and that the Committee on Privilege, a Select Committee of this House, does its job without fear or favour. I cannot accept the view that, because certain things happened in the Marconi case, from that time forward the House is precluded from setting up a Select Committee when that course of action is indicated.
Mr. Ellis: On a point of order. I may have misheard, but I think I heard the hon. Member for Worcestershire, South (Sir G. Nabarro) say in his comments on the Prime Minister's statement that he would be prepared to appear before the Select Committee if—and then he qualified it—it were held in public.
As I understand, that is threatening not the Government, but this House as a whole, and I understand that no individual can be above this House as a whole. As such, the hon. Member was challenging not only this House, but you who represent us in this House, Mr. Speaker. I hope that you will make quite clear that the hon. Member, when it is a matter of decision of this House as a whole and you as our Speaker, has no right to qualify it in this way.
Mr. Speaker: Order. The hon. Member is right in one thing—that no hon. Member or right hon. Member is above this House—but the matter to which he referred is a one for the Select Committee, if it is set up.
Mr. Shinwell: On a point of order. All that has happened this afternoon, although we seem to have gone beyond what happened originally, has been an announcement by the Prime Minister of the Government's intention to submit a Motion asking for the appointment of a Select Committee. I think that it is the practice of the House that we do not debate a Motion until it comes before the House, but what we are doing now is proceeding to a debate. I suggest that all that hon. Members wish to say—if they wish to say anything, from either side of the House—on the merits or demerits of the question should wait until the Motion comes before the House.
Mr. Sandys: On a point of order.
Mr. Speaker: Order. I can deal with only one point of order at a time. There is some merit in what the right hon. Gentleman has said. There is not yet a Motion that we should set up a Select Committee, but hon. Members are entitled, when a statement is made by a Minister, to ask elucidatory questions.
Mr. Sandys: On a point of order. I should like to have your guidance, Mr. Speaker. Is it in accordance with our normal Parliamentary practice for this

229
House to set up a Select Committee to inquire into statements made by hon. Members outside the House?
Mr. Speaker: That is not a matter for the Chair. It is a matter which can be discussed when the Motion comes before the House. I hope that we can proceed.
Mr. Woodburn: May I ask the Prime Minister whether he proposes to give the Select Committee powers to make its own investigations? The hon. Member for Worcestershire, South (Sir G. Nabarro) may have been misled by a conspiracy, as suggested in the newspapers. It would be quite improper for a Committee of this House to make investigations of that kind. Would this Committee have power to employ the necessary research to inquire whether a leak took place—if there was a leak between the Treasury and its printing office?
The Prime Minister: It must be for the Select Committee to decide its own procedure within the terms of the Motion which we shall ask the House to approve. The Committee must construe the matter and carry it out to the best of its ability.
Captain W. Elliot: Could the Prime Minister clear up this point? He will be aware that yesterday the Chancellor of the Exchequer said that there was no foundation in the allegations made by my hon. Friend. Is this inquiry to establish whether there was a leak of non-information, or whether there was a leak of vital information?
The Prime Minister: The position was as stated by my right hon. Friend yesterday. It was not accepted by the whole House, for example, by the hon. Member responsible for making the allegations outside the House. I heard him say, although not physically in his presence at the time, that he did not accept the statement of my right hon. Friend. Great publicity has been given to these allegations. It is right, in defence of those who have been the subject of these allegations, that there should be a proper independent investigation by a Select Committee. There are alternative means, such as those suggested by the hon. Member for Orpington (Mr. Lubbock), but we do not take the view that that would be the appropriate way of proceeding in this case.
Mr. Moonman: Would not my right hon. Friend agree that the reason for preferring this sort of inquiry over other methods of inquiry is the seriousness of the situation and that many hon. Members on this side of the House welcome this method without question or qualification?
The Prime Minister: That is what my hon. Friend said on television and in the letter which he sent to my right hon. Friend.
Sir Harmar Nicholls: Are we not debasing—
Mr. Faulds: On a point of order—
Sir Harmar Nicholls: I am on a point of order. Are we not debasing the coinage of Parliament? A Minister of the Crown has stated categorically that there has been no leakage. Is it necessary to inquire into every comment by a backbencher?
Mr. Speaker: Order. We cannot debate here the merits of the issue which the Select Committee will look into. I hope that we can move on.
Mr. Faulds: On a point of order. Is it in order for the House to waste valuable time on the tittle-tattle of such a self-publicist as that cardboard cavalier?
Mr. Speaker: Order. The hon. Member for Smethwick (Mr. Faulds), not for the first time, is doing what I have asked him not to do.
Mr. Winnick: Is the Prime Minister—
Sir G. Nabarro: On a point of order. You observed yesterday, Sir, that Mr. Speaker was not strange to strong epithets in the House. Would you rule now, Sir, in reference to another hon. Member as a "cardboard cavalier"? If you rule that that is in order, would it not be equally in order to talk of a broken-down actor from Stratford-on-Avon?
Mr. Speaker: Order. The ways in which hon. Members express their disapproval of each other's conduct is a matter for the Chair if they exceed the rules of order, but I do not think that I have heard anything out of order.
Mr. Winnick: Is the Prime Minister aware in view of the demolition job which

231
the Chancellor did yesterday it seems a complete waste of time to have an inquiry? Is it not a fact that over 22 years the House has refused to take the hon. Member for Worcestershire, South (Sir G. Nabarro) seriously?
Mr. Speaker: Order. We must move on. Mr. Hector Hughes. A point of order.

PRIVATE BILLS (OBJECTIONS)
Mr. Hector Hughes: I wish to raise a point of order on a different question from that which we have been discussing and one—[Interruption.]
Mr. Speaker: Order.
Mr. Hughes: Last Tuesday, at the appropriate time for Private Business—[Interruption.]
Mr. Speaker: Order.
Mr. Hughes: Last Tuesday, at the appropriate time for Private Business, the Brighton Corporation Bill was duly presented according to the rules of the House for Second Reading. Also according to the rules of the House, I objected to it.
Looking at HANSARD I see there is not a word about the objection. If it be the rule of the House that such objections are not recorded in HANSARD I suggest, Mr. Speaker, that you refer it to the appropriate Committee with a view to having a change made so that such objections are duly recorded. In the absence of such a record, the HANSARD is incomplete.
Mr. Speaker: I was not previously apprised of the point of order, but I have been advised on it.
As the House knows, it is often difficult, if not impossible, to identify the Member or, in many cases, the chorus of Members, who are shouting "Object" to a particular proceeding.
HANSARD does it best to record the collective objections raised to Private Members' Bills on Friday afternoon at 4 o'clock, but it is not the practice to record objections to Private legislation taken at the beginning of the day. At
232
that hour Bills may be opposed either by verbal objection, or by a Motion placed upon the paper under the terms of Standing Order No. 7(3), so there are two methods by which a Private Bill, as distinct from a Private Member's Bill, may be opposed. I think that this procedure is clear enough for all practical purposes.
The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) has this afternoon made it clear to all concerned that he objects to the further progress of the Brighton Corporation Bill, and I think that he must rest content with that.

ADULT EDUCATION, ENGLAND AND WALES (COMMITTEE OF INQUIRY)
The Under-Secretary of State for Education and Science (Mr. Denis Howell): With permission Mr. Speaker, I would like to make a statement.
My right hon. Friend the Secretary of State for Education and Science has decided to institute an inquiry into adult education in England and Wales. He has come to the conclusion that this important part of the education service, which has shown considerable growth in recent years, needs a new definition of its role in a changing society. He has accordingly decided to establish an independent Committee of Inquiry to examine its purpose and structure and to make recommendations for its future development.
The Committee will have the following terms of reference:
"To assess the need for and to review the provision of non-vocational adult education in England and Wales; to consider the appropriateness of existing educational, administrative and financial policies and to make recommendations with a view to obtaining the most effective and economical deployment of available resources to enable adult education to make its proper contribution to the national system of education conceived of as a process continuing through life."
I am pleased to inform the House that Sir Lionel Russell has accepted my right hon. Friend's invitation to be Chairman of the Committee. I will circulate a full list of the members in the OFFICIAL REPORT.
Mr. J. E. B. Hill: We welcome an independent inquiry into this most important field of education, which we think is long overdue. Will the Committee be free to interpret "non-vocational" in its terms of reference? Will it be able to examine some of the ground which seems to have been pre-empted by the Open University, particularly with regard to the use of television, tutorial resources, and residential facilities? Will the Committee pay regard to the provision that is being made from private and independent sources as well as Government ones, and also to the special difficulties of rural areas where the W.E.A. has played such an important rôle over the last 50 years?
Mr. Howell: I am grateful to the hon. Gentleman for his words of welcome. I agree that this inquiry is long overdue. I confirm that all the points the hon. Gentleman mentioned will be within the Committee's terms of reference.
On the special point about the Open University, I am happy to say that one of the members of the Committee will be Mr. Brian Groombridge, who is a member of the Open University Planning Committee. The importance of coordinating activity in this field with the Open University is certainly appreciated.
Mr. Murray: How long is the inquiry likely to take? As there is to be the inquiry, will my hon. Friend ask authorities such as Kent to hold back the increases in fees they are about to make of between 300 and 1,000 per cent. until Committee reports on the financial aspects?
Mr. Howell: This is an independent inquiry. Its Chairman, Sir Lionel Russell, believes that to do the job adequately and thoroughly in a field which, as the hon. Member for Norfolk, South (Mr. J. E. B. Hill) said, has not been inquired into for many years, and to get the structure and financing right, he will need at least two or three years.
We are well aware of the difficulties of the financial policies of certain local education authorities at present. These difficulties, which have come to the surface very recently, are among the matters which the Committee will be looking into. I hope that local education authorities will pay heed to the fact that there
234
is now to be a thoroughgoing inquiry into the whole service.
Sir S. Summers: Will the Minister, for the purpose of his statement, define "adult"?
Mr. Howell: Parliament itself is about to do that in legislation which is shortly to be put before it.
Mr. Park: Does my hon. Friend agree that adult education has been a most successful and expanding service in recent years? Is he aware in particular of the contribution to the improvement in industrial relations which has been made, and which will continue to be made, by such bodies as the Workers' Educational Association and university extramural departments in their provision of educational courses for trade unionists?
Will my hon. Friend bear in mind the need for this Committee to take an expansionist view of its responsibilities and not to allow itself to be used for false economy measures which could do a great deal of damage to the whole service?
Mr. Howell: The whole purpose of the inquiry is to establish the importance, as the Government see it, of the service as a whole. I am happy to say that there has been a considerable growth in the service and particularly some very exciting opportunities occurring for adult education in the whole field of industry, especially the education of trade unionists in the processes of management. Therefore, my right hon. Friend the Secretary of State has specifically appointed four members who have special regard to this matter—Mr. Jim Conway, General Secretary of the A.E.U., Mr. John Marsh, Mr. Clifford Barclay and Sir Alfred Owen.
Mr. Geoffrey Lloyd: Will the Under-Secretary note that the fact that Sir Lionel Russell is to be Chairman of the Committee will give great satisfaction?
Mr. Howell: I am obliged to the right hon. Gentleman.
Mr. McNamara: I welcome this statement, but will my hon. Friend define more specifically the phrase "non-vocational", because many people would say that there is no distinction between the

235
various types of education? While agreeing that there is an important part to be played in training people for leisure in the future, the phrase "non-vocational" tends to suggest that there are unnatural limits in education, where, for example, a business course could be extremely vocational but also extremely educational.
Mr. Howell: The interpretation of this part of its terms of reference will be a matter for the Committee's common sense. The House will readily understand that it was necessary not to have an inquiry ranging over the whole field of technical education. Therefore, it was thought best to exclude from its terms of reference that part of the educational service.
Mr. Lubbock: Is the Under-Secretary aware that in some local education authorities the most savage cuts are being made in the adult education service, out of all proportion to the cuts being made in other services, in an effort for the authorities to meet their financial responsibilities? If this process continues, there will be nothing left for Sir Lionel Russell and his Committee to inquire into. Therefore, will the hon. Gentleman impress on local authorities that they should not make savage economies in this service at a time when the Committee is about to begin its investigations?
Mr. Howell: I am obliged to the hon. Gentleman for making that point. I fully support him and greatly regret the savage cuts which have been made in certain areas. In fairness to the education authorities, it is right to say that the authorities that have thought it right to make, to quote the hon. Gentleman, savage cuts, are in a very small minority. This is a good opportunity to remind local education authorities of their overall responsibility for education as a continuous process throughout life, that being the concept of the 1944 Act, under which they operate.
Mr. Coe: While not going right across the whole technical field, will my hon. Friend expand on what he means by the fields which he would like to see the Committee tackle?
Mr. Howell: This is not the time for me to give all my views on the matter. Indeed, it would be improper, since we
236
have appointed a Committee to advise us. However, I should have in mind three great areas of activity in which there ought to be considerable expansion and effort, and it is my personal hope that the Committee will look at them. One is the whole range of adult education in industry. Another is the tremendous growth of interest, particularly among women and housewives, in the possibilities of the adult education service. The third is the new and important service beginning to emerge in education for retirement and the opportunities which it can offer to retired people.
Mr. Lane: I welcome the inquiry, but is it not yet another reason for deferring plans for the Open University, at least until the Committee has reported?
Mr. Howell: No, Sir.
Mr. Roebuck: If it is the fact, as my hon. Friend the Member for Gravesend (Mr. Murray) and the hon. Member for Orpington (Mr. Lubbock) have said, that local authorities are cutting down savagely on education grants, cannot my hon. Friend suggest that they would do a far better job if they cut down on some of the grants for the roistering, guitar-strumming students of the London School of Economics rather than cut down on the educational opportunities being offered to decent taxpayers and ratepayers?
Mr. Howell: I do not think that I should be drawn into that argument.
Following is the list of members of the Committee:
Sir Lionel Russell, Chairman, former Chief Education Officer, Birmingham.
Mr. Clifford Barclay, banker, industrialist, currently President, British Film Producers' Association.
Mr. Jim Conway, General Secretary, Amalgamated Union of Engineering and Foundry Workers.
Mr. R. D Salter Davies, formerly Chief Inspector, H.M. Inspectorate.
Mr. R. T. Ellis, Colliery Manager, Wales.
Mr. Brian Groombridge, Education Officer, Independent Television Authority; Member, Open University Planning Committee.
Mr. David Heap, Dentist, former Secretary, National Union of Students.
Mr. J. W. Henry, Chief Education Officer, Salop.
Mr. H. D. Hughes, Principal, Ruskin College, Oxford; Vice-President, Workers' Educational Association.
Professor H. A. Jones, Vaughan Professor of Education, University of Leicester.
Mr. John Marsh, Director General, British Institute of Management; Member, Albemarle Committee on the Youth Service in England and Wales.
Ald. Mrs. E. W. Mitchell, Member, Northumberland County Council; formerly Chairman, Northumberland Education Committee.
Dr. Elizabeth Monkhouse, Senior Staff Tutor, London University Extra Mural Department; co-opted Member, Civil Service Council for Further Education; Vice-Chairman, Governors of Kingsway College of Further Education.
Sir Alfred Owen, Chairman and Joint Managing Director, Owen Organisation; Pro-Chancellor, University of Keele; formerly Chairman, Staffordshire County Council.
Secretary
H.M.I. Mr. C. W. Rowland, Department of Education and Science, Richmond Terace, London, S.W.I.

BILL PRESENTED
  HOUSING (LOCAL AUTHORITY CONTRIBUTIONS)
  Bill to make provision for the payment by local authorities out of the general rate fund of contributions in connection with the provision of housing accommodation; and for purposes connected therewith, presented by Mr. Alfred Morris; supported by Mrs. Braddock, Mr. Will Griffiths, Mr. Laurence Pavitt, Mr. Arthur Davidson, Mr. Will Howie, Mr. Michael Foot, Mr. Kenneth Marks, Mr. Arnold Gregory, Mr. Ivor Richard, Mr. Eric S. Heffer and Mr. William Hilton, read the First time; to be read a Second time upon Friday, 14th February, and to be printed. [Bill 77.]

FILMS (STATUTORY DEPOSIT)
4.31 p.m.
Dr. David Kerr: I beg to move,
That leave be given to bring in a Bill to require the deposit of certain copies of moving pictures in the National Film Archive of the British Film Institute.
I hope that I shall have the sympathy of the House, after this rather long wait, if I am more likely to give a sigh of relief than make a sparkling speech.
The Bill would endow the British Film Institute with a statutory power to acquire for deposit in the National Film Archive any film selected as suitable for that purpose. The growth of interest in the film as a medium of artistic expression as well as a document of social and historical importance has been one of the most remarkable features of the artistic world in recent years, and it has done something, though not nearly enough, to rescue the film from the commercial and aesthetic depression of the post-war years.
The film is essentially a popular art form, perhaps the most popular. The British Film Institute, with its National Film Archive, has played an integral part in promoting the film as an art form, by studying methods of storage and by introducing new scientific and technological methods of preserving film. It has a national and international reputation which, unfortunately, is not paralleled by a public appreciation of its work, despite the fact that it costs the taxpayer about £90,000 a year.
The aim of the Archive was stated in 1935, when it was established; it was to be responsible for film records and to maintain a national repository of film. The aim was redefined more broadly, and more recently, as being to maintain and develop a permanent national collection of moving pictures from all sources shown in Great Britain of lasting value to the study of film art and its development and as an historical record of every aspect of contemporary life and behaviour.
Unfortunately, the Archive is frustrated in this work and in its aims by its failure to acquire the films which are selected. Only one feature film in five shown in this country is thought suitable

239
for deposit in the Archive, yet the records over the past 10 years show that of about 1,000 feature films which were selected for deposit, only 286 have been acquired: from the United Kingdom, 126 out of 237; from the United States 110 out of 360; and of Continental and other films which come to this country because they are, broadly speaking, of high quality, only 50 out of 401 have been acquired for the Archive.
Nearly all the films which are deposited at present are donated by the film industry. I must speak plainly here: if all the film industry were as good, as far-seeing and as generous as the best, there would be no need for me to be speaking today. But of the 286 films which have been received, thanks to the generosity of a section of the industry, a large proportion are old used prints no longer suitable for commercial exhibition. The Archive faces problems of maintenance and examination, and of maintaining a bureaucracy for cataloguing and retrieval. The deposition of new films of mint quality would relieve the Archive of much of this burden.
The Bill would give the British Film Institute the right to require for the Archive any film selected from among those which have received public exhibition. The selected films would include not only films ordinarily so called but television material as well. Further, it would be an important principle that the British Film Institute itself would undertake to pay the cost of preparing the copies for deposit.
I stress that the Bill, if it becomes law, will in no way intrude upon the copyright of owners of the films nor in any way infringe the possibilities of commercial exploitation. There would be no difference from the arrangements which now apply to the deposit of film on a voluntary basis. Second, the cost of preparing the prints would fall in the first instance on the British Film Institute. It would not fall on the Government or on the taxpayer.
I must in fairness quote from what the Estimates Committee said in its recently published Report reviewing the work of the British Film Institute. It said:
"Your Committee would not consider the introduction of a payment for the right to
240
acquire a single archive copy an appropriate solution to the problem."
and it added:
"At present your Committee could not recommend the allocation of part of the existing scarce resources to this task, though in improved economic conditions they would welcome reconsideration of the question."
I have quoted those words in fairness to the House. I wish to make plain that the British Film Institute recognises the difficulty which my Bill might impose for a time on the process of archiving. However, I emphasise that there are difficulties already, and it is not envisaged that the passage of the Bill would do anything to increase them. Moreover, the actual cost of archiving on a 100 per cent. selected basis—that is, if we received all the films selected, not if we took all films which were shown—has been estimated at its maximum to be £150,000 a year, slightly more than 1 per cent. of our national expenditure on all gallery and museum activities—not, I suggest, even if it were to fall wholly on the Government, an entirely disproportionate amount.
The industry has expressed fears that the cost might be made to fall on its side, through, perhaps, the National Film Finance Corporation or the Eady Fund. This is not the intention. There are alternative sources open to the Institute upon which it could call. Second, even to maintain the present level of deposit would mean a cost not of £150,000 but of £20,000 a year.
In the long run, it would still be open to the Institute not to select any films for archiving if it found that it had not the necessary resources, and there is, as I say, the possibility of deriving financial support for this important purpose, which has a commercial significance, from such sources as television and even on a voluntary basis from the industry itself.
The Bill would not solve all the problems facing the Archive, but it would begin to solve one of the most pressing which faces the Archive and the nation as a whole. I hope that the passage of the Bill and the debates which, I trust, will take place on it will encourage a more positive attitude by the film industry and by television. In this respect, I am much encouraged by the failure of the industry to express any opposition to the terms of the Bill as I have brought it

241
to the House. We need to serve not merely the film-going public but tele-viewers too, and, above all, we must have in mind the need to serve the social historian 50 years hence.
Question put and agreed to.
Bill ordered to be brought in by Dr. David Kerr, Mr. Hugh Jenkins, Mr. Lubbock, Mr. Ryan, and Mr. Strauss.

FILMS (STATUTORY DEPOSIT)
Bill to require the deposit of certain copies of moving pictures in the National Film Archive of the British Film Institute, presented accordingly, and read the First time; to be read a Second time upon Friday, 18th April and to be printed. [Bill 78.]
ORDERS OF THE DAY

  CONSOLIDATED FUND BILL
  Order for Second Reading read.
  Motion made, and Question proposed, That the Bill be now read a Second time.

INVESTMENT GRANTS
3.41 p.m.
Mr. A. P. Costain: I am fortunate in having been selected by Mr. Speaker to raise the question of anomalies in investment grants. I must declare an interest. I am a director of a firm which has manufacturing factories; a director of a firm of civil engineers; a director of a firm of builders; and a director of a firm of hotels. All of them are affected. According to Mr. Speaker's Ruling of 26th March, 1968, I am prohibited from raising any questions of taxation and legislation, but I am permitted to raise questions about administrative policy. This, of course, restrains me from asking the House to refer to bringing back the investment allowances, but it allows me to point out that, when investment grants were substituted for investment allowances, the House was told that they would encourage investment in selected industries and in specific assets.
The grants give great power to the Board of Trade, which has produced a booklet, "Investment Grants: A Guide for Industry". I see that the Minister of State is equipped with a copy. We are used to white papers and green papers. This document is orange, while the first document produced by the Board of Trade was yellow. The way things are going, I prophesy that the next one will be red.
The booklet can be obtained from any Board of Trade office. It is free—and all in industry can obtain it. But, like everything else in commerce that is free, one gets exactly what one pays for, and I congratulate the staff of the Board of Trade on producing the booklet in this colour. The Board of Trade must have a sense of humour, because this is neither stop nor go. However, under this Government, the Department's civil servants need a sense of humour.

243
I should also explain that, in private industry, before anyone embarks on any new project or any capital expansion, the first thing to do is to find out what the cost of the expansion will be. Unlike Government Departments, which can make an estimate and then double it and treble it during the Parliamentary year, commercial firms have to make an accurate estimate. If they did not, they would go bankrupt.
I can produce no better evidence than this booklet to show what is wrong with the system. I draw the Minister of State's attention to page 7, which says:
"It is hoped that the booklet will help firms to know, in advance of submitting claims, to what extent their investment expenditure is likely to be admissible for grant."
It goes on, cleverly:
"This booklet will be revised from time to time in the light of experience does not have legal force."
This is why I claim that it is a yellow document that gives no real information at all.
Secondly, we know from experience of what has been happening since the operation of the Act that an applicant has to wait up to nine months after spending the money to know whether he is eligible to get his grant. The Estimates Committee, on which I recently had the privilege to serve, heard evidence that over 195 cases dating back to 1966 were submitted to the Board of Trade as late as last November.
We can go further with this booklet. I refer the House to page 12. This is a most interesting page, because the Board of Trade has substituted a flyleaf for the original. I have done my best to see what secrets there are under it, but have not found out. Perhaps it is not a good time to do it for the moment, anyway. But it is evident that someone realised that the Board of Trade was giving too much away, had a sudden panic and ordered a flyleaf to be put in. The evidence of the hurry is that in paragraph 29 even the spelling is wrong. It says:
"The Board will consider whether it will be cosnistent …"
I presume that this is meant to be "consistent". The misspelling shows the panic with which the document was prepared. The flyleaf says:
244
"Grants will not normally be paid on manufacturing equipment whose use is subsidiary to or forms part of a non-qualifying process …"
The first example is
"… a lathe used in a repair shop or garage;"
When is a repair shop not a repair shop? When is a garage not a garage? I have a garage in my constituency, Martin Waters Limited, which manufactures and has a successful export trade. Is its work to be regarded as not qualifying for grant? The next exclusion is
"a saw for cutting wood at a timber merchant's yard;"
What is the difference between a timber merchant's yard and a joinery shop, and why has it been decided to exclude this one miserable saw? Quite often, timber merchants' and joiners' shops are adjacent.
This special page which has been stuck on goes further. It excludes
"printing equipment for use in office activities,"
I wonder what that means. If a company buys a printing machine and prints a circular about office hours, will grant on that be allowed? I wonder what happens if the same printing machine prints a notice board for the works. Is that office equipment or manufacturing equipment? I remind the House that this booklet is supposed to clarify matters.
The next item excluded is:
"kitchen equipment in a restaurant or hotel,"
But that is obvious. We know that, ever since the Government came to power, they have a sort of yen against the hotel and restaurant business.
The Government went out of their way to cripple this industry with all forms of taxation; but I would be trespassing on your generosity, Mr. Deputy Speaker, if I said anything further about that. The anomaly of this is that if a manufacturing process cooks food and the manufacturer supplies it to a restaurant, the grant becomes payable. We have had cases in Scotland of two adjoining restaurants, one with a bakery attached, the other without. The restaurant with the bakery receives the investment grant and the other does not. This is the sort of fair competition the Government want to help investment and improve production.
I assume, although I have not checked it, that if a firm of caterers such as

245
Lyons was to cook its food at Cadby Hall it would get its grant, but if it cooked food at the Cumberland it would not.
Let us look at the industry about which I, perhaps, know most, the construction industry. This is dealt with in some detail in chapter 4, page 14 of this explanatory booklet. Paragraph 36 explains what will be allowed in civil engineering and building. It says—a quite remarkable statement:
"Ordinary repair or maintenance of buildings or structures is not a qualifying activity and"—
believe it or not—
"machinery or plant used solely for this is not eligible."
What a shaft of light is such a booklet! Who can possibly say what type of building equipment is used exclusively for maintenance, unless it is that used by the small builder who does nothing but maintenance? Every large firm carries out maintenance from time to time. What is the difference between alteration and maintenance? Is this building in which we are sitting being maintained or altered? How can anyone define it? Yet the Board of Trade, in this helpful document, says that it should be excluded.
It would need an army of civil servants in the building industry to work out such details. The only person who suffers is the small builder, who does nothing but maintenance. This, from the Government about to introduce a Bill for maintenance of houses in twilight areas. They make it difficult to get grants. Paragraph 38 deals with development areas and says that
"Construction equipment which is provided for continuing use in a development area is eligible for grant at a rate for those areas, but if it is used outside development areas at any time during the first three years from the date when expenditure was incurred in providing it, the fact must be reported to the Board of Trade, who may require repayment of … some of the grant."
What do we mean by "development area"? Development areas are areas of local employment exchanges, which generally follow the pattern of local authorities. Many of the boundaries of such local authorities were settled in the times of the Domesday Book. We can blame our forefathers for quite a lot, but we cannot blame them, when they drew up the boundaries, for not seeing that the Government would use them for taxation
246
purposes. Even if boundaries were in a straight line, as in Canada and Australia, there would be problems enough. Boundaries in this country wander round, and this can make the building of motorways, normally built in a straight line, rather difficult.
The Government are, quite rightly, building motorways, not enough, which cross these hypothetical boundaries. We are not talking about small equipment here. The sort of equipment used on motorways costs millions of pounds. This document, this flash of light, tells us that if the equipment is bought in a development area, and works entirely within that area, a 40 per cent. grant is paid. Should it cross the boundary, then the Board of Trade should be notified.
In building a motorway, a contractor moves millions of yards of material across these mythical boundaries. Soil is moved from a development area, into a non-development area, and then back again. Is an industrialist to have an army of flagmen blowing whistles and timing the intervals when equipment is used outside of a development area? Are the Government to establish a body of civil servants to calculate this?
The booklet goes on to say that this applies for only three years. No one knows why, and it will lead to some interesting situations. Some contractors might take a job outside a development area, which confuses the calculations. What happens then? The most extraordinary things can happen. If one is writing-off a very large crane, as opposed to a small piece of equipment the situation is near absurd.
The Minister of State, Board of Trade (Mr. Edmund Dell): So that I may be clear what argument it is that the hon. Gentleman wishes me to reply to, will he make it clear whether he is arguing against having a differentially higher rate of grant in development areas?
Mr. Costain: I am not arguing against the differential grant in development areas, because the Government have agreed on a policy of additional grants. I am asking that a certain amount of common sense should be put into these regulations. I hope that the Minister will feel at liberty to intervene again, if there is anything he is not clear about.

247
In writing-off, a situation can arise when it is not worth taking a piece of equipment out of a development area, near the end of its life. What will the attitude of the Board of Trade be if the plant is not working, and remains in a development area? I would expect that, good guardians of public funds that they are, they might say, "No. You have to work outside the boundary area". But some of this big plant takes a month or two to repair. Is it right that it should be repaired in a repair shop in a development area which does not qualify for the grant?
The Government are pressing the civil engineering and building industry to export. I can say without fear of contradiction that we are doing our very best in that connection. But, having got the plant with the help of these grants, the moment we respond to the Government's appeal to export, the grant goes; it is taken away. Instead of having this wonderful asset to help exports, the Board of Trade says, "No. We might be subsidising exports". There are very few nations, except perhaps Germany, which are not subsidising exports.
Recently, the previous Parliamentary Secretary to the Ministry of Public Building and Works, Lord Winterbottom—a name which is easy to remember—made a speech on the necessity for builders to equip themselves for building in winter conditions. He made such an appeal to the builders that they responded and got on with buying equipment, including heating equipment. We in the building industry are sufficiently naïve to believe that whatever the Minister in charge says is put into effect.
However, when this equipment was purchased and it came to the question of allowing it for grant—and the gestation period between buying it and knowing whether one will get a grant in respect of it is nine months—the builders were told, "No. That is welfare". Apparently, heating a building to keep out the frost so that one can get on with laying bricks is welfare. The Government talk a great deal about welfare, but when it comes to paying for it, that is another story. The Blue Book makes it clear that welfare is excluded.
I refer to the evidence given before the Estimates Sub-Committee, on which
248
I have the privilege of serving. I am delighted to see the Chairman of the Sub-Committee present. We carried out an inquiry into an excess of expenditure on investment grants which is dealt with in the Winter Supplementary Estimates. The increase above the Estimate is 11 per cent.—£45 million. This followed a 39·4 per cent. increase the year before. I do not blame the Board of Trade officials for their inability to give an accurate estimate. But I should like to congratulate the author of the paper which was put before the Estimates Sub-Committee; it was a masterpiece. It explained why the Estimate was not accurate.
Paragraph 5 on page 49 of the First Report of the Estimates Committee, Session 1968–69, reads:
"It seems clear to us that given the nature of the scheme there will inevitably, even with longer experience, be a number of uncertain factors at the time when the main estimates are prepared. These could all move in one direction, leading to an over-stated or an under-stated estimate, or they could cancel each other out in whole or in part".
Was there ever a clearer statement to the effect, "We do not know what we are talking about, but we will put it in writing". The man who produced that should be made Leader of the House.
The argument which I am developing, be it very unsuccessfully, is that, as these Estimates increase, pressure will be brought to bear to disallow items which have previously been allowed. I have evidence relating to a firm with two factories, one in Scotland and one in England. It had items allowed for investment grant. On the next occasion, they were disallowed in England but allowed in Scotland. Then the Scottish and English got together, for a change, and they were disallowed in both cases. By that time the investment programme had gone on. We become suspicious about these matters. In view of these overestimates, is it possible that the Board of Trade is under instructions from the Treasury to cut down?
In Question 289, one of the officials of the Board of Trade was asked
"whether there is any pressure from the Treasury on the Board of Trade to have a time limit from the point of view of the demand-management of the economy?".
The answer was:
"There has been no pressure from the Treasury on this particular point. The Treasury

249
are, of course, concerned about the total cost of investment grants and this is one reason why the-e has been no further progress in the past year towards shortening the period of delay between expenditure and grant."
If anything lets the cat out of the bag, that does. It is clear that, having made these promises in order to get popularity, the Government are, once again, trying to get out of their promises and commitments and are using the clammy hand of the Treasury as a reason for the delay.
I hope that the Minister of State does not believe that I am putting forward a political argument. I am looking at this matter as an industrialist. I should like to refer to a recent study of taxation which most hon. Members have received in the last few days. It is Study No. 3, by the Industrial Policy Group, which is composed of leaders in industry, into how we may get the economy going, help exports and stimulate the economy but cutting taxation.
These are a few of the scathing remarks made about investment grants. On page 42, it says:
"We now turn to the system of investment grants which, though not formally a part of the taxation of business income, is intimately connected with it. The present system is another of the innovations hastily produced in 1965–66. It has the following major defects:
It discriminates between manufacturing and other industries. This is not only wrong in principle. It is impossible to apply in practice without numerous anomalies arising from the difficulty of defining manufacturing. It is wrong in principle because the distinction between manufacturing and other industries is not a distinction between industries in which it is desirable to stimulate investment and those in which it is not."
That is a summary of what I have been saying about the difficulties.
It goes on:
"Its administration is, and must be, costly owing to the need for bureaucratic decisions on what may or may not qualify for benefit.
It is uncertain. There are investment decisions which have to be made before it can be definitely known whether investment grants will accrue or not, owing to problems of definition. Uncertainty is in itself a deterrent to investment."
The message I want to leave with the House—
Mr. Dell: As I understand, the hon. Gentleman has been arguing that it was a regrettable thing that further progress
250
had not been made in reducing the period before which investment grants were paid. He now appears to be arguing with the Industrial Policy Group in favour of a return to industrial allowances. How does he reconcile these two positions, taking into account that investment allowances cannot be paid in less than 18 months as compared with the present 12 months for investment grants?
Mr. Costain: I am grateful for the interruption, since it shows how inadequately I have argued my case. I did at the start say that I was prohibited by the rules of the House from speaking about investment allowances, and your nod, Mr. Deputy Speaker, led me to believe that I must not trespass further on that matter.
The Minister has missed the most important thing. What is wrong is the definition. If a firm knows that it will get an investment grant, the bank can be told, "In spite of the Government's squeeze, in spite of the rude noises which the Chancellor of the Exchequer is making to you, we have this profit of so much and we know that we will get a refund." If the firm tried that on now, and went to a bank and said that the Government had promised the firm an investment grant, the bank would say, "Which Government?" "Which grant?" "Where is it in the book?" There is no book; and the bank manager will not give overdrafts on promises. This is the difference.
If investment grants are to work, the Board of Trade must in all decency produce a schedule of what it will allow and what it will not allow. There has been time enough since 1966 to prepare a schedule, so that industrialists can go ahead with expansion in the knowledge that a grant will be paid. Until the Board of Trade puts that right, the country will never get the benefit which it should get out of investment grants.
5.15 p.m.
Mr. A. H. Macdonald: The hon. Member for Folkestone and Hythe (Mr. Costain) is in a fortunate position since, as he remarked and as you confirmed, Mr. Deputy Speaker, it would be out of order to refer in any but the most oblique manner to the circumstances that prevailed before. He has, therefore,

251
been able quite comfortably to indulge in all his invective against the investment grants system in a vacuum, without being able to make comparisons.
With all respect to the hon. Gentleman, following the intervention of my hon. Friend, I would remind him that he did carry on about the length of time that it takes to pay investment grants, and I fully take his point. He spoke about the length of time, and it would have been reasonable to make an oblique reference to the length of time that prevailed before.
The hon. Gentleman referred in some detail to the evidence which was presented to the Estimates Committee. I also had the privilege of serving on that Committee and, though the quotations which he made were absolutely accurate and apposite, they also were just a wee bit selective. He might have referred to some of the other questions which were put to the witnesses which indicated that the system of investment grant offered a measure of control. The matter is now before the House because we have this system. Under the previous system it could hardly have been brought before the House, but I will not elaborate on that point. The fact that we are discussing the matter now stems entirely from the introduction of the present system.
The hon. Gentleman, having been a member of the Committee, will recall that witnesses replied to questions by stating that the investment grants system enabled a more accurate method of control to be established than that which existed previously; it enabled hon. Members to put questions about the way public money is being spent in a way which could not have been done before, These comments are to be found in the Report and in the supporting evidence, but no reference was made to this in the speech by the hon. Gentleman.
Mr. Costain: Will the hon. Gentleman say to which question and to which evidence he is referring? This would help me to follow his arguments more carefully.
Mr. Macdonald: I was thinking of Question No. 303 on page 44 of the supporting evidence. The point I am anxious to make, treading as carefully as possible to avoid referring to the previous system, is that the advantages of
252
the present system can be established only after it has been working for a reasonable period. Even if I wanted to make a comparison with the previous system, which I accept would be out of order, it would not be possible to do so because the previous system provided no statistics on which a comparison could be based.
There is some evidence, though of a slightly doubtful nature, to suggest that industrialists paid very little attention to the previous system. The hon. Gentleman is an industrialist and will no doubt have seen the booklet called "Investment Appraisal" which was published a few years ago and which showed something on these lines. The evidence I have does not suggest that the uncertainty of business and industrial firms on which he dilated at such length is significantly greater now. This is why it is all the more unfortunate that the hon. Gentleman proceeded, as he was obliged to do, in a vacuum, without reference to what had gone before.
He might have referred to some of the advantages of the present system. I remember most distinctly discussing with a group of businessmen and industrialists the system of investment grants with particular reference to the concept of rental. I suppose that we are all agreed that the concept of renting equipment should be encouraged. It enables a more effective use of plant, and it enables the use of expensive and specialised plant.
I do not want to elaborate on it in great detail, but it is common for the company engaged in renting out equipment, through some quirk in our system of accountancy, very often to show in its early years an apparent loss in its accounts. It is not a real loss. The profit is there in the future, but it is one which is to come, and it does not appear in the accounts for the early years. The only item featured there is the written-down capital value of the equipment and not, except in rare cases, the capitalised value of the rental contracts. For that reason, it is not unusual for the balance sheet of a company engaged in renting out equipment to show a loss.
Under the old system, no advantage was gained, but, under the system of investment grants, such a company can qualify for grant and receive it. As rental is an aspect of industry which

253
we wart to encourage, it seems that the system of investment grants is admirably adapted to doing this, and that was the response which I obtained from a group of businessmen whom I addressed in the course of the 1966 General Election campaign. They said that they saw manifest advantages in the system. They were not alarmed at the prospect of uncertainty, because they saw no more uncertainty than existed before. Equally, they were not alarmed at the prospect of delay, because they saw no more delay than existed before.
Mr. Costain: The hon. Gentleman is putting over a powerful argument about the renting of equipment, and he has just referred to conversations that he had in 1966. However, does he realise that if a contractor rents equipment his grants are not allowed? Quite a lot of building firms inter-relate equipment, but, as soon as it is rented out, the grant goes.
Mr. Macdonald: That was not quite my argument, but, if the hon. Gentleman had confined himself to the point that he has now made, I would have felt inclined to support him. Although the system of investment grants assists the renting out of equipment, it could do more than it does, and I should like to see an expansion. If the hon. Gentleman had proceeded on that point, I would have been pleased to support him.
However, following up his remarks, I wonder if it is entirely true that in some circumstances a grant is payable. Manifestly, it is not possible to get two grants. The company hiring equipment cannot get a grant if the company hiring it out has one, and there are cases of the company hiring out equipment getting grant and the company using equipment gaining benefit from it because the hiring company has been able to quote attractive rental terms.
I would not like it to go entirely unremarked that there are distinct advantages in the present system of investment grants, but the arguments advanced in their favour in the Report of the Estimates Committee did not emerge fully from the hon. Gentleman's speech.
5.24 p.m.
Mr. Nicholas Ridley: In answer to the hon. Member for Chislehurst (Mr. Macdonald),
254
I want to make it clear that I am against both investment grants and investment allowances. For me, there is no question of a choice between the two. In my view, the whole system of subsidising investment is getting us into deeper and deeper water.
To begin with, I must declare the same interest as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). I, too, am a director of a civil engineering contracting company, and a competitor of his in some contracts. That means that it does not matter to competitors whether or no they receive investment grants, provided that they are all treated alike. But if I, as a development district based contractor, am to compete with my hon. Friend, as a non-development district based contractor, the competition becomes unfair. My hon. Friend receives 20 per cent. on his plant, whereas I get 40 per cent. I can assure the Minister that his inspectors do not follow my every wheelbarrow in its perambulations round the countryside, in and out of development districts.
There are other anomalies. One arose in my constituency where a firm making plastic mouldings was in the habit of treating the moulds as the property of the customer and, although the customer sometimes invested heavily in those moulds, they were refused investment grants on them. The problem has now been resolved satisfactorily, but there is no limit to the number of anomalies which other hon. Members can bring to the Government's attention.
I want to devote a moment or two to the development district concession of 40 per cent., as opposed to 20 per cent. It was one of the reasons for the very large increases which the Select Committee investigated. It will be known that the original guess was that about 20 per cent. of the money would go to the development districts and that this has had to be revised to 33½ per cent. If my arithmetic is correct, that amounts to £100 million in extra subsidy to the development districts.
It is highly questionable whether it is right to discriminate in favour of the development districts to the tune of £100 million a year of public money by making investments in capital-intensive industry.

255
As I understand it, the problem in the development districts is the shortage of employment for people. It is curious to spend so much money on providing capital intensive and, therefore, labour scarce employment. This has been recognised by the Government, who have brought in the regional employment premium, designed to redress the balance by subsidising labour. However, the two together are now costing us something in the region of £200 million a year—£100 million for capital and £100 million for labour. I suggest that it would have been easier to have abolished both, thereby saving £200 million a year.
The Department of Economic Affairs has always denied that these two large items, investment grant and regional employment premium, should be included in my calculation of the cost per job in the development districts. But the Prime Minister has said that the cost has gone up from £18 million a year to £250 million, which means that we are now spending £8,000 per job in the development districts by including them.
The time has come when this spiral of expenditure must be stopped, and this House is entitled to ask for value for money in the matter. The Chancellor said yesterday that private consumption must be curtailed and that public expenditure is on target and nothing but good. I do not know what this target is. It has gone up by 50 per cent. since Labour came to office, from £9,807 million to £14,500 million. But we have a glorious example of public expenditure which could be cut by £425 million a year in investment grants.
If I might quote to the House the figures which the Estimates Committee investigated, they are very revealing. Originally, in 1967–68, the scheme was to cost £166 million. A summer Supplementary in that year added a further £60 million. Not content with that, a Winter Supplementary was added of £89 million, making the first year's total £315 million. The Board of Trade for this year, 1968–69, upped the figure from £315 million to £380 million in its estimates and already this winter it has discovered that it is inadequate and it has come along for a further £45 million, making a total requirement of £425 million a year which is three times the
256
original estimate when this House was induced to vote for the scheme and to vote for the expenditure. We have really trebled annual expenditure on this item
This is one of the most rotten pieces of estimating and forecasting. Whatever the reasons, it is absolutely disgraceful that civil servants should have made mistakes of this order, and always on the wrong side. They never over-estimate and give us a credit. I think that the time has come to suggest that this expenditure is out of control, and the anomalies mentioned by my hon. Friend show that it is in a most unsatisfactory position.
We have to be steady and not emotional about it and to ask what value we are getting for the money. What is the result of this £425 million that is being invested this year and which is still growing? It is interesting that the manufacturing investment in this country has not risen. It is running at approximately the same annual level as in 1964 before the scheme was brought in. So, despite this enormous expenditure, we are not getting any increase in manufacturing investment, and presumably that is what it is designed to do. We are in the position of investing as a nation less than any of our competitors and at a time when the need to invest more has become absolutely crucial. In 1966 we invested 18·5 per cent. of our gross national product. I will not read out the figures for all the other countries which I have here, but it is interesting that Japan invested 35·2 per cent.—about twice as much as us. This extraordinarily low investment rate is one of the prime causes of our distress. Despite the expenditure of this large sum of money in grants we do not seem to be making any improvement in the level of industrial investment. It is to that problem that I turn my attention for a moment.
It seems ridiculous to tax all the industrial companies in this country in order to give them investment grants at a rate of 20 per cent. on this ever growing scale. The effect of investment grants is presumably to make investment more attractive. But this has an effect upon investment, which can be treated like a commodity. If we are to make it more attractive to spend capital, to invest by means of these grants, we have to deal with the other side of the equation which

257
is to make it more attractive to produce capital, that is, to save at the same time. The more we spend on subsidising investment the more we have to raise by penalising savings in taxation.
For example, if we subsidised the price of tomatoes, it would result in an increased demand for tomatoes because the public would be demanding more and more. But if we raised that subsidy by a tax on tomato growers there would be an ever dwindling amount of tomatoes grown and, therefore, an ever greater shortage. This is the position into which we have got ourselves. The more the Government go on subsidising tomato eaters the more they have to whack the producers of tomatoes with the result that the supply of capital for investment becomes smaller and smaller.
I believe that investments are made not because of the 20 per cent. grant, but because they are thought to be profitable, and the profitability has little to do with the rate of investment grant. To give an example, interest rates in the last four years have gone up from 5½ per cent. to approximately between 8 and 9 per cent. for new money in the market borrowed by first-class industrial companies. This represents a greater increase in industrial costs than is compensated for by the 20 per cent. grant which they receive in lieu. The 20 per cent. grant brings current interest rates down to 7 per cent. in equivalent terms, whereas in a development area it would only bring down the current rate of interest to around 5·3 per cent. The result is to put us back to where we were in 1964 in terms of interest rates in a development area and to keep us in the position of being at a 7 per cent. rate of interest in a non-development area. Therefore, we can see that this expenditure of a vast sum of money is unlikely to be very tempting to industrialists or to have much effect on stimulating investment, which depends much more on confidence, security, stability—
Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Member is getting into a wider debate than is admissible on Supplementary Estimates. He can argue against the Estimates, but he cannot go into this wider sphere.
Mr. Ridley: I accept that. I will quickly bring my remarks to a conclusion. These Supplementary Estimates
258
bring into doubt the whole value of this very large and expensive subsidy of £425 million a year which is rapidly being increased in every supplementary.
I have tried to show that there is no evidence that we are getting value for money and that the way to tackle the shortage of investment is much more at the supply end than at the spending end. I believe that the Government have a case to meet to justify coming to this House and asking for money. I believe that we should not grant it. I hope that their successors on the Treasury Bench, who will be of the same political colour as myself, will have the courage to come out and say that the investment grants system will be brought to an end. That seems to me to be the best way to deal with the problem.
5.38 p.m.
Mr. Kenneth Baker: Although it may have escaped the attention of hon. Members, we are discussing an increase of £45 million in investment grants. I am grateful that this subject is being discussed this afternoon. It is the largest part of the winter Supplementary Estimates, and we are fortunate that the subject came up in the ballot. If we approve this additional Estimate of £45 million, the total amount that will be spent in the current year upon investment grants is £425 million. We have to be satisfied that this extra amount of £45 million is money well spent. The first question that we ask the Minister is: what is the evidence that this is money well spent?
I understand that the object of spending this money is to stimulate investment, particularly in manufacturing industry. Has this been achieved? Has this substantial increase of £45 million already brought, or will it bring, substantial benefits?
Turning to the Board of Trade Journal of 24th January this year, we find a table of the actual level of investment this year compared with earlier years. The year 1968 shows a drop in manufacturing investment from £1,203 million to £1,190 million. So there was a drop of £13 million last year in investment by manufacturing industry. These figures are taken at 1958 prices.
It appears that we are being asked to approve additional expenditure of £45 million which has brought about a drop

259
in investment in manufacturing industry. It is interesting to note that during the same period last year—and again I get this information from the Board of Trade Journal—investment in distributive and service trades which, on the whole, do not qualify in all respects for investment grant, rose from £1,010 million to £1,030 million, while investment in that sector which the Government have selected to stimulate investment dropped. In these circumstances, can this money be well spent? I believe that the onus of proof rests with the Government to show that it can be. When the Minister replies perhaps he will tell us how many jobs were created by this sum of £45 million which we are being asked to approve. Perhaps he will tell us, too, how much extra production can be attributed to the expenditure of this sum, and also how much specific investment is directly attributable to it.
As was said earlier, some of the ground was worked over in the First Report of the Estimates Committee. On page 42 the hon. Member for Hampstead (Mr. Whitaker) asked:
"Has there been any research done into the efficacy of the investment grant use as at present administered?"
The official who replied said:
"This is the subject of constant inquiry within the department, but I must say as yet we have no conclusive information."
We have been called here solemnly today to approve the expenditure of £45 million to stimulate investment which fell, and about which there is no conclusive evidence and information. It is therefore legitimate for us to ask the Government to produce the evidence that the investment grant system is beneficial to our economy.
I do not want to stray into the future, because I shall be out of order if I do so, but, if we are to stimulate the economy in 1969 and 1970, we must be sure that the money we spend on investment grants will produce an increase in investment. Businessmen do not believe that it will, and only yesterday the Financial Times carried the headline, "Industrial investment boom checked". The Board of Trade estimates that industrial investment this year will rise by 10 per cent. Last year it estimated that investment would rise by 5 per cent., but in fact the figure fell by £13 million.
260
This debate is timely, because I dare say the Government will be spending £400 million to £500 million on investment grants in 1969, and that sum might be even less productive than the money spent last year. There are various attitudes to investment grants. I do not want to broaden the debate too much. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) is in favour of abolishing them. I believe that his argument is attractive because if, in 1968, this grant produced a fall in investment, it cannot be an effective way of stimulating the economy.
What has escaped the attention of the Minister and of the Government is that investment grants should be the means of stimulating marginal investment. Most investment consists of replacing plant and machinery, and old factories. This is done almost automatically. It is part of the business process. If there is to be encouragement to investment, whether by grants, which I believe is the worst method, or by initial allowances, the encouragement must be directed to increasing the marginal rate of investment, that is, to getting a little extra out of the investing public's pocket. That is what investment grants have been particularly unable to do.
The present system of investment grants is not only ineffective, but unfair, because it discriminates against the efficient firm in favour of the inefficient one. It discriminates against service industries, in favour of manufacturing industries. It discriminates against labour-intensive industries, in favour of capital-intensive industries, and it discriminates against non-development areas in favour of development areas.
How can the Minister justify a system which allows a company operating in, say, the Highlands of Scotland, to buy a computer for £1 million, a computer which might produce employment for six academics living with their families in crofters' cottages, and then gives that company £400,000? If, however, a company operating in the South of England in retailing, or warehousing, or wholesaling, spends £1 million on introducing an efficient retail network, or on a wholesale distribution network, or on introducing modern American methods of warehousing, how much will that company get

261
back from the Government? The answer is nothing. This is the sort of anomaly which is thrown up by the system of investment grants.
Mr. Dell: The hon. Gentleman might like to look at paragraph 89 of the orange book to which the hon. Member for Folkestone and Hythe (Mr. Costain) referred. If he does, he might find that his question is unnecessary.
Mr. Baker: I am familiar with that book, because part of my task outside the House is to interpret the tax angles in it. I assure the Minister that I shall be only too pleased to give him chapter and verse of the two companies to which I have referred.
Finally, I have tried to show that the investment grant system is ineffective because it has not produced an increase in manufacturing investment. This is one of the most disturbing features of our present economic situation. The system is unfair because it makes a whole set of arbitrary discriminatory rules against some parts of the country which are considered better than others, and some industries which are considered better than others.
Mr. David Steel Mr. David Steel (Roxburgh, Selkirk and Peebles) rose—
Mr. Baker: Hon. Members should realise that when the hon. Member who has the Floor says "finally" it does not mean that he has come near to the end of his speech. I shall, none the less, take the hint and conclude my remarks.
If we want to stimulate industrial investment, which I believe is desperately required—and I am sure that there is nothing between the two sides of the House on this issue—and if we are to achieve an economic growth rate of 2, 2½, or 3 per cent., there must be a massive increase in investment. There must be, not a drop of £13 million, but an increase of £300 million in manufacturing industry alone. If we are to get that, we must give inducements to marginal investment, and not to normal investment which industry is doing all the time. The best way of doing that is by having an initial allowance of 50 per cent. and a write-off period of five years thereafter of the remaining 50 per cent.
262
Mr. Deputy Speaker, I see you sitting on the edge of your Chair. I do not intend to suggest something which requires new legislation, but I believe that what we have at the moment is the worst possible system of all. The system to which I have just referred would, I think, comply within the phrase used by General de Gaulle about gold. It would be "impartial" and "universal", alas not immutable, but this system of investment grants is mutable, and it will be possible to change it, because I am many of my colleagues believe that it is the worst system to adopt to stimulate industrial investment. It is the worst system which has ever been designed by a well-developed economy. It must be changed. It must be altered, and it must go, and in that respect it is like the Government.
5.50 p.m.
Mr. David Steel: I apologise to the hon. Member for Acton (Mr. Kenneth Baker) for being over-enthusiastic in rising to speak when he stopped for a moment to draw breath. The hon. Gentleman made an interesting speech. The fact that my name appears among others is purely fortuitous, and in a sense unfortunate, because I do not intend to follow the general trend of the argument which has been advanced so far. My experience as a Member representing a development area is the reverse of the general observations which have been made to date.
It must be borne in mind that one purpose of the investment grant system was to stimulate employment and capital investment in particular parts of the country, and in that respect I am not qualified to speak about the other matters raised by the hon. Gentleman. My experience, following the Industrial Development Act of 1966, is that conditions in both employment and investment are a good deal better than they were. Therefore, although I shall make a fairly critical speech, I shall do so on the basis of accepting that the investment grant system is basically good, and should be encouraged and promoted.
Mr. J. Bruce-Gardyne: Before the hon. Gentleman gets to his criticisms, will he deal with the point made by the Scottish Council of the C.B.I. that the improvement which has

263
been experienced in the development areas of Scotland is in no sense attributable to any of these things, including the investment grant system?
Mr. Steel: I do not intend to get into an argument about that. I intend to limit my speech to my experience in my constituency. It may be that the Scottish Council of the C.B.I. has views on how things have improved in Scotland as a whole. I shall not comment on that, just as I shall not comment on the case made by the hon. Member for Acton for tying the fall in manufacturing investment to the investment grant system. I do not think that the hon. Gentleman's case was complete, because he was confined by the narrowness of the debate. Other factors may be involved.
I want to come to the criticisms which I have to make of the method of administering this enormous sum of public money which has been put into investment grants. All the points which I shall make have been made in correspondence with different Ministers at the Board of Trade over the last two months. I represent a constituency which is hoping to attract new industry, generally of the smaller variety. It may be that as the development of the Border region progresses we shall want to attract to the area industries which employ between 200 and 2,000 people, but, generally, the new industries which come to my part of Scotland employ between 20 and 200 people. They are in the small bracket, and it is here that the system of investment grants as administered by the Board of Trade is defective.
The firm of Kenvale Textiles wanted to establish itself at the fairly remote village of Newcastleton in my constituency. The Government are pledged to a development scheme which retains the populations in rural communities. Here was an isolated village community of about 1,000 people. There was very little local industry, and even that amount has declined since the local railway line was closed.
In the middle of October, 1967, the gentleman who owned the firm wrote to me, and I put him in touch with the Scottish Country Industries Development Trust. It was not until 23rd April, 1968, about five months later, that the Board of Trade finally turned down his application
264
for various forms of financial assistance to get the business going. It seems to me that to take five months to go through the process of dealing with a single-man business, to investigate his accounts and the viability of the scheme, is to take far too long to deal with a relatively small amount of public money, and a relatively small industry.
In this instance I make no great complaint. I think that B.O.T.A.C. made the wrong decision. The firm went there despite the lack of assistance. It employs 20 people, and provides much-needed employment. In due course it will probably employ 60 people, but it is greatly handicapped by the shortage of working capital which is needed to assist an essential element in the economy of that small and remote community. This was my first experience of dealing with the Board of Trade.
Perhaps I might now give the House a current example of a larger firm, B. & T. (Essex) Limited, which is being ordered to a new industrial site in Hawick. The firm wishes to have its new factory ready by June to enable it to manufacture toys for the Christmas period. If the factory is not ready in June, the firm will have to put off the whole of its industrial cycle for a year, because everything is geared to the Christmas demand.
At the end of November last the firm applied for a building grant, and, I think for loan capital from the Board of Trade. In the correspondence which I have had with the Parliamentary Secretary, and which the Town Clerk of Hawick has had with the Department, it has become clear that no decision can be expected until the middle of March. Four months is a long time in which to investigate the finances of a fairly small company, and failure to make a decision is affecting the company's whole programme of development.
Only the other day I received a copy of a letter—I have not had the time to follow it up with the Board of Trade—which the Town Clerk of Hawick wrote to the Board of Trade. The letter is dated 29th January, and says that
"one of the directors, who is handling the business side of operations, tells me that the Board of Trade accountants completed their inquiries about a fortnight ago and are in process of lodging their reports. The information I have received through Mr. Steel

265
to date indicates that it will be the second Wednesday in March before the application is placed before B.O.T.A.C. but I gather that meetings of this Committee are, in fact, held monthly so that there would be an earlier meeting on the second Wednesday in February."
I hope that it will be possible to advance the consideration of this application so that a decision can be made this month instead of next month.
Those examples clearly show that the Board of Trade's machinery is universal and omnibus for all forms of industry. If Fords of Dagenham were to go to the Cairngorms, the same machinery would be used by the Board of Trade as would be used for a small man who wanted to settle in a part of the development area of Scotland.
I shall not go into another example of which I think the Minister is aware, and which I have forwarded to the Parliamentary Commissioner, concerning the refusal of an investment grant to Mr. Dorward, but I propose to add to my examples the experience of a firm of photo-finishers in Peebles, a firm which takes trade from all over the country by means of mail orders. It is now building a factory on a new industrial site. It is the first new industrial development in the town, and is very much welcomed as being unconnected with the woollen trade.
At the end of July, just before the Summer Recess, in a Written Answer to the Parliamentary Private Secretary at the Board of Trade, the hon. Member for Aberdeen, South (Mr. Dewar), who is never slow to come to the rescue of the Government, the Government sneaked out the news that they were going to diminish, or to cease to grant, investment grants to service industries employing fewer than 50 people. That sort of announcement should not have been made in a Written Answer just before the House rose for the Summer Recess, because such news is of major importance to small towns in the development areas. It is of major importance to small towns in the development area. It is not perhaps significant in terms of the overall employment of the country, but it is important in terms of these small towns in my constituency, which are trying to attract new industry.
The decision to go ahead with the factory came just after the Board of Trade
266
announcement and I have had it confirmed by the Parliamentary Secretary that the firm will not be eligible, regrettably, for a building grant. It may be that the Board of Trade, faced with my criticisms, feels itself very much under pressure from the Estimates Committee and the Public Accounts Committee. It is true also that the Board of Trade has had some unfortunate experiences in Scotland. We all remember the Cadco affair at Glenrothes and there is some caution, therefore, in the granting of public money. This is right, but, somewhere in the Board of Trade, new machinery should be devised so that the same machinery used to spend £1 million on Cadco is not used when we are talking about a building grant of this figure, or for small allocations to small businesses. The Board of Trade uses a sledge hammer to crack a nut.
There are two ways of getting round this difficulty and I should be glad of the Minister's reaction to them. The first is that the Department should devolve the processing of these applications and have a sub-committee of B.O.T.A.C. or a similar organisation in Scotland to deal with applications of less than a certain value. I suspect that one reason for the complaints I have received is that just as the Estimates show that there has been an underestimate by the Board of Trade of the amounts involved in investment grants, so there has been an underestimate in the amount of work involved. I suspect, therefore, that the officials concerned are grossly overworked in dealing with these matters. If this is so, my suggestion is given added weight for the work on smaller applications to be devolved.
The second is that if it is not possible to do what I have suggested, then a special small unit should be set up by the Board of Trade to process small applications. This would avoid these matters having to be taken before monthly meetings of B.O.T.A.C. and there would be no need for lengthy investigations into relatively small applications.
The investment grant system has basically been good. However, it is too slow and it is critical in its slowness in dealing with the movement of complete small firms as opposed to the larger processes and decisions which must be made by large industries.

267
The Scottish Office is very much involved in the development area programme in my part of Scotland. I attended a meeting between the Minister of State and the local authorities, at which I made some of these observations. The Minister said that they came as news to him, and he was anxious that I should convey my criticisms to the Board of Trade. I have done so in correspondence.
It should be a matter of general concern that local authorities as well as firms coming into the area feel exasperated and frustrated in trying to carry out the Government's policy of moving firms into development areas, particularly when they find that the Board of Trade's machinery in this matter is cumbersome and unnecessarily slow.
6.3 p.m.
Sir Spencer Summers: Although we are primarily discussing investment grants, this is part of a debate based on the proposition that the Government be given authority for an additional £163 million; namely, the total winter Supplementary Estimates.
It is significant that the Labour Party, which is supposed to be the great reformer of the life of Parliament and is anxious to set up all sorts of committees to ensure that Government policies are given adequate scrutiny has at no time since the debate began contrived to provide more than five hon. Members on the benches opposite. For most of the time there have been only three hon. Gentlemen opposite in their place, and most of them have been Government spokesmen or Whips. Considering what hon. Gentlemen opposite say about their concern for public expenditure and, thus, taxation, the disparity of interest between the two sides in a subject like this is evident.
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has rendered great service in revealing the fantastic anomalies which inevitably arise in a system of this kind. He quoted many examples of the almost contradictory instructions which are given and explained how it would be almost impossible to deal even in a book with the potential anomalies that arise. The Estimates Committee is precluded from discussing policy. One is, therefore,
268
naturally glad when an investigation of this kind is brought to the Floor of the House because the inhibition in regard to policy matters which applies to the Committee which wrote the Report does not apply to us.
It is interesting to note that this system has its major impact on the cash flow of companies of all kinds. We were told that the import arrangements for the additional surcharge which were designed ostensibly to reduce imports, would not have much effect but would have a substantial effect of the amount of credit resources available and were worthy on that account. If cash resources are such an important part of the Government's weapons, it is strange that the Government should be using a weapon here which is contrary to the restrictions imposed on bank lending, for this is putting more cash from the Treasury at the disposal of companies to which, it is said, the banks should be chary of lending money.
In other words, this system is at variance with the advice tendered by the Chancellor of the Exchequer at the Guildhall recently and makes it still more difficult to understand how a system like this can be defended at a time when the very reverse of assistance in cash is the Government policy.
The Committee was somewhat inhibited in asking whether or not this was a good plan, since clearly the question impinged on policy. We asked, therefore, not for information on which we could judge whether it was a good plan—we should have been precluded from doing that—but what steps the Government had taken to find out whether, in practice, it was a good plan and was accomplishing the purposes for which it was designed. One bit of information we were given in response to questions of that kind appears in paragraph 27 of our Report:
"A witness said that the Board knew that 'firms who are contemplating substantial investment have been very concerned to try and find out in advance what investment grant they would get, which suggests that this has been a considerable factor in their calculations'."
I take it from the context that the inference drawn by the witness about calculations and about whether or not firms should go ahead with certain propositions is an entirely false interpretation of the situation. The calculations to

269
which he should have referred are the amounts of cash that would be needed by companies to finance the projects in question. It is, therefore, false to assume that just because companies ask, "Are we to get a grant?" they are interested to the extent of saying, "We shall or shall not go ahead with the project". They are simply interested to know what effect the project, with or without grant, would have on the cash resources available to them.
We asked what steps had been taken to find out whether the scheme was good. We were told that nothing in the way of comprehensive research had been carried out. It is strange that we should have a system involving the expenditure of £425 million with no steps as yet having been taken to find out whether it is achieving its object.
I freely admit that it is virtually impossible to find out by any scientific means whether that object is being achieved by this method. To give an analogy in another context, I was once asked for my views on whether the Peace Corps field training experience was of value to those concerned. A year after the training experience those who had taken it were asked what effect it had had on their efficacy in the field, and I was asked for my views. I replied that it was impossible for anyone to fill in the questionnaire honestly because it could not be said with accuracy whether the experience, lasting a few weeks a year earlier, had resulted from one of many experiences, such as an event in one's life, coming into contact with a pretty girl or fifty-five or more other factors. Many things enter into the matter when deciding what influences decisions of that sort.
The same applies here. The state of the market, the likelihood of competition, the extent of the profits which will accrue to the company to invest—all these things are vital in deciding whether a project should go ahead or not. It is virtually impossible to find which of these many factors, the addition to the cash flow to the business and so forth, are influencing firms to behave in a particular way. We have had examples to show that in those fields where it was hoped that investment would follow, investment has fallen and where it was hoped that it would fall it has increased.
270
Whether it be this scheme or all the other influences to which a board of directors is subject it is clear that this is not the paramount one. All this adds up to the proposition that if we cannot scientifically discover with any greater certainty than is apparent at present that over £400 million of public money is achieving the object claimed, it is high time that we stopped spending money in that way.
I am glad that the time and effort of the Estimates Committee has led to discussion on the Floor of the House of the merits of the scheme, which I believe will in the course of time be proved to have outlived its usefulness.
6.12 p.m.
Mr. Cyril Bence: I was encouraged to make a contribution to this discussion by the remarks of the hon. Member for Salisbury (Sir S. Summers). We have passed through a long period when it has been a useful economic exercise for the Slate to collect funds in the form of taxes in order that those funds should be channelled into industrial processes in the regions through industrial institutions and also to individuals. This has been a useful process over the last 40 years.
But when a State is developing technologically and scientifically and the situation of the individual in society and industry becomes more secure, when the techniques of managing the market and finding the product for the market are easier than they were 40 or 50 years ago, I wonder whether the State and society may be approaching a situation in which we are creating a huge complex of feed-pipes to pour out money, having collected it from society, and then starting the process over the next few months of going to the outlets of those pipes to collect our share. As we create greater prosperity for the individual—
Mr. Deputy Speaker: Order. I have difficulty in relating the hon. Member's remarks to the Supplementary Estimate. Perhaps he will help me.
Mr. Bence: Yes, Mr. Deputy Speaker. I am thinking of investment grants. I think there is a process in this method—collecting vast sums of money by taxation from the community as a whole, taking it from our pockets in taxes after we are paid on a Friday, centralising it

271
and putting it back by investment grants into institutions in which we have our interest—which is like emptying some bottles so as to fill another bottle. I hope that I am in order in trying to make the point which I should like to have examined by economists, who often have not been right.
I wonder whether it would be worth examining whether it is right to have hundreds of millions collected in taxation and given back in investment grants, or whether it would be better to leave the hundreds of millions in the hands of businessmen and industrialists to make their judgments on investment rather than pumping the money through the State in ever-increasing quantities. This would be one way of cutting Government expenditure and impelling industrialists—
Mr. Deputy Speaker: Order. This is a proposition which the hon. Member cannot discuss in detail tonight. He must come to the Supplementary Estimate of £45 million.
Sir S. Summers: Does not the hon. Member think it would be a good start in the process, to which he may be coming, to join those who object to spending £45 million in this way?
Mr. Bence: I agree that this £45 million has to be collected. I suppose I have made some contribution towards it. The industry in which I was interested and employed paid something towards it on a Friday and then collected some of it back on the following Friday. We could short-circuit this process which increases bureaucracy by collecting from taxpayers and getting money circulating by what seems an unnecessary process. It would be a good thing to have an inquiry into the whole domestic monetary machine.
Mr. Deputy Speaker: Order. This is very interesting, but I am afraid not on this occasion. We cannot discuss taxation but only the question of the £45 million Supplementary Estimate concerned with investment grants.
Mr. Bence: I do not know from where the £45 million comes, but I presume it is from taxation.
Mr. Deputy Speaker: Order. The hon. Member is perfectly correct, but he cannot discuss where it comes from tonight.
Mr. Bence: Naturally, I accept your Ruling, Mr. Deputy Speaker. I am trying to suggest that we could cut out all the unnecessary complex machinery involved in collecting this £45 million from the people and then giving it back at some other point. I am sorry if I am on the wrong theme, but I am deeply concerned. I think we should consider whether we are channelling too much money through the central State machine and not leaving sufficient in the hands of people to do more for themselves.
6.18 p.m.
Mr. David Waddington: The hon. Member for Dunbartonshire, East (Mr. Bence) will forgive me if I do not follow him because I fear that if I did I should speedily be ruled out of order. I think there is a great deal in what he said. For a long time I have been worried by the fact that we have moved into a situation in which everyone seems to have a hand in everyone else's pocket. That does not seem to be a satisfactory state of affairs.
In accordance with the practice of the House, I must declare my interest. I am a director of two small cotton manufacturing concerns. What I have to say is not coloured by my interest, which is strictly limited, and I am not often able to devote my time to my interest in that direction. It strikes me as peculiar that this Government of planners who habitually claim to know better than private industry what is good for the country and what level of capacity is required almost always manage to get their sums wrong. It has emerged clearly from this debate so far that this time they have got their sums wrong to the tune of £45 million. That is not "peanuts" when we think of all the trouble there was over school meals a few months ago, and it is not a fluke. The Winter Supplementary Estimates for last year show that at that time they got the sums wrong to the tune of £60 million.
Many of us have the gravest doubts whether investment grants are a good idea. I appreciate that I cannot ask for legislation to scrap them. What I can

273
perhaps do within the rules of order is say that there is a body of evidence to the effect that investment grants are wasteful. All hon. Members on this side will expect the Minister, in the face of that evidence, and at the conclusion of this debate, to try to prove their usefulness, because, as far as I can see, no evidence thus far has been produced by this Administration to prove their usefulness. We are entitled to seek some powerful evidence of their usefulness when common sense tells us that it is not, on the face of it, very sensible to give money to a company whether it is capable of making a profit out of it or not.
It has been pointed out that in large parts of the country—I refer now to the development areas—firms are receiving these grants at double the normal rates. Again, there is powerful evidence that we are not getting value for money. I for my part expect and hope that the Minister will try to prove that part of this £45 million which is referable to the 40 per cent. investment grants in development areas is good value for money for the taxpayer.
My mind immediately goes to the case of the Ford Motor Company, which has a fairly new plant at Halewood on Merseyside. Ford at Halewood now gets a 40 per cent. grant in respect of any new machinery it installs, in addition to the 37s. 6d. a week a worker it receives by way of regional employment premium. I am not anti-American and I have no objection to American investment in Britain, but I am surely entitled to ask whether it is not crazy that, while we are forbidden to make profitable investments abroad, we as taxpayers, and with no financial interest in Ford, are compelled to give the Ford Motor Company a present of £40 for every £100 worth of machinery it buys. To put it another way, how can it be right and in the taxpayers' interest that a company which is 100 per cent. American-controlled should be able to expand on only 60 per cent. American capital? I should like some convincing from the Minister that that part of this extra £45 million which is going into the development areas, and in particular into that development area which is not far from my constituency, is money well spent.
274
When this scheme was introduced we were told time and time again that it would be very discriminating and flexible, that it was a worth-while reform because only in this way would the taxpayer get full value for money, only in this way would his money be used in such a way that he got a real response by way of industrial investment.
The scheme has proved completely inflexible and quite unable to cope with some of the major problems of today. One example is that of the grey areas. Although for a long time places like Nelson and Colne—my constituency—have been suffering and people have been leaving such areas to go to development areas simply because of the regional employment premium and double investment grants, the Government have merely sat on their backsides, wrung their hands and enjoined us to wait until the Hunt Committee reports. Incidentally, that Report is an unconscionable time acoming. So much for this dynamic, purposive Government. I hope that at the conclusion of the debate the Minister will try—he will have a very difficult task—to prove to me and to others on this side that any of this £45 million is money well spent.
6.25 p.m.
Mr. Michael Shaw: We should all be grateful to my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) for initiating this debate. It is inevitable that certain aspects of investment grants are referred to time and again, not only in the speeches which have been made today, but in those which have been made previously. I well remember the broad and deep division of opinion between the two sides of the House as to the collective merits of the two types of assistance—investment allowances and investment grants—when the Industrial Development Bill went through the House in 1966.
This afternoon I shall deal only with investment grants. The disadvantages which flow from this system as distinct from any other system have been highlighted again today. I have some practical experience of the working of investment grants. I am convinced that this is not the better system. The great weaknesses are just those which were foreseen at the inauguration of the

275
system. There is, first, the discrimination in favour of manufacturing industries as against other industries. The system hits hard at service industries, particularly tourism. This was and is still deeply resented by the tourist industry. Even more fundamental is the objection that this system does not impose any discipline on the industry receiving the benefit to encourage it to make a profit and to earn this reward only after making a profit.
I want to refer to the Report of Sub-Committee D of the Estimates Committee, which examined the Supplementary Estimates. My first point relates to what was called by the Sub-Committee the possibility of a cut-off date for making applications. At present there is no cutoff date. The question was raised by the Committee whether it would be advisable to introduce such a cut-off date so that the Ministry could finalise claims for expenditure made in a particular year. I was glad to note that in its answers the Ministry indicated that it saw no need as yet for a cut-off date.
On the evidence so far, certainly as it appeared before the Sub-Committee, I hold the view strongly that there is no need for a cut-off date. One of the responders to the question was good enough to submit a short memorandum as to the incidence of applications during the six quarters ending the third quarter of 1968. It is clear from that evidence that there is a rapid tail-off in the applications being made in respect of the old expenditure. It seems that old applications will quickly be mopped up in two or three years. Applications for allowance for Income Tax purposes can be made as far back as six years in normal circumstances, and it would appear that claims for investment grants will be made well within that period. On that evidence I believe that the Ministry is right not to seek powers to establish a cut-off date by which applications for the grant must be made.
The next point I had in mind has already been made, but I do not apologise for returning to it. It emerges from Question No. 290, put by the hon. Member for Hampstead (Mr. Whitaker), the most important question put throughout all those proceedings of the Committee:
276
"Has there been any research done into the efficacy of the investment grant as at present administered?"
As my hon. Friend the Member for Aylesbury (Sir S. Summers) said, the answer came in two parts. The first part was to this effect:
"We do know that many firms, particularly the larger firms, who are contemplating substantial investment have been very concerned to try and find out in advance what investment grant they would get."
The point of that inquiry is plain. It is made not to decide whether to make an investment but in order to work out future capital requirements. Unlike Government Departments, an industrialist has to get it right, because if he gets it wrong the banks, at least nowadays, cannot come in to bail him out for the extra. Obviously, therefore, for any major expenditure there must be an inquiry of that kind before it is undertaken.
I add in parenthesis that under the present Government in many more cases than would be normal the question whether the 40 per cent. grant, as it is in the development districts, is given can be critical for the venture, since industrialists know that they are very tightly controlled by the banks nowadays. I regard that as an artificial state of affairs—or it should be. It is rapidly developing into a permanent state of affairs under this Government.
The crux of the matter is that 95 per cent. of investments made in this country—this certainly applies to most of those which I see—are made not on the criterion of whether the industrialist will have some sort of grant but on the judgment of confidence as to the buoyancy and expansion of the economy in the future. If businessmen have confidence, they will not need the investment grant. If they do not need it, it is money which the Government could save by not spending it.
The second interest of industrialists is to see whether, having invested the money they will secure an adequate return as a result. If they see that they will have an adequate return, they will invest. Again, if they have invested on that basis, the Government waste public money by giving them a grant in addition.
The third important factor taken into account by industrialists when investing is the nature and extent of competition

277
facing them or likely to face them. Can they afford not to invest if they are to stay in business? If the answer is that they cannot afford to do without the investment, they will invest. As I say, spurred on by the picture presented by those three factors, and not by whether they will have the grant, businessmen make 95 per cent. of their investments.
It is vital, therefore, if we are to continue this system, that we have far greater knowledge of the effectiveness of investment grants. Here I draw attention to the last part of the answer given by the official to Question No. 290:
"But there has as yet been nothing in the way of comprehensive research into this matter."
That situation must be rectified as soon as possible.
I hope that the Minister will tell us that research is being undertaken as a matter of urgency to find out how effective the investment grant system is in initiating additional capital expenditure. I beg the hon. Gentleman to put into that inquiry the further query which I have already posed: On the assumption that the credit squeeze is no longer with us, is the investment grant such an important element in the decision whether to invest?
In my view, the investment grant system needs to be carefully studied if it is to be continued. I agree with the hon. Member for Dunbartonshire, East (Mr. Bence) when he says that today far too much money is going out of the industrialist's pocket into the Treasury and then back again into his other pocket. Where it is proved not to be necessary, it is time that that came to an end.
6.36 p.m.
Earl of Dalkeith: We are all grateful to my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) for having initiated this debate and given us an opportunity to discuss important aspects of the investment grant system.
At the outset, I dissociate myself from some of the remarks made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) when he endeavoured, I thought, rather too strongly to depreciate the aims and achievements of investment grants in
278
relation to development districts. However, I should prefer to debate that with him outside rather than here now. I have only one comment to make in passing in that context. The greatest extravagance in which any nation can indulge is to pay large numbers of men large sums of money for doing nothing. Obviously, and rightly so, a great deal of emphasis during the debate has been put on the need to secure value for the money which is handed out by the Government in investment grants. These are large sums, and it is right that we should see that the money is well spent and that we do have good value for it. That requirement must always be kept in mind.
I strongly support my Member of Parliament, the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), when he asks for a speeding up of the procedures in investigating applications, particularly those coming from small companies which can make such a big difference to small isolated communities such as the one to which he referred, Newcastleton. If the Board of Trade can devise a new method to speed things up, it will be greatly welcomed by many people in many parts of Scotland.
Mr. Dell: The noble Lord will realise that investment grants are now paid six months more speedily than investment allowances. I understood the hon. Member for Roxburgh, Selkirk and Peebles to be talking about grants under the Local Employment Act.
Earl of Dalkeith: Yes, but we must, if we can, cut down any waste of time. The hon. Gentleman gave the example of a toy factory for which it was crucial that the answer should be given fairly early on. Is it possible for the Board of Trade to have a separate Scottish establishment, perhaps responsible to the Secretary of State for Scotland, which could deal with some of the smaller applications?
The only other local point I make relates to Edinburgh, and I shall pass over it quickly for fear of straying out of order. I draw the Minister's attention to the great difficulties created by the geographical boundaries selected for those areas which qualify for development grants because they are development districts and for those which are excluded. There is now the most extraordinary situation whereby Edinburgh, which is the one and

279
only small area excluded from development district status within an enormous area, is undergoing the most awful convulsions—I can only call it that—whereby industries are picking themselves up and moving outside the City boundaries in order to qualify for grant. This is absurd, because it is merely transferring unemployment from one locality to another. It is not adding in any measure to the general increase of the prosperity of Scotland. I hope that the Minister of State will look at this matter.
My main objective is to draw attention to another industry, and to ask the Minister how he decides which industries should qualify for grant and which should be left out. The industry to which I refer in particular is forestry, in which I declare an interest as I am involved to a considerable extent. What criterion does the Board of Trade adopt in allowing the extractive industries, for example, to have grant but not forestry, which performs much the same sort of occupation?
There are four compelling reasons why the Government should consider giving an investment grant for harvesting equipment in forestry. First, it is logical that forestry should be put alongside the extractive industries. Secondly, forestry has an enormous import-saving potential. Timber imports in every form cost the country about £640 million a year. As a result of giving investment grant to forestry, we should get quicker development of machinery and harvesting equipment, greater efficiency and lower costs. There would be quick results.
Thirdly, we should also be encouraging the development of industry in the far away parts of the country—the Highlands and some of the far outlying areas which are suffering depopulation. Fourthly, Scotland is struggling to recover from the terrible hurricane damage of a year ago, and if a grant could be applied to harvesting machinery for forestry, Scotland would be able to overcome its great problems much to the advantage of the nation in that the timber which is now lying all over Scotland could immediately be put to good use throughout the British Isles and could at once save money spent on imports.
I am reluctant to ask the Government at this time for any form of increased
280
spending but there are occasional exceptions to the rule, particularly when it can be shown that the nation will be making a worth-while investment.
Mr. Speaker: Order. The hon. Gentle man cannot ask for increased expenditure in this debate. He can, however, talk about switching some of the £45 million if he wishes to.
Earl of Dalkeith: I was just about coming to my last sentence, my great peroration, Mr. Speaker. I ask the Minister of State to consider this suggestion seriously, since I believe that it would be much to the advantage of the nation as a whole.
6.45 p.m.
Mr. Tom Boardman (Leicester, South-West): I shall not follow my noble Friend the Member for Edinburgh, North (Earl of Dalkeith) into a discussion of Scotland or forestry, which are far from my constituency, although they are close to my heart. I endorse what has been said by my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) but at the same time make one exception to his speech. He referred to investment being made on confidence and buoyancy. That is how it should be, but it is not always so. I believe that the grant has distorted investment judgment. I believe that firms tend to invest where they will get a grant, whereas economic sense would not always justify the investment. If the investment grant does anything, it tends to distort the proper business decisions on which investment should be made. My hon. Friend may be right in saying that the grant does nothing. If that is so, it should not be paid, and that may well be the right answer.
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) did a great service in exposing the administrative nonsense in the system. He revealed its ugliness and, as one might call it, its indecent exposure in that he stripped it and showed us its raw spots. I will add four illustrations, which I believe have deep economic significance to industries with which I am personally concerned or with which my constituency is concerned, of the way the grant is operating harshly or unfairly and makes nonsense.
The first is the footwear trade, which the Minister of State knows well. One

281
of the vital pieces of plant in the industry-is the sets of lasts. On these lasts, the building of the shoe or boot depends. Lasts are supplied in sets of various pairs, shapes, sizes and fittings. But because each last costs less than £50 no investment grant can be paid upon them, although a set of lasts, which is the complete tool, costs considerably more than £50. The industry, which is one of our growing export industries and has a vital rôle to play at home as well, is placed under this penalty and deprived of a grant which I believe it should get. I ask the hon. Gentleman whether he has given further reflection to his legal powers in refusing the grant in view of the British Oxygen case.
The second illustration is the scrap metal industry. It is well known that an enormous amount of saving of imports is achieved by reclamation of ferrous and non-ferrous metals. A letter circulated by the British Secondary Metals Association some time ago gave figures which have not been challenged. These show that the reclamation industry as a whole saves more than £1,000 million annually in foreign exchange, of which more than one-third is attributable to non-ferrous metals. This reclamation is achieved by the use of plant and machinery, and yet modern plant and machinery used in that vital import-saving industry is deprived of investment grant. Can that be right?
Thirdly, there is the illustration of the disposal of trade effluent—I can hardly call it an industry. Investment grant in this case is paid to manufacturers who, in connection with such disposals, put down their own sewage disposal plants or add or adapt their disposal systems in bringing their effluent up to requirements. An industry particularly affected here is the leather industry. The Minister will be aware of the representations made by the British Leather Federation. I should declare an interest, as I am a director of a tannery.
In most cases the treatment of the effluent can best be done at the local authority sewage works. Instead of each manufacturer putting down his own little plant, the large plant of the local authority can be extended or altered to deal with the combined effluent. But in that case the local authority cannot get an investment grant. It can charge back to
282
the manufacturer an annual sum representing the capital cost of the central works, but as no investment grant is paid it often comes to substantially more than the manufacturer's own plant would after he has got the grant. This is an absurd waste of money, and should be looked at again.
My fourth point concerns the administration of the scheme as it applies to plant bought on hire-purchase terms. Plant is often bought by people who have set up in partnership to start a small business. When the business prospers and expands, as most businesses set up by young men of enterprise will, the owners are advised to convert it—I use the term loosely—into a private company, and the plant is notionally transferred to a private company. I say "notionally" because it is the same factory, the same men and the same everything, but the business is an incorporated company instead of a partnership. Yet investment grants that would have been allowed on the future hire-purchase instalments had the business continued as a partnership are not payable to the company, which therefore suffers a loss. This is a deterrent to people forming themselves into a corporate organisation which can expand, and I ask the Minister to look again at it.
If the grants have any economic purpose—and as we are discussing an extra £45 million, the Government presumably think that they must have some—instances such as the four I have quoted, plus the many more ably quoted by my hon. Friend the Member for Folkestone and Hythe should be remedied. The attitude that has appeared when such points have been raised in correspondence and at Question Time shows a complacency which I have heard defined as "compound ignorance". I am told that ignorance is when people do not know, and that compound ignorance is when they do not know that they do not know. I should hate to accuse the Minister of ignorance or compound ignorance, and I hope that his answer will satisfy us that he is guilty of neither.
6.53 p.m.
Sir Keith Joseph: The Minister of State has nobly, and virtually on his own, sat out this debate. He has a large number of questions to

283
answer, and I shall try to put to him what I think to be the four main ones to emerge from the speeches. There will also be a number of detailed points that he will have picked up, and which we hope he will answer.
We owe thanks to my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) for opening the debate in the way that he did. He gave the House a catalogue of some of the conundrums that result from the arbitrary distinctions inherent in the investment grant system. We look forward to the Minister's comments on what he said.
We also owe a great deal to the Estimates Committee, which put some of the key questions that have recurred time and time again in the speeches today. The disadvantage of the sort of expenditure we are considering is that it is inherently very difficult to predict. We must accept that, but some of us are left with a feeling of amazement at how any Chancellor of the Exchequer can live with runaway expenditure such as investment grants involved last year and again this year. They are costing the taxpayer £425 million this year. Last year there were two extra demands on the taxpayer of £60 million and £89 million, and this year there has been an extra demand, unpredicted when the Chancellor introduced his Budget, of £45 million. The grant system is almost turning into a blank cheque.
Yet the immense sums with which we are dealing may not be the end of the story. There were news items after the Prime Minister's conference at Chequers that all concerned were going away to discover how they could spend more money to encourage investment, and we have the C.B.I. asking that the 1968 investment bonus should be continued during the current year. Therefore, large though the sums are, the demand to increase them may remain to embarrass the Government.
It is true that investment grants are not quite as costly to the taxpayer as the figures might suggest. I understand that to the extent that the grant replaces a company's expenditure its claim to set depreciation against tax is reduced, and this is some offset for the taxpayer.
284
The purpose behind investment grants, and behind the distinction between the level of grant outside and inside the development areas is at least common to both sides of the House. We all want more, better used investment, and we all want prosperity in all parts of the country. The question raised by the Estimates Committee's Report is whether the present system serves those purposes best. My hon. Friends the Members for Cirencester and Tewkesbury (Mr. Ridley) and Acton (Mr. Kenneth Baker) suggested radical changes which were vigorously opposed by my noble Friend the Member for Edinburgh, North (Lord Dalkeith). Without entering into the argument on this occasion, I would say only that it would be perfectly possible to reconsider investment incentives in general while still giving special investment advantages to the development areas and to any individual industry which made out a good case for special treatment.
We can all agree that investment is vitally important, but most of us on this side of the House would add that it is by no means in itself a panacea for this country's needs. It is first the quality, quite as much as the quantity, of investment that matters. The marketing, design and production cost of our goods matter equally.
Nevertheless, we start in agreement that investment is vital. But it was my hon. Friend the Member for Aylesbury (Sir S. Summers) who was the first in today's debate to put his finger on the key issue. My hon. Friend, who was on the Committee, quoted from paragraph 27 of its Report to ask the crucial question, "How effective is the investment grant system in increasing investment?"
I should like to put four questions to the Minister. The first is that put by my hon. Friend the Member for Aylesbury: what is the link between investment grants and investment? The question was also put vigorously and effectively by my hon. Friends the Members for Cirencester and Tewkesbury, Acton and Nelson and Colne (Mr. Waddington). My hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) correctly emphasised that investment decisions are made far more on the grounds of confidence, hope of profit and a buoyant market than they are because of the amount of availability of investment incentives.

285
As many of my hon. Friends have pointed out, throughout the application of these investment grants, manufacturing investment has been stagnant. Meanwhile, paradoxically, commerce and distributive industry investment, which gets no grants has increased. The Government have to explain now, in these circumstances, the expenditure of the taxpayers' money can be justified. We know that the President of the Board of Trade has said that he accepts this paradox, but that he believes that investment grants have prevented manufacturing investment slipping as much as it would have slipped. This may or may not be a good argument, but we cannot accept it on the say so of the President of the Board of Trade.
We hope that the Minister of State will address himself to the link, to the paradox that commercial investment, without investment grants, has increased, while manufacturing investment with grants has decreased. Will he explain what justification, if any, there is for believing that manufacturing investment would have decreased even more but for the grants? The first question to the Minister of State is: what is the link between investment grants and manufacturing investment?
I leave aside the very valid point made by my hon. Friend the Member for Leicester, South-West (Mr. Tom Board-man) that investment grants may have a distorting influence on investment decisions that are made. The second question to the Minister of State is: what is the link between investment grants and jobs in the development areas? We note that the main reason for the under-estimation by the Government of the cost of investment grants was that they assumed that the development area component would be 20 per cent., when it has turned out to be nearer 33 per cent. What is the measure of the benefit to the development areas compared with the extra cost to the taxpayer? Does he accept that there are investments, sometimes quite large ones in the development areas, which receive large investment grants but which would have gone to those development areas anyway, for good commercial reasons?
Mr. Dan Jones: How can we say that?
Sir K. Joseph: It would be easy if one wished to check, by talking to the individual
286
firms. It is my belief, without quoting cases, although I would be prepared to do so in private, that many firms would admit that the investment grant was no more than a bonus, received as the result of a decision that would have been made anyway. Secondly, we ask the Minister of State to tell us how many jobs have been created in the development areas by the investment grant system, and by the extra investment grants given in the development areas.
We note the comments of the economic Review of the National Institute of Economic and Social Research that:
"The most obvious interpretation is that this incentive …"
has the effect of systematically segregating the most capital intensive industries in the assisted areas and the labour intensive industries outside them. This is the very opposite of the objectives of the Government and the Opposition. We know from the Board of Trade's publication that the largest slice of this huge investment grant sum coming from the taxpayers' pockets, has gone to the chemical industry, the most capital intensive of all industries, the one least likely to bring large numbers of jobs with it. We are left with the thought that perhaps an alternative use of part of the money spent outside development areas would produce more jobs inside them, perhaps by better roads, more help to industry for retraining and lower taxes.
The third question is what are the Government's views of the prospects? Quarter after quarter the Government have predicted increased manufacturing prospects. Quarter after quarter their prediction has had to be cut down. We have from the Government a sort of manufacturing investment mirage. It all looks handsome in the distance, but as the time approaches it fades away. Only last month we had cheerful forecasts for an increase in manufacturing investment during 1969. But the opinions on which that forecast was based were given before the Chancellor's November package. We gather from the Financial Times this Monday that business is less confident, or rather a smaller proportion of business is confident now than it was four months ago, that it will be increasing its manufacturing investment during

287
1969. Will the Minister of State give us the latest Government opinion on this?
I resist the temptation, because we so want to hear the Minister of State, to go into the burdens of the overheads on industry which this whole grants system involves. My last question, to which we want a categoric answer is: will the Minister say whether or not the research requested by the Estimates Committee into the effectiveness of expenditure on investment grants is being commissioned by the Government? The four points I have put from this Box are: what is the link between investment grants and manufacturing investment; what is the link between investment grants and the number of jobs created in development areas; what are the prospects for manufacturing investment in 1969; and is the research requested by the Estimates Committee being put in hand?
7.7 p.m.
The Minister of State, Board of Trade (Mr. Edmund Dell): I will certainly try to deal with the very large number of questions raised during this interesting debate. It is a good thing that we have had the opportunity to discuss investment grants, and although it has been a critical debate, it has been useful. Let me first state certain points of agreement with what the right hon. Member for Leeds, North-East (Sir K. Joseph) said. Investment is vital, it is not a panacea, and it is as important, if not more important, to secure the right quality rather than the right quantity of investment.
One question which has been put during the debate is whether investment incentives assist one to achieve this necessary level of investment. There have been some hon. Members such as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), with the unexpected assistance of my hon. Friend the Member for Dunbartonshire, East (Mr. Bence), who thought that any system of investment incentives was undesirable. I do not propose to argue with that very much. The experience of both parties in Government has shown that they are wrong. The Industrial Policy Group, although not in favour of our present system of investment incentives, is in favour of a system.
The hon. Member for Leicester, South-West (Mr. Tom Boardman) thought that
288
the investment grant system distorted the pattern of investment, if it did anything. Any system of investment incentives distorts the pattern of investment. The investment allowance system with its discrimination in favour of development areas, which the previous Government adopted, distorted the pattern of investment, and deliberately so. Either this is a criticism of the whole system or a point which we can note in passing and get on to the main matters raised.
Mr. Tom Boardman: My criticism was that it distorted the proper economic argument, not the pattern of investment
Mr. Dell: I note the hon. Gentleman's point. I think that I have already replied to it.
If we want a system of investment incentive—and it is on that proposition that the rest of my remarks will be based—it seems to me that the investment grants system has substantial advantages. The fact that it is a cash grant is of psychological importance, because it is more clearly understood by industry. It is also more clearly understood by industry in that there is a greater degree of stability in the level of investment grants. The investment allowance system was changed again and again. The hon. Member for Folkestone and Hythe (Mr. Costain) reproached us about the uncertainty of the investment grants system. I think that the uncertainty in the investment allowance system greatly exceeded it. However, uncertainty on all the points which the hon. Gentleman raised in criticism of the investment grants system can be substantially removed in almost every case by consulting the local investment grant office.
I grant the hon. Member for Folkestone and Hythe and other hon. Members who made this point that there were cases in the early history of the investment grant system, when we were gaining experience of its administration, of the policy being changed. But that period is, I hope, substantially over. The right way to discover whether one is likely to be entitled to an investment grant is to go to the investment grant office. A substantial advantage of the investment grants system is that it has had this greater stability. When we changed the rate, it was upwards, and we gave two years' notice of the fact that after the

289
end of 1968 it would revert to the original levels.
The regional incentive is a most important aspect of the investment grants system. I note that many hon. Members opposite do not believe in discrimination in favour of the development areas. The problems which the hon. Member for Folkestone and Hythe and other hon. Members raised are, unfortunately, inherent in discriminating in favour of the development areas. Certain difficulties are created when machinery crosses borders, but I do not see how we get over them if we discriminate in favour of development areas. That is the basic element in the policy.
Criticism has been directed against the way in which the investment grants system selects manufacturing industry for assistance. This is a reasonable discrimination. After all, manufacturing industry is responsible for 80 per cent. of our visible exports. It so happens that it is in manufacturing industry that the level of investment in this country has mainly lagged compared with countries like Germany.
The right hon. Member for Leeds, North-East said that there was this paradox: investment in distribution and services has risen, investment in manufacturing industry has not risen. I should have thought that this was support for the proposition that it is on manufacturing investment that we need to concentrate our investment incentives.
Mr. Ridley: The hon. Gentleman must address himself to the point that this treatment does not seem to have worked and that the level of investment in manufacturing industry has not risen. Why does he think that it has not, and what is he prepared to do about the matter?
Mr. Dell: I agree that I must address myself to that problem, and I promise the hon. Gentleman that I shall do so.
The investment grants system is discretionary; the Board of Trade has a discretion in its administration. The reasons for this discretion are very powerful. By this discretion, we can avoid the extension of the area of benefit in the way done under the investment allowance system, which was extended by a succession of court cases, which increased its uncertainty, into most peculiar areas. This discretion, which has been criticised,
290
is a valuable and essential part of the system. But it is not administered in a haphazard way. It is not administered in response to Treasury pressure to discriminate against particular people in order to save money. Discretion is operated in order to maintain consistency in the operation of the investment grants system.
Sir K. Joseph: If investment is made in a development area which would have been made there anyway and which will bring very few new jobs, would the Board of Trade use its discretion not to give it an investment grant?
Mr. Dell: Certainly not, because to do so would be inconsistent with the policy of the Act and with the maintenance of consistency in the administration of the investment grants system.
There is a point about the investment grant system which hon. Members opposite have tried to get away from whenever they have spoken about speed. The investment grant system has within it the potentiality of reducing the period of payment even further. Already it is 12 months compared with 18 months under the investment allowances system. That, taking into account discounted cash flow calculation, increases the value of the grant even further.
There is the criticism that the system is not profit-oriented. The hon. Member for Scarborough and Whitby (Mr. Michael Shaw) made that point. It is also made in the somewhat academic review of the investment grants system published by the Industrial Policy Group. This is not a substantial criticism of the system. Even if one gets a 20 per cent. grant or a 40 per cent. grant, one has still to put up 80 or 60 per cent. of the money. People will not do that unless there is the prospect of profit.
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) was concerned with the interest of small firms. New small firms are often of great potential value to the economy. But a new small firm does not yet have a profit record. Either it has not a profit record or it has not a profit record sufficient to get the full benefit of the investment allowance. Therefore, the investment grants system is of substantial benefit compared with the investment allowance system.

291
Criticism has been made of the fact that the Board of Trade has not yet made any attempt to assess the effectiveness of the investment grants system in promoting investment. This criticism is a little odd because during all the years of the investment allowances system no attempt was made, as far as I know, to assess its effectiveness. It would have been very difficult to make such an assessment because of the continual changes and uncertainty connected with it.
The hon. Member for Aylesbury (Sir S. Summers) put forward a most extraordinary proposition. He said that if we cannot scientifically establish the benefits of a system we should not adopt it. If that principle were followed in life, in government, or in the conduct of industry we should never take a decision. We cannot scientifically establish the benefits of the investment grants system any more than we could establish the benefits of its predecessor. We can make a judgment on the basis of evidence. We may be wrong. It may be a good or bad judgment. The evidence may be powerful or otherwise. But we must make a judgment. We cannot rely on scientific certainty in the way that the hon. Gentleman suggested. Nevertheless, I accept that we shall have to make an attempt to assess the effectiveness of the system. We have relatively short experience of the operation of the system—two years or so.
There are many incentives to invest besides the investment grant system: profitable demand; availability of cash; confidence in the future. These things, as hon. Members have said, affect investment decisions as much as the availability of investment incentives, perhaps more. The balance between these factors is very difficult to establish.
Then there comes the question of their effectiveness in development areas. The differential investment grant is not the only incentive to people to invest in development areas. There is the Regional Employment Premium, the Selective Employment Premium, the I.D.C. policy; all these things combine to make a total policy to increase employment in development areas. To select out one element and to ask what is the effect of this element
292
is very difficult. What one has to do is to see the results of the total policy. If it is possible to find indications of the effectiveness of one element, by all means do so, but we propose to study this—
Mr. Kenneth Baker: Is not this very disturbing? I agree that it is difficult to segregate one item, but the one item which the Government have segregated, namely, investments grants, will cost between £400 million and £500 million in this current year, and cost £425 million last year. It is disgraceful for a Minister of the Crown to say that he is sorry but he is not quite sure how effective this is; it is one of six factors. It happens to be the most expensive factor, and we want value for money.
Mr. Dell: I agree that it is an expensive factor, that we want value for money and that we should study this. One must also remember that a further factor which is effective both in development areas and outside is the general level of economic activity. I put it to the hon. Gentleman, as I put it to the House, that the investment allowance system also could have been studied and was not. We are proposing to study the effectiveness of this system as far as it is possible to do so, but I do not want to tell the House that we will study it and leave the House under any illusions as to the extent to which this question can be scientifically established in the way in which the hon. Member for Aylesbury required.
Mr. J. T. Price: When the Minister is carrying out this study, will he pay particular attention to the discrimination now shown in development areas in the payment of the 40 per cent. grant as against the 20 per cent. grant in respect of those industries already successfully established within the development areas? In other words, could not the Government effect considerable economies if they were less undiscriminating in the dispensing of public money and had regard to the needs or the capacity of the industries already there to engage new labour? With great respect to what the Minister has said, this is not being done, and it ought to be studied in depth.
Mr. Dell: My hon. Friend raises a point which links up with the question put to me by the right hon. Gentleman

293
relating to the effectiveness of the investment grants system in creating jobs. The investment grant is available on an asset. An asset is installed by a firm in order to maintain its competitiveness. By maintaining its competitiveness it maintains employment. Investment grants, therefore, are not just concerned with creating new employment; they are concerned with maintaining existing employment in competitive industry in development areas, and this must be borne in mind. The answer to the question how many jobs are being created cannot be given. Jobs are being maintained as well as being created. In the development areas we nave had over the last few years difficult problems associated with the contraction of various industries. It has been vitally important to create new jobs and also to maintain existing jobs, and where industry can be competitive to enable those industries to expand in development areas, based on that competitiveness. All these factors have had to be taken into account, and I cannot give an answer in the way the right hon. Gentleman wants to that specific question.
Sir K. Joseph: The Minister is bringing in R.E.P. and S.E.T. premiums, points which we did not raise. We are asking a simple question: will he isolate the projects of manufacturing investment for which investment grants have been given in development areas, and tell us how many new jobs have been created with them? That surely must be contained in the books of his Department.
Mr. Dell: Investment grants are paid not just on new projects; they are paid on existing projects, on new assets in an existing firm. This is the point which my hon. Friend was making.
Mr. J. T. Price: I am glad the Minister has come right to the point. I do not agree with the system and I have said so on numerous occasions in this House, and during the passage of the Industrial Development Bill which established the system I was a continuous and consistent critic of it. I am sorry that I was unable to join in the debate earlier in the day since there are far-reaching comments which I should like to have made.
Mr. Dell: I am well aware that my hon. Friend does not agree with this. I
294
have followed my hon Friend's comments on the system over the years. I do not agree with my hon. Friend. What we are concerned with here is investment in assets which replace other assets, and, therefore, one cannot give an answer to the question asked by the right hon. Gentleman any more than an answer could have been given to a similar question on the effect of investment incentives given in development areas under the previous Government.
Despite the qualifications which must be placed in advance on any such inquiry, we think that such an inquiry would be useful, and we are undertaking an interim appraisal with which industry will be associated.
There is, however, no question of investment grants ceasing. We must maintain the priorities on which the system is based. It is vitally important, as it was when investment grants were started in 1966, to increase the rate of investment of productive industries. Investment grants are the most important means of encouraging investment in those sectors which can do most to help the balance of payments.
The point was put to me that there is no evidence which can be produced in such an inquiry that the system was at all effective. This is a matter of judgment, and we shall perhaps learn more as a result of the inquiry which we are conducting. Nevertheless, in my judgment it is effective. This judgment is based on the contact which we have with industry; on the fact that the level of investment in 1967 and 1968 fell less than was to be expected and was prophesised in respect of that investment cycle; on the fact that we believe that the movement of investment is now upwards and on the level of investment in development areas.
Sir S. Summers: Will the Minister tell us what is to be the nature of the inquiry? I ask because the Committee of which I was Chairman asked the Department to find out if it was feasible to assess the effect of the system. There are two quite separate questions, and I should like to know which is to be inquired into. One question is: what is the effect of the system? The second question is: is it feasible to find out the answer to that? Which will he do?
Mr. Dell: Clearly, we have to do both. My earlier remarks about the difficulties of such an inquiry dealt with the second point made by the hon. Gentleman. It is difficult to assess the effectiveness of any investment incentive system, but this is a problem which we are trying to tackle. We shall do this as best we can, with all the limitations which such an inquiry must have, and industry will be associated with it.
Criticisms have been made about the fact that we are dealing with a large Supplementary Estimate. One hon. Member said that we are now dealing with a level of investment grant with an expenditure three times the original Estimate. The original Estimate for 1967–8 was £166 million. There was a Summer Supplementary Estimate of £60 million, and a Winter Supplementary Estimate of £89 million, making a total of £315 million for the year. The total Estimate for 1968–9 will be well over £400 million. This is not, as a matter of arithmetic, as much as three times £166 million, but in any case the original Estimate for 1967–8 represented payment on three-quarters of a year expenditure only, whereas the figure of well over £400 million represents payment on four-quarters of expenditure plus overspill from the previous year. There is the further point that the 1968–9 Estimate represents payments at the higher rates of 25 per cent. and 45 per cent., whereas the £166 million related to grants of 20 per cent. and 40 per cent.
I think that it was accepted that there is necessarily difficulty in estimating with absolute accuracy the level of investment grants in any financial year. Taking the position at the moment, for example, on which we would have to make an estimate for 1969–70, we have available to us esimates of the actual level of investment in the second and third quarters of 1968. In respect of the fourth quarter of 1968 and the first quarter of 1969, which is the period with which we are concerned in making an estimate for 1969–70, we have only forecasts based on Board of Trade inquiries. Here, to start with, is a major element of uncertainty.
There is also some uncertainty, until we gather greater experience, as to the proportion of expenditure in manufacturing industry which will qualify. These are factors of uncertainty which must have been associated with the system
296
of investment allowances also because, although they took the form of rebates against taxation, presumably the Government of the day wanted to know what would be the total in any year.
A second uncertainty has been the level of investment in the development areas as a proportion of the total. As has been said, we started with 20 per cent. We are now working on a figure of 33⅓ per cent. That in itself justifies the view that the system has been effective in directing more investment to development areas. But this is an uncertainty in the nature of the system until we get the proportion of investment reasonably well established.
Then there is the problem of the rate of claim, to which the hon. Member for Scarborough and Whitby referred and on which the Estimates Committee commented when it asked whether there should be a cut-off point because so many claims are put in very late. The hon. Gentleman argued that there should not be a cut-off point. We have a suggestion from the Estimates Committee, and we shall consider it. But again I must point out that a cut-off point would mean considerable difficulty for many firms who might otherwise find themselves out of time.
Then there is a temporary uncertainty which has made estimating more difficult, relating to the existence of the investment allowance option. On a substantial part of their expenditures in 1966 and, to a certain extent, in 1967, firms have been able to claim investment allowances instead of investment grants. It applies to expenditures on assets already contracted for when the grants scheme was introduced. It was uncertain how many firms would opt for investment allowances, rather than grants.
There is the further factor creating uncertainty that, at any given time, 10,000 to 15,000 claims are under consideration, representing grants of between £35 million and £50 million. It is only at the last moment that one can be sure how much will fall on one side of the line of the end of the financial year and how much on the other. However, I accept that we must make this estimate as accurate as possible, and I hope that, with the fuller figures that we will have for 1966 and 1967, as old claims come in and are dealt with and paid, we

297
shall be able to establish a much firmer basis for this estimating than we have succeeded in doing so far.
I was asked a number of specific questions by hon. Members. The hon. Member for Edinburgh, North (Earl of Dalkeith) suggested, though I was not entirely clear whether he spoke of investment grants or grants under the Local Employment Acts, that there should be a grant office in Scotland. There is a grant office in Glasgow, dealing with the whole of Scotland.
Then the hon. Member dealt with the difficulties that arise from the existence of development areas and the fact that they have; to have boundaries. I acknowledge those difficulties. The problem is how to solve them while maintaining development areas. Unfortunately, boundaries anywhere tend to create difficulties.
Earl of Dalkeith: My specific point is that we have one very small area excluded from the very large area of the development district. It is in such a case that these complicated problems arise.
Mr. Dell: I note the hon. Gentleman's point. However, difficult and complicated problems arise on the borders of development areas generally.
The hon. Member for Roxburgh, Selkirk and Peebles made a speech which, as far as I could understand it, was not on the subject that we have under discussion. He appeared to be speaking about grants under the Local Employment Acts, grants which were subject to B.O.T.A.C. inquiries, and delays in the making of building grants, all of which are most important subjects. Unfortunately, we are dealing with investment grants under the Industrial Development Act. I am afraid that Mr. Speaker would rule me out of order if I followed the hon. Gentleman into these areas of discussion.
The only point at which the hon. Member came on to the subject under discussion was when he referred to a firm whose complaint he has referred to the Ombudsman. It is a subject about which he has been in correspondence with me for some time and on which I will no more comment than he did, as he has referred it to the Ombudsman. I
298
might perhaps say in passing that I wish that he had reserved his comment in The Guardian, too, before referring it to the Ombudsman.
As far as I can see, the remainder of the hon. Member's remarks were not on the subject with which we are dealing, though I congratulate him on getting them in—
Mr. David Steel: If the hon. Gentleman feels that he cannot follow me into the subjects that I raised, perhaps he will consider replying to me in writing. Incidentally, my article in The Guardian was written in the hope of persuading him to change his mind long before I considered sending the case to the Ombudsman.
Mr. Dell: I am sorry that the article failed to persuade me. However, I will make a general point about small firms and investment grants. I recommend them to seek advice from investment grant offices, and then perhaps there will be less of the difficulty that this firm has experienced.
The hon. Member for Leicester, South-West asked me about the de minimis situation. There is the British Oxygen case. The appeal has been heard, and judgment has been reserved. We are waiting for the judgment. The hon. Gentleman will not expect me, therefore, to comment on the de minimis situation.
The hon. Gentleman also raised the matter of the scrap metal industry, which has been covered in Question and Answer in this House. I very much regret the distress that this causes the scrap metal industry. I accept its contribution to the economy, but I am afraid that within the policy of the Act I am unable to accept its arguments. I hope that I have covered the points which hon. Gentlemen have raised in the course of the debate.
Mr. Peter Blaker: I thought, from the answer to the intervention from my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), that the Minister would say something more about the point that, in spite of investment grants, investment in manufacturing industries has fallen and that investment in service and distributive industries has been buoyant. I have listened fairly intently, but I do not think that

299
the hon. Gentleman has said anything on this subject except that he feared that investment in manufacturing would have fallen more but for the grant. Is that the hon. Gentleman's only answer on this point?
Mr. Dell: That is part of my answer. The real test of the effectiveness of an investment grant system will come in a period of buoyant demand, such as we are now entering. The test will lie primarily in the level of investment in manufacturing industry achieved in such a period. The hon. Gentleman knows that we are now expecting an increase in the level of investment. The last Board of Trade sample review, which covers a wider sample than the Financial Times, makes that point, though I accept that the answers were probably not for the most part informed by the November measures. Nevertheless, we shall have a further forecast in due course, and I think that this will be the test. The hon. Gentleman should not underrate that there was not the expected fall in the level of investment during 1967–68. If he looks back at the forecasts made, for example, by the C.B.I. at that time, which led the Government to introduce the 5 per cent. supplement, he may begin to wonder whether the investment grant did not have a positive effect at that time.
Earl of Dalkeith: Will the hon. Gentleman look at the forestry industry and harvesting grants?
Mr. Dell: I will look at anything. But, as the hon. Gentleman knows, grants are available for forestry from the Ministry of Agriculture, for planting and maintenance, I think. I do not claim to be an expert on that matter. I think that grants for forestry are more appropriate to that Ministry than the Board of Trade, but I will think about it and write to the hon. Gentleman.
I have tried to deal as fully as I thought necessary with the questions which have been raised. I hope that the House will in due course be prepared to approve this Supplementary Estimate.

PENSIONS AND ALLOWANCES (SUPPLEMENTATION)
7.43 p.m.
Sir Brandon Rhys Williams: I beg leave to draw the attention of the House to the Supplementary Estimates under the heading Supplementary Pensions and Allowances. An additional provision of £33 million is sought by comparison with the original Estimate of £394 million. I calculate that this represents an increase of about 8 per cent.
It is not because of the amount itself that I feel it necessary to bring this matter to the attention of the House, but rather the way in which it is being spent. In support of the Supplementary Estimate we find that that sum is required partly for the higher numbers of beneficiaries. In passing, I should comment that we are informed that this additional £33 million will cover only 75 per cent. of the increase likely to be required this year. I cannot help asking myself where the 25 per cent. is to come from. I hope, and I feel confident, that we shall hear about that from the Minister. If it is to come from the £200 million which was lately transferred from the National Insurance Reserve Fund to the National Insurance Fund, a drawing on capital account which we were told would be brought in to ease the pressure on the current account, what sum will be released out of that £200 million to go into the pockets of the public before the end of the current financial year?
It is necessary to consider a little of the history of these special supplements. Those of us who have reread the Beveridge Report in recent weeks—if indeed we did not know it before—will recall that his recommendation concerning National Insurance was that it should abolish need. I think that the great man envisaged that there would always be some special cases as a residue which would have to be attended to by a special body, such as the Supplementary Benefits Commission or the National Assistance Board, because it is impossible to deal with the whole of humanity as standard cases. But I do not think that Beveridge ever envisaged that we would use the special supplementary system on the present scale.

301
Let us look at the growth record in the numbers drawing special benefits. In 1949 it was the already tragic total of 1,157,000 people. In considering these figures I suppose that we ought to take into account too the dependants of the people who are the beneficiaries of this form of assistance. By 1959 the figure had grown to 1,766,000, and in November, 1968, the latest date for which we have accurate figures published, it had risen to 2,637,000, of whom I calculate that 1,847,000 were over pension age.
In January, 1969, those of us interested in the subject avidly read the White Paper on National Superannuation and Social Insurance in which the total of pensioners receiving special supplements is given as 2 million. With the number receiving special allowances as well, we have a figure approaching 3 million people who must be dependent on special assistance of one kind or another.
It appears too, that the cost of paying for special supplements has doubled since 1962–63. When considering this very large number of people—if it is not 3 million, it is certainly in excess of 2½ million regularly in receipt of special supplements—I cannot help asking: how can they all be special cases? It seems beyond the bounds of acceptability to reason that all these 3 million people are special cases.
About six months ago I was informed in this House that the staff of the then Ministry of Social Security was handling about 6¼ million claims per annum for special supplements. It is an impossible task to do the case work of 6¼ million claims per year, and I feel that it is a crying scandal that it should be necessary.
A week or two ago a newspaper reported me as using the word "impersonal" about one of the branches of the Ministry of Social Security. I should like to make it perfectly clear that when I used the word "impersonal" I was referring to the machinery, not to the people who have to handle this enormous volume of work. I have nothing but praise for the people who try to tackle this virtually impossible burden of individual case work. They are doing a magnificent job with good temper and perception and a sense of duty which is matchless. I hope that the newspaper which reported me before will report me again in that context. I claim that the
302
machinery is impersonal because it is using this system of special supplementation in a way that was never intended.
From such case work as I have been able to do, and by drawing on the advice of people who are much better able to judge than I am. I think that the real number of genuine special cases who are probably in need of assistance of this kind may be about 250,000, that is to say about one in ten of the people who are at present getting supplementary benefits. All the others are straight forward, or relatively straight forward cases of people who simply cannot manage on their National Insurance. For how long is this machinery going to be misused? From the very large sum which is applied for in this Supplementary Estimate it seems that for the present at all events there is to be no limit to the number of people who will be dealt with on a non-contributory basis.
Though the White Paper was launched as something "better than Beveridge", I suggest that it should, rather, have been described as an attempt to catch up with Beveridge after the 25 years which have elapsed. I resent the existence in our midst of this large number of people who are in receipt of means-tested charity. Do not let us mince words—that is what it is. I resent it, because to me it seems clear that first and foremost it undermines the saving habit.
If, when someone gets to retirement age, because he has accumulated a certain amount of personal property—I know that there are certain disregards, and I shall return to these—he is not entitled to help from the State, but a man who has virtually no assets when he retires is helped, those who retire without having saved anything are bound to think that they have had a better bargain out of life than the people who have been so foolish as to put money aside.
The present system not only undermines the saving habit. It is also a direct cause of dis-saving. Though the dis-regards are administered with all the mercy that goes into the system, and with all the concessions that go into it, yet the operation of the supplementary benefit system must introduce an element of dis-saving. If there is one thing which is vital to our economy it is to restore to the public the savings habit, and to put an end to the trend, which is gathering

303
speed, towards dis-saving. The Government simply present us with this Estimate and say nothing about the way in which they intend to tackle this problem.
I said that I should return to the question of the disregards. Some time ago I read—it stuck in my memory, and I believe that it is still true—that if a person has assets other than his house of about £2,000, that is taken to be within the limits of the disregard, but the Ministry is not able to inquire what his actual income is from the capital asset of £2,000. The Ministry is obliged to deem that the income from that asset is £7 a week—140s. a week. If anyone in the House knows a stockbroker who can advise me how to invest £2,000 so that with any reasonable degree of security I receive an income of £7 a week, I hope that he will take me to him at once. Remembering the sort of investment into which people who have small resources normally go, I calculate that this provision of the so-called "disregards" requires the pensioner to dis-save at the rate of about £5 a week.
I also object to the presence in our society of this large number of people in receipt of non-contributory means-tested charity, because it undermines their self respect. I know the reason why the first Minister of Social Security, with the best motives, decided that this was the way, in the short run, in which the problem had to be tackled. But the short run is turning into the long run. I think that to some extent one might say that good work was done in the short run in persuading people who up to that time had refused to apply to the National Assistance Board for special help even though they needed it, that rather than continue below the level which society regarded as the subsistence level they should swallow their pride and go to the office and ask for public help. I believe that about 500,000 people are now doing that who were not doing so two or three years ago. I am glad, in some cases, that they are doing that; and yet I am sorry that it should be necessary for them to do it. One still meets many people who say, "I shall manage on what I have, plus what I get from my National Insurance, but I am damned if I am going on my knees to the office to ask for more". These people are
304
foolish by the standards of our generation, but I love them, and I wish that there were more of them.
We are tackling poverty in the wrong way and this Estimate takes us further down the same road. The tragedy is that all hon. Members would accept that. Everyone concerned with the social services must want to know specifically how the Government intend to reduce this growing number. Like others, I waited with the greatest anxiety for the Government's White Paper, from which we hoped for so much. In no party spirit, I say that it is bitterly disappointing because of the things that it leaves unanswered, particularly what to do about people in real need now.
This is not the time to discuss the White Paper in detail—I hope that I may be able to speak on it soon—but in it we can discern the broad outlines of the Government's policy for dealing with need. It is to give the most money to the people who already have the most. That is what graduated benefits mean. The scheme which the Government have in mind to introduce not sooner than 1972 aims to concentrate help not where it is most needed, but where it is least needed. This is a cockeyed sense of priorities. The Government show no sense of urgency and no appreciation of the need by publishing a White Paper in which 1972 is held tantalisingly in front of people who will probably be dead by then. And nothing specific is said about the ways the Government propose to help the rising number who now cannot manage on their own resources.
Graduated contributions are right in principle, because they adhere to the principle of equal shares—the millionaire can pay his proportion towards National Insurance just as the widow does, with her two mites. But graduated pensions are the wrong solution and will do nothing to solve the problem which the Estimate is trying to tackle. If the Government introduce such a system, it will help the poorest only where it slips in some element of redistribution as an incidental, in other words, if it defies the logic of its own mathematics by taking money away from people who, according to the strict application of the system have an entitlement, and hands it downwards to those whom we are discussing, at the bottom of society.

305
The right solution, as it always was, is the Beveridge solution, to give flat-rate benefits which are enough. Then we would not face this type of alarming increase, in which it is proposed that tens of millions of public money should go down the wrong road.
But I hope that I can prove myself a realist by qualifying that in one respect. I realise that, for people without large personal resources, rent is one of the most important elements making for variation in need from place to place and from family to family. From the Government's publications, I deduce that the allowances given to those receiving supplementary benefits and living in houses owned by private landlords in 1967 were 33s. 5d. on average per week because, no doubt, of the application of rent controls. For those in local authority accommodation, the figure was 42s. 4d. The figure for owner-occupiers was about 20s. 9d.
Yet I am sure that the Parliamentary Secretary knows that, in central London, £4 4s. is not regarded as unreasonably high in certain circumstances for a single person, while a married couple may regularly be paid £5 15s. and sometimes more. That shows the variation, from one place to another and one type of accommodation to another, which rents are bound to cause.
If we took the Utopian solution of giving universal flat-rate benefits to everyone in retirement, we should have to take into account these extreme variations, so I would agree that, at any rate in the short run, in accepting the Beveridge principle, we should do as the great man himself envisaged we might have to do, something special about rents. In this, some rudimentary case work is probably necessary.
The nub of the objection to my recommendation to raise National Insurance across the board rather than special supplements is the total cost. But I should like to ask the question: can we afford not to meet our commitments? The generation which is making these regulations about pensioners is simply profiting from the effects of inflation. A former Prime Minister said that we must not forget the old people, because they had brought us to where we are; but we are forgetting them by forcing them down
306
to the level of means-tested, charity-aided supplicants.
One of the origins of the problem is that National Insurance is not properly funded. On all sides we see the weakness of people dependent on unfunded schemes, who cannot say, "This asset, or this share of this asset, is mine", but who must say, "Because the cost of living has gone up, I can no longer live on what I thought was enough, so therefore I have some sort of claim." But the majority of voters are all too frequently deaf to these claims.
If we are to use the principle of repartition—I make no apology for using that useful old English word, which means precisely what we will have to discuss when debating the Government's White Paper—if we use the principle of repartition or "pay as you go" provision for pensioners, we had better learn from the French the principles by which they administer such schemes. It is no good using the notion of a fund which is not a real fund and then drifting completely away from principle in dealing with people who have claims upon us because of their earlier contributions which were spent at the time and not funded.
It is wrong to say to such people, "We waive your claims, but deal with you instead by gigantic Supplementary Estimates." We cannot afford not to meet our National Insurance commitments as a generation, because we ourselves will one day be pensioners. When we consider how we are treating our own old people, are we able to make such a claim on our children that, when we retire, we shall be entitled to a fat living? We are all disgusted by the spectacle of old people in second-hand clothes picking up cigarette ends, but it can be seen any day in Oxford Street. This is the society in which we are content to live. How can we criticise the young people and the "cadgers" about whom we hear so much, when we ourselves are also paying such scant respect to our elders?
The other question which arises over the problem of cost is this: what would be the extra cost of a flat-rate increase in National Insurance? We know that the Government's method appears to cost £33 million. Of course, by the old-fashioned method of accounting, to increase National Insurance benefits across the board would seem to cost much more

307
to the central Budget. National Insurance has become so inextricably muddled with the rest of the Budget that no one understands it and so it is resented. It makes it almost impossible to raise contributions if people do not know where the money goes.
National Insurance is paid for partly by the contributors themselves. There is a substantial Exchequer grant of hundreds of millions of £s and we are told that, at the present rate, employers are also paying well over £1,000 million a year. I am not against employers being asked to contribute to the Welfare State, but it is hard to specify exactly what they are getting out of it. This is wrong. In spite of all these extraneous contributions to National Insurance from the employers and the Exchequer, it still does not cover more than a fraction of the cost of the Welfare State.
Our way of thinking about our income and expenditure on welfare stems from our confusion over the purposes of taxation. Taxation by central Government should be seen to be of two kinds—
Mr. Deputy Speaker (Mr. Harry Gourlay): Order. We are this evening discussing not taxation, but the Supplementary Estimate on page 39. The hon. Member must not refer to questions of taxation.
Sir B. Rhys Williams: I accept your Ruling, Mr. Deputy Speaker, but I thought that I would be criticised if, having dealt with an alternative method of coping with real need—a need which has resulted largely from the rises in the cost of living which have occurred in recent years, I did not recommend how the alternative I am recommending should be financed. I trust that I will be allowed to develop this theme to the extent—
Mr. Deputy Speaker: Order. The Chair must obey the rules of order. So must the hon. Gentleman.
Sir B. Rhys Williams: I naturally bow to your Ruling, Mr. Deputy Speaker.
In the explanation which the Government give of their policy which lies behind these Estimates, I trust that they will show that they are working towards the concept of contribution as being the
308
source of the money which is distributed to those in need and to pensioners. While they continue with the 19th century pattern of paying money by means-tested charity rather than as of right, this problem will continue.
In dealing with the National Insurance system the Government have a duty to show what is happening to the contributors' money; from whom the money is coming and to whom it is going. I would like National Insurance to be separated from the rest of the Budget accounts so that one can see the income and the benefits clearly, and define precisely who is paying for what and how.
Insurance is a system for transferring money from the fortunate to the unfortunate as of right. At present the Government are transferring money from the fortunate to the unfortunate, but they are giving it to them not as of right but as a so-called special supplement. Why not, therefore, return to the insurance principle and make it work? This would give the pensioners back their self-respect and if, in the process, National Insurance would be giving somewhat more money to those who are not in actual need, at any rate it would not be falling into the error of giving the most money to those who are not in any need.
I suggest that it would not be inappropriate to have an across-the-board increase in National Insurance benefits as a means of enabling everyone to fend for himself in retirement. For those who are not in actual need such an increase should be seen as a form of reduction in taxation in old age. After all, what one pays in and what one draws out are the two sides of a life-long relationship with the State. In the same way, one cannot look at one side of a tennis court when a game is in process and understand the game. The tennis ball goes to and fro across the net and one must watch its progress in both courts if one is to comprehend fully what is going on. The same applies when we consider what each individual pays in and what he draws out from National Insurance.
I hope that the Government will say explicitly in the near future what they intend to do to stop the advance of this retrograde movement into special supplementation, by which more and more people are being obliged to go down to the office for charity.
8.14 p.m.
Mr. Evelyn King: I am sure that the House—I wish there were more hon. Members present—will be grateful to my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for raising this subject. I was sorry that the rules of order did not permit him to give a full analysis of his solution, for I was anxious to hear it. I shall not attempt the sort of tour d'horizon which he made. Instead, I will expound two cameos on a point of principle, and both derive, certainly in part, in my constituency.
The first example arose as I was canvassing during the last election. I visited two old ladies living next door to each other, both over 70 and both pensioners. Each was angry with the other and each had a grievance. The first on whom I called was in receipt of supplementary benefit. Her grievance was that, in her view, she was not receiving sufficient to meet her needs, and about that she was angry.
The second old lady, who had known the first throughout her life but was no longer on speaking terms with her, was furiously angry because although throughout their working lives they had earned more or less the same income, the second old lady had contrived to save—not a great deal; something in excess of £1,000—and as a result received no social benefit at all. Meanwhile, of course, her next-door neighbour was drawing a benefit to which the one who had saved objected. After all, had she been less provident, she, too, would have been entitled to benefit.
To whom should our maximum sympathy extend? My sympathy goes to the second who having saved throughout her life, and having shown the virtue which we are always being called upon to show, gets no reward. That is inherent in the system which we are entitled to debate and criticise tonight.
My second point concerns a totally different matter which increasingly alarms me. It is the number of not old but young, sometimes very young, who throughout the summer months—I refer to 17, 18 and 19-year olds—go to seaside resorts in the south of England, who sleep rough under the pier, who indulge in other habits which are undesirable but
310
which are not germane to this debate and who spend the occasional night in a lodging house to secure an address, after which they queue for social security benefits to enable them to live that sort of life.
That was not the purpose for which social security benefits were designed. I am utterly sure that, however much sympathy we may have for the old, the ever-increasing amount which we dish out to the unworthy is something which we must soon investigate and seek to diminish. We cannot consider these points without seeking to establish some sort of principle about the duty of the State. I have no doubt that its first duty must be to bring aid at the sight of poverty or want carried to the point of hunger. The same can be said of housing which is below a certain standard. It must be the function of the State to ensure that such abuses exist no longer, rescue the needy and come to the aid of those who cannot control their own lives.
We all agree so far. The quarrel begins at that point, for I would not admit that it is in any sense the duty of the Slate to come to the aid of those who are not in need of such aid. This is where we come up against the scheme outlined by the Minister last week, in which it is proposed to set up a huge apparatus—
Mr. Deputy Speaker: Order. We are discussing not a scheme outlined last week but the Estimates before the House. We are discussing whether the amount in the Estimates is sufficient or otherwise.
Mr. King: I should have liked to discussed how that money is to be used and to point out that it is not the function of the State to give this money, whether in the form of pensions or supplementary benefits, to those whose means are such that they no longer require it. I accept your Ruling, Mr. Deputy Speaker. I cannot develop the point, but it was worth making.
8.20 p.m.
Mr. Tim Fortescue: The House will be most grateful to my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for giving us a preview of some of the debates we shall have in the comparatively near future on the whole field of

311
social security, pensions and National Insurance. But for your intervention, Mr. Deputy Speaker, at one time he was about to tell us of his eloquently written and well prepared scheme for a new social contract which so many of us have studied with care and admiration. I should like to have heard him on that, but in the circumstances I well understand why that was not possible.
My hon. Friend took us back to Beveridge, the pure wine undistilled of that great man, as he called him. I am sure we all bow to the great memory. He told us that in his view any new scheme should be arranged rather differently from the arrangement proposed by the right hon. Gentleman the Secretary of State for Social Services. That will be for another day. There will be much opportunity to discuss these matters then.
My hon. Friend the Member for Dorset, South (Mr. Evelyn King) gave us vivid examples of the incongruous way in which the present system sometimes works. His examples of its impact on the old and the very young were especially pertinent. I speak with a little experience in that I was privileged to spend some time in an office of the Ministry of Social Security in my constituency last summer. I remind my hon. Friend of the very considerable difference which the pronouncement made by the then Minister of Social Security on 25th July last year has made to this problem of benefits being claimed in an unwarranted fashion especially by the young. The House will remember that on that date the right hon. Lady said:
"I have become increasingly concerned about the very small minority of people who are abusing social security provision."—[OFFICIAL REPORT, 25th July, 1968; Vol. 769, c. 213.]
She went on to say that she was determined to ensure that supplementary allowances are not paid to those who while unemployed are not genuinely seeking new jobs.
I found when I arrived in the local office of the Ministry in Liverpool in September that the policy she outlined in that statement was already beginning to have effect. I was very impressed by the way in which officers behind the counter and in the back rooms of the office were determined to stamp out abuse and were greatly strengthened in
312
their determination by the way in which the right hon. Lady had spoken in the House.
There are, however, two ways in which abuse of the system still exists. If they could be eliminated Supplementary Estimates of the kind with which we are faced would not be so necessary or at least the sums asked for would not be so great. In her statement last July the Minister referred specifically to fit young single persons who would be told and are being told that when work is available in their locality they should be able to find it within four weeks, if they did not find it within four weeks they would not be paid any more supplementary benefit. This policy was being shrewdly administered at the Ministry's office when I was there.
The phrase "in their locality" worried me because there seemed no reason why fit young single persons should not work elsewhere. Why should they not take up jobs at some distance from their homes? Why should a fit young single person have to remain for the whole of his life in his locality? We have to come many hundreds of miles from our homes to do our job: I cannot see why fit young single persons should not do the same rather than drawing the charity of the State when a job is not available for them on the doorstep. In pursuit of this I asked a Question on 27th January. I asked
"Does the Minister agree that for a young, fit, single man without family responsibilities, supplementary benefits should be curtailed not merely if there is suitable employment in his locality, but if such employment is available at any distance up to, say 100 miles?"
The Minister of State replied:
"that is indeed part of the policy which is being applied."
I was delighted to hear that because I thought my point had been conceded but then one of the Minister's hon. Friends was rather worried and asked:
"When looking into this problem, will my right hon. Friend consider the position of a person sent to work at another place where train services are being cancelled or abolished altogether, making it almost impossible for him to work at a distance of up to 100 miles, as suggested by the hon Member".
The Minister replied:
"Certainly the availability of travel facilities should be taken into account in all these cases".—[OFFICIAL REPORT, 27th January, 1969; Vol. 776, c. 911–12]

313
It was not my intention to suggest that any man should travel 100 miles to and from work every day although some commuters in the London area I believe travel for almost that distance. I suggested that young men should take up residence at the place where a job was available. Why should they live at home on charity? I should like the Under-Secretary to reply to this point.
The Under-Secretary of State for Health and Social Security (Mr. Norman Pentland): Is the hon. Member suggesting that he would be in favour of direction of labour, for that is what this amounts to?
Mr. Fortescue: No, it would not amount to that. Perhaps theoretically it would, but I suggest that if there is a job somewhere in the country and a fit young single person somewhere else, he should be told that if he did not take up that job he would not be paid supplementary benefit. I do not say that he should be told to go there.
Mr. Pentland: That is the very essence of direction of labour which to the best of my knowledge hon. Members on both sides of the House have always abhorred. I apologise, Mr. Deputy Speaker, for going far beyond discussion of this Estimate, but surely that is what the hon. Member is suggesting.
Mr. Fortescue: I will give an example to show that that is not what I am saying. Last year during my visit to the Ministry office in my constituency a young man came to the office He had four "O" levels, was 20 years of age and left school when he was 17. He had worked for six months and then lost his job and had not worked since. He lived at home on supplementary benefit. When I asked what he did all day he said he helped his "mum". We, the taxpayers, were paying for him to help his mum all day. I said casually, "What would you do if I said to you that we had had enough of this and would not pay you supplementary benefit any more for staying at home and helping your mum? "There was no question of lack of means in this case: the boy came from a comparatively well-to-do family. He looked at me in horror and said," But you cannot do that" I said, "I do not think I can, but I am asking you a theoretical question. What
314
would you do?" He said, "I would get a job".
I say that the work-shy—and, by definition, as was stated by the previous Minister, we are talking about the work-shy—would find themselves jobs if their supplementary benefit were to be curtailed in these circumstances. I do not say that they must be told where to go to find jobs. I say that this charity about which we are talking should not be given to them if there is work available for them.
That is the first form of abuse which I believe could be eliminated or greatly reduced, thereby reducing the need for the Supplementary Estimates.
The whole House is worried about abuses of this kind. The former Minister expressed her concern. There is no political point in this. The abuse of social security provisions brings the whole sysem of social security into disrepute. This is bad for the system and bad for the House.
My second worry is that I found in the office of the Ministry of Social Security that the one case of abuse which officials were powerless to interfere with, where they knew that they were being deceived by the claimant but could do nothing about it, was that of the man with a doctor's note who claims sickness benefit. This is the man who comes in waving a doctor's note and grinning all over his face and saying that he is claiming sickness benefit because the doctor says he is sick.
I made some inquiries among Liverpool's doctors about this matter. The ones to whom I spoke—I admit that it was not a great number, only three or four—admitted to me entirely freely that on many occasions they had given notes to claimants for sickness benefit without being certain whether the men were sick.
Mr. Pentland: Then why did they give the notes?
Mr. Fortescue: They gave the notes for several reasons, the combination of which they found irresistible. The first was that there are conditions which cannot be checked in a brief interview in the consulting room. If a man comes to the consulting room and says that he has a backache, how does the doctor check that he has a backache? The

315
second reason is that many of the patients, if not all of them, are social acquaintances of the doctors, and it is difficult to refuse a sickness note to someone whom you will see socially that evening.
The third reason is that the patients on a doctor's panel are his means of livelihood. If he loses patients, his income obviously diminishes. He does not want to acquire a reputation in the neighbourhood for being the kind of doctor who will not give sickness notes. The fourth reason, which hon. Members may not believe, is that there are examples of doctors' windows having been broken in Liverpool when they have refused to give sickness notes. These four reasons add up to a fairly formidable catalogue.
So on 21st October last I asked the then Minister of Social Security
"whether she will introduce arrangements whereby medical certificates supporting claims for sickness benefit must be signed by salaried doctors rather than by general practitioners whose practice depends on the good will of their patients",
The right hon. Lady replied, as I expected:
"No. Sickness benefit is paid for incapacity for work and the person best qualified to certify whether a patient's condition is incapacitating for work is the doctor who is responsible for diagnosing and treating that condition."—[OFFICIAL RL'PORT, 21st October, 1968; Vol. 770, c. 209.]
I have not taken the matter further, but I still believe that there could be ways and means of overcoming this problem. There must be available in the Ministry's statistics figures showing what illnesses and conditions are mostly claimed for. For instance, the 1967 Report of the Ministry shows that over half a million claims for sickness benefit were referred to regional officers of the Ministry. Of that half million, 55 per cent. were upheld—that is, the men and women were found to be incapable of working. By my simple arithmetic, in 45 per cent. of cases the claims were not upheld, nearly a quarter of a million were found to be capable of work, though they had been given sickness benefit notes by their doctors.
Would it not be comparatively simple for certain conditions to be referred automatically to the regional medical officers, and not at the request of the doctor as
316
now? Would not that be a way of reducing the abuse which undoubtedly exists? The people behind the counter in the Ministry's offices would tell the hon. Gentleman which conditions should be covered in that way. They know. If he talks to his officers and to a few doctors in the big cities, the extent of the abuse will rapidly come home to him.
I have tried to make a few practical suggestions showing how Supplementary Estimates of this size and nature could be reduced or, perhaps, even eliminated in the future.
8.35 p.m.
The Under-Secretary of State for Health and Social Security (Mr. Norman Pentland): I listened carefully to what the hon. Member for Kensington, South (Sir B. Rhys Williams) said and to his various suggestions for reformulating our system of social security provision. I imagine that the hon. Gentleman will agree that it is impossible for me to enter upon a detailed discussion of the ideas which he has put forward in a debate of this nature falling within a narrow compass. As he said, there will be other occasions when we shall discuss many of the topics which he raised.
The hon. Member for Dorset, South (Mr. Evelyn King) referred to what he called the unworthy people who receive Supplementary Benefit. He has raised this matter with me on more than one occasion, and I am sure that both he and his hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) realise—the hon. Member for Garston accepted it—that we in the Ministry, particularly on the supplementary benefit side, do all we can to end abuse.
I was more interested in the ideas of the hon. Member for Garston about how young people could be expected, with pressure—that pressure being the stopping of their only means of livelihood—to move from one part of the country to another. I could never agree with him about that. However, I should be straining the patience of the House if I were to stray into a discussion of what we regard as the ethics of the direction of labour. In that connection, we should have to have regard also to the direction of industry. The two go hand in hand. The hon. Gentleman raised far too wide a topic for this debate.

317
I imagine that Liverpool doctors, although the hon. Member for Garston spoke 10 only three or four, will be interested to see what he said tonight. No doubt, they will have ways and means of coming forward on that matter.
In all these cases, as we have said time and again, we recognise that there is a tiny minority who abuse the system. One can find abuse of our social security provision in all its forms. But we must not overlook the decency and honesty of the vast majority of people, who in some cases have to be encouraged again and again to claim what they are rightly entitled to in social security provision. Further, we have said that if any hon. Member knows personally or has evidence of abuse and if he will pass his knowledge or evidence to the Department we shall by all means have it fully investigated. The hon. Member for Garston accepts that that is so. He knows that these cases are carefully scrutinised by our officers, who do everything possible to try to end abuse.
Mr. Evelyn King: I fully understand the hon. Gentleman's difficulties, and I am not unsympathetic, but my point was quite distinct from that made by my hon. Friend the Member for Garston. There is no question of direction of labour. I am concerned about the number of young men and women who deliberately, of their own will, leave their homes during the summer, come for two or three weeks to a seaside resort with the idea of enjoying a holiday, and then go on supplementary benefit. That is the point. The direction of labour could not possibly come into that.
Mr. Pentland: Of course, I could not generalise without the evidence before me of the circumstances of these young people. I should think offhand that it was perhaps a question not so much of enjoying a holiday as possibly of some mental deficiency, for example, which makes them leave home. We have to remember that we do have this type of people in our society. We do have "drop outs". I am sure that some of them migrate to the south of England just as others migrate to London. But if the hon. Gentleman has evidence, as he seems to have, and will send it to us, we will have it. thoroughly investigated. This is the kind of help our officers
318
would gladly welcome in order that we could get to these cases.
It may be helpful if I now explain the basis of the Supplementary Estimates for supplementary benefit. The hon. Member for Kensington, South referred to the transference of money from the National Insurance Reserve Fund. He probably knows that supplementary benefits are financed from general taxation. They are not financed from any contributions. There is, therefore, no question of using any money transferred from the National Insurance Reserve Fund to the National Insurance Fund to meet the extra cost of supplementary benefits such as we are discussing.
Sir B. Rhys Williams: The hon. Gentleman has not explained where the 25 per cent. is coming from.
Mr. Pentland: I will deal with that. The original estimate of the net expenditure on supplementary benefit for the year 1968–69 was £394 million. The additional provision which has been under discussion this afternoon is £33 million. The greater part of this increase is, of course, the direct result of the decision taken by Parliament last summer to raise the supplementary benefit scale rates with effect from 7th October, 1968, for the 2½ million beneficiaries.
The leading rate—that for a single householder—was put up by 5s. from 86s. to 91s. a week. Other rates were increased in proportion and there were improvements in certain other features of the scheme. For example, the long-term addition to the rates for people over pension age and certain other beneficiaries was raised from 9s. to 10s. a week. The cost of these changes introduced last October is expected to amount to £24 million in the period up to the end of the current financial year.
A further £11 million was asked for not on account of the changes in the scale rates themselves but because of minor variations in the number of beneficiaries on the average payments which they are receiving. The net figure is, however, only £33 million, not £35 million, because of an expected increase of £2 million in Appropriations-in-Aid—that is receipts, mainly by way of arrears of National Insurance benefit, and payments from liable relatives.

319
For certain groups of people these levels are slightly higher than was originally expected. The House will appreciate that since the average payment is the net result of setting on the one hand a person's requirements—the appropriate scale rates, rent, and any special needs—against his resources, such as National Insurance benefit, on the other, changes in the range of resources or the level of requirements can affect the average payments even though the scale rates themselves remain unaltered. I think that that is the question about which the hon. Gentleman was concerned. It is in respect only of that extra expenditure that £11 million was expected to be about 75 per cent. of what the hon. Gentleman mentioned as the expected additional amount needed. The full cost of the uprating during the present financial year has been allowed for. It is stated in the Supplementary Estimate.
Perhaps I may remind the House of the circumstances which led to the increase in supplementary benefit scale rates, and thus to the major part of the Supplementary Estimate that we are discussing. On 16th January, 1968, my right hon. Friend the Prime Minister, speaking in the context of measures following devaluation, pledged the Government to protect the most vulnerable classes of the community from hardship resulting from the effect of devaluation on import costs. In fulfilment of this pledge the Government brought into effect last autumn increases in family allowances, in the qualifying levels for rate rebates and in the rates of supplementary benefit. I have already quoted the main increases in benefit which produced in October, 1968, an increase over the rates introduced in October, 1967, of rather under 6 per cent. As intended, this covered the increase in prices over the same period.
What this meant is that the significant advance in standards of non-contributory benefit which the Government have introduced since they took office in October, 1964, have been maintained despite the grave economic problems which face the country. Thus, in real terms, the main rates of supplementary benefit are a fifth higher than they were in October, 1964, even if no account is taken of the
320
long-term addition. This addition was introduced when the Supplementary Benefits Scheme began in 1966 for all old people on benefit and for people below that age, other than the unemployed, who had been on benefit for two years or more. It is now payable to about 80 per cent. of the beneficiaries on the books of the Supplementary Benefits Commission at any one time, and was raised from 9s. to 10s. in October, 1968. Taken together with the other improvements made when the Supplementary Benefits Scheme started in 1966, all this has marked a real step forward in providing help to many of the poorest in the community.
It is worth considering for a moment to whom these benefits go. By far the largest number, or about 70 per cent., of supplementary benefit recipients at any one time, are old people. The next largest group—about 12 per cent.—are the sick and the disabled, just over half of whom are also receiving national insurance sickness benefit, while most of the remainder are the congenitally sick and handicapped who have never been able to work.
Then come the unemployed, under 9 per cent., followed by fatherless families, including National Insurance widow beneficiaries, with about 6 per cent. Finally, there are certain smaller groups such as childless widows and people who are staying at home to care for sick or aged relatives. All these groups have been helped by improvements in supplementary benefits, while poor families where the father is in full-time work, together with people whose supplementary benefit is "wage stopped", have been helped by the Government's family allowance improvements and other innovations such as rate rebates. These have also benefited many old people just above supplementary benefit level.
The improvement is supplementary benefit standards, which the Supplementary Estimate under discussion helps to maintain, has, naturally, led to an increase in numbers on benefit in most of the groups mentioned above. This has been added to by other factors, in particular the effect of the new scheme of 1966 in attracting people who may have been reluctant to claim. As a result, to take the largest increase as an example, the

321
number of old people claiming supplementary benefit is now some 400,000 more than it was before the scheme began.
I realise that at first sight it may seem odd to be talking in terms of the increases in the numbers on supplementary benefit when the Government have just produced a White Paper advocating a new scheme of contributory benefits whose long-term aim is to reduce very substantially the numbers on supplementary benefit.
Again, I come to a particular point raised by the hon. Member for Kensington, South. He raised the White Paper figure of 2 million retirement pensioners receiving supplementary benefit. This includes the wives receiving supplementary benefit. The figure of 1,848,000 old people receiving supplementary benefit at November, 1968, does not include wives, since they are included with the husbands. It also includes about 170,000 old people not receiving retirement pension. This is not the time to discuss in any detail the new Government proposals, but I should explain that there is no inconsistency in this situation.
The Government consider that for the long term the contributory system is the right way to go. But a new contributory system cannot be brought into effect overnight. It cannot cover people who have not paid contributions under it, and it cannot cover all possible misfortunes of life. For all these reasons the Supplementary Benefits Scheme has a key rôle to play, in the view of the Government, even if the extent of this work will in the long term decline. The Government are determined to provide the best supplementary benefit scheme they can to carry out these tasks.

DRIVING TESTS (APPLICATIONS)
8.54 p.m.
Mr. Edward M. Taylor: The Chair is usually very kind and generous in selecting as part of the Supplementary Estimates debate something to do with transport. Over the years quite a number of items have arisen under this heading. One of our friends absent this year is the British Railways deficit increase. This is one of the few Supplementary Estimates debates at which I have been present when we have not had to allow some extra additional sum for the extra loss of British Railways. This year we do not have one, and perhaps the Minister might not think it amiss if we were to convey our good wishes and congratulations to British Railways for this change. My hon. Friend the Member for Finchley (Mrs. Thatcher) and I visited the railways recently, and were impressed by the changing morale and outlook there. I hope that this will be a permanent feature.
We are considering Estimates of £162 million. The item which I wish to discuss concerns only £700,000. While we lightly agree to the spending of millions of pounds, it is only when we turn to relatively small figures that figures become meaningful. I wish to discuss a meaningful figure. These Estimates need to be probed, and there are quite a few questions which must be answered which I hope the Minister will be able to answer.
The sum of £700,000 is the shortfall in anticipated revenue from driving licences. This may not appear to be a large sum in a great nation like ours in which millions of pounds are spent every hour. But the fact that the difference between the original Estimate and the present Estimate is no less than 18 per cent. of the anticipated revenue gives some idea that £700,000 is a figure of significance. I have asked for this debate, and I am grateful to you, Mr. Speaker, for selecting it, because reasons should be given for this sudden change. Those reasons are not apparent from the Estimate Committee's Report, which I have read with some care, or from the evidence which was given before the Committee.
One spokesman for the Ministry said in evidence before the Estimates Committee that this change was "somewhat to

323
our surprise". This understandably surprised the Ministry. After years of buoyancy and growth in the numbers of driving licence applications, there is suddenly a change—not just a change in direction from increase to decrease, but a decrease in revenue of 18 per cent.
There was one reason given for this, namely, that there had been a delay in increasing the driving test fee from £1 to 35s. It was a delay of only one month, and it was estimated that the maximum amount which this would account for was £130,000. When £130,000 is taken from £700,000, there is still a lot of money to account for—well over £500,000. It was indicated in the evidence that after the fee was increased, as well as before, there was a remarkable change in the numbers of applications.
One question which was asked by the Estimates Committee was whether the increase in the fee from £1 to 35s. had been referred to the National Board for Prices and Incomes. The reply was:
"The implications of this increase were very carefully considered by Ministers."
One of the reasons for the change hinted at by the Ministry officials and by members of the Committee was that perhaps we had got over the hump and that the numbers of older people taking tests were beginning to be phased out. That might be a long-term factor to which we should have regard, but it could not account for such a dramatic fall in the number of applications. Another reason which was advanced was that perhaps people were deciding not to go forward for tests until they were ready for them. That is a matter of change in human disposition and human feelings, and I suggest that that is not the sort of factor which can operate within a year.
Therefore, the reasons which have been hinted at, and perhaps advanced, are not sufficient in themselves to justify or explain a very sudden drop in the number of applications for driving tests. I am not advocating that more people should take tests, or that fewer people should take tests. I want to investigate the reasons, and I would ask the Joint Parliamentary Secretary to say if the reasons I put forward for this sudden drop are the right reasons.
324
One reason, which I almost hesitate to mention in view of certain events of recent days, is the sudden dramatic increase in the burdens of tax on road users—
Mr. Deputy Speaker (Mr. Harry Gourlay): The hon. Gentleman is very ingenious, but in discussing the Estimates he must not refer to questions of taxation.
Mr. Taylor: Mr. Deputy Speaker, I want to know why the number of applications has gone down. Surely I am entitled to ask the Minister about factual matters without in any way debating policy. Surely I am entitled to ask the Minister if this had any bearing on something which we are discussing in the Estimates. If we do not do so we are failing in our duty in the House of Commons.
Mr. Deputy Speaker: The hon. Gentleman may certainly make incidental references, but he must not discuss taxation at any length.
Mr. Taylor: I was not intending to, Mr. Deputy Speaker. I just mentioned the word. I am not trying to bring in another subject under the guise of this subject. That was not my intention in asking for this debate.
Mr. Deputy Speaker: The hon. Gentleman may continue, and I will pull him up if he goes out of order.
Mr. Taylor: I am grateful, Mr. Deputy Speaker. Over the last four years the total burden of tax on the road user has doubled, from £777 million to £1,585 million by way of petrol duty, purchase tax and vehicle licences. That is a trend, but this trend would not explain the sudden change in one year. There would have to be a sudden change in the trend of taxation within that one year to justify the drop. By looking at the figures for January, 1968, compared with January, 1969, we see the factor which has changed dramatically. Mr. Average taking a driving test in 1968, and thereafter becoming the average motorist in Britain, would find, looking forward to a period of one year, that the total burden he would have to accept would be about £86 10s.; that is for an average family car, travelling 8,000 miles in a year and getting 27 miles per gallon. In one year from January, 1968, he could anticipate

325
spending £53 Is. 9d. on petrol tax, £15 13s. 3d. on Purchase Tax and £17 10s. on licence duty.
Mr. Average, in January, 1969, finds that his total burden has jumped from £86 10s. to £106 4s.; petrol tax £63 16s. 9d., licence £25, Purchase Tax £17 7s. 3d. That is assuming depreciation over about 8 years. Perhaps this dramatic change in the course of the one year which we are considering is one fundamental reason why there has been such a dramatic drop in the number of applications for driving licences. I feel that this is a relevant factor.
If that was the case, surely it is a matter which the Government should investigate fully. When we have these Estimates before us and see this dramatic reduction in the number of applications for driving licences, surely the Government should look into the position very carefully and decide whether this was the reason.
In the past, we have regarded the motorist as a kind of dripping roast, and perhaps recent events have shown that it has ceased to drip when we consider the one kind of thermometer which can give us any guidance; that is, the number of applications for driving tests.
What other guidance is there? There is none in the short term. In those circumstances, the Government should look very seriously at whether the change which has taken place can be related to the fact that there has been a savage increase in the amount of tax imposed on the private motorist, which, as I say, has doubled in four years. I hope that the Minister will say that his Department is making exhaustive inquiries into the relationship between the reduction in the number of applications for driving licences and this savage and thorough increase in all forms of taxation applying to motorists. The only other reason that he may be able to find is that there has been a miscalculation.
Previous Ministers of Transport have made it clear that the Ministry has a team of brilliant economists looking at all the figures, estimates and plans and that, because of the extra talent, because of the machinery and the extra ability in the Ministry, more accurate estimates can now be made. However, bearing in mind
326
the Ministry's long-term plans, if we cannot place any reliance on its estimates, we shall be in a serious situation.
I think that there is a simple explanation, and it is the one that I have given. We have reached a situation of diminishing returns from the hard-pressed motorist who, having had a great deal to suffer already, now finds himself having to pay twice as much as four years ago. It must be remembered that we are not discussing a matter which affects a minority. We are discussing 50 per cent. of our population.
There may be other reasons which discourage Mr. Average from taking the driving test. One fact which influences him very much is the ability that he will have to use his car on Great Britain's roads. When I was looking into the reasons for this remarkable drop, I came across some other figures relating to roads in Great Britain. These are the roads on which Mr. Average will drive, having been successful in his driving test.
When we consider our road building programme, it is interesting to note that of every £5 that Mr. Average contributes in taxation to the so-called Road Fund only about £1 goes on road building In 1966, which is the last year for which figures are available, for the average person in Great Britain only about £7 8s. was spent on roads, compared with £15 in Germany, £10 in France—
Mr. Deputy Speaker: Order. The hon. Gentleman is now referring to matters of taxation. While I ruled that he could make incidental references, on this occasion he is making detailed references.
Mr. Taylor: Mr. Deputy Speaker, since I have left taxatoin entirely and will not mention it again—
Mr. Deputy Speaker: The hon. Gentleman is referring to taxation, since the money raised for roads is raised by taxation.
Mr. Taylor: My difficulty is that the money spent on the driving test is also raised on taxation.
Mr. Deputy Speaker: The hon. Gentleman must know that the fee for a driving test is one for which the Minister is responsible. It is not raised by taxation.
Mr. Taylor: But that is my point. The Report tells us that the amount brought

327
in from driving tests has not covered the cost of them, and it has had to be taken from general taxation. This is mentioned time and again in the Report of the Estimates Committee. The point is made that because the fee was £1 we were not able to raise the money to pay the 1,500 examiners in Britain and cover the costs of the scheme. To that extent surely the purpose of taxation might be used. Having said that, I will leave the subject. I do not intend to come back to the general question of taxation.
It is vital to discover why there is this reduction in the numbers taking driving tests, because of the lessons that we can draw from it. I have perhaps strayed a little and taxed your patience, Mr. Deputy Speaker, and for that I am sorry. Therefore, I come to what I might call reason No. 2: is it because of inadequate roads and to what extent can we put reliance on this aspect?
We can count on having only £35 per vehicle spent on roads in Britain. That compares with £44 in France, £54 in the United States, £55 in Australia, £67 in Belgium, £74 in Italy, £79 in Germany and £113 in Japan. Whether we look at it as per vehicle or as per head, Britain's road spending appears at the foot of both leagues when compared with our main competitors and all other countries. It might be said that we are a small country with a lot of people, so per head is not a relevant consideration, but surely per vehicle is.
These are facts of which the Minister is aware. He has been cutting road spending so often that he must know the facts about the situation. Therefore, I ask him whether he can tell us the extent to which increased tax is the reason and the extent to which poor roads and scandalously low spending on roads in relation to revenue is the reason for the reduction in the number of applications for driving tests.
Having mentioned road building at some length, I move on to what might be reason No. 3. I should like the Minister to give some indication of the extent to which he feels parking is responsible for this amazing and sudden reduction in the number of applications for driving tests. Recalling my own driving test, one of the most difficult
328
things to do was parking my car. Obviously in county areas there is no difficulty about parking cars because there is plenty of space. But in the towns there is grave difficulty in managing to park cars. I suggest that anyone thinking of taking a driving test might well be discouraged if he knew that when driving his car in towns he would find great difficulty in parking. I suggest there are indications that the seriously deteriorating position about parking cars is having an effect on the number of people coming forward to take the driving test. I want to know what the Ministry's experts feel about it and what the Minister, with his own detailed knowledge and experience, also feels.
In 1955 we had a change. Parking meters were brought in. Perhaps I might briefly mention the experience of Glasgow. In May, 1965, Glasgow introduced meters. Up till November, 1966, the yield was about £130,000 in charges and excess payments. In 1966–67 the expenditure in salaries etc. for operating the meters was £46,475 and the income was £52,000. So we have a scheme bringing in £52,000 in charges and excess payments, but we are spending £46,000 administering it.
Here we have a situation which, unfortunately, because the money has been used for other purposes, and because the Minister brought in a Bill to use the revenue derived from parking meters for the purposes of public transport, is getting worse. What I am asking the Minister to do is to look at these three propositions which I feel could explain this sudden reduction in the number of applications for driving tests, and to say whether these are the three reasons. First, is it taxation? Is it the fact that the burden on road users has doubled in four years, and perhaps most remarkably of all during the last 12 months?
Mr. Speaker: Order. Even if it is true, we are not, on these Estimates, discussing the burden of taxation. The hon. Member must keep to the subject.
Mr. Taylor: I shall not dwell on that any longer. There must be a reason for this decline, but we have been given no satisfactory and convincing reason why, in one year, there has been a sudden reduction of about 18 per cent. in the Estimates, and a reduction of about 14 percent,

329
in the number of applications for driving tests.
We want to know the reason for that. I am saying that one reason may be taxation, one reason may be the roads, and one reason may be the difficulty of parking. I want to know to what extent the Minister feels that one, or all, of those factors may have contributed to this reduction. In the explanations given to the Estimates Committee no convincing reason was given for this decline. Only long-term trends were mentioned.
Having put those questions to the Minister, which I know he will consider in his usual courteous way, may I ask whether he thinks this reduction will be permanent. If it is to be permanent, we must consider that part of the expenditure which provides the salaries of 1,500 examiners, and also provides continuity of employment for them. If this is to be a permanent feature, I think that we should consider having a different kind of test, and perhaps having better tests. I think that we can all remember taking part in a test which involved flapping one's hands, something which one never did after passing the test. If this decline is to be a permanent feature, will the Minister consider making better use of this money and of the services and experience of these excellent examiners.
Perhaps the Minister will consider something which I think we all agree would be in the interests of road safety. If someone has an accident, particularly if he is a teenager, or a young adult, he should be required to take another test. Will the Minister also consider the proposition that instead of having tests in the suburbs or in towns only, part of the test should ensure that people have some experience of driving on motorways, and of driving at night, which requires a different kind of driving?
I think that the present situation gives us the opportunity to ask the Minister why this has happened, how it has happened, and what reasons he thinks have been advanced logically for it. If this is to be a permanent feature of our way of life, can greater use be made of the valuable experience of the examiners so that better tests can be held in the interests of road safety?
We are considering Estimate for millions of £s. I am discussing the expenditure
330
of only £700,000. A shortfall of this amount is very small in relation to the total sum, but I think that the lessons we can learn from this reduction in the number of driving tests could set the pattern for our policy for a long time to come.
I hope that the Minister will try to answer my questions, because, as I have said, I believe that some important lessons can be learned from this shortfall, lessons which I hope the Minister of Transport in particular will remember today, in the future, and at all time when the future of the motoring public is being considered.
We are talking not about a minority of 10 or 20 per cent. but about half the families of Britain, who have cars and who feel, I am afraid, that there has been a vendetta against them and that they are being treated—
Mr. Speaker: Order. We are talking about the reduction in the number of citizens taking driving tests.
Mr. Taylor: I was going to say that the reason for the decreasing numbers may be that they have been adversely treated, not that they are looking forward to the future with more hope and confidence.
9.21 p.m.
Mr. Peter Mills: I congratulate my hon. Friend the Member gor Glasgow, Cathcart (Mr. Edward M. Taylor) on bringing up this matter in his usual clear and forthright way. This reduction in the numbers taking the driving test represents a serious loss of revenue, and it is vital to know the reason. My hon. Friend was right to say that a contributory factory is higher taxation and other things which mean that people feel that they cannot afford to drive a motorcar and so there is not much point in taking the test. We cannot dismiss this important factor—
Mr. Speaker: Order. We cannot dismiss it, but we cannot discuss it in this debate.
Mr. Mills: It is important that people should have these tests. They should be prepared for driving, and the standard of the tests should be much higher. I am concerned that the numbers have dropped by 18 per cent., which is a large figure,

331
and I should be interested to know whether the Minister thinks that the trend will continue.
In these days of financial crises, we should know what we shall do with the testers who may become redundant. Has the right hon. Gentleman any alternative plans for them? It is not much use paying them if they are not working to full capacity. As the numbers apply for tests go down, these men will not be doing a full day's work. Time after time the Government have said that we need more productivity; I should like these men to do other things, like vehicle-testing. Alternatively, we might require that everyone who had an accident should take a fresh test.
Another contributory factor—I may be out of order to mention it—is surely fear. People are afraid to take a test because they are afraid to drive on our roads. Unless one has a very high standard, driving on motorways is a frightening experience. This is one of the reasons for the serious loss of revenue. I hope that the Parliamentary Secretary will give us a clear answer to these questions so that we know where we are. Above all, I am concerned about what he will do with these inspectors who are not working to full capacity.
9.25 p.m.
Mr. George Younger: Can the Minister give figures to show the regional variation in the drop in the number of people taking driving tests? If the drop is greater in the congested areas where driving is more difficult, it will be a more serious matter than even my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) pointed out. If, however, the drop is more severe in the remote areas, perhaps the Minister can take action to make it easier for people in these places to take the test. I have found that in the more scattered areas it is difficult for people to arrange to be at testing centres at the appropriate times because of restricted public transport. In other words, is there a significant pattern shown by the figures not merely in Scotland but throughout Britain?
Has the drop in the number of people taking driving tests any relationship to the number of failures? It has been
332
represented to roe on several occasions in recent years that more people are failing the test. Could this be discouraging people from taking the test more frequently? If so, this could be an understandable explanation for the drop.
9.27 p.m.
Mr. Ian MacArthur: The House will be grateful to my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) for raising this important subject and for presenting figures which I can only describe as shocking. My hon. Friend the Member for Ayr (Mr. Younger) spoke of the possible regional variation and I hope that we shall be given information about that.
I hope that the drop in the number of applications for driving tests in Scotland is not as marked as it is south of the Border. There is, however, good reason why it should be, although driving conditions in Scotland are, by and large, more pleasant than they are in the South. I was informed by the Minister some time ago that there are fewer cars per mile on roads in Scotland.
Mr. Edward M. Taylor: There are better people, too.
Mr. MacArthur: These more pleasant driving conditions are a great tourist attraction.
One could advance many other arguments to explain this reduction. A number of factors have occurred in the last few years which could have deterred people from taking the driving test in Scotland. While driving is more pleasant in Scotland, certain factors have eroded that pleasantness. For example, Scotland more than the rest of Britain suffers from the impact of S.E.T.
Mr. Speaker: Order. The hon. Member knows that we cannot discuss in this debate the economy of Scotland and Selective Employment Tax. We are discussing a decline in the number of persons seeking a test.
Mr. MacArthur: I am obliged, Mr. Speaker. I hoped that it would be in order to touch on the tax. I believe that in Scotland over the last year some people coming for tests may have been deterred from doing so by the impact of British Standard Time on driving in the mornings.
Mr. Speaker: Order. The hon. Member can mention a number of factors, but he cannot discuss in detail any of them on this Vote.
Mr. MacArthur: May I pursue the point which has been raised by my hon. Friends? If this trend continues what is to happen to the examiners? I should like to know the number of examiners there are in Scotland and what plans there are for them if the trend continues.
Mr. Edward M. Taylor: There is the Land Commission.
Mr. Mac Arthur: Are they to be employed in the new heavy vehicle testing station? If unemployment is created among examiners, the number of unemployed persons, particularly in Scotland, will be much increased. The number of new jobs provided in Scotland has fallen and the number of people employed in Scotland has fallen sharply. Employment opportunities for redundant people are that much lower. Therefore, it is important when there appears to be a threat of unemployment for these hardworking, deserving members of the community that we should ask what study is being made of the impact on the examiners of the drop in the number of those coming for tests. Particularly in Scotland, what are the plans drawn up by the Minister and his colleagues in the Department of Employment and Productivity to provide alternative employment in the same sort of work for these examiners, who will lose their employment if the trend continues?
9.32 p.m.
The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Bob Brown): We have had an interesting debate. The question of taxation has been raised on more than one occasion, but I do not propose to tax your patience, Mr. Speaker, because this is a matter for my right hon. Friend the Chancellor of the Exchequer. Suffice it to say that I do not remember any Chancellor who was the darling of the motorist. I can hardly imagine a situation in which motoring organisations would issue with their annual reports car stickers saying, "We love Roy", or Harry or whatever the name may be.
Driving test applications have increased steadily through the years, although they
334
have not done so consistently. In 1960 the number of applications received was around 1·6 million. There was a dramatic increase in 1964, when for the first time applications topped the 2 million mark. Since then the number has been 2 million or just over that, until in 1968 we saw a significant fall in the number. This amounted to a drop of 4·5 per cent. on the 1967 figure. I concede that it was significant, but this is a matter in which it is very easy to be wise after the event. In practice, it is not easy to judge the elasticity of the demands for driving tests. That is highly unpredictable and a broad brush approach is inevitable.
Prior to the increase on 2nd July last year, from £1 to 35s., the driving test applications in 1968 were running at the rate of only about ·8 per cent. lower than in 1967. The slackening in demand arose in the six months after the increase in fee: there was a drop of 8·5 per cent. over this period. During the last eight weeks of 1968, the decrease was only 5·9 per cent. compared with the last eight weeks of 1967. The impact of the increased fee seems to have been wearing off by them.
We have been criticised for not foreseeing the effect on demand of the increase in fee. I freely admit that the immediate impact of the fee increase was greater than we expected, though, as I have already said, the effect seems to be wearing off. The fact that 54 per cent. of tests result in failure suggests that far too many people come for a test before they are ready for it. This is confirmed by the fact that so many people appear to have been so easily and quickly discouraged, by the increase in fee, from presenting themselves for test.
In an all-out effort to improve the standard of driving instruction and to reduce the number of people who fail the test, we have introduced the Register of Approved Driving Instructors. This was established in 1964, and since then registration has been purely voluntary. About 8,000 professional driving instructors have passed the qualifying examination which entitles them to registration. Inclusion in the Ministry Register signifies that an instructor is capable of a high standard of tuition. Furthermore, registered instructors are subject to periodic test checks of their continued ability to give driving instruction to the high standard that we desire. We have evidence that the pass

335
rate achieved by candidates trained by Ministry-approved driving instructors is significantly higher than the national average.
I want to explode the popular myth that examiners look for people to fail. This is completely false, because our examiners are as keen as the candidates themselves are to see that they pass the test if their driving is up to the required standard.
By any standards the test is still, at 35s., good value for money. The fee charged no more than covers the cost. By this I mean, not only the time the examiner spends with the candidate, but also the cost of training the examiner to the high standard to which I have already referred and supervising the conduct of tests to ensure that this standard is maintained at a uniform level at the 400 driving test centres throughout the country.
I make no apology for the fact that the fee is now 35s. This is what it costs to provide, and it is surely right that those who use this service should pay for it. Our officials are in close touch with their opposite numbers in European countries, and I remain convinced that the British driving test is second to none in its quality, the way it is conducted, and the degree of supervision it receives. I talked briefly about the driving test in the recent debate on accidents on the Ml. As I said on that occasion, the driving test is a carefully balanced and searching test of both driving skills and driving behaviour.
The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), after speaking about taxation, a subject to which I will not refer again, suggested that one of the reasons for the falling number of applications for tests was the scandalously small amount of money we are spending on roads. This comes ill from any hon. Member opposite, since in 1963–64, the last full year of Conservative administration, just over £150 million was spent on new construction and major improvement of roads. Last year, 1967–68, comparable expenditure was over £250 million, an average annual increase of 15 per cent.
Mr. Speaker: Order. We may not discuss the general road programme in
336
this debate. There is an item in the Supplementary Estimates of £625,000. grants for highways in Wales; but I see no other.
Mr. Brown: I bow to your Ruling, Mr. Speaker, and I shall not labour the point. By 1970–71, spending will top £350 million. Thus, in spite of the economic situation, it is clear that the Government are determined to tackle the results of the years of neglect of British roads which faced them when coming into office.
The hon. Members for Torrington (Mr. Peter Mills) and for Perth and East Perthshire (Mr. MacArthur) asked what driving examiners were doing now, the implication being that we have driving examiners sitting in test centres throughout the country doing nothing. Driving examiners are fairly versatile people. Their formal title is "Driving and traffic examiner". They are appointed both to conduct driving tests and to enforce the drivers' hours requirement applicable to drivers of goods vehicles under Section 73 of the Road Traffic Act, 1960.
This is a convenient arrangement because it means that we have a flexible force of men who can be kept within or drawn from driving test work as the need arises. It is a sensible arrangement which ensures the most economical use of driving examiners. There can be no question of surplus funds or manpower arising as a result of the decline in applications for tests. The size and, therefore, the cost of the organisation are geared in both the short and the long term to the demand for tests. As I said, the fee does no more than cover the cost of the organisation, taking one year with another.
Mr. MacArthur: The hon. Gentleman has just made a statement of great significance, if I understood him aright. I understood him to say that even if the trend continues employment among examiners will not be affected because they are qualified to be transferred to other duties, and the Government have no hesitation in so transferring them. That is a serious statement, particularly if those duties are to enforce requirements of the recent notorious Transport Act. It would represent a total change of occupation for these deserving and hardworking people. I hope that the hon. Gentleman will say more about that.
Mr. Brown: The hon. Gentleman could not have been listening. I said that the driving examiner's formal designation, which, therefore, governs the terms of his employment, is "Driving and traffic examiner". It includes more than simply undertaking the conduct of the driving test. There is no question of these people being bludgeoned into doing any job for which they are not trained and which they do not want to do. It is part of their job.
Mr. MacArthur: Is that what they are all doing now?
Mr. Brown: The hon. Gentleman is being very difficult. Of course, they are not all doing it. Driving examiners are conducting driving tests. If there is any slackness at a particular test centre, they go on to the enforcement work to which I have referred. This is nothing new. It is not something which has happened since the fee was increased. This inter-changeability has been going on for years.
The hon. Member for Ayr (Mr. Younger) spoke of regional variations. In Scotland, there are 130 examiners doing testing, and in England and Wales there are 1,070. In Scotland 153,000 tests were conducted in 1968, and in England and Wales there were 1,900,000. The total of tests per examiner in 1968 in Scotland was 1,176 and in England and Wales 1,765. There are 126 centres in Scotland and 339 in England and Wales. The figures should reassure the House that there is no severe regional variation in Scotland.
Mr. Younger: I am grateful for the figures but my point was whether the drop in the number of driving tests is worse or better in other regions than in the South-East.
Mr. Brown: The very fact that in proportion the figures are so close together indicates that there is no differential between the populated areas of Scotland compared with those of England and Wales.
The hon. Member for Cathcart referred to the availability of parking. Clearly, he thinks that we should be spending more money on parking schemes. We intend doing just that. There are proposals in the Transport Act on this, and if hon. Members opposite had not put
338
up so much pointless opposition to the Act we might have had its benefits much sooner. Under the new scheme of grants towards capital expenditure on public transport, grant of up to 50 per cent. will be available towards the cost of car parks at railway stations handling substantial volumes of commuter traffic. The hon. Member may also like to be aware, as he evidently is not at present, that the Government give substantial aid to expenditure by local authorities on parking schemes through the rate support grants.
Mr. Speaker: Order. The hon. Gentleman cannot pursue that subject in detail. There is no provision in the Supplementary Estimates for extra provision for car parks.
Mr. Edward M. Taylor: May we have an assurance that the hon. Gentleman will perhaps refer to the Supplementary Estimates that we are discussing and, in particular, explain where the figure of an 18 per cent. deduction comes from when the only reduction he has referred to is one varying between 0·6 and 5·9? While you are generous in the way you handle these debates, Mr. Speaker, perhaps the hon. Gentleman will now refer to the Supplementary Estimates.
Mr. Speaker: Order. It is not for the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) to call the Joint Parliamentary Secretary to order.
Mr. Brown: I have answered the question about percentages. Clearly, while there may be a reference to 18 per cent. in the Estimates, I have referred to percentages at different periods.
The hon. Member for Cathcart suggested that we should have a better system of testing. I take it that in referring to younger drivers he meant people aged 25 or younger. He suggested that if they were involved in accidents they should perhaps be retested. However, if we were to take such a course, I could not accept that it should apply only to young drivers. Why not to more experienced drivers? In any case, I hope that the hon. Member meant people who were blameworthy in accidents, because there are often blameless parties to accidents. The courts already have power, under Section 5(7) of the Road Traffic

339
Act, 1962, to disqualify from driving until such time as he passes a driving test a person convicted of certain driving offences such as careless or dangerous driving.
The hon. Gentleman suggested that we should have a better test, embodying night and motorway driving. This is debatable. Night driving tests are not feasible during the short hours of darkness in the summer. Tests at night when there is little traffic about would, in any event, prove little or nothing. It should be fairly obvious that a driver's competence cannot be shown by a night driving test.
A high-speed driving test on motorways is impossible in London and the other large cities and towns where the majority of driving tests are conducted. It has been tried in Switzerland, where it was found that such extended tests in no way changed the result of the first tests on ordinary highways. In Rotterdam part of the test routes necessarily include a stretch of motorway, but we understand that the examiners find out nothing about the driver as a result of his drive along a motorway.
It is often said that the test should include a test of the candidate's ability to control a skidding vehicle. Apart from the practical difficulties of finding 400 new places to do this, we feel that it is entirely the wrong approach. I am sure that hon. Members would not wish driving examiners to conduct this sort of test on the public highway. The important thing is that drivers should learn to drive in such a way as to avoid skidding.
We must accept that in the latter part of 1968 the applications for driving tests turned out to be lower than those for similar periods in other years. We must also admit that the extent by which applications fell off was quite significant, at any rate in the weeks immediately following the change in fee. I ask the House to accept and understand the difficulty of making forecasts in this field. Consumer resistance cannot always be accurately forecast, even by long-experienced market researchers in the employment of big concerns.

BANABAN COMMUNITY (GRANT IN AID)
9.54 p.m.
Mr. Edwin Brooks: On page 12 of the Supplementary Estimates we find under subhead C.17 of the Commonwealth Services Vote an item which reads:
"Banaban Community (Grant in Aid) (Revote) £80,000."
This sum is listed as "Revised provision". It is in fact a net increase of that amount. It is further described as an agreement by Her Majesty's Government to provide a grant to the Banaban Community on Rabi Island.
My interest in this small and apparently insignificant item was initially aroused when I noticed that a footnote was appended at the bottom of page 13 which said:
"Expenditure will not be accounted for in detail to the Comptroller and Auditor General. Any unexpended balances of the sums issued will not be liable to surrender to the Consolidated Fund."
This is a fairly unusual, though by no means unique, provision. It is perhaps worth noting that under the same heading of "Special Payments" we find that the £250,000 allocated as emergency aid to Nigeria is apparently to be subjected to the Comptroller and Auditor General's detailed scrutiny.
As an assiduous member of the Public Accounts Committee, I deprecate such intended absence of public accountability for any reason, and I felt it worth pursuing this obscure item to find the reasons for this apparent anomaly.
It was first necessary to find out the whereabouts of the Banaban Community, which until then had escaped my attention. It proved to be a long search. Reference to the Encyclopaedia Britannica proved useless, as neither the Banabans nor their island were mentioned.
The Times Atlas Gazetteer also drew a blank, with the only Rabi listed being apparently in Czechoslovakia. Fortunately, at that stage, I had yet to learn that the Chairman of the Rabi Island Council is Mr. Tito. Eventually the Columbia Lippincott Gazetteer came to my rescue, although it seemed that to find "Rabi" I had to look up "Rambi". This I did, and read;

341
"Rambi, Rambe or Rabi", which was described as a volcanic island of some 1,048 souls in the Pacific Ocean. Fortified by this narrowing of my search and by the elucidation of the spelling, I returned to The Times Gazetteer, where, sure enough, Rambi was listed.
However, surprise, surprise, no latitude or longitude was given, which is not only curious, but frankly impossible. At this stage, I realised that serious research was called for, and it was during this phase of my labours that the oddities accumulated to such an extent that I felt persuaded to raise this matter in the House tonight.
Mr. William Molloy: I find it fascinating to listen to my hon. Friend's researches, which he entered into in his endeavour to bring this matter to light. May I recommend that he might have short-circuited all this by going to the Royal Geographical Society?
Mr. Brooks: As a former professional geographer before entering this House I can only plead lamentable and profound ignorance, for which I have no excuse. Before developing my main queries about this item, may I make the simple point which is brought out by this narrative of amateur bewilderment and inefficiency? It is that we in the House of Commons, inevitably preoccupied with the affairs of constituency and State, are naturally ignorant of the conditions—and even the whereabouts—of that remote scatter of islands and archipelagoes and coral atolls which are left us by a half-forgotten Imperial legacy.
The British Empire has evolved, remarkably painlessly, on the whole, towards an independent Commonwealth of Nations, in which independence has been bestowed upon peoples who have become politically and economically viable. At least that is the philosophy and the doctrine, and we British have cast ourselves in the rôle of a mother who is happy to see her children let go of her apron strings. But there are some children who can never grow up in that sense; in terms of populations, resources and economic potential, they are simply not viable as adult independent nations. They are what might be called "impossible countries", and even if, as has happened notably in Africa, such States do
342
appear on the map of post-colonial geography, their future is as secure—and certainly no more secure—than that of the child orphan cast alone into the wicked world.
Among such impossible States are the tiny scattered island communities of the Pacific Ocean. And this brings me to the story of the Banabans and their migration a thousand miles from Ocean Island to their present home on Rabi, in the Fiji group. There was on 7th June, 1967, an Adjournment debate introduced by the hon. Member for Rye (Mr. Bryant Godman Irvine) which coincided with a visit being paid to this country by representatives of the Banaban Community. This enables me to avoid a great deal of tedious detail about the circumstances of these curious people. Some short summary is nevertheless necessary.
The Banabans, it seems, are a people of distinct culture who once lived on this island, itself 250 miles distant to the west from its main neighbours in the Gilbert and Ellice group. This island came under British rule in 1901 in circumstances over which perhaps we should draw a veil. I understand that the Banabans were paid £50 for the island. From then on throughout the whole of this century it has been a major producer of phosphates, mainly for the Australasian markets. Naturally such mining strips the soil and impoverishes the environment generally and it has been estimated, by the Banabans at any rate, that it would cost about £A36,570 to rehabilitate each acre of Ocean Island. This estimate is based upon certain calculations made in comparable conditions on the Nauru group. On such figures per acre, the total cost of restoring Ocean Island, the original home of the Banabans, following the exhaustion of its phosphates, would come to approximately £A40 million.
However, the Banabans left Ocean Island before the Japanese onslaught across the Western Pacific, and after the war the Island of Rabi, a small island, although with some economic potential, was purchased for the low sum of £25,000 as a home where the Banaban Community, it was hoped, would be able to settle permanently. Although remote from their original homeland, Rabi is an island of some agricultural wealth, and it is well provided, in particular, with

343
coconut palms. Following an experimental period of two years on Rabi, the Banabans decided by a large majority, and by secret ballot, to remain there. However, they have not surrendered claim to Ocean Island, and within the last two years they have been demanding independence for that island.
Presumably they envisage an independent State within the Commonwealth of two small islands 1,000 miles apart, one of which would be virtually uninhabitable following the conclusion of the phosphate mine, and with a total population of between 1,000 and 2,000—in effect, a large, or not so large, village. This is clearly the concept of national sovereignty gone made. It is easy to deride such rather grandiose projects. Nevertheless, it poses the problem which I have touched upon of the political future of such tiny dependent territories. This is where the grant of £80,000 to some extent involves policy decisions about this future political status.
The Banabans have been quick in recent years to point to the example—and there are some parallels—of Nauru, which is also a major supplier of phosphates, where the estimated income for the islanders during the next 30 years from such mining has been put at £144 million. Therefore, we are talking about a very great deal of money. But the position on Ocean Island is much less entrancing. In the first place, the revenue from the phosphate industry is an essential ingredient in the budget of the Gilbert and Ellice Islands, within which Ocean Island has been administratively incorporated. This colony is economically weak and fragile, despite recent moves towards a more democratically elected governing structure. Therefore, any loss of income from Ocean Island—for example, as a result of new arrangements with the Banabans involving their independence or some new contractual arrangement over the distribution of royalties from the phosphate mining—would quite severely hit the Gilbert and Ellice Islands Colony unless Britain were to step in and make grants or loans available to that colony.
In passing, I might mention that in the Adjournment debate of 7th June, 1967, to which I earlier referred, there
344
was a sympathetic and sensitive elaboration of the Banaban case. I do not wish to use this debate, even if I were permitted to do so, to attempt to argue the alternative point of view put forward by the Gilbert and Ellice islanders; but they have their own point of view on this. It has been expressed as recently as last autumn in London, and they would be very apprehensive if the financial problems of the Banabans were to appear to be solved as a result of taking away some of the revenue from Ocean Island, upon which they too depend.
The second element in the difficulties facing Ocean Island is that the phosphate deposits are running out fast, particularly as it has recently been decided to increase the annual rate of extraction from 450,000 tons to 600,000 tons. As a result of this decision, which was reached by the British Phosphate Commission on grounds of efficiency and profitability of production, the deposits will be exhausted in 1977 instead of in 1981 were the lower annual rate to be maintained.
The Banabans have for many years benefited, not nearly as much as they might feel is their entitlement, from royalty payments derived from the extraction of phosphates from their original homeland. They are naturally concerned that this traditional source of revenue will have dried up in as little as eight or nine years' time. They are also critical, I think with some justification viewing this historically, of the benefits which they have derived over the years from this mining activity. They have made strenuous efforts to gain a larger share, partly to help them to develop Rabi during the next critical 10 years before the phosphate deposits run out, and partly to help them to rehabilitate the ravaged landscape of Ocean Island.
Whether any such increase as has been talked about in royalty payments would come remotely near meeting the bill for the rehabilitation of Ocean Island, that is to say £A40 million, is open to serious doubt. I ask my hon. Friend what the British Government plan to do with Ocean Island, which is still in the ownership of the Banabans, once the phosphates are exhausted. Is it to be left as a Pacific junk yard or, as the Banabans themselves once put it, as a land of "coral pinnacles"? This is a critical matter in

345
evaluating the significance of the grant which is now being suggested as adequate compensation to the Banabans for the income which they claim they should have been receiving over the years from Ocean Island phosphates.
Whether Ocean Island is destined to become part of the Banaban Republic or part of the Gilbert and Ellice Islands Republic, which might be almost equally non-viable, or whatever may be the eventual solution, it is clear that the ending of mining is bound to pose severe difficulties for the local administration. Perhaps my hon. Friend will indicate, if the information is available, the detailed reasoning which lay behind the decision to increase the extraction rate. On the face of it, it seems likely, whatever may be the merits of doing so, to precipitate changes which there might be some point in postponing. There may be a case for spreading out this work in order to delay the problems which will arise for the Banabans and for the Gilbert and Ellice islanders in 1977.
This brings me directly to the £80,000 we are now making available to the Banaban Community. The money was originally made available last year, indeed in 1967 in the first place, and it was also at that time made available in a Supplementary Estimate.
It was, however, subsequently rejected by the Banabans as being inadequate and unsatisfactory. In an effort to reconcile the various viewpoints, including those of the Gilbert and Ellice islanders, the so-called Ocean Island phosphates discussions took place at Lancaster House at the close of October, 1968. Since the report of the discussions has been published with the various viewpoints clearly set out, I have no wish to read the detailed financial case presented by both the Banabans and the Gilbert and Ellice Islands representatives. I would simply ask my hon. Friend to explain the financial reason behind this ex gratia payment. In other words, what were the criteria involved in assessing the sum? Was it to be regarded as a once-for-all payment, a sort of settlement for the ravages of the imperialists of long ago? I ask that because, in the Daily Telegraph of 20th June, 1967, a report of the original offer reads:
346
"Britain has agreed to make them (the Banabans) an ex gratia payment of £80,000, with the promise to review their share next spring."
That would have been the spring of 1968.
It appears that, at that time, in the summer of 1967, the then Minister of State for Commonwealth Affairs was arguing clearly that it was to be a once-for-all payment. She said:
"It is in respect of this that we are making a once-for-all grant of £80,000 to be used under controlled conditions for the economic development of Rabi Island, where at the moment the Banaban community is living."—[OFFICIAL REPORT, 7th June, 1967; Vol. 747, c. 1252.]
Does the same position hold with this renewed offer under this year's Supplementary Estimate? In other words, is the Banaban share of royalty payments subject to review at some subsequent date?
In paragraph 6(b) of the Agreed Minute, which was orginally signed at Wellington on 15th September, 1967, such flexibility seems to be implied and also to be at the discretion of the British Government. But in paragraph 7(h) of the Concluding Statement made by the right hon. the Lord Shepherd on 30th October last, it would seem to be unlikely that any changes would be permitted which would be to the disadvantage of the Gilbert and Ellice Islands Colony. However, since there is the proviso "for the time being" in that paragraph, it might be helpful to know precisely what further financial concessions are contemplated for the Banabans.
My next question concerns the disposal of the £80,000, assuming that it is accepted this time by the Banabans. It would be interesting to know if they have indicated their willingness to do so. Although it is a small sum in these days of Concorde, £80,000 is still a tidy sum in terms, say, of Britain's annual contribution to the invaluable work of the International Planned Parenthood Federation. Furthermore, it will go to people who number at most 2,000, including children, and I think that we should see it as roughly equivalent to at least £150 per family in a part of the world where per capita incomes are not notably high. According to the figures supplied last October by the Government of the Gilbert and Ellice Islands

347
Colony, the Banabans are already in receipt of an annual unearned income of at least 315,000 dollars, so that they are by no means the poorest of the world's under-developed peoples.
I do not want to sound parsimonious, but I think that Parliament should have some idea of what is happening to its money, particularly when detailed auditing appears to have been abandoned. This is a matter of accounting principles and, in view of the oddities of the whole story, it is a principle which we should not ignore. I feel that there is a matter here of wider concern, and it is very much implicit in this grant and the reasoning which seems to lie behind it.
The real dilemma of the Banabans, and of the Gilbert and Ellice Islanders, too, is that they are incapable of achieving political and economic stability and growth if left to themselves. We can shrug off the problem conveniently by pretending that it does not exist or assuming that the number of people involved is so small that we can jog along with the occasional hand-out or bribe to them to be of good behaviour.
But we may be wholly underestimating the future importance of many of these apparently insignificant and remote atolls. The Pacific today is the great arena of confrontation between a resurgent China and a rich but fearful United States. It is a big protective moat, but the lesson of the Second World War was that it could be hopped over. Today China is developing nuclear weapons, and probably intermediate range ballistic missiles. Before long she may well be testing them in the Pacific in the vicinity of these islands that we are discussing, just as the other great Powers, including the U.S.S.R., have been doing in recent years.
It would be foolish to sound too alarmist or to develop the argument at great length, but the prospect of a myriad tiny island states, most of which would be only too vulnerable to political corruption—not to mention Mafia-type activities—is not a pleasing one in these days of strategic reappraisal symbolised in the Sentinel ABM system.
Is Britain to stay indefinitely policing these States and giving them from time to time ex gratia payments, or are we to pull out completely—and, if so, when—
348
from the vast area east of Borneo? Is Australasia or the United States to take over our protective rôle? If not, is it to be the Soviet Union or China? Or should we reappraise the potential rôle of the United Nation
This leads me to consider not so much the speculative problems of military technology in terms of island bases—and there have been reports, although I discount the notion, that the islands may be envisaged as one such island base—but the inevitable growth in the economic importance of the ocean, the sea bed and marine technology in the next few decades. It is true that many of these Pacific islands lack the extensive areas of continental shelf which might one day offer rich yields of minerals and fuels, but they may well offer suitable sites for the new marine farming which is coming as certainly as the world's population is going to mount.
Such islands, small in themselves—Ocean Island is only three miles across—have territorial waters whose significance in future may well be great. They are, I think, likely to become increasingly important for meteorological and marine science stations and for the jumbo jets which will need servicing and refuelling facilities as they cross the Pacific. The supersonics are also likely to follow, for sonic boom reasons, the great ocean routes. Not least, they will become increasingly important as the advent of mass flying brings them into the holiday orbit of affluent Westerners and Japanese as areas where we can all follow Gauguin to the sun and to other delectable objectives.
What I am trying to suggest—and clearly I must not develop these wider themes tonight—is that we need to take a long hard look at the whole future of these dependent territories. I have for some time been urging the Government to define the powers of the Constitutional Commission so that it can consider the future links between the United Kingdom and these small and remote dependencies—
Mr. Speaker: Order. The hon. Member must resist the temptation to go too wide.
Mr. Brooks: I fully accept your point, Mr. Speaker. I will certainly not pursue this particular matter. But it is clear

349
that if we do not, when maters such as this arise where sums of money are allocated as part of an apparent philosophy of dealing with these small islands as client States, raise these more general issues of their political future, perhaps no opportunity will be presented to the House. As I have tried to argue, policy questions of some magnitude are involved in what appear, on the face of it, to be very small and harmless decisions.
10.19 p.m.
Mr. Frank Hooley: I should like to make a brief comment, but, first, I apologise to my hon. Friend for not being present during the first few minutes of his remarks.
I do not want to go into detail because of the late hour and because my hon. Friend is extremely well briefed and has covered all the essential points. My interest arises from a special report from the Methodist Church which is deeply concerned about these people and has made social representations on their behalf. I understand that it is also committed to raise, from the World Methodist Church, a sum of at least £10,000 to help them. My interest in and knowledge of the case derive entirely from that source.
I am also concerned about this problem for the reasons set out in the latter part of my hon. Friend's remarks. I believe that there is a serious general problem about what this country should do in relation to what has been called the micro-States, that is to say this scattering of about 30 dependencies, the residual amount of the erstwhile Colonial Empire, consisting largely of tiny territories, with tiny populations, which, to be realistic, cannot be looked on as potential independent States with viable political or economic futures.
The details of the matter have been gone into with great care by my hon. Friend. I am not sure whether he has quoted any figures for the value of the phosphates, but I obtained some information from my hon. Friend on the Front Bench, and it is rather startling to look at the disparity between the value of the phosphates themselves and the moneys accruing to these people whose land and property this was until they were removed from it, and I believe that theoretically it still is their property.
350
Ten years ago the value of the phosphates was about £1 million. The revenue accruing to the Gilbert and Ellice Islands Administration then was £250,000, while the Banabans got £29,000. In 1967–68, ten years later, the value of the phosphates was £2½ million. The Gilbert and Ellice Islands got nearly £1 million of that, while the Banabans received £162,000. These figures are in Australian £s.
It seems to me that the relationship of the proportions of those sums shows that the Banabans have a substantial case for further consideration and for more financial aid from this country than they are getting at the moment. As these phosphates are by any reasonable standard the property of the people, and while, obviously, the technical expertise which makes them exploitable has to be paid for, nevertheless it seems that the money accruing to the Banabans from the total revenue raised is somewhat tiny in relation to the value of this natural resource.
I underline what my hon. Friend said about the rate of exploitation, which is of serious concern to these people. I confirm the figures given by my hon. Friend of the build up from 450,000 tons to 600,000 tons which has occurred recently, and which is estimated to shorten the life of the industry to about eight years.
One of my major concerns is that we should be aware that the treatment, of peoples in our few remaining colonial dependencies has a direct effect on the general prestige and standing of this country in the world at large, and at the United Nations in particular. We may rightly be proud of the fact that the former Colonial Empire has developed into the Commonwealth, but many members of the United Nations—about 70 or 80 of them—are still extremely sensitive on the subject of colonialism generally, and colonial possessions in particular.
So long as we leave unredressed what may be regarded as legitimate grievances, and so long as we even appear to exploit small peoples who are unable adequately to defend themselves, so long shall we be subject to continual criticism and attack at the United Nations, and from bodies such as the Committee of 24 Some of the criticisms and attacks may be ill informed, unnecessarily vicious and politically stupid, but they will go on until

351
we get down to the serious question of solving these people's problems.
I am not wholly satisfied that the Government have worked out a general forward policy for dealing with this kind of territory. We can probably work out a sensible forward policy only by deliberately offering to co-operate with the international community through the United Nations and perhaps by making use of a part of its machinery, the Trusteeship Council, which may lately have appeared
352
to have exhausted its useful life but which could be given a valuable new lease of life by a calculated act of policy by the Government in saying, "We have these territories which are a residual responsibility and pose certain international and other problems, and we should explicitly like the co-operation and help of the international community in devising for them a viable and a sensible future acceptable to the peoples themselves and to the world." This is essentially my plea, and I am glad to support what my hon. Friend has said.
10.27 p.m.
Mr. John Peel: I had not planned to intervene, but I am probably one of the few hon. Members who knows this colony, and Ocean Island, among the many islands which make up the colony of the Gilbert and Ellice Islands fairly well.
I wanted to make sure that the Under-Secretary would cover one or two points which are particularly applicable. For instance, my memory, which is getting rather old on this matter, is that, when it was realised that Ocean Island would cost a great deal of money to rehabilitate after the phosphates had been dug out, we arranged to provide for the Banabans a much more luxurious island in the South Pacific, in the Fiji group, which could be developed to make a good agricultural community. Certainly, during the years that I was there, there were no serious complaints from the Banabans on that score, so I am rather interested that, many years later, these claims should be coming forward.
The problems of a colony of that size are very difficult, but people do not appreciate the enormous distances involved and the very small size of these islands. In fact, over the years, their peoples have themselves asked us, the administering Power, to help them to go to other islands where there is more room. There has been considerable overcrowding on many islands in the area and we instituted a large resettlement programme at the request of these people, and moved them to these other islands. In some cases, this resettlement was successful, but in others not so successful. In all these cases, although the islands may be overcrowded, certainly older people very much dislike being moved.
It is, therefore, nothing new to these people to move to other islands. My recollection of the removal of the Banabans to the South Pacific is that it was a good move in that the island provided for them, Rabi, was a good and fertile place. I hope that the Minister will explain more fully what is the present position.
As for the rumour that Ocean Island might be used as a harbour by potential enemies, my recollection is that it is one
354
of the worst anchorages one could find, so that the danger which has been rumoured is unlikely to arise.
10.31 p.m.
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. William Whitlock): My hon. Friend the Member for Bebington (Mr. Brooks) began with what one might call a cold financial interest in the matter under discussion; but, being warm hearted, he was quickly carried away by an intriguing story which he was able to unravel about the Banabans.
I wish, first, to comment on the question of accountability which he raised. He was puzzled by the footnote on page 13 of the Supplementary Estimates. It is customary for grants of this nature to be governed in this manner. They are not subject to audit by the Comptroller and Auditor General here. Nor is it the custom for the balances to be subject to surrender. Adequate arrangements are made locally for audit.
The grant is being paid into a fund which is being set up in Fiji for the specific purpose of directing the money towards the proper objectives. It is intended that the money will be under the control of the Governor and that expenditure will be subject to proper audit in the Colony. In view of the circumstances in which the grant is being made, it would be inappropriate for the expenditure to be accounted for in detail here, in London, to the Comptroller and Auditor General. Since the Government have undertaken to provide the round sum of £80,000, it would not be appropriate to surrender any unexpended balance at the end of the financial year.
As my hon. Friend has found, the Banabans are a little-known but very attractive people who have been championed by hon. Members on a number of occasions. They were originally inhabitants of Ocean Island, where phosphate mining began in 1900. From an early date the Administration had been concerned about the future livelihood of the Banabans after mining had removed the top soil. They therefore had the idea of finding a new island for the Banabans and an opportunity occurred during the last war to buy the Island of Rabi, the Fijian spelling of which is, I gather, Rambi. An opportunity to buy this

355
island, which is in the Fiji group, occurred at that time at the low price of £A25,000. The purchase was negotiated by the High Commissioner for the Western Pacific with Banaban funds which he held in trust.
When the Banabans—who, during the Japanese occupation, had been sent to other islands and were used almost as slaves—gathered together again on the Island of Tarawa, they agreed to go to Rabi for a trial period of two years. At the end of that they agreed, by a large majority recorded in a secret ballot, to remain in Rabi. I gather that Ocean Island had become almost a moonscape, an ugly, inhospitable, almost uninhabitable island of coral peaks and rocks and holes left by mining excavations, whereas Rabi was not an atoll but an attractive island capable of considerable development. Quite voluntarily, and by the decision of an overwhelming majority, they decided to stay on Rabi.
The relationship between Her Majesty's Government and the Gilbert and Ellice Islands Colony and that between Her Majesty's Government and the Banabans is different in kind. Her Majesty's Government have a direct constitutional link with the Gilbert and Ellice Islands Colony of which Ocean Island is a part, and have responsibility for the good order and efficient conduct of the administration. The Banabans, on the other hand, are a community living in Fiji, but with certain rights as inhabitants of Ocean Island in the Gilbert and Ellice Islands Colony. This community has the same right of approach to the British Government as other inhabitants of the dependent territories.
My hon. Friend asked whether it is possible that Ocean Island can become independent. I draw his attention to a document which I am sure he has read, and which was placed in the Library after the discussions here in October, 1968, on the Ocean Island phosphates. During those discussions my right hon. Friend the Minister of State for Foreign and Commonwealth Affairs said:
"In this context, I must remind you of a cardinal principle to which Britain has adhered closely in the past in dealing with her dependent territories, and to which we continue to adhere—that the wishes of the people of the territory must be the main guide to action.
356
There are cases where adherence to this principle has led to difficulties for Britain. But the fact remains that we must be guided by the wishes of the people as a whole within the existing boundaries of the territories.
In this case those members of the Gilbert and Ellice Islands Colony Delegation who are elected members of the House of Representatives (including the Chief Elected Member of the Governing Council), and thus representing the people of the Gilbert and Ellice Islands Colony, have made it absolutely clear that they would not agree to the exclusion of Ocean Island from their territory either now, or at any time when the Gilbert and Ellice Islands Colony may reach some status other than its present relationship with Britain.
On these grounds, I have to state that it is not possible for Her Majesty's Government to consider the exclusion of Ocean Island from the Gilbert and Ellice Islands Colony through the grant of independence on Ocean Island to the Banaban community."
It is entirely out of the question to consider Rabi as being excluded from the Fiji group. The Fijians would not consider any severance of the island from Fiji. There would certainly be repercussions from Fiji politicians if we were in any way to suggest that that is possible. There seems no question of an agreement that Rabi should be separated from Fiji and Ocean Island or the Gilbert and Ellice Islands Colony and made into one State.
My hon. Friend spoke about the small islands over whose future there is a questionmark, small islands whose future economic potential is very much in question and whose economic potential may have an importance out of all proportion to their size. As he said, they may have a strategic importance militarily which they do not have now. They may be in demand as sites for space tracking stations, meteorological stations, and so on. He spotlighted the danger that undesirable elements may wish to develop the islands in a way of which none of us would approve. Mafia-type organisations are operating in other parts of the world, but I know of no such instance in the Pacific. All these matters are matters of conjecture. They are matters on which I assure my hon. Friend that the Government will keep a close eye.
These islands may become very important because of the development of the resources of the seabed. We are on the verge of space travel, although we have not yet learned to live sensibly and

357
at peace on our own planet or to develop the resources it offers. Among the resources which we have not yet learned to develop are those of the seabed.
The importance of the resources of the seabed was spotlighted by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs in a debate on 31st October last. On 26th July last there was a full-scale debate on the question of the ocean bed, when it was pointed out that at the United Nations the United Kingdom delegation, along with Malta, sponsored the idea of setting up a committee to study the peaceful use of the seabed for all nations. We have gone to considerable lengths to consult on seabed matters all dependent territories with coastlines, and we pay due respect to their views.
As to the future of the remaining British dependent territories, the British Government stand ready to give independence to dependent territories which want it and which can sustain it. For the others, Britain is willing to work out arrangements appropriate to each territory which will enable it if it wishes to continue in some form of association with Britain. My right hon. Friend the former Secretary of State for Commonwealth Affairs, in his opening address to the Bahamas Constitutional Conference in London in September, 1968, outlined the policy of the British Government towards the dependent territories as follows:
"There still remain a number of British territories around the globe. We do not know what their ultimate constitutional future will be. We have not and never have had any detailed blueprint. A few of these territories may wish to proceed to independence. Others may not. It is always difficult to forecast, but whatever the future holds we in Britain will adhere closely to the cardinal principle to which we have adhered in the past, that the wishes of the people concerned must be the main guide to action. It is not and never has been our desire or intention either to delay independence for those dependencies who want it or to force it upon those who do not."
Now that most of the territories for which independence is the goal have attained it or are close to it, our task is for the most part to work out arrangements for small island territories whose leaders most definitely recognise that they cannot hope to sustain separate sovereign independence and who in
358
many cases wish to retain some form of continuing link with Britain. The problems with which we shall be dealing in future are to some extent different in character from those with which we have been concerned in recent years. Some of the features of the arrangements already adopted in the associated states may be applicable to other British territories. In each instance our policy will remain, as it has always been, to work out arrangements for them in consultation with the representatives of their people which will meet the special circumstances of each individual case.
In this task our minds are not closed to new ideas. We have noted the concern expressed in the United Nations Secretary General's reports for the last two years about the proliferation of independent micro states, and his recommendation that their special problems should be examined. We are glad that there is a growing realisation that independence may not be the solution for very small territories. We have indicated our support for a United Nations study of smaller territories which is due to begin soon.
My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) has mentioned the Committee of 24 and we are well aware of the interest of the international community in decolonisation. Although we may think that some of the discussions of the United Nations have been somewhat unrealistic, we have participated in those discussions and we welcome constructive suggestions from any quarter. At the same time, we have made it clear that responsibility for our territories is ours alone while they remain dependent on us and we cannot shirk that responsibility. With that proviso, we are willing to consider constructive suggestions put forward in the United Nations including that for a special study of the problems of smaller territories.
The reason for making the special grant of £80,000 to the Banabans was stated by my noble and right hon. Friend, Lord Shepherd, in his concluding statement at the Ocean Islands phosphates discussion held in London in October last year. This was printed in a print containing the representations of the Banabans and the Government of the Gilbert and Ellice Islands Colony on the

359
subject of the division of the benefits from the Ocean Island phosphates, a copy of which was placed in the Library of the House at the time. Her Majesty's Government acknowledge a responsibility for assisting the Banabans to develop the Island of Rabi to its fullest potential as the best means of securing the future welfare of the Banaban community.
The Banabans have made claims as to their rights on the Ocean Island phosphates which the British Government cannot accept, for reasons made clear by my right hon. and noble Friend in his statement to which I have referred. I think the following passage from his statement clearly sets out Her Majesty's Government's position:
"I would hope that both the Banabans and the people of the Gilbert and Ellice Islands Colony will accept that in coming to this decision the British Government has balanced the conflicting interests which inevitably arise with objectivity and fairness. The facts of the situation, when it comes to matters of hard financial decisions, must dictate the Government's policy.
The Government has considered from every aspect the Banabans' case for a greater financial income from the phosphates and has taken very seriously the Banabans' declarations of trust in the Government's good faith in deciding this issue. One of the factors which has decided the matter is the Government's sincere belief, based on all the evidence available, that the economic future for the Banabans in Fiji is a good one.
The British Government has on a previous occasion acknowledged a responsibility for assisting the Banabans to develop Rabi to its fullest potential and we still believe that this is the best means of securing the future welfare of the Banaban community.
The British Government therefore believes that everything possible should be done to press forward with a practical approach to the development of Rabi Island. A sound ground plan has already been prepared by experts who went to the island last year under technical assistance arrangements, and I firmly believe that if this can be followed up with the proper energy over a period of time, the future prosperity of the Banabans on Rabi Island can be fully assured.
For these reasons, Her Majesty's Government is prepared to renew the offer of a grant of £80,000 which was made last year, conditionally only on its controlled application to the development of the Rabi Island. Her
360
Majesty's Government have always taken the view that because of the mining of Ocean Island they ought to do their best to help the Banabans to settle on the island of their choice and develop it to its fullest possible potential."
Those were my right hon. and hon. Friend's words at the end of the conference to which I have referred.
My right hon. Friend the Minister of Overseas Development arranged in 1967 for a two-man team to visit Rabi under Technical Assistance arrangements to consider the best means of future development of the island, and a copy of their report also has been placed in the Library. I am sure that my hon. Friend the Member for Bebington has looked at it.
As has been reported to the House previously, the Banabans declined to accept the grant of £80,000 when it was offered to them after their representations made in 1967, but I am glad to say that their representatives have been discussing development projects for the expenditure of the grant of £80,000, made at the October 1968 discussions, with officials of the Fiji Government. I hope that practical steps will soon be taken in the development of the island. My right hon. Friend the Minister of Overseas Development has undertaken to consider any further technical assistance which may be required.
I am satisfied that the Banabans on Rabi will be able to provide for a prosperous future for the community. The Banabans in Fiji are lucky to be residing in a territory which, by Pacific standards, enjoys modest prosperity and has a stable social background, as the hon. Member for Leicester, South-East (Mr. Peel) said. It is true that the phosphate revenue will eventually cease, but even then, provided that the Banabans cooperate in developing Rabi to its optimum extent, they will still have a valuable asset to cushion them against the problems of the future.
Question put and agreed to.
Bill accordingly read a Second time and committed to a Committee of the whole House.
Committee Tomorrow.

CONSUMER COUNCIL MACHINERY
Motion made, and Question proposed, That this House do now adjourn.—[Dr. Miller.]
10.53 p.m.
Mr. William Molloy: In taking this opportunity to emphasise the need to increase public awareness of the Consumer Council's machinery, I realise that the subject covers a number of industries and services, but I shall confine myself principally to the power industries, that is, coal, gas and electricity, adding a word or two about transport.
It is 20 years since we established the consumer consultative machinery for these four major industries, and in this respect, in relation to the principle of public ownership, which I support absolutely especially as regards these industries, there remains a good deal of room for improvement. I hope that this debate tonight, short though it will be, will make its contribution to increasing public awareness of the machinery which exists.
I am sure that my hon. Friend the Parliamentary Secretary, who, I know, is well versed in all the forms of consultative machinery from local government through to national level, will be sympathetic to the points I have to make. What is particularly encouraging to me is that I know that he is very knowledgeable about these things and I think that he will acknowledge that a failure in any of these industries or services—coal, gas, electricity or transport—can, at worst, cause a major crisis, on an intermediate level can create hardship and, when things are not going quite perfectly well, can create a great deal of irritation, since, between them, their products are essential to modern life. It is, therefore, incumbent upon me to outline what I understand to be the consultative machinery.
In the coal industry I understand that there are the Industrial Coal Consumers' Council and the Domestic Coal Consumers' Council. The objective is primarily to consider any matter affecting the sale or supply of coal, coke or manufactured fuel which is the subject of a representation made by consumers
362
or what the Council thinks ought to be considered, and to notify its conclusions to the Minister where action appears to be necessary, and also to consider and report to the Minister on any matter that he might refer to it.
The research departments of the National Coal Board have done a remarkable job in producing new forms of smokeless fuel in such a range and so swiftly. They have made a great contribution not only to keeping our homes warm but also, in conjunction with the Clean Air Act, to keeping the air of our great cities as reasonably clean as can be in this day and age.
It is, therefore, irritating to me when I read or hear ill-informed criticisms of the Board and its research departments about the production of smokeless fuels. Yet, often, when an area has been designated a smokeless zone, and a variety of new grates have been offered, nothing can be more irritating than when, for some reason or other, there is suddenly a shortage of specific fuel for specific grates.
From time to time, hon. Members have submitted to the Department complaints from constituents. This in itself seems to indicate that there is not enough knowledge, even among hon. Members, of the correct machinery which should be used. I confess to guilt in this respect in having sent direct to the chairman of the Board or to the Minister complaints from constituents. But I have often also pointed out to constituents that consumer councils exist to assist them in these matters. People are often amazed to learn that such machinery exists. That is the gravamen of my case.
The same applies in the electricity industry. I understand that each area board has its corresponding Consumer Consultative Council, and that the members of the Council—not less than 20 and not more than 30—are appointed by the Minister of Power as follows:
"… not less than two fifths and not more than three fifths from a panel nominated from members of local authorities in the area by the representative local authority associations; the remainder, after consultation with such bodies as the Minister thinks fit, to represent agriculture, commerce, industry, labour, the general interests of consumers of electricity, and other persons or organisations interested in the development of electricity in the area."

363
That is quite a formidable list. Therefore, the endeavours of this great publicly owned industry are most commendable in theory, but for the housewife, the ordinary home consumer, we have not yet been able to pierce the fog, the blanket of not knowing what machinery exists, so that they can use it to the full, which would be an advantage both to the consumer and the area board.
The area board is compelled, under its terms of reference,
"… to consider any matter affecting the distribution of electricity in the area, includng the variation of tariffs and the provision of new or improved services and facilities within the area, whether as a consequence of a representation or not, and to notify its conclusions to the area board; …"
That alone shows that the general Council has been as wide as possible in laying down its terms of reference to cover every eventuality.
In the gas industry the arrangements are very similar to those I have outlined for the electricity industry. I understand that they stem from Section 9 of the Gas Act, 1948. There is a consultative council for the area of each board. The members—not less than 20 and not more than 30, plus the chairman—are appointed by the Minister of Power; and not less than half and not more than three-quarters from a panel nominated from members of local authorities in the area by the representative local authority associations. In addition, consultations are held with other bodies.
The structure is also similar in the transport industry. Beneath the Nationalised Transport Advisory Council, which advises the Minister on questions relating to co-ordination and so on, there are area transport users' consultative committees which the Minister may establish for such areas of Britain as he may prescribe, on the express condition, however, that there must be one such committee for Scotland and one for Wales and Monmouthshire. I cannot understand why there is not one for England. We should look into this. I can understand the necessity for having such boundaries on what might be described as national lines in view of the particular problems of language in Wales and various other matters. But it is wrong not to have an advisory council or consultative committee for
364
England on its own, since the other two countries have them. Generally speaking, the efforts that have been made in the establishment of the various consultative councils are admirable, but somehow or other they have failed to click.
The Consumer Council has published an admirable work called "Consumer Consultative Machinery in the Nationalised Industries". It is a pity we cannot have a full-scale debate on such a report, rather than me having to cram it into this debate tonight. In the paragraph relating to the public awareness of the Consultative Council, it says that one of the major conclusions
"… which emerged from our field survey was how very limited is the extent to which the general public is aware of the existence of the consultative bodies 12 per cent. only of the sample being aware of the electricity councils, and 12 per cent. of the gas councils. Knowledge of the actual functions of the councils and of the work they are doing on the consumer's behalf must, therefore, be more limited still."
This should be a matter of grave concern to my hon. Friend and I am sure that he will treat it as such. Surely the answer lies in more publicity? Will he consider advertising the functions of the various consultative committees in local newspapers, on local radio and T.V.? There could be a number of experiments in parts of the country, results could be examined to see if public awareness has been increased, and the experiment could be stepped up.
I acknowledge the efforts made by various councils to increase public awareness, but that quotation shows that the efforts made through leaflets and handbooks have not proved successful. We should tell people that this is not just a method of advancing complaints. The public should be encouraged to submit ideas, too. For people involved in top-line policies, small suggestions can prove to be very useful. Perhaps leaflets could be exhibited on works' notice boards, and lectures and talks could be inaugurated on the reasons for such machinery. Film shows are a possibility. There is much advertising in the cinema, some interesting, some humourous. Perhaps we could do something along these lines?
Will my hon. Friend also consider increasing the liaison of our councillors and Members of Parliament with the area

365
boards and the consumer councils? There are many more things I would like to say, but my time is running out.
I ask my hon. Friend to take this matter seriously and to start a new drive to increase public awareness. He might even find an imaginary inflammatory document to hit the headlines and create excitement, thereby contributing to the increase of public awareness. If a programme such as I have outlined is not undertaken there is a danger of a first-class idea becoming nugatory and withering away.
My hen. Friend might also consider a conference between the three big industries—and he might pass this on to his right hon. Friend the Minister of Transport—to examine ideas for increasing public awareness of the consultative machinery.
One of the principles of public ownership is that the public not only own the industries, but the industries function on their behalf, and one of the bulwarks of modern society is that the public should be entitled to submit complaints, and should take an interest in how the industries work. With interest will come understanding; with understanding will come efficiency; with efficiency will come satisfaction.
11.12 p.m.
The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): My hon. Friend the Member for Ealing, North (Mr. Molloy) was kind enough in his opening remarks to refer to my interest in this subject. I assure him that since I came into the House and was appointed Parliamentary Secretary to the Ministry of Power, two years ago, my interest has not flagged. I hope that I have done something, perhaps without publicity, to stimulate interest within the purview of my Department, and the industries on which he has concentrated.
I have recently, without prior notice, sat in on a number of consultative councils in the electricity and gas industry, and also on district committees, which operate under the umbrella of the consultative councils and to which my hon. Friend did not refer. While it is not for me to discuss here my reactions in detail to those meetings, I found them interesting End I have picked up a number of ideas which I shall pursue in my Department.
366
As I have said elsewhere on a number of occasions, we have embarked upon an era of consumer politics in a wide range of activities, not only the area which is the concern of the Ministry of Power. This subject will be at the centre of politics in the years to come. It is to be seen in housing, urban renewal, education and consumer products purchased in the stores, as well as in our industries.
It is right, at the beginning of my remarks, for me to give due credit to the many people who, over the last 20 years, have given voluntary public service throughout the country to the consultative councils and district committees under them in the electricity and gas industries and, to a degree, in the coal industry. Indeed, I could make the same remarks about those industries which do not come under my Ministry.
Many people have given excellent service, and, whatever examination one makes of the consultative machinery in the electricity, gas and coal industries, and whatever constructive criticisms which may be made of that machinery, one aspect of which we are discussing this evening, it is right to say that a lead has been given which has yet to be followed over a large part of our economy in other spheres of activity. Whatever advances may be made in the future, most of our economic activities have yet to catch up with the efforts of this consumers' representation on a formal basis which has been established over the past 20 years.
I listened with interest to the various suggestions made for extending publicity in this area. My first reaction is that I accept fully that the consultative councils in these industries are not as widely known as they could and should be. I agree very much that it is important for consumers to be made more aware of the existing machinery to protect their interests and of the proper places for them to lodge complaints and ideas.
Naturally, the most important requirement is good management customer relations, whereby people have an effective way in which they can make representations and get matters seen to promptly at managerial level. In that connection, the consultative machinery should be seen, not exactly as a long-stop, but as a reserve channel through which matters

367
can be investigated further if it is felt that complaints or views have not been dealt with adequately by the management concerned.
Over the last two years or so, I. have taken every opportunity possible to see for myself what is going on in the country. In my view, the lack of awareness of these organisations is due to the fact that, over the 20 years of these industries under their present set-up, there has been a steady improvement in relations between the managements and their customers. However, I hope that I do not sound smug about that, because I agree that there is a need for greater awareness.
I want to go over a number of the matters that have been activated by the consultative councils in the electricity and gas industries chiefly, though to a lesser degree in other spheres with which my Department is concerned. My hon. Friend will find that a number of his points have been picked up already, though perhaps not to the extent that he and I would like, or that members of the consultative councils would like. This question of awareness and the need for publicity is one that I have repeated constantly in my discussions with representatives of these bodies.
On the point made in the Consumer Council's Report, the same point was made subsequently in a report about which I am sure my hon. Friend will know but to which he did not refer. It is a publication by the Co-operative Party entitled "Public Monopoly and the Consumer", issued in the latter part of last year. A good deal of consideration has been given to publicity and awareness by the consultative councils since the point was made in those reports a year or 18 months' ago. Quite a lot has been done since.
Arrangements vary between councils, but there are displays of posters and leaflets in showrooms. If hon. Members, members of local authorities or members of the public, note that these are not on display, they are welcome to make the information known to us, and we will get in touch with the appropriate showrooms and do our best to ensure that adequate publicity is given to the posters and
368
leaflets which are available for display in showrooms.
These leaflets and posters have been made available recently to the G.P.O. and they are gradually being displayed throughout the country in various post offices. An attempt is being made by many of the consultative councils to get local authorities to display posters and leaflets in such places as public libraries, town halls and other local offices. The success of these efforts varies considerably, but there is this constant pressure. The more local representatives, Members of Parliament, councillors, as well as the Ministry and the people in the consultative councils, can bring to the notice of local authorities and other similar bodies, including local post office managers, the need to put these items on display the better.
These leaflets and posters are being produced and distributed. Some boards, as a result of the representation of their consultative councils, have issued notices when the bills go out so that members of the public know that, if they are not satisfied with consideration of their complaints or queries by the management, they can go to the consultative councils to pursue the matter further because they have the addresses and the names of people distributed to them.
I understand that a number of councils distribute their annual reports and other literature to the local Members of Parliament concerned. Others have liaison with the local citizens' advice bureaux, the welfare departments, and the local authorities. Talks are being given. In certain cases councils make a point of holding meetings in different parts of their area during the year. I have seen something of this recently, having sat in on meetings at various addresses within the Board areas.
I do not mean that it is common practice to find a high standard everywhere. There is need to maintain pressure and interest in the publicity to which my hon. Friend has referred, but the councils are prepared to consider new methods. I am sure that they will read the report of tonight's short exchanges between my hon. Friend and myself and will take note of ideas. I will certainly read HANSARD to see whether there are any particular

369
points which we can put to the chairmen of the consultative councils at Ministerial level.
My hon. Friend referred to radio and television, broadcasts. There have been such broadcasts recently in some areas. There have also been discussions on television between secretaries and chairmen of some of the consultative councils. There have been discussions on radio and on television in certain areas of the very Consumer Council Report referred to by my hon. Friend.
370
I have already mentioned that standard posters have recently been produced and are being circulated throughout the country. There are other—
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 twenty-three minutes past Eleven o'clock.

MINISTRY OF POWER
  Steel Industry (Fuel Contracts)
  Steel Industry (Fuel Contracts)
  Nuclear Power Stations
  Nuclear Power Stations
  Steel Industry
  Steel Industry
COAL
  Coal-Fired Power Stations (Cost)
  Coal-Fired Power Stations (Cost)
  Open-cast Coalmining (Acklington)
  Open-cast Coalmining (Acklington)
ELECTRICITY
  Electricity Industry (Reorganisation)
  Electricity Industry (Reorganisation)
  Domestic Consumers (Fixed Charges)
  Domestic Consumers (Fixed Charges)
  Generating Capacity
  Generating Capacity
GAS
  Gas Industry (Reorganisation)
  Gas Industry (Reorganisation)
  Natural Gas (Scotland)
  Natural Gas (Scotland)
LOCAL GOVERNMENT
  Parliamentary Commissioner (Powers)
  Parliamentary Commissioner (Powers)
  Water Supplies, Huddersfield (Contamination)
  Water Supplies, Huddersfield (Contamination)
HOUSING
  Housing Subsidies (Norwich)
  Housing Subsidies (Norwich)
  Housing Cost Yardsticks (Review)
  Housing Cost Yardsticks (Review)
NATIONAL FINANCE
  Income Tax (Visitors' Earnings)
  Income Tax (Visitors' Earnings)
  Alcoholic Drink (Consumption)
  Alcoholic Drink (Consumption)
  Duchy of Cornwall
  Duchy of Cornwall
  Public Works Loan Board (Interest Rates)
  Public Works Loan Board (Interest Rates)
  Company Financing (Funds)
  Company Financing (Funds)
  Purchase Tax (Boys' Shirts)
  Purchase Tax (Boys' Shirts)
  Stamp Duty
  Stamp Duty
  Income Tax and Surtax (Evasion)
  Income Tax and Surtax (Evasion)
  Road Licence Fee
  Road Licence Fee
FOREIGN AND COMMONWEALTH AFFAERS
  Greece (Membership of Council of Europe)
  Greece (Membership of Council of Europe)
  Czarist Debts
  Czarist Debts
CIVIL SERVICE
  Government Offices, Scotland
  Government Offices, Scotland
  CENTRAL STATISTICAL OFFICE (MINISTERIAL RESPONSIBILITY)
  CENTRAL STATISTICAL OFFICE (MINISTERIAL RESPONSIBILITY)
  INVERURIE RAILWAY WORKSHOPS (PROPOSED CLOSURE)
  INVERURIE RAILWAY WORKSHOPS (PROPOSED CLOSURE)
  TREASURY (TELEPHONISTS' DISPUTE)
  TREASURY (TELEPHONISTS' DISPUTE)
MINISTRY OF DEFENCE
  Highland and Lowland Training Depots (Permanent Staff)
  Highland and Lowland Training Depots (Permanent Staff)
ECONOMIC AFFAIRS
  Hunt Committee (Report)
  Hunt Committee (Report)
  Ministerial Engagements
  Ministerial Engagements
EMPLOYMENT AND PRODUCTIVITY
  Local Offices (Christmas Holiday)
  Local Offices (Christmas Holiday)
  Armstrong Patents (Pay Dispute)
  Armstrong Patents (Pay Dispute)
AGRICULTURE, FISHERIES AND FOOD
  Annual Price Review (Wages Award)
  Annual Price Review (Wages Award)
HOME DEPARTMENT
  Riding Establishments (Licensing)
  Riding Establishments (Licensing)
  Banks, West Norwood (Security)
  Banks, West Norwood (Security)
  House of Lords Reform
  House of Lords Reform
POST OFFICE
  Wages, Investment and Capital Requirements
  Wages, Investment and Capital Requirements
TELEPHONE SERVICE
  Treasury (Telephonists' Dispute)
  Treasury (Telephonists' Dispute)
PUBLIC BUILDING AND WORKS
  Government Offices (Open-plan System)
  Government Offices (Open-plan System)
  St. James's Palace (Clock)
  St. James's Palace (Clock)
  Railings, Piccadilly
  Railings, Piccadilly
SOCIAL SERVICES
  Influenza Vaccine
  Influenza Vaccine
  Prescription Charges (Schoolchildren)
  Prescription Charges (Schoolchildren)
  Surgery Equipment (Loans)
  Surgery Equipment (Loans)
HOSPITALS
  Physiotherapy
  Physiotherapy
SCOTLAND
  Brucellosis
  Brucellosis
  Woodpigeons (Trials of Stupefying Baits)
  Woodpigeons (Trials of Stupefying Baits)
  Teachers (Registration)
  Teachers (Registration)
  Rabbit Clearance Societies
  Rabbit Clearance Societies
  Housing (Rents)
  Housing (Rents)
  Rating
  Rating
  Prisoners (Parole)
  Prisoners (Parole)
  Royal Aircraft Establishment (Non-military Research Programmes)
  Royal Aircraft Establishment (Non-military Research Programmes)
TECHNOLOGY
  National Physical Laboratory (Research Programme)
  National Physical Laboratory (Research Programme)
  Atomic Energy Authority (Research Establishments)
  Atomic Energy Authority (Research Establishments)
BOARD OF TRADE
  Shipbuilding Industry (Imports)
  Shipbuilding Industry (Imports)
AVIATION
  Travel Agents (Foreign Airline Bookings)
  Travel Agents (Foreign Airline Bookings)
SHIPPING
  Trawlers (Safe Working Practices)
  Trawlers (Safe Working Practices)
ROADS
  M1 and M45 (Direction Signs)
  M1 and M45 (Direction Signs)
  Road Research Laboratory (Programme)
  Road Research Laboratory (Programme)
TRANSPORT
  River Waveney, Beccles-Bungay (River Craft)
  River Waveney, Beccles-Bungay (River Craft)
WALES
  Transport Facilities, Abertillery
  Transport Facilities, Abertillery
  Countryside Commission (Committee for Wales)
  Countryside Commission (Committee for Wales)
  Road Links, Midlands—South Wales
  Road Links, Midlands—South Wales

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

KENT COAL MINES
VISCOUNT MASSEREENE AND FERRARD: 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 is the policy of the National Coal Board in relation to the Kent coal mines.]
THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM): My Lords, if the Kent coalfield can produce at an acceptable level of cost, the National Coal Board see no reason why total production should not remain at about the current level, as there are markets available for the coal. At present, it is only at Chislet that results are such as to put the future of the pit in jeopardy, and the unions have been informed. There have been difficulties at Tilmanstone in connection with water pollution, but the National Coal Board have recently announced that they are to spend a substantial sum on constructing a pipeline to carry the surplus water to the sea.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I thank the noble Lord for that reply. Could he say how soon the Coal Board will know when we have an acceptable level of cost?—because there appears to be a great deal of uncertainty regarding the Kent coalfield, and men have been leaving the coalfields.
LORD STONHAM: My Lords, the Kent coalfield has lost money every year since nationalisation, and last year it lost £1·7 million, which was its greatest loss. My first Answer made clear that production is continuing, and so far as the four collieries in the Kent coalfield are concerned the National Coal Board have no plans for the closure of Tilmanstone, Betteshanger and Snowdown. The only doubt is with regard to the future of Chislet. No firm decision has yet been taken, but its prospects will be reviewed when the results of the period ending next March are known.

TURNHOUSE AIRPORT DISPUTE
2.37 p.m.
LORD KILMANY: 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 progress has been made towards settling the dispute which has caused B.E.A. to withdraw all services to and from Turnhouse aerodrome.]
LORD BESWICK: My Lords, B.E.A. were able to restore their services to Dyce

3
on Thursday, January 30, and restored the Edinburgh services from yesterday morning.
Her Majesty's Government are hopeful that discussions now taking place will lead to a satisfactory ending to this dispute, which has inflicted such serious inconvenience to passengers and could have caused damage to the Scottish economy.
LORD KILMANY: My Lords, while welcoming the setting up of the Working Party, and wishing it well in its efforts, may I ask the noble Lord why it was not set up sooner? Is it not a fact that this dispute could have been foreseen, and indeed was foreseen, some little time ago? Is the noble Lord aware that there is much resentment at the dilatory handling of this matter by Her Majesty's Government?
LORD BESWICK: My Lords, I hope the noble Lord will forgive me if I say that it is always easier to say that these things could have been settled more easily if one has no responsibility for their settlement. This was a complicated matter. We now have three different kinds of authorities for aerodromes, and getting some sort of standardised and uniform rates throughout the aerodrome industry is not easy.
LORD TREFGARNE: My Lords, could the noble Lord say what progress has been made in transferring the control, or at least the management, of Turnhouse Aerodrome to the British Airports Authority?
LORD BESWICK: No, my Lords. That is a quite separate Question, and if the noble Lord will put it down, I will try to give him an Answer.
BARONESS HORSBRUGH: My Lords, could the noble Lord say why so many lightning strikes took place, and why people were even taken off aeroplanes at the last moment, when they were all ready to go, and yet nothing was done until B.E.A. shut the whole place?
LORD BESWICK: My Lords, the reason there were so many lightning strikes was that the workers concerned thought this was the best way of bringing their alleged grievances to the general notice. There was some criticism of B.E.A. for closing down; but, in the end,
4
I think the noble Baroness will perhaps agree that this did enable us to get, not of course a conclusion, because we have not yet concluded the matter, but to get together to see whether we could work out a proper agreement.
LORD STRATHCLYDE: My Lords, is it not a fact that this dispute arose because those at Edinburgh Airport receive less remuneration than those summarily employed at other airports? Why should there not be a level of remuneration suitable to all airports?
LORD BESWICK: My Lords, there are now three different authorities for aerodromes. We have the British Airports Authority. There are the local authorities which are aerodrome owners; and there are other aerodromes which are under the control and ownership of the Board of Trade. Different conditions and factors exist at all these airports. Some have pension arrangements, and some have not. As I have said, trying to get fair play all round is a complicated question and I hope that the Working Party will come up with a satisfactory Report.
LORD BALFOUR OF INCHRYE: My Lords, while I admit that an industrial difference did exist, was it not vindictive of the leaders of these unofficial strikes to wait until an aircraft was actually overhead, and then strike so that the aircraft could not land? Surely, such conduct as that cannot be condoned in any industrial dispute.
LORD BESWICK: My Lords, I note what the noble Lord says, but I do not think I should be helping the sort of atmosphere that we want if I started calling some of the parties to the Working Party that is now set up vindictive.
LORD TREFGARNE: My Lords, is it not possible to amend the service contracts of these gentlemen to prevent them from taking action which is prejudicial to the safety of the aircraft?
LORD BESWICK: My Lords, it may well be that if we tried to do something like that it would cause even greater trouble in the future.
THE EARL OF DUNDONALD: My Lords, can the Minister say why British United Airways managed to maintain their services, and why B.E.A. could not?
LORD BESWICK: My Lords, I am not aware of the difficulty here, but I should have thought it was possibly because they had fewer services and were able to look after their passengers with fewer personnel.
THE EARL OF SELKIRK: My Lords, can the noble Lord say whether the safety of aircraft was ever endangered or whether it was only a case of gross inconvenience to passengers?
LORD BESWICK: My Lords, I should have said that the decision of B.E.A. to suspend services had in mind both factors: both the inconvenience to passengers and the question of safety.
THE MARQUESS OF ABERDEEN AND TEMAIR: My Lords, can the noble Lords say which authority controls Dyce Airport, Aberdeen?
LORD BESWICK: My Lords, both Dyce and Turnhouse, as I understand it, are Board of Trade responsibilities.

RHODESIA
2.44 p.m.
LORD SILKIN: 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 what is holding up the continuation of the negotiations with Rhodesia.]
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD SHEPHERD): My Lords, Her Majesty's Government have made it clear to Mr. Smith and his colleagues, and also to the Commonwealth Prime Ministers at their recent Meeting, that the "Fearless" proposals remain on the table. They have also made it clear that it is for Mr. Smith to make the next move.
LORD SILKIN: My Lords, in view of the great importance of this matter, is it really necessary that we should stand on our dignity? Surely it is much more important to come to a settlement than to decide who takes the next move.
LORD SHEPHERD: My Lords, I am surprised that the noble Lord, with his knowledge of this matter, is not himself
6
aware of the repeated initiatives that have been taken by Her Majesty's Government to seek a settlement. We have made many proposals to the Smith regime. They have been rejected, and no alternative proposals have been put in their place.
LORD GRIMSTON OF WESTBURY: My Lords, may we take it from the noble Lord's reply that Her Majesty's Government do wish for a settlement, or are they just prepared to leave matters as they are?
LORD SHEPHERD: My Lords, Her Majesty's Government desire a settlement, but to get a settlement there need to be two parties, and, as I have said, the other party have not yet been willing to put alternative proposals to us if they, as they do now, reject our own.
LORD BYERS: My Lords, would the noble Lord not agree that it is not just a settlement that is wanted, but a settlement that is just to all the citizens of Rhodesia?
LORD SHEPHERD: And also honourable, my Lords.
LORD SILKIN: 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 what were the matters still unresolved in the most recent negotiations with Rhodesia.]
LORD SHEPHERD: My Lords, my right honourable friend the Minister without Portfolio made a Statement in another place on November 18 last. It was not repeated in your Lordships' House since this House was not then sitting. The Statement was long and detailed, so for the convenience of your Lordships I will circulate it In the OFFICIAL REPORT.
LORD SILKIN: My Lords, that is not very helpful to me in putting a supplementary. Should I be right in saying that the only issue between the parties is the additional safeguard which Her Majesty's Government have been insisting upon; namely, the question of an appeal to the Privy Council?
LORD SHEPHERD: My Lords, I hope my noble friend will not think it is the

7
duty of a Minister to make available opportunities for supplementary questions, but if my noble friend will look at the Statement that was made by my right honourable friend he will see that, apart from the point that he has just referred to, which is perhaps the most important, there are at least six or seven other points to which we attach great importance and to which we have not been able to find a solution.
LORD BROCKWAY: My Lords, may I ask my noble friend this question? Is not the difficulty here that Mr. Smith is insisting that any safeguard shall be within the Parliament elected by a minority of the people, and does not all experience show that such a safeguard would be ineffective once a Government obtains independence?
LORD SHEPHERD: My Lords, I believe it is the will and desire of certain of the main political Parties in this country that any safeguard should be a real safeguard. This is what we are seeking to achieve, but so far we have not been able to achieve it.
LORD SALTOUN: My Lords, may I ask Her Majesty's Government whether it has ceased to be the duty of Her Majesty's Government to answer a Starred Question which has been properly put by the permission of the House? Has it ceased to be a duty to provide an Answer?
LORD SHEPHERD: My Lords, I have a duty, clearly, to answer Questions that are on the Order Paper, but I think I also have to take into account the convenience of your Lordships' House. As I said, this was a long, detailed Statement. I will lay it in the OFFICIAL REPORT and there will then be an opportunity for any noble Lord to raise further questions.
Following is the Statement referred to:
"As my right hon. Friend the Prime Minister informed the House on 1st November, I left for Salisbury on that date to assist in the consideration by Mr. Smith and his colleagues of the proposals for a settlement which we put to them on board H.M.S. 'Fearless' set out in Command 3793.
"I was in Salisbury from 2nd to 9th November; and again from 13th to 16th November after visiting Zambia, Malawi, Uganda, Tanzania and Kenya and having conversations with the Heads of State of these countries.
"While in Salisbury, my delegation and I held nine full-scale meetings with Mr. Smith and certain of his colleagues and advisers, in addition to a number of informal exchanges of view. No time limit was set for my visit and I left only when both sides were agreed that no useful purpose could be served by my staying longer.
"Together with my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs, I saw representatives of many different sections of Rhodesian opinion, ranging from Mr. Nkomo and Mr. Sithole to the Chairman of the Rhodesian Front.
"Throughout my talks with Mr. Smith I stood firmly by the 'Fearless' proposals, and I made it clear to him at all times that any settlement must be fully consistent with the six principles. Some progress was made on certain points, on the basis accepted on both sides that agreement on them would be contingent on an overall agreement being reached.
"But this measure of understanding was overshadowed by the number and weight of the points on which we were not able to reach even a contingent agreement of that kind. Mr. Smith and I agreed that we had reached a stage where it would be right for the public to know the facts about what still divided us and what, after prolonged talks, we had found ourselves unable to resolve. I also listed to Mr. Smith the items which I told him I felt obliged to explain to the House. I think that the House has a right to know these and I apologise for taking up time by giving them in detail.
"The first of these was, of course, a second safeguard for unimpeded progress to majority rule and against retrogressive amendments of the Constitution. We made it clear in the Fearless' White Paper that we were prepared to consider alternative methods to achieve this, although we believe that the Judicial Committee of the Privy Council would provide the best instrument.
"I must emphasise that, to be acceptable to us, any alternative method must be fully as effective as that provided by the Judicial Committee. Mr. Smith, however, showed no interest in the other forms of judicial safeguards mentioned by my right hon. Friend the Prime Minister in this House on 22nd October.
"In these circumstances, I put forward a further alternative proposal for a second safeguard of a different character, which would not only begin in Rhodesia but would also leave the last word with the Rhodesian people. Under this proposal the Judicial Committee of the Privy Council would have the task of deciding whether a proposed amendment was of such a kind that the second safeguard should be brought into operation. This question would only come before the Judicial Committee on an initiative either by an agreed number of members of the Rhodesian Parliament, or by the Constitutional Council in Rhodesia.
"If the Judicial Committee considered that the second safeguard should be brought into operation, my proposal would then place fairly and squarely in the hands of the people

9
of Rhodesia themselves, including the African majority, the responsibility and the power to decide whether the amendment should be proceeded with in the Rhodesian Parliament or not. They would take this decision in a referendum of the A and B roll electors voting separately.
"This seemed to me both to provide the necessary safeguard for the first and second principles and to avoid the objection which had been raised against our earlier proposal—namely, that it placed the final responsibility for what was in essence a political decision in the hands of a judicial body which did not form part of the political system of Rhodesia. But Mr. Smith told me that he totally rejected the principle on which this alternative proposal was based. I asked Mr. Smith whether he had any proposals of his own for a second guarantee. But he had none to offer.
"This is a fundamental point of difference between us. But it is not by any means the only important issue of principle on which we differ.
"For example, there is the question of the jurisdiction of the Judicial Committee of the Privy Council sitting as an ordinary court of law, as opposed to acting as a second safeguard. Mr. Smith and his colleagues would not commit themselves to agree to the Judicial Committee of the Privy Council continuing, as in the 1961 Constitution, to hear appeals in such cases.
"Other major disagreements also remain. The chief of them, taken in the order of the Fearless' proposals to which they relate, are as follows.
"First, the regime wish to extend the period under the 1961 Constitution for which the legislature can approve the proclamation of a State of Emergency. This, as the House will know, is a period of three months at a time.
"Hon. Members in all part of the House sill share our deep concern over a proposal which would mean lengthening the period for which Rhodesian citizens would be held in detention without charge or trial, and without the Rhodesian Parliament having the opportunity to scrutinise the need for the State of Emergency and, if it thought proper, to end it.
"Secondly, the régime wish to alter the composition of the legislature as proposed in the 'Fearless' document. While accepting a blocking quarter of directly and popularly elected Africans, the régime wanted either fewer elected Africans in the Senate or else more A roll seats in the Lower House and more European seats in the Senate. Again, we could not accept this.
"Thirdly, the régime wished to balance an extension—as in both the 'Tiger' and 'Fearless' proposals—of the B roll franchise by an alteration of the present arrangements for cross-voting. Their suggestion was that the proposed extension of the B roll franchise should be accompanied by a reduction in the existing value of B roll votes cast in elections in A roll scats. That value is at present 25 per cent. Their proposal was that it should be reduced to 10 per cent.
"This may seem to be a complex and technical issue. But its essence, I ought to explain to the House, is that it would postpone the date when majority rule might conic about. Obviously, we could not agree to such a proposal.
"Fourthly, the régime wished to eliminate the 'delimitation' formula which is also included in both the 'Tiger' and 'Fearless' propopsals. This provides that as the number of Africans on the A roll increases, the Africans' chances of capturing A roll seats should increase proportionately.
"Fifthly, the regime wished to extend the criteria which the Judicial Tribunal should apply when considering whether detainees and restrictees should be released to take part in the Test of Acceptability. The 'Fearless' proposals already cover cases where the Tribunal is satisfied that the person concerned would himself be likely to commit, or to incite or conspire with others to commit, acts of violence or intimidation.
"This is an adequate safeguard for the preservation of public order. The régime wanted to add to this case where, without any guilt on the part of the individual concerned, others might respond with violence to his release. This again, we could not agree to.
"Sixthly, there were important differences between us over the treatment of, those Rhodesian public servants who, since I.D.I., have felt bound to leave Rhodesia in order to remain loyal to the Crown. We felt that, as part of the necessary process of wiping the slate clean, if a settlement were reached they should have the choice of reinstatement or compensation. Mr. Smith said that he could not possibly agree to their reinstatement, although compensation was another matter.
"Each of these points, taken individually, is important. But more significant still is that all of them taken together indicate that the régime are not at this stage ready to commit themselves to the necessity of accepting majority rule except in an impossibly remote and indefinite future.
"I do not want to be unfair to Mr. Smith on these points. He did say that he believed that if it were possible to reach agreement on the question of the second safeguard our differences on the other points which I have mentioned could be quickly resolved. That may or may not be so. In so far as Mr. Smith meant that he would expect us to give way on them, I made it absolutely clear to him that there could be no question of our doing so. I cannot speak for his own readiness to change his position on them. I can only tell the House, as I have sought to do, the position he took on them when talking to me.
"To sum up, my discussion with Mr. Smith showed, in the words of a Press statement issued before I left Salisbury, that there remains fundamental disagreement on several major matters of principle. We both felt that a prolongation of my stay would not enable us to resolve that disagreement. So I have come back to report to my colleagues and to the House how things stand.
"Nevertheless, the proposals in our 'Fearless' White Paper and the alternative suggestion in the second safeguard which I put to Mr. Smith in Salisbury remain on the table for consideration, for discussion and, I would hope, for acceptance when reflection in Rhodesia has brought wiser counsel. Meanwhile, of course, sanctions will continue, together with all the other consequences that have flowed from illegality.
"My report, I recognise, is a gloomy one. I myself found the last fortnight disappointing and saddening. So fair an opportunity has been turned down that, I am afraid, I could not feel otherwise. But to repeat what I have said before: we for our part are not slamming the door, and perhaps one day the response from the other side of that door will be more constructive than it has so far been."

FOREIGN COMPENSATION BILL
2.48 p.m.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT): My Lords, I beg to move that this Bill be now read a second time. The primary purpose of the Bill is to enable assets in this country of persons formerly resident, or carrying on business in the Baltic States and in certain other territories, ceded to the Soviet Union by Finland, Poland, Czechoslovakia and Rumania during and after the Second World War (and described in the Bill as the "ceded territories") to enable these assets to be disposed of so that compensation can be paid for losses suffered by British persons and interests in those regions. The Bill is the final stage in a somewhat complicated series of events extending over nearly thirty years and, if it is to be seen in perspective, I must ask the House to bear with me while I go over a little of the history concerning the former Baltic States from which by far the greater part both of the assets and of the claims arises.
In the summer of 1940 the Baltic States came under considerable Soviet pressure and to a large extent ceased to be free agents. In July of that year far-reaching measures of nationalisation were passed and British property in the Baltic States was seized without compensation. The United Kingdom Government of the day protested to the Baltic Governments against these measures and, when the Soviet State Bank tried to secure possession of the gold held by the central banks in London, the gold was blocked by Her Majesty's Government under wartime
12
powers in order, as was made clear at the time, to safeguard British interests. In August, 1940, the Baltic States were formally incorporated in the U.S.S.R. and their Governments ceased to exist. At the same time their central banks were absorbed into the Soviet banking system and responsibility for the external debts of the Baltic States was repudiated, including three external loans—the Riga Loan, the Estonian Loan and the Vilna Loan—all of which had been raised in the City of London. In the following year, 1941, the Baltic States were overrun by the Germans and both the gold and other assets in this country came under the Trading with the Enemy legislation.
At the end of the war, after the reoccupation of the area by the U.S.S.R., the Soviet Government, who were recognised by Her Majesty's Government as the de facto but not the de jure Government of the region, put forward claims to the gold on the basis of purchase, and the assets on the ground that, as a matter of municipal law in those areas, the Soviet-controlled enterprises had become the successors of the former Baltic concerns. Her Majesty's Government, on the other hand, were claiming from the Soviet Government, as the de facto Government of the area, compensation in respect of the British interests which had been dispossessed, and this was the substance of the dispute. Many years of diplomatic correspondence ensued and it was not until 1959 that the then British Administration and Soviet Government agreed to hold negotiations to cover the various claims and counter-claims. The choice at that time was either to proceed by way of negotiation with the only Government in the area, with the prospect at the end of some sort of off-setting arrangement; or to leave the assets inviolate, and by the same token to leave the British claims unsatisfied, for an indefinite period, by which I mean until such day as Baltic States might again emerge, with whom the question could be discussed. A third possibility was to distribute the assets unilaterally; but to have done so would have involved accepting a considerable risk of retaliation. The British Government at that time, that is, 1959, chose to enter into negotiations with the U.S.S.R. and, with their clear duty to the British claimants, I do not see how they could have done otherwise.

13
To prepare for the detailed negotiations, an Order in Council was made in 1959 providing for the registration of claims by the Foreign Compensation Commission and our claims were then submitted to the Soviet Government. It was not, however, until 1965, six years later, after Her Majesty's present Government had taken office, that it was possible to begin detailed negotiations. Neither side accepted liability as a matter of law and progress towards agreement on the existence and value of the assets claimed on either side was slow. The principal asset claimed by the Soviet Government was of course the gold, the weight of which was known to them and which when it was sold in June, 1967, realised £5·8 million. In all, the Soviet side were claiming £10 million. The British side were claiming £15 million, including some arrears of interest, but I must emphasise—and this may be an important point in your Lordships' consideration of the Bill—that this represents simply the sum of the values put upon their claims by the individual claimants themselves and perhaps some of them were, as sometimes happens in these cases, somewhat inflated. Certainly the Soviet side thought so.
By the end of 1966 we were convinced that the only hope of breaking the deadlock was to seek agreement on a basis which would mean that each side, without admitting liability, would undertake not to pursue its claim against the other. This the Soviet Government would not accept, and in monetary terms the respective positions of the two sides were still far apart. But during Mr. Kosygin's visit to this country early in 1967, agreement was reached and announced on February 12, on the basis that each side undertook not to pursue further its claims, but with the payment by the British Government, out of the assets, of the sum of £500,000 in the form of consumer goods additional to Russian net purchases under the current five-year trade agreement. The settlement preserved the point of principle that we did not recognise Soviet title to any part of the assets and it remains our position that the Soviet Government is recognised as the de facto but not the de jure Government of the area. In the Government's view the payment to the Soviet Government of this small proportion of the assets which we hold was a necessary but worthwhile con
14
cession to achieve a negotiated agreement, which would give a firm legal basis for their distribution and avoid the risk of the repercussions which would certainly have followed on a decision to distribute them on a unilateral basis.
The settlement of February 12, 1967, provided for the formulation of the terms of the settlement and this led, not without further difficulty, to the Anglo-Soviet Agreement of January 5, 1968, to which reference is made in the preamble to this Bill. Many noble Lords will be familiar with the terms of this Agreement and I do not think that it is necessary for me to go through them in detail. By Article 2, the Soviet Government undertook not to pursue its claims to assets in this country with which we are concerned in this Bill; and by Article 3 the Soviet Government is to be solely responsible for the settlement of claims by its nationals. Article 5 contains the provisions about the payment of £500,000 into a special account with the Bank of England one week after signature of the Agreement.
All this is the background to the Bill which is before us to-day. The primary purpose of the Bill is contained in Clause 1 and in subsection (2) of Clause 2. The broad effect is quite simple. Clause 1 would enable the Custodian to pay over to the Foreign Compensation Commission proceeds of assets which are "former property" of a Baltic State or ceded territory. The expression "former property of a Baltic State or ceded territory" has to be read in the light of the definition in Clause 3, subsection (1) on page 4, lines 8 to 27 of the Bill. It will be observed that the definition includes income which has accrued on such property. Subsection (5) of Clause 1 provides for the payment into the Exchequer of the £500,000 needed to recoup the Exchequer for the payment already made to the Soviet Government under the terms of the Agreement. In addition, there is to be a payment under subsection (4) of Clause 1 from the Board of Trade Vote of a sum not exceeding the income which has accrued from these assets since February 12, 1967, and has been paid into the Exchequer. This amounted to about £170,000. Subsection (2) of Clause 2 enables an Order in Council to be made empowering the Foreign Compensation Commission to determine claims and pay compensation to the

15
successful claimants. This, as I have said, is the primary purpose of the Bill.
The Bill has also the subsidiary purpose of making four amendments to the Foreign Compensation Act 1950 which experience has shown to be desirable. Your Lordships will find these in Clause 2. The first two such amendments are contained in subsections (1) and (3) of the clause which have the effect of broadening the scope of the Act of 1950, especially as it affects Section 3. First of all, by virtue of subsection (1) of Clause 2, it would be possible to use the Foreign Compensation Commission should there be a question of distributing compensation paid by a Commonwealth Government. At present, the scope of the Commission's work is limited to settlements with foreign countries other than Commonwealth Governments. No such compensation settlement with any Commonwealth Government is in fact in prospect at the moment, but it is not out of the question that one might arise and this Amendment would then have a useful effect, for the Commission would have it in its power to deal with that matter.
The second extension of the Foreign Compensation Commission's powers, which is contemplated, is contained in subsection (3) of Clause 2 which would enable an Order in Council to be made for the registration of claims not only when negotiations with other Governments are already in contemplation but also in anticipation of such negotiations. Your Lordships will appreciate that it is sometimes convenient to get the necessary information recorded, without waiting for the other Government concerned to indicate its willingness to negotiate. Subsection (5) would make another small amendment. Its effect is to provide that Section 2(3) of the 1950 Act shall cease to have effect. This subsection provided for the appointment by a Commonwealth Government of additional members to the Foreign Compensation Commission for the purpose of determining applications for compensation received by the United Kingdom Government on behalf of Commonwealth nationals. It was only used once many years ago and the United Kingdom is highly unlikely in future to negotiate on behalf of the nationals of other Commonwealth countries. It is therefore pro
16
posed that that subsection shall cease to have effect. The subsection as it stands is in any case defective in that it enumerates the Governments of those Commonwealth countries which were independent in 1950, and has not since been brought up to date.
Now, my Lords, I come to Clause 2(4). This deals with the fourth amendment, and it is the section which was added during the passage of the Bill in another place. If some of the comment and correspondence in the Press is to be believed there has been a good deal of misunderstanding about this clause. The amendment has been occasioned by the majority judgment delivered on December 17 by your Lordships, sitting in a judicial capacity, in the case of Anisminic Ltd. v. The Foreign Compensation Commission and Another. This judgment has serious implications for the future work of the Foreign Compensation Commission.
It was provided in Section 4, subsection (4), of the Foreign Compensation Act 1950 that:
"The determination by the, Commission of any application made to them under this Act shall not be called in question in any court of law".
This provision was approved at the time without any controversy at all. The then Lord Chancellor explained in this House that the task of the Commission was to "decide, and decide finally", applications for compensation made to it. Parliament's intention in this respect was reaffirmed in 1958 when, during the passage of the Tribunals and Inquiries Act, an Amendment was made in Committee in another place so as to exclude the Foreign Compensation Commission from the operation of certain sections in view of its special character. In the recent judgment of your Lordships' House, to which I have referred, a declaration was upheld that the Commission's Provisional Determination was a nullity. Reversing the Court of Appeal, the majority in your Lordships' House found that the courts were entitled to review the Commission's interpretation of the relevant Order on the ground that the Commission had misconstrued it and had therefore exceeded its jurisdiction, with the result that its determination was a nullity and was therefore not protected from judicial review by Section 4(4) of the Act of 1950.

17
But in practice, of course, the Commission cannot avoid interpreting the Orders under which it carries out the distributions entrusted to it. This judgment would therefore make it possible, contrary to what the Government believe to have been the intention of Parliament, for the Commission's determinations, made in perfectly good faith and after the most careful deliberation, to be challenged in a wide range of cases. The consequences of this, as I am sure your Lordships appreciate, would be most unfortunate. The task of the Commission, which is of a special character, is to determine claims and to arrange for distribution on a rate-able basis to successful claimants, of what are nearly always finite "lump sums" either received in the form of cash from foreign Governments, or in some cases raised by the disposal of foreign assets in this country, such as those to be made available under Clause 1 of this Bill.
Until all obligations, or at any rate all those of any substance or magnitude, have been disposed of, it is impossible for the Commission to judge with any degree of certainty what will be the share attributable to each successful application and so to pay anything like a final dividend or perhaps any worthwhile dividend at all to them. If there is to be a risk that their determinations may be challenged in the courts and perhaps taken right up to your Lordships' House, the claimants, who have usually already been waiting for a very long time—nearly thirty years, in the case or most of those affected, for instance, by the distribution contemplated by this Bill—may well have to wait a further substantial period before they can touch their awards or at any rate the greater part of them. There is, obviously, another way out of this theoretically. If the Commission were to distribute the funds as expeditiously as possible without having any regard to the risk of successful litigation, judgment might be given against them after the relevant Fund had been exhausted. I think it is obvious at once that this would be bound to bring up the difficult problem of how to satisfy the judgment, and it would certainly lead to pressure for the successful litigant to be paid out of public funds, whereas I think there will be no argument that the source of compensation should be the foreign Govern
18
ment concerned and not the British taxpayer.
We believe, therefore, that Clause 2(4) reaffirms the original intention of Parliament, which was, on strictly practical grounds, in the interests of the claimants as a whole, to exempt determinations of the Foreign Compensation Commission from the normal right of appeal to the courts. It is important to make clear that the subsection is not in any sense retrospective and will apply only to distributions begun after the passing of this Act. For example, it will not affect the case of Anisminic Ltd. which the Foreign Compensation Commission a will consider again in the light of the recent judgment. Neither will it prejudice the exercise of jurisdiction by the courts in the case of an alleged failure to observe the rules of natural justice or a complaint, for example, of some fundamental error of procedure. But it will, we believe, restore to the determinations of the Commission the measure of finality which they must have if the claimants as a whole are to get their money with all practical expedition.
My Lords, I hope I have sufficiently explained the effect of the Bill itself. There is, of course, nothing in the Bill about the distribution of assets, the enabling of which is the primary purpose of the Bill. The terms of this distribution will be contained in an Order in Council which will be made at the earliest opportunity after its passage into law. This will provide for applications to be made in respect of the various categories of claims covered by Articles 1 and 4 of the Anglo-Soviet Agreement to which I referred earlier. This comprises claims in respect of British property affected by nationalisation, or other measures, and of financial losses in the former Baltic States and in the "ceded territories". It also deals with the Government's own shipping claim in relation to shipping services provided under the Anglo-Soviet Ships' Expenses and Freight Agreement of 1942; with British claims in respect of bonds and shares and claims, irrespective of the nationality of the holders, in respect of the unredeemed promissory notes issued by the Soviet Government to two firms, the Lena Goldfields Company and the Tetiuhe Mining Corporation.

19
These two British companies, as some noble Lords may know, both invested large sums in the Soviet Union in the years after the First World War. Their concessions were terminated and they were receiving compensation, albeit on a somewhat inadequate scale, in the form of promissory notes redeemable at intervals until 1954. But in 1940, in retaliation for Her Majesty's Government's refusal to release the Baltic gold, the Soviet Union refused to redeem the outstanding Lena and Tetiuhe notes. All the note holders alike suffered because of this Soviet retaliation for the British action in defence of British interests and that is why all holders, irrespective of nationality, are entitled to participate in this distribution.
It is impossible to estimate at this stage what dividend will be payable to successful claimants. This can be known only when every claim has been determined by the distribution authority. The capital value of the claims presented on our side in the negotiations amounted to £13½ million, though the Russians accepted liabilities of less than £3 million only. No doubt the capital value of the claims when they have been assessed will lie somewhere between these two figures. It is impossible also to say with certainty at this stage what is the value of the assets available for distribution to claimants but it is likely to be around £6 or £6½ million. There will be a six-months period during which applications must be made. Thereafter the Foreign Compensation Commission will proceed with the distribution as quickly as it can and it is hoped that it will be possible to declare an interim dividend soon after the closing date for applications.
If, as I hope, the House is willing to give this Bill a Second Reading this afternoon it will be providing that former owners of property in the Baltic States and the ceded territories should at last receive some compensation for losses which most of them sustained a great many years ago. I am happy to commend to the House a Bill which, so far as they are concerned, brings appreciably closer the end of a long and wretched story. My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2ª.—(Lord Chalfont.)
3.13 p.m.
THE MARQUESS OF LANSDOWNE: My Lords, the noble Lord, Lord Chalfont, has given your Lordships a careful exposition of the Bill and he has presented the Government's case in support of it. While following it in the OFFICIAL REPORT through all its stages in another place I have grown to like it less and less, and I am bound to say that nothing the Minister has said this afternoon has made me feel one whit better disposed towards it. As we have been told, this is an enabling Bill to implement an Agreement between Her Majesty's Government and the Government of the U.S.S.R. which was signed on January 5 of last year, one particularly objectionable Article of which was immediately acted upon without any reference whatsoever to Parliament. I shall have more to say, later on in my speech, about this insolently high-handed behaviour of Her Majesty's Government.
This Bill, and everything that has led up to it is, as the noble Lord has said, complicated and involved. For this reason, the noble Lord, Lord Chalfont, was good enough to give us a lot of the historical background. I am grateful to him for that. If I may recapitulate what seem to me to be the most essential points in the past history leading up to this Bill, it is because the passage of time can sometimes invest a questionable act with an appearance of respectability which that selfsame act could not possibly have commanded had it been perpetrated many years sooner. Distance, my Lords, adds enchantment to the view. I propose, therefore, first to ask your Lordships to consider some of the background history, then to study the Agreement, and finally to have a look at the Bill itself, and in particular the Amendment to which the noble Lord referred last in his speech, and which was introduced at very short notice on Third Reading.
At the end of the First World War Estonia, Latvia and Lithuania gained their independence, and in 1921 they were admitted to the League of Nations. Between 1922 and 1926 Britain signed commercial treaties or agreements with all three of them. These treaties, I understand, could legally be terminated only after notice had been given. So far as I am aware, no such notice has ever been given, so presumably in law these treaties

21
stand. I wonder whether the noble Lord can enlighten me on this point.
The independent status of these three Baltic States seemed assured by the terms of the treaties signed with Soviet Russia in 1920, when Russia renounced voluntarily and for ever all her rights of sovereignty over them and their peoples. Twenty years later, however, Mr. Molotov was telling the Deputy Prime Minister of Lithuania to
"take a good look at reality and understand that in future small nations will have to disappear."
In the process of their disappearance, between June, 1940, when the Soviet armies invaded the Baltic States, and June, 1941, when the Nazis drove them out, 61,000 Estonians, over 50,000 Lithuanians and over 34,000 Latvians were deported or killed. I must remind your Lordships that the three Baltic States had declared their neutrality at the outbreak of the war.
When war seemed imminent, the Baltic central banks, anxious about the security of their assets deposited with the Bank of England, suggested their transference to the United States of America. They were given assurances that the assets were entirely safe in Britain and a transfer to America was unnecessary. The United States, my Lords, still refuses even de facto recognition of the annexation by the Soviet of the Baltic States. In America, the assets of which Her Majesty's Government are disposing in order to settle claims against the Soviet would have remained safe. My Lords, what price the old, proud adage, "As safe as the Bank of England."?
In July, 1940, the U.S.S.R. and Nazi Germany being technically friends, as a result of the Molotov-Ribbentrop Pact, the Baltic assets in the Bank of England were blocked in order to safeguard British interests. After the Nazi invasion of the Baltic States, and the withdrawal of the Russians, these assets, in accordance with trading with the enemy legislation, were handed over to the Custodian of Enemy Property. Of course the Baltic States were not our enemies. They had started the war as neutrals; they were not our enemies. But the Nazis were in occupation, and it was solely for this reason that the Baltic assets were treated as
22
enemy property. Once the assets had been handed over to the Custodian of Enemy Property it was possible to make a vesting order making the Custodian the legal owner and having the power to sell. Had the Nazis not occupied the Baltic States, the Baltic gold would presumably have remained in the safe keeping of the Bank of England and beyond the reach of the slippery fingers of Her Majesty's present Government.
In a letter to Sir Tufton Beamish dated November 24, 1967, Sir Leslie O'Brien said:
"Each individual bar remained the property of the customer concerned until it was vested in the Custodian of Enemy Property, in accordance with the relevant United Kingdom legislation…"
And a little further on in the same letter he wrote:
"…the gold was placed with us in much the same way as a private individual might place jewellery or other valuables in his bank."
It would seem to me that the banks of the Baltic States, who were "the customers concerned", have had their gold stolen from the Bank of England, the theft having been perpetrated by Her Majesty's Government with the assistance of the Trading with the Enemy Act. Section 7 of that Act lays down that vesting orders are carried out
"with a view to preventing the payment of money to enemies and preserving enemy property in contemplation of arrangements to be made at the conclusion of peace."
Finnish assets in this country were also lodged with the Custodian of Enemy Property for the same reason. Finland was overrun by the Nazis, and at the end of the war her assets were quickly restored, the Government of Finland having been given de jure recognition by Britain.
Will the Minister tell the House if it is the opinion of Her Majesty's Government that the gold which had been deposited in 1919 by the Baltic States in the Bank of England was, on January 5, 1968, the property of the British Government, and, if it was the property of Her Majesty's Government on that date, by what legal process had that ownership come about? I hope that the noble Lord who is going to reply will give me an answer to that question. It is of course perfectly clear—it was repeated again this afternoon that Her Majesty's

23
Government do not accept that the U.S.S.R. had any title whatsoever to the Baltic gold. This was confirmed on June 15, 1967, in a letter from the then Minister of State at the Foreign Office to Sir Tufton Beamish, in which he wrote:
"Shortly before the Baltic States were formally incorporated into the Soviet Union, the Soviet State Bank represented that it had purchased the gold from the Baltic Central Banks. This claim is not one which we have recognised, and the transfer of gold was withheld."
That has been confirmed again this afternoon.
I must now ask your Lordships to consider for a few moments the claims and counter claims between Britain and the Soviet Union, in settlement of which the Agreement on January 5, 1968, was made. The claims and counterclaims with which we are concerned in this Bill are only those financial and property claims which arose after January 1, 1939. Assets held in the United Kingdom belonging to nationals and Governments of the Baltic States and those parts of Finland, Poland, Czechoslovakia and Roumania subsequently ceded to the Soviet Union were frozen when Nazi Germany invaded those countries during the Second World War.
The Soviet Union, for its part, had frozen assets belonging to British nationals and others in these territories, and in particular there were outstanding claims by the holders of unredeemed Notes issued by the Government of the Soviet Union to the British joint stock companies, the Tetiuhe Mining Corporation and Lena Goldfields, Limited, of London, both these companies operating in Siberia. The British claims against the Soviet Union, which were the subject of the negotiations started in 1965 and which were settled under the Agreement of January 5, 1968, were approximately—as the noble Lord has told us—£15 million, and the Soviet claims against Britain approximately £10 million. Noble Lords will appreciate that I do not of course criticise the determination of Her Majesty's Government to obtain a settlement of these claims, but I do most strongly object to the manner in which this settlement has been achieved.
My Lords, I come now to the Agreement signed on January 5, 1968. The Minister has explained its content. As I understand it, not only was this a bad
24
bargain but it was also immoral, and included in this shameful settlement there had to be a "tip"—I cannot call it anything else—of half a million pounds sterling to the Soviet Union to induce them to have an agreement at all. I cannot accept that Her Majesty's Government had the moral right to utilise the gold of the Baltic States, deposited in the Bank of England for safe keeping before the war, in order to settle British claims against Russia, and I was glad to see that the honourable member for the Cities of London and Westminster, Mr. John Smith, a banker of some twenty years' experience, described the transaction as "dishonourable and inexpedient". I can give the noble Lord the reference if he wants it. He also said in answer to the Government spokesman's claim that they had done what was "practical":
"The bank in which I work has rooms full of objects, many of them extremely interesting and many of them to which the title is almost perfect, but not quite. We would not dream of parting with any of them without a perfect title being shown to us. Why is that? It is because we wish to stay in business as bankers; and what applies to us in commerce applies, a fortiori, to this country."—[OFFICIAL REPORT, Commons, 7/11/68; col. 1121.]
I have said that I cannot accept that Her Majesty's Government had the moral right so to dispose of the Baltic gold, but if it is possible to make a case in law that Her Majesty's Government were acting within their legal rights, I cannot for the life of me see any justification for handing over to the Soviet Union half a million pounds sterling out of these assets, to which Her Majesty's Government have stated the Soviet have no legal title. Nor why the proceeds from the assets from the Baltic countries should be distributed to meet claims which arose from losses in parts of Czechoslovakia, Finland, Poland or Roumania, ceded to the Soviet Union, or for that matter the Lena Goldfields' creditors and the Tetiuhe Mining Corporation in Siberia. What has this all got to do with the Baltic States? Will the noble Lord explain why Her Majesty's Government gave the Soviet Union this money, and on what possible grounds there is justification for using Baltic funds to meet claims in other countries now part of the Soviet Union? My Lords, it is a bad story, and it is humiliating for a people who have long enjoyed a reputation for fair dealing.

25
There is another aspect of this Agreement to which I wish to draw your Lordships' attention. I refer to the high-handed treatment of Parliament by the Executive and what appears to me to be broken pledges. In a letter of June 15, 1967, the Minister of State, Foreign Office, informed my honourable friend, the Member for Lewes, that the realisation of the Baltic assets was subject to Parliamentary authority. As it transpired, the gold was in fact sold exactly two weeks later and Parliament was not even informed, let alone asked for its opinion. What is the explanation of this? Will the Minister of State, when he comes to reply, be good enough to give some explanation to this House?
According to the OFFICIAL REPORT of October 23, 1967, col. 1351, the Under-Secretary of State for Foreign Affairs said in another place:
"It is the case that legislation would be required before the process of distribution took place."—[OFFICIAL REPORT, Commons, 23/10/67; col. 1351.]
Yet £500,000 was paid to the Soviet from the Civil Contingency Fund in January, 1968, almost immediately after the signing of the Agreement, and then this transaction was discreetly slipped into page 33 of the Supplementary Civil Estimates for 1967–68, which were not published until February 15, 1968—one month after the money had been placed to the credit of the Soviet Union in the Bank of England. What is the explanation of this?
The Bill, which I shall come to shortly, provided in Clause 1, subsection (5), for the repayment of £500,000 to the Consolidated Fund out of the proceeds of the property which is to be, or has been, realised by the Custodian of Enemy Property. Strictly speaking, therefore, by these devious means it would be possible to advance the legalistic argument that the payment to the Soviet Union was not a direct distribution of the Baltic assets. Is that the argument of Her Majesty's Government in justification of the statement of the Under-Secretary of State for Foreign Affairs which I have just quoted:
"…legislation would be required before the process of distribution took place"?
I noticed that the noble Lord emphasised that there had been no distribution, yet according to the OFFICIAL REPORT in 1968 the then Foreign Secretary said:
26
"The Agreement will be subject in due course to Parliamentary approval. If Parliament turns it down, that will be that"—[OFFICIAL REPORT, Commons, 23/1/68; col. 210.]
But the £500,000 was deposited in the Bank of England to the credit of the Soviet Union in January of last year, and contracts for British goods to the value of the whole amount had already been signed before ever Parliament was asked to approve the Agreement. So what would happen if Parliament does turn down the Agreement now?
It has been argued that once having decided to take what, in my view, was the dishonourable step of distributing the proceeds of the Baltic assets to our claimants against the Soviet Union, no Agreement with the Soviet Union was necessary. We held the assets and the claimants are here. Furthermore, an additional £500,000 would have been available for distribution. This argument seems to me valid, and I am bound to ask, in view of the noble Lord's remarks about the risk of retaliation and risk of repercussions, what could the retaliation or repercussions have been? Perhaps the noble Lord would be good enough to tell us in his winding-up speech.
The Bill to which the Minister has asked your Lordships to give a Second Reading was first discussed in another place ten months after the Agreement to which it ostensibly is to give effect was signed by the then Foreign Secretary and the Russian Ambassador. No doubt Her Majesty's Government allowed hopes of an Anglo-Russian détente to influence them when considering a solution to the question of outstanding financial and property claims. The tragic and monstrous treatment of Czechoslovakia by the Soviet and the horror with which we have read of young patriots driven to despair by the brutal suppression of the small measure of freedom their country had so painfully won has not unnaturally made this tardy request to approve a completely gratuitous gift of half a million pounds to Russia particularly repugnant, but I should hope that in any circumstances and in dealings with any Government noble Lords would feel a sense of deep humiliation at being asked to approve a most blatant bribe, and a bribe carried out with moneys which, by any normal standards of morality, could

27
not in my opinion be consider ours to give away.
This mortifying piece of legislation has, alas! passed through all its stages another place, where determined and carefully reasoned arguments were deployed against it, without avail, and all Opposition Amendments rejected. The attitude of Her Majesty's Opposition in this House will be determined by certain proposals that we shall have to make at a later stage and by the satisfaction or otherwise which we receive to-day from the answers to questions addressed to the Minister. I sincerely hope that the noble Lord will reconsider the suggestion made in another place by my right honourable friend the Member for Bridlington, Mr. Richard Wood, that Her Majesty's Government should undertake to make a full restitution of these Baltic assets to their appropriate owners should the opportunity arise. Will Her Majesty's Government now give such an undertaking?
In the course of my remarks I have avoided so far as possible complicated points of law, leaving these to other noble and learned Lords better qualified to deal with them. Despite this, I cannot refrain from expressing my own anxiety concerning the Amendment to Clause 2 of the Bill which was introduced at very short notice at Third Reading and now forms subsection (4) of Clause 2. This provision is, as I understand it, in order to enable the Foreign Compensation Commission to carry out its work expeditiously and, like anyone else, I would regret that claimants, often in great need, should have to wait any longer than was absolutely necessary. But this provision would mean that it would be impossible for a claimant to secure redress if the Commission were to make a mistake. There could be no appeal to the Parliamentary Commissioner or to the courts. I hope that noble and learned Lords will consider this point very carefully, for it seems to me that though it is probably desirable to preserve the substance of the Commission's decisions from subsequent appeal, it is undesirable to remove from a claimant any means of questioning the validity of a decision.
Your Lordships will have noticed—and the noble Lord referred to it—in The Times of Saturday, February 1, a letter
28
from Professor Wade on this subject, in which he said:
"The law's delay, like its uncertainty and expense, is a tempting reason for sacrificing justice to speed, but if the courts are prevented from protecting legal rights, the remedy is much worse than the disease."
That is an argument quite comprehensible to the layman and, subject to what I hear from learned Lords on the subject, I shall be inclined to accept it. The Times to-day publishes, across three columns, a letter signed by the Chairman of the General Council of the Bar and the President of the Law Society. The combination of the arguments and the eminence of these learned gentlemen has almost convinced me. However, from past experience I have learnt that legal luminaries often disagree, so I shall wait and listen and then make up my mind. It rather looks as though this mean-spirited and dishonourable little Bill has sired a real monster. I hope that, in considering the possible destruction of the offspring, noble Lords will not lose sight of the thoroughly objectionable qualities of the parent.
3.37 p.m.
LORD TREVELYAN: My Lords, I must declare my interest as President of the Council of Foreign Bondholders. As early as 1959, Her Majesty's Government agreed with the Soviet Government that particulars of outstanding claims which had arisen since 1939 should be collected with a view to negotiations for a comprehensive settlement. It has taken nearly ten years for an Agreement to be concluded and for the consequent Bill to reach your Lordships' House. It having been decided in 1959 that the settlement of these claims should be by way of an Agreement with the Soviet Government, there was a pressing need for this Agreement to be concluded in order that the claimants should obtain some compensation after so long.
There are some features of the Agreement which certainly cannot be welcomed. We surely all regret that it was found necessary, in order to get the Agreement, to pay the Russians £500,000 since even before this payment, apart altogether from other considerations which have been put forward by the noble Marquess, Lord Lansdowne, the assets available for distribution were not expected to be sufficient to satisfy the legitimate claims.

29
Another feature of the Agreement against which objection can be validly raised is that the Agreement covers all holders of the Lena and Tetiuhe State Notes, but only those Baltic Bonds in British ownership. It has therefore admitted the right of the Soviet Government to prescribe in some degree how the British Government should distribute the Baltic assets to which the Soviet Government renounce their claim under this Agreement. I can have no objection of principle to the inclusion of foreign holders of the Lena and Tetiuhe State Notes, since these notes were a sterling issue. On the other hand, the Council of Foreign Bondholders endeavour to maintain the same principle in their settlements that sterling bonds should be settled on an issue rather than on a national basis. There is something to be said for the settlement of both the Sterling Bonds and the Sterling Notes on a national basis. There is something to be said for settling both on an issues basis, even if the British claimants get rather less compensation. There is nothing to be said for settling them on different principles.
I am not sympathetic to the argument that the Baltic assets should not have been brought into the Agreement on the ground which was put forward very eloquently by the noble Marquess, Lord Lansdowne, that we have not recognized the Baltic States de jure as part of the Soviet Union. I think we must look at the matter from a practical point of view, and it is quite time that these assets which are lying with us were made available to British claimants who have been deprived of compensation for so long.
It is a logical argument that the use of Baltic assets should have been limited to Baltic claims, which would have excluded the holders of the Lena and Tetiuhe State Notes and those with claims relating to other territories annexed by the Soviet Union from Czechoslovakia, Poland, Finland and Rumania. I would not, however, press this point, since there would have been no agreement on this basis and these are the only assets which are ever likely to be available for meeting these claims.
It has been suggested that a rider should be added to the Bill that the Government should restore the value of the Baltic assets if the Baltic States became independent again. We should, I suggest,
30
leave this question to be dealt with in accordance with developments of the future. We are all naturally concerned at the legal and moral implications of the appropriation of these assets. I cannot, however, regard it as desirable to provide for a hypothetical situation in this way. It is, I fear, a very unlikely contingency. Moreover, in the highly unlikely event that the Baltic States should become independent again the British Government would surely not agree to pay those Governments these assets without any comparable obligation on them to meet the legitimate claims against the Baltic States.
Since the principles of distribution, which are to be set out in the Order in Council, have been already discussed by Ministers in the other House and, briefly, by the noble Lord, Lord Chalfont, in your Lordships' House to-day, I trust that your Lordships will bear with me if I make brief comments on them at this stage. I have at no time sought absolute priority for the bondholders over other claimants, though this could be theoretically justified. Obviously, there must be some element of equity in the division of the assets. The Government have agreed that the Baltic Bonds should rank for nominal capital plus contractual interest from the date of default, which maintains the important principle for the treatment of Sterling Bond issues in default.
However, it is in my opinion wrong that notional interest at the rate of 4 percent. should be allowed on all other claims, including the non-interest-bearing Lena and Tetiuhe State Notes. This does not recognise the superior status of the Baltic Bonds, which are claims carrying contractual interest against a Government and for payment in sterling, compared with commercial claims with no contractual interest for payment in local currency which would have been transferable into sterling, if at all, only at a loss, and State Notes which were specifically non-interest-bearing. I trust that these considerations will still be taken into account by the Government in deciding the principles on which the distribution will be based.
Much time has passed since the Agreement with the Soviet Government was announced. There is much work still to be done before the distribution can be made, particularly in a full inquiry into

31
the validity of the commercial claims, which will surely be found in some cases to have been inflated. The bondholders have no opportunity to inflate their claims. I hope that this work will be carried out urgently, so that the claimants will not have to wait much longer before receiving that proportion of their claims which can be provided from these assets after the various categories of claims have been established and proportionately scaled down.
Finally, may I take this opportunity to say that I welcome the Statement made by the Minister of State for Foreign Affairs in the other House on December 16, that Her Majesty's Embassy in Moscow have informed the Soviet Government that they hope it will be possible to initiate discussions with the Soviet Government on the pre-1939 Anglo-Soviet claims. This matter has been outstanding too long. It will be an added argument in favour of the Agreement made between Her Majesty's Government and the Soviet Government if it paves the way to a settlement of the old claims. Subject to these comments, I support in general the Bill before your Lordships' House, without supporting all the details in it.
3.45 p.m.
VISCOUNT DILHORNE: My Lords, the noble Lord who has just resumed his seat said that he was not sympathetic to the objection to bringing in Baltic assets to meet the claims of foreign bondholders, wherever they might arise. He went on to say that he was naturally concerned with legal and moral obligations, and then he put the stress on what he considered to be practicable. I hope it is the case that the noble Lord has first regard to moral and legal obligations. I should have been more interested if he could have explained to me how he reconciled distribution of these Baltic assets to creditors, foreign bondholders, who never have had a shred of right to these assets at all.
When listening to the speech made by the noble Lord, Lord Chalfont, in introducing this Bill, anyone who had not briefed himself with the background to it would not, I think, have realised the very great issues to which this Bill gives rise. The noble Lord made a very attractive speech. He dealt to some extent with the historical background, but he omitted to deal, and very wisely, with a number
32
of points, and, in particular, with the main points made by my noble friend Lord Lansdowne. He has frequently been put into bat on a sticky wicket, and I sympathise with him in that respect. But I am very glad to-day that he has the assistance and support, as one speaking in this debate, of the noble and learned Lord, the Lord Chancellor, for I think that the issues raised here concern matters of great legal importance, and not merely matters of morality.
We know that the Agreement of January, 1968, came into force on the day on which it was signed—January 5, 1968. But on January 23, 1968, the then Foreign Secretary said that it was very good business to get this Agreement; and also, as my noble friend has said, that the Agreement would be subject in due course to Parliamentary approval. "If Parliament turns it down," he said, "that will be that." But the Agreement came into force on signature. It was partially implemented without recourse to Parliament immediately after signature. It was never subject, in any respect at all, to Parliamentary approval. Now, all we are asked to do is to approve this Bill, and if Parliament were to reject it that would have, as I see it, not the slightest effect on the Agreement, which would remain in full force and binding on this country and the Soviet Union.
I think that an explanation is called for. Although Foreign Secretaries have changed, this was a statement for which other members of the Government have collective responsibility. The Government would appear to me to have broken their word. Either that should be frankly admitted or we should be told in clear language how an Agreement which came into force on January 5, 1968, and was not subject to ratification is subject to Parliamentary approval. I think that that would tax the ingenuity of the noble and learned Lord the Lord Chancellor. But before this Bill gets a Second Reading, this matter, I suggest, should be dealt with and should be dealt with clearly.
Speaking for myself, despite the statement of the Foreign Secretary I take the view that in considering this Bill one must proceed on the basis that the Agreement is binding, and that whatever we do with regard to the Bill will not affect the Agreement at all. If the noble and learned Lord the Lord Chancellor thinks

33
that I am wrong about that, I will willingly give way to him, for when considering this Bill we ought to know where we stand with regard to the Agreement. My Lords, I have read carefully—and some parts more than once—all through the debates that took place on this Bill in another place, and I wish I could agree that it was good business to get this Agreement. I cannot. I think it an astonishing document, and it reveals an attitude of mind which really shocks me. I propose to speak first about the Agreement and the provisions of the Bill relating to it, and then to say something about Clause 2(4), to which the closest attention should be given at a later stage in our proceedings.
My Lords, the noble Lord, Lord Chalfont, made some reference to the history at the back of this Agreement. I think it is worth bearing in mind that these three banks to whom the gold belonged—the Bank of Estonia, the Bank of Latvia and the Bank of Lithuania—were all, in a sense, private banks. Two of them were joint stock companies; the third, the Bank of Latvia, was held by the Supreme Court of Latvia to be an autonomous and separate State enterprise and not an agency of the State. So none of this gold which we are now considering distributing was in fact the property of a Baltic State: it was all the property of individual concerns in those States. It was entrusted, as my noble friend has said, to the Bank of England; and, as the Governor of the Bank of England has said in writing, it was entrusted to the Bank of England "for physical safe custody".
In 1940, after the Soviet troops had entered those territories, puppet Governments were formed which purported to nationalise these banks without compensation. The view has been expressed, I understand, that under International Law nationalisation without compensation, although amounting to confiscation of the assets within the territories concerned, does not affect the ownership of assets outside. I should be interested to know whether the noble and learned Lord the Lord Chancellor agrees that that is the position under International Law; for if it is then the Soviet Union can have no claim to that gold arising out of the nationalisation of those banks. As I understand it, the claim made by the
34
Soviet Union in relation to that gold has been put forward on two hardly consistent grounds: first, that the banks which owned the gold were nationalised and the Soviet Union became entitled to the gold on the incorporation of those territories in the Soviet Union; and, secondly, on the inconsistent ground that the Soviet Union had bought it. I should like it confirmed (I think it is the case) that neither argument has ever been accepted by any British Government as having the least validity.
It was because of that that a Defence Regulation was made on July 24, 1940, in the following terms. It is quite short. It was later amended when, I think, the Soviet Union became our allies, but it starts with these words:
"Where the Treasury are satisfied that any state is exposed to pressure from another state"—
and these three States clearly were—
"and in consequence action is being, or is likely to be, taken to the detriment of the economic position of the United Kingdom, the Treasury may give general or special directions prohibiting, either absolutely or to such extent as may be specified in the directions, the carrying out, except with permission granted by or on behalf of the Treasury, of any order given by or on behalf of … the first-mentioned state or the Sovereign thereof or any person resident therein, or … any body corporate which is incorporated … therein …"
I will not read the rest, but under that Defence Regulation these assets of these Baltic States were frozen; the ownership of them was not transferred to anyone else. It was only after the German occupation of those territories, as my noble friend Lord Lansdowne has said, that it became possible to make any order in relation to those assets under the Trading with the Enemy Act 1939.
My Lords, the object of Section 7(1) of that Act was expressed to be:
"With a view to preventing the payment of money to enemies and of preserving enemy property in contemplation of arrangements to be made at the conclusion of peace".
The owners of this gold and of the other property vested in the Custodian were enemies only by virtue of the definition in that Act.
"Any individual resident in enemy territory"
was defined as an enemy, and "enemy territory" is defined in the Act as including:
"any area … in the occupation of a Power with whom His Majesty is at war".

35
I am not sure whether I correctly caught all that my noble friend Lord Lansdowne said on this, but I rather thought he made some criticism of the making of the order vesting these assets in the Custodian. I may have misunderstood him; but in my view there was nothing wrong in those circumstances, once the Germans had occupied the territory, in making an order under the Trading with the Enemy Act vesting these assets in the Custodian of Enemy Property. There was clearly power to do so. But, my Lords, what was the property that was vested? Was it property of the States? Was it property of the ceded territories? The Under-Secretary of State said in another place, on November 19, 1968, that:
"the vast majority of this property was reported to the Custodian in the names of individuals and companies and hardly any of it was reported in the names of the Baltic Republics. In particular the gold was reported in the names of the three Central Banks"
And these were not in fact enemies: they were treated as such only by virtue of the German occupation.
My Lords, it is only because that order was made that the present Government now have control over these assets. That being the position, is it not our duty, our moral duty, to secure the return of those assets to the owners, where they can come forward and establish that they are the owners? Have we any right to dispose of this property, vested in the Custodian by our Act of Parliament, to discharge any liabilities of this country to the Soviet Union, or to discharge any liabilities that the Russian Government may have to shareholders of a company which operated in Siberia? That is the question which is really raised by this Agreement. The Under-Secretary has told us that the Soviet claims amounted to £10 million, being claims for this gold, which was sold for £5·8 million just before, I think, devaluation. Had it not been sold then, it would presumably have been worth a great deal more now.
The noble Lord, Lord Chalfont, told us that the assets for distribution were expected to realise £6 million to £6½ million. Am I not right in thinking that all these assets really come from the Baltic States; that they comprise interest upon the assets vested in the Custodian
36
and that no property of any magnitude at all came from the other ceded territories? We were told that the claim by the Soviet Union was in respect of this gold —sold, as I said, for £5·8 million—and also in respect of Baltic ships requisitioned by us. Presumably that means ships which are the property of these three Baltic countries or of individuals resident therein. He said that there were also some miscellaneous property claims.
My Lords, what is the position with regard to the claims in relation to the Baltic ships? We have always rejected the claim for the gold. Have we ever admitted that there is any entitlement to the Soviet Union for compensation for the requisitioning of Baltic ships? If we have not, what right have we now to settle that claim by the payment of money which does not belong to this country? If it is a liability of Great Britain, what can be the justification for using Baltic assets for discharging it?
As I have already said, we have paid the Soviet Union £500,000 which is going to be paid out of the property vested in the Custodian. As my noble friend has said, the money was, in fact, paid immediately after the Agreement was entered into; but the provision is contained in this Bill for its repayment to the Treasury by the Custodian out of these assets. I shall be very interested to hear what the noble and learned Lord the Lord Chancellor may say to justify the expenditure of that money which does not belong to us. For if the expenditure of that money out of these Baltic assets cannot be justified, it seems to me that we might well consider whether subsection (5) of Clause 2 ought not to be taken out of the Bill.
My Lords, I pose this question. It may be very practicable to give this money to foreign bondholders, and so on, and distribute it; but what moral or legal right can there be to use any of it to meet our liabilities? We are told that this payment out to the Soviet Union was "very well worth doing". All we have from it, according to the Under-Secretary, is the making of this Agreement. Are there any other benefits that flow from it? I should be interested to know. Surely it cannot be argued that this payment of £500,000 was "very well worth doing" because of the string attached that the money should be spent

37
on goods purchased in this country. Could that justify the use by us of money that did not belong to us?
In the circumstances that now exist I should not object to the disposal of this property to those who can establish either that they had the right to it before it was vested in the Custodian or that they had suffered financial losses in those territories as a result of the German occupation; but this Agreement goes far beyond that. Not only have we paid the £500,000 to the Soviet Union but we have also relieved them of liability in respect of the unredeemed notes issued by the Soviet Government to the Lena Goldfields and Tetiuhe companies. Your Lordships may recollect that the Lena Goldfields company was awarded £30 million compensation in arbitration in 1930 but that the Soviet Government did not accept that award. Some years later they agreed to pay £3 million, mostly by the issue of notes. And when we refused to meet their claim to the Baltic gold they defaulted on the payment of those notes.
Now we have agreed that the Soviet obligations on those notes are to be cancelled and that the holders of the notes will be able to claim against property which belonged to individuals and companies of these Baltic States and which is vested in the Custodian. Again, I ask: what moral or legal justification can there be for that? At the moment, I must confess that I see none. We have thus, in addition to the payment of £500,000, undertaken to discharge certain Russian liabilities out of this property. The result appears to be that although we have rejected the Russian claims to the gold, we have really agreed to treat part of it as theirs and to use it to meet, to some extent, their obligations; to act, to a certain extent, as their bankers. The amount of the property that will be available for distribution among those who have lost assets in consequence of the occupation of the Baltic States will be diminished. We are treating this property as if it belonged to us and as if the rights of the individuals and companies to whom it belonged had been extinguished.
My Lords, I can see no grounds for calling this a good Agreement. I cannot see any need to have entered into an Agreement of this kind. The noble Lord, Lord Chalfont, said that there were
38
two courses open to us: either to make this Agreement or to leave these assets inviolable. He said that there was a third possibility: that, having these assets in this country, we should ourselves distribute them (they have been here for a very long time) to those whom we thought entitled, to those who had a claim on them, without agreement with the Soviet Union. That course he rejected because of the possibility of retaliation. I think those were his words. He spoke of "repercussions". My Lords, are we to be deterred from a proper course of conduct by the possibility that there might be some further defaults—defaults like those on payment of the notes issued by the Soviet Government on the Lena Goldfields Company? Surely we should not deal in this way with this property just for fear of what might be done. This Agreement could be justified only on moral and legal grounds; not on grounds of expediency.
I was disappointed to find that the noble Lord, Lord Chalfont, said very little about the rights of the matter. I think we could have, and should have, distributed this money to those who could show they had a claim in relation to these assets; either a claim to ownership of them (though there may be few who could now establish that) or, where the assets remain without owners coming forward, a claim on the basis of having suffered losses in those Baltic territories. I can see no grounds for saying that those assets, or any part of them, should go to other people.
My Lords, if this Bill gets a Second Reading it will be left to the Foreign Compensation Commission to go into the claims; and it is now intended, if I understand it aright, really to make this Foreign Compensation Commission above the law; to make it master of its own fate and in complete control of its own jurisdiction. We shall examine this proposal in more detail in Committee. I think the noble Lord said that even with Clause 2(4) in the Bill it was still possible, on matters of procedure, for the Foreign Compensation Commission to be brought before the courts. So recourse to the courts is not completely excluded, and it is right that that should be said. But what is much more important is that questions of jurisdiction should come before the courts.

39
My Lords, much has been said about the delay which claimants would suffer if there was any litigation. I appreciate the force of those arguments but at the same time it does not seem to me right that there should be no recourse to a superior tribunal on the question of the construction of an Order. I am not at all sure that I agree with the noble Lord, Lord Chalfont, when he says that Parliament had always intended that those questions should be removed from the courts. Because my impression was—and I shall read what he said with care —that what Parliament really intended was that the Commission's decision on questions of fact should be final and not open to appeal. I know that it is not expressed quite in that way, but I think that was the intention The Orders lay down who can claim and in what circumstances they will be entitled to have their claims accepted, and if you leave the Foreign Compensation Commission completely in control of the interpretation of those Orders, the same thing may happen as happened in the recent case in the House of Lords where the Foreign Compensation Commission rejected a claim on grounds on which they were not entitled to reject it; because they required proof on grounds additional to those contained in the Order in Council. The claim being rejected meant that more was available for distribution among the other claimants. But the converse could equally apply. The Foreign Compensation Commission might, quite wrongly, on the construction of the document accept a large claim which would reduce the share of the other claimants.
It seems to me, my Lords, that where you get a difficult question of construction, the Foreign Compensation Commission might itself welcome a ruling from a judicial body. But the real problem—and it is a real problem—is to devise a way in which that ruling could be secured and finally secured without such a delay as would be intolerable. In the case which went to the Lords, I gather that the litigation started after the provisional determination and before the final review by the Foreign Compensation Commission. I am wondering—I mention this now because I should like some thought to be given to it before the Committee stage—whether it would not be
40
possible to provide that there should be an appeal to a court. It might conceivably be to the Court of Appeal direct. It might be provided that the determination of the Court of Appeal should be final but that the notice to start the litigation must be given within a short period after the provisional determination. I do not believe that that would involve such great delay, because in the circumstances of all the other claimants being held up I believe that the courts might grant facilities for a speedy trial. I believe that some such procedure is wanted and would be very much better than the present subsection of Clause 2.
My Lords, I fear that I have spoken for too great a length. I feel very unhappy about this Bill and very unhappy about this Agreement which was entered into. I hope that it will not be a precedent which will be followed in future. I do not believe that the Agreement should have been made. I do not think it possible to find a good word for it.
4.15 p.m.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, the noble Marquess, Lord Lansdowne, referred in his speech to a letter in The Times this morning, signed by the Chairman of the Bar Council and the President of the Law Society, on Clause 2(4). My noble friend Lord Chalfont will reply to the debate, but I thought your Lordships would expect me to say something on that and accordingly I shall apply myself entirely to Clause 2(4).
My Lords, there has, I think, been a certain amount of misunderstanding about this subsection. In the first place, it does not change anything. It does not actually do anything. All it does is to provide that an Order in Council may be made at a later date and that Order in Council will itself be subject to Parliamentary control. Secondly, there is nothing retrospective about it, and it cannot be made to apply either to the Anisminic case or to any Egyptian case at all. That case, and any others which are in the same position, will of course be reopened before, and reconsidered by, the Commission according to the law as laid down in your Lordships' House. So it cannot affect Egyptian claims at all. It can apply only to the future, including the Baltic, and if such an Order is made,

41
and when it is made, it will be subject to Parliamentary control.
The next thing I should like to make quite clear about this subsection is this. The Government have nothing to gain by providing that there shall be no appeal from the Commission, or by providing that there shall be an appeal. It does not affect the Government at all whether this subsection is there or not. We shall not have a penny more money or a penny less money. We are concerned solely with what is best from the point of view of the claimants. There always has to be a level of final decision, and it is a pure question of opinion according to the nature of the proceedings whether it is a good thing to have no appeal, or four appeals.
Your Lordships may remember that recently on the Administration of Justice Bill I did not conceal from your Lordships my view that it was not really in the interests of the taxpayer or the Government that in tax matters one had first to argue the whole thing before the Special or General Commissioners of Income Tax and get a decision from them; then, secondly, re-argue the whole thing, if taken to appeal, before a Judge of the High Court and get a decision there; then another anneal to the Court of Appeal and then perhaps another appeal to the House of Lords. It is very much a matter of opinion.
In the first Judicature Act, of 1873, Parliament expressed the view that it would be better to remove your Lordships' judicial powers and create a Court of Appeal from which there would be no further right of appeal. Then, two years later, Parliament changed its mind. Thus, how far there should be an appeal, or several appeals, or what is a thing which ought to be decided in the interest of the litigant. Whilst it is usually thought in the interest of the litigant to have an appeal, it is very doubtful whether, having regard to the desire for certainty, the desire to arrive at a decision within a given time, more than one appeal is really in the litigant's interest.
What happened here is simply this. As your Lordships know, it has always been open to anybody here with money to invest his money at home or abroad. If he invests it abroad, he may get a higher rate, but that higher rate may reflect the fact that he is running some risk of losing his capital which he would
42
not run if he invested it here. A country declares war and swallows up another country in which you have property, and your property has simply gone. You get to the point where you have to admit yourself that the swallowed-up country no longer exists.
Or your property may be confiscated without any compensation at all. We all know that there are parts of the world where experience has shown that this is particularly a danger—Russia during the whole of this century; some States in South America; the Middle East. If in the result you do lose your money, you cannot expect the taxpayer to recompense you. There is no reason why the taxpayer should recompense you if you choose to invest your money abroad, particularly in area s of that kind. Naturally our Government have always done their best to get what money they can out of foreign Governments to recompense those who have lost money in this way. But when they do so, they do not do so as agents.
This situation has been going on for most of the last century. In 1876 our merchants had lost about three million dollars as a result of the actions of Chinese merchants. The Government found out what the claims amounted to and got that sum from the Government of China. Apparently there was some delay in distribution and someone started an action to get compensation. But where the British Government are paid money by a foreign Government in these circumstances, claimants have no legal right. In that case the Court of Appeal held that the Government do not act as agents of the claimants, and that even when they get the money it is not trust money, in a legal sense. Of course, it would be dishonest if the Government were to put this money into their own pockets (as it were) to reduce income tax. Obviously they have a moral duty to distribute it in a way that they think fair. But Governments are responsible only to Parliament. There is no legal right.
That decision was approved by the Court of Appeal in 1912, and right up to 1950 distribution was always done by the civil servants in the Foreign Office as a matter of discretion. No doubt the civil servants did what they thought was fair. It was difficult to do and different

43
methods of distribution were used. Either a flat rate was accepted or they said that claims up to £10,000 would be paid 100 per cent., with a decreasing proportion for larger sums. There is no doubt that they did what they thought to be fair. No doubt they did their best to decide which people properly qualified as claimants. This has never been easy. The longer these cases go back (and this applies particularly to Baltic cases) the greater the likelihood that there is no evidence now available: all the documents have gone. Therefore, at the end of the day, if a claimant says that 35 years ago he owned a house and that it was worth so much, there is nothing to support it and nothing to contradict it.
In 1950 the then Government thought that on the whole it might be better to have a Commission to deal with the distribution, instead of leaving it to civil servants, because the number of cases were increasing and it was getting a great deal for the Civil Service to handle. There was debate as to whether, the civil servants having had the last word, this new Commission should have the last word or whether there should be some right of appeal. Parliament thought that claimants would be much happier with an independent board than with civil servants. Questions of time and cost had also to be taken into account. Governments have always deducted costs of distribution from the fund. If there are going to be law cases up to the House of Lords, somebody has to pay the lawyers; and this all has to come out of the fund, so that the money available for distribution becomes less.
Rightly or wrongly, it was thought that it would be in the interests of the claimants to have finality rather than what I might call a perfect decision. In law, of course, your Lordships' House cannot be wrong, but I do not know whether, from a common sense or layman's point of view, there is any real reason to suppose that if you take a case higher and higher, particularly on questions of construction, one decision will be right rather than another. In this very case, the 1950 Act provides, in fairly simple words, that
"The determination by the Commission of any application made to them under this Act
44
shall not be called in question in any court of law."
Eight Judges in our superior Courts considered that provision. Five said that it meant what it says: that a determination by the Commission, though it might be a wrong determination, based on a wrong construction, was a determination and the Court could not consider it. Three thought otherwise. They took the view that if the Commission's determination was based on a wrong construction, then it was a nullity and not a determination. This is largely a play of words, but because three of the Judges were in your Lordships' House and, of the other five, three were in the Court of Appeal and two in your Lordships' House, of course the view of the three prevailed.
Is it not really in the interests of people who have been waiting for some years for some money that when at last, after previous Governments have tried desperately hard to get an agreement with the Russians so that something can be done but have failed to do so (and when I say "failed" this is no criticism because it takes two to make an agreement), agreement is reached and the money is there, a finality should be reached. These things happened mainly thirty years ago and those who are still alive are pretty old. We get the most pathetic letters from them, saying, "What is the earliest date on which I might possibly get something, because it is no good getting it after I am dead?" That, my Lords, was what the Government thought about this problem in 1950.
It was reconsidered by Parliament in 1958, after the Franks Committee Report had been presented, when a large number of provisions taking things away from the courts were repealed by the Tribunals and Inquiries Act. Parliament specifically considered this particular case and by an Amendment excluded it from the Act, because, it said, when dealing with these foreign claim compensation cases it was important not to delay things more than necessary. The money was never enough to meet the claims in full, and distribution of the money available could not be made until the total amount of claims was decided, and if towards the end of the period of assessment somebody could start a case and go on appealing this was not in the interests of the claimants.

45
In the case we are discussing the determination was in May, 1963; and the case did not reach your Lordships' House until December, 1968—five and a half years later; and, of course, nothing could be distributed until finality was achieved. Therefore, I am grateful to noble Lords for having raised the question of this subsection, because the Government still have an open mind and want to know what everybody thinks about it. This is not just a matter for lawyers. Naturally lawyers prefer to have everything decided by lawyers—as many lawyers as possible. But I think that this matter ought to be decided on this basis. Would a claimant want his money as soon as he can have it by letting this Board of three distinguished lawyers decide, in finality; or would he wish, if they were wrong on a matter of construction, to send the case to the House of Lords which, after five and a half years and the expenditure of a lot of money, might decide one way or the other?
My Lords, what it ought to depend on is what the claimant would want. Would he want finality or one, two, three of four appeals? It was because I thought, from what I read in The Times, that there was a good deal of misapprehension about this subsection that I have ventured to say what I have.
4.30 p.m.
LORD CONESFORD: My Lords, I am slightly relieved that the noble and learned Lord on the Woolsack, whose formidable intervention I thought might cause me some difficulty, has dealt exclusively with a question which I am prepared to leave to the Committee stage. I would comment on only one point he made. He said that claims have waited for thirty years. I think there is a point there, one that the Government might well have kept in mind when they decided that this controversial Agreement made with Russia could not wait for any Parliamentary consideration at all. The claimants had waited for thirty years, but Parliament must not have a word to say on the Agreement: that had to come into force on signature. No reason has been given for that indecent haste, and I do not believe any reason can he given.
I was grateful to the noble Lord, Lord Chalfont, for his outline with dates of some important events, which was supple-
46
mented by my noble friend Lord Lansdowne in making the first speech from these Benches. Those two noble Lords have given the main facts so clearly that I only revert to the matter of what happened in June and July, 1940, for this reason: that I thought that even the noble Lord, Lord Chalfont, made a slight suggestion that there was some difference in the responsibility of the Governments of these three Baltic States in the short period before the official takeover by the Russians and afterwards.
I merely wish to give a few quotations, with which I think the noble Lord will not differ, which show that during the whole period of that summer of 1940 these three Governments were subjected to the most brutal duress. I do not ask the House to accept any version given by any citizen of the Baltic States, and still less any description that I shall give. I want to quote from our own official historian, in the work British Foreign Policy in the Second World War, by Sir Llewellyn Woodward. Most of these quotations were rightly given during the Committee stage in another place by my gallant friend Colonel Sir Tufton Beamish. Dealing with the period between June 14 and 17, 1940, the official history says that the Russians
"compelled Lithuania, Latvia and Estonia to change their governments and to allow the entry of Soviet troops."
It goes on to say that on July 21
"new puppet governments in the three Baltic States, with the support of a popular vote secured by the usual Russian methods, asked for the incorporation of their respective countries in the U.S.S.R."
The account goes on as follows:
"There was no doubt about the methods of fraud and force used by the Soviet Government in securing a vote in favour of incorporation into the Soviet Union…The Foreign Office regarded the Russian action as of the same nature as the German conquests of Austria and Czechoslovakia."
Then there were the so-called elections, which resulted in the request to be incorported in Russia. The puppet Governments asked for incorporation in the U.S.S.R. after these elections. What happened at these elections? The leaders of all Parties, apart from the approved Communist Party of collaborators, were deported, killed or imprisoned. The only people who could stand for election were Communists approved beforehand

47
by the Russians. Voting took place under duress. The results of the count were announced in foreign countries before the count had in fact been completed, and it was not astonishing that the usual result of a 90 per cent. Communist vote was obtained without much difficulty. Russian action resulted in the nationalisation measures which are the origin of many of the British claims.
British property was seized without compensation and the external debts of these States were repudiated. None of these things was the fault of the Baltic States. Then in June, 1941, the territories were overrun by the German forces. As your Lordships have heard, before the incorporation the Government of this country had blocked the Baltic assets under our war legislation—actually I think it was Regulation 2A of the Defence (Finance) Regulations. When the overrunning of these countries by the German troops took place, that made them enemy terri under the Trading with the Enemy Act. Here I find myself, as indeed throughout, in complete agreement with my noble and learned friend Lord Dilhorne. That gave the authorities here ownership and control of the gold.
There are those who think that the British Government should not in any circumstances have realised the gold. Having regard to what has been the practice and the law of this country, I do not take that extreme view. In many wars, where enemy property, defined geographically, has been taken by the authorities, normally its fate has awaited the Peace Treaty that has followed the war, when an Agreement has been made between two lawful de jure Governments. What happened here was that there was no lawful de jure Government with whom such an agreement could be made.
I can appreciate the argument that that made it impossible to have lawful dealings with this gold, but I do not wish to take so extreme and strict a view. I think, however, it is quite obvious—here I am strongly with my noble and learned friend Lord Dilhorne—that the gold should not have been used for purposes quite outside the compensation of British nationals who had suffered damage in the Baltic States. Above all, not a penny should
48
have been used as a tip to the State that had brutally invaded and destroyed the Baltic States.
As has been pointed out, there are claims, or nominal claims, by both parties. Roughly, our claim amounted to £15 million—and I agree with the noble Lord, Lord Chalfont, that on investigation that may prove to have been too much. The Soviet so-called claim amounted to £10 million—and that definitely is fantastically too much, because the main part of that claim is for the gold itself, and nothing is more obvious to a lawyer, and I should have thought to a non-lawyer, than that the Soviet Government has not any claim, in morals or in law, to one penny of that gold. No claim which they could put forward for this gold could stand up in any court whatsoever; nor have they been so foolish as to attempt to establish such a claim in any international court.
Here I should like to draw the attention of the House to the contrast between what happens when the British Government or British nationals have claims against the Communists and what happens when Communists put forward claims against the British Government. Let me take the Lena Goldfields as an example. As my noble and learned friend Lord Dilhorne pointed out, under the arbitration clause in their agreement this matter went to international arbitration and they secured an award of £30 million. The Soviet Government did not recognise this award. Later the company had to be content with £3 million, which was later received by the Lena company mainly in promissory notes, on which the Soviet Government ceased to pay when we blocked, quite rightly, the Baltic gold in that summer of 1940. But, my Lords, not only has this company lost the £30 million award; not only did it not get the £3 million, but now the British Government are going to pay it, and pay it out of the Baltic assets. If some writer of fiction had put this forward as a possible agreement, or had it been presented as a comic work on the B.B.C., people would have said that this was too extravagant a parody about what any British Government could do. But they did it.
I remember another case in which the British Government were involved against a Communist Government—I

49
mention this only in passing. I happened to be at The Hague at the time the Corfu Channel case was being heard by The Hague Court, and I went to the Court and had the pleasure of hearing the then Sir Frank Soskice, now the noble Lord, Lord Stow Hill, arguing the case for the British Government. In due course we got a judgment against Albania for the repayment costs of the "Saumarez" valued at over £700,000, We did not re a penny. That is what happens which the British Government establish in tribunals valid claims against Communists. But when a chief Communist Government puts forward an entirely bogus claim for the Baltic gold, what do we do? In order to get them to come to an agreement to withdraw their bogus claim we pay them £500,000. Nor is that all. That is not the limit of what we pay under this Agreement. We pay that £500,000; we also release them, under Article 1(b), from over £1 million owed to the British Government under the Ships' Expenses and Freights Agreement. My Lords, this absolutely unjustifiable giving of tips to the Soviet Government—what good result is it designed to bring about?
My noble and learned friend Lord Dilhorne has discussed, and I think proved, the immorality and unprincipled nature of this Agreement. I am astonished by something slightly different. I think even its immorality is surpassed by its stupidity. Do the British Government really think that yielding to unprincipled and groundless claims will improve their relations with the Russian Government? It will not improve those relations; it will make those relations worse. Russia respects strength and not least, perhaps, strength of character. By giving them half a million pounds raised from the Baltic gold, we incur not their good will, but their contempt. It is wholly untrue that the British Government's choices in this matter were either this Agreement or leaving the gold unused indefinitely, profiting nobody. Both the claimants of compensation for what they had suffered in the Baltic States, and the assets, were here. We could dispose of those assets to the claimants by our own legislation without any agreement with the Russians at all. This point was put with great force at all stages by my learned friend Sir John Foster in another place. Incidentally, I should like to say that when
50
the much disputed subsection of Clause 2 was introduced at the final stage in another place, Sir John Foster immediately got up and delivered a most able speech, maintaining the view that has subsequently been put forward by eminent lawyers in the Press.
I fear—in fact, I am certain—that the Russians will use the fact that we yielded to a groundless claim to boost the legend that they seek to spread about what happened in 1940. I do riot know whether there are many Members to-day in this House who remember the Question that I asked on December 18, 1962, just over six years ago. They may care perhaps to look it up. In a Parliamentary Question I drew attention to a disgraceful publication by UNESCO of a booklet called Equality of Rights between Races and Nationalities in the U.S.S.R. This was a piece of perfectly unscrupulous and lying Communist propaganda and was published by UNESCO. The authors said this about the annexation of the Baltic States, which at the beginning of my speech I described in the words of the official historian:
"In 1940 the Soviet regime was restored in the Baltic Republics, which voluntarily joined the Union."
If that could be put forward at a time when the British Government had done nothing to boost these absurd claims, what will they do now?
My Lords, we cannot, of course, oppose the Second Reading of this Bill because the great mischief of it is not in this Bill but in the Agreement. Had that Agreement come before Parliament, I do not think it could have lived in either House of Parliament. I believe that is why it did not come before Parliament. There was no reason of any kind why that Agreement should not have been made subject to ratification by Parliament.
My Lords, it was a sorry day when this Agreement was concluded. It will harm our good name at home and abroad, but on Second Reading of this Bill we can do nothing about it. When it comes to the Committee stage there are some possible Amendments which perhaps could be considered. One obvious Amendment concerns the subsection dealt with by the noble and learned Lord on the Woolsack, and there is another on which I believe my noble and learned

51
friend Lord Dilhorne may have something to say. There is not very much we can do with the Bill, but I do not think it should go through this House (as it did not go through another House) without the strongest condemnation of an unprincipled and foolish Agreement.
4.51 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I find this Bill distasteful in the extreme. It is a Bill of expediency, supported by dubious arguments and very carefully phrased justifications. Many noble Lords, including myself, knew between the wars the States of Lithuania, Latvia and Estonia. We learned to respect them as proud, small nations, well governed and well administered, and we were shocked at the ruthless seizure by Russia of these small countries in the year 1940. What appals me is that the rape of these gallant little nations is now described in such a gentle manner, free from any condemnation, by Ministers of Her Majesty's Government.
In another place the Under-Secretary of State for Foreign Affairs described that horrid transaction of Soviet Russia in these words:
"… many honourable members will recall, in 1940 Soviet influence was established over the Baltic states …" [OFFICIAL REPORT, Commons, 7/11/68, col. 1096.]
The noble Lord, Lord Chalfont, has said to-day that in 1940 these nations ceased to be free agents My Lords, has a dastardly crime of crushing three little nations ever been described in such gentle terms by a Government before? I trust not, and I am ashamed that Her Majesty's Government should not have used one phrase of condemnation for the acts which took place in 1940.
I need not elaborate on the Agreement, because that has already been done by other noble Lords. But then, in order to get the agreement on claims and counterclaims with Russia arising from their annexation by force and seizure of the assets, personal and Government, of the Balts; in order to get the agreement of the two parties, the Government give away the treasure of the third, and then they add a "tip"—£500,000 of noble Lords' and of my money, of the taxpayers' money—as a sweetener. If I may use the expression of West Africa,
52
the Government have "dashed" the Soviet Government £500,000.
This dubious act is dressed up as being a further purchase of consumer goods, but there is absolutely no guarantee or indication anywhere that Russia is buying one pound's worth more of goods than she would under our normal trade. Her Majesty's Government admit that this little sweetener was slipped in in order to obtain that agreement. Let us look for a moment the admission of that from Her Majesty's Government. The Under-Secretary of State said that it would have been impossible to obtain the agreement, and added:
"Then the £500,000 which was made available to the Soviet Union came into the picture and clinched the deal. Without that £500,000 there would have been no settlement."—[OFFICIAL REPORT, Commons, 7/11/68, col. 1134.]
My Lords, it would have been far better that there had been no settlement.
The Government have refused to be drawn in another place, and so far the noble Lord, Lord Chalfont, has refused to be drawn in your Lordships' House, on any undertaking, specific or in general terms, that if and when these Baltic States revive, and their sovereignty is re-established, there will be an admission of claim for a repayment of these moneys of which they have been robbed. Noble Lords know that curious things happen in Eastern Europe. It is not beyond the bounds of possibility that that may happen in the future.
The Government's own description of this Agreement does not seem to me to be very satisfactory. Let me see how they described it, perhaps in an unguarded moment. The Minister described it thus (col. 1106):
"The agreement with the Soviet Union, and the measures to give effect to it which are now submitted to the House, are to be judged by the criterion of what is practicable rather than by ideal standards of justice."
What a terrible admission for a Minister to make! The Government make great moral gestures in regard to the alleged oppressed majority in Rhodesia but they raise not one finger and show not a flicker of interest for the interests, moral or material, of the oppressed minority of the Baits, who are suffering under Soviet rule at the present time. Perhaps Her Majesty's Government think that this

53
Agreement will build a bridge of good will between ourselves and Soviet Russia. Let me remind the noble Lord, Lord Chalfont, that since this Agreement was put forward Russia has invaded, in a cruel and heartless way, Czechoslovakia. Let me remind him of the Note to this country of December 2. Let me remind him of the abuse of this country, of the B.B.C. and the Press, which flows constantly from Soviet Russia. "Appeasement" has now become a dirty word in politics, but to-day it is the appeasers of Russia who sit on the Benches opposite.
At any rate let me say this: in 1938 appeasement gave us something—it gave us a year of time. I will not go into this further, but in 1938 we could not have fought, qualitatively or quantitatively, the Luftwaffe. We could not have won the war. But in 1939 we were harvesting the seed of Hurricanes and Spitfires laid down by my noble friend Lord Swinton in the years 1935 and 1936. So Mr. Chamberlain's appeasement, whatever one may say, gave us a year of time. But the Wilson appeasement of Russia gives nothing except surrender of other people's property—half a million pounds cash of the taxpayers' money and something of our national honour, which many of us deplore seeing given away by the present Government.
5.0 p.m.
LORD DENNING: My Lords, I am sorry that, because my duties elsewhere prevented me from coming before this moment, I was not here earlier to hear the discussion on this Bill. I should like to say a word on the clause which is being introduced, and quite deliberately introduced, to reverse the decision in this House sitting judicially in the Anisminic case. That case came before the Court of Appeal, in which I sat I suppose some two years ago, in which the Foreign Compensation Commission sought to strike out a claim at the earliest stage, saying that there was no cause of action whatsoever and that the decision of the Commission could not be challenged in the courts of law. We said that at least there was something to be argued out; and how gratifying it was when this House established in the Anisminic case that even that tribunal was subject to control by the courts of law! This clause which is being put in at the latest stage
54
means that that tribunal is, so to speak, a law unto itself; that it can interpret an Order in Council and if it interprets it wrongly there is no one to correct it, not even our courts of law.
My Lords, I thought that question had been discussed and determined when we had the Tribunals and Inquiries Act in 1958. Previously tribunals had been setting themselves up above the law and saying that the courts of law had no jurisdiction over them; that we could not control them even when they went wrong on points of law. That Act did a great deal of good. I may tell your Lordships that we have in my Court from day to day appeals to us on points of law from nearly all the tribunals throughout the land—the Lands Tribunal, the rent tribunals, industrial tribunals and all the rest. Is this tribunal to be the only one, or virtually the only one, to be exempt from the rule of law? My Lords, I suggest that this proposal should not be allowed to be introduced.
What is the argument on the other side? It is the length of time which it is said it would take for a decision to be obtained from the courts, from one series of appeals to another, up to the House of Lords; and, it is said, further, that a long time would elapse before funds could be distributed. I would ask your Lordships not to be swayed by such considerations. It is the simplest matter for an appeal to be simply to a single judge, with no appeal further. In all the pensions appeals we had I was the final and ultimate judge.
VISCOUNT DILHORNE: My Lords, may I intervene to ask my noble and learned friend a question? Would he not think it better that there should be an appeal direct to the Court of Appeal?
LORD DENNING: My Lords, I should think it infinitely better, because that is what we normally have; nearly all the appeals come from the Lands Tribunal, and so on, direct to me. I had not the benefit of hearing what my noble and learned friend had said. Certainly with matters of this size, which may involve several millions of pounds, the appeal should be direct to the Court of Appeal, or controlled by the Court of Appeal; it would surely be better than allowing

55
the tribunal to be judge in its own case. In any event, we could always expedite matters if need be.
It is said also that there are distinguished lawyers already on this Commission. That may be so; but there is a great temptation, if there is no appeal from you, to do just what you like. I have known it myself. The existence of a possibility of revision by a separate court does a world of good for all tribunals. My Lords, it is, as I understand it, one of the cardinal features of the rule of law in this country that tribunals and other bodies, of whatever description, should, in the last resort, be controlled by the Judges of the High Court or of the Court of Appeal, who in saying what the law is should have the last word or the interpretation of Orders in Council. For that reason, I hope that your Lordships will not allow the Bill to go through with this clause in it.
5.5 p.m.
LORD WILBERFORCE: My Lords, I venture to add a few words after what my noble and learned friend Lord Denning has said, simply because he was not present at the earlier stages of the debate and there were one or two points raised by earlier speakers on the legal aspect of the Bill to which I should like very shortly to reply. It is important, I suggest to noble Lords, that we in this House should be quite clear what Parliament is being asked to enact in this Bill. There are two aspects of this matter. In the first place, it is necessary that we should get the law right in the Bill itself. The noble and learned Lord the Lord Chancellor said, quite justly of course, that Clause 2(4) does not itself do anything; it awaits the enactment of an Order in Council. But he knows quite well that an Order in Council, if one were to be enacted conferring these very large powers upon the Foreign Compensation Commission, cannot, if it comes up, be amended in this House; we have to take it or leave it, and very soon we shall have to take it. So that what we have to do is to get the law right in the Bill itself.
Secondly, as speakers have pointed out, this clause received very scanty discussion in another place. Only one legal speech was made on the Third Reading in the House of Commons, and that by
56
Sir John Foster, the Member for North-wich, and he was strongly critical of the clause. So it is right that we should give careful attention to it here. One need not get tied up with a lot of legal difficulties and technicalities. The point is a perfectly simple one for anyone to understand. This Foreign Compensation Commission is one of a number of judicial bodies set up by Parliament to discharge specialised tasks. There are a great many of them; there are over 1,000 in the country at this time. And when Parliament sets up such a tribunal, it—Parliament—lays down in the Act or in the Order in Council, as the case may be, what is to be the area within which the tribunal is to operate; it defines the sphere of competence of the tribunal concerned. It may give it a very large responsibility indeed; it may give it a very slight responsibility, to fix a figure. Or it may give it very large adjudicatory powers, as it has done here.
But the question in every case, great or small, must arise and does arise quite often: what is to happen when the tribunal departs outside the area which Parliament has laid down for it? And what happens in such a case up till now—and this is a consequence of a long series of decisions going back for about a hundred years—is that the question whether the tribunal is inside its area or outside its area is a matter for the courts. There is no question here of this House or anybody having decided that the Commission's decisions of substance (I take the expression from the noble Marquess's speech) shall be reviewed by any court. To take the example of a man who owned a house in Riga 35 years ago, and his establishing his claim, there is no question of decisions on a point of that sort being challenged or of its not being covered by this exclusionary clause.
There is equally no question of depriving the Commission of power to decide finally and definitely, even on questions of construction to which the noble and learned Lord the Lord Chancellor referred. If anybody thinks the contrary is the case they have only to read our judgments in the Anisminic case. I am quite prepared to believe that that has not been done, because the clause was introduced so rapidly. The ink was hardly dry on our judgments before the clause was brought in, and I have to say that our judgments were rather long. But those

57
points are perfectly clear: the Commission may decide questions of fact; the Commission may decide even questions of construction. All that was said was that if the question of competence of area arises, that i3 a matter for the courts ultimately to review. It has normally been thought, and thought for many years, that the courts are impartial and suitable arbiters between Parliament, when it lays down what a tribunal is to do, and the tribunal itself. It has normally been thought that the tribunal should not in such a matter be a judge of its own powers, be the ultimate judge in its own cause. That is all that is meant by conferring supervisory powers on the courts of justice, and that is, in the end and in its ultimate essence, what is meant by the rule of law.
Just a little closer to the actual situation with which we are now faced, these questions arise not, as your Lordships know, under the Act of Parliament but under the Order in Council which ultimately lays down how the assets are to be distributed. Those Orders in Council are of great complexity. Your Lordships have not the one which dealt with the distribution of the Egyptian compensation claim, but I can assure your Lordships that this was a most elaborate document, amended a number of times, and if I may respectfully say so, not very skilfully drafted in all its respects. One is not to blame the Foreign Compensation Commission for getting the interpretation of it wrong. Everybody is human. It was easy enough to take a different view on what the Order in Council said.
But now one comes to the question put by the noble and learned Lord the Lord Chancellor: what about the individual litigant who has a claim? Is he going to be satisfied with no appeal whatever from this body which is going to decide what the Order in Council means and whether his claim is shut out? Is he going to be satisfied because this is an eminent body with lawyers sitting on it? The Commission does not even have to give any reasons for its decisions, no reasons at all; and the reasons have had to be dragged out of it on a number of occasions. Even a learned member of the Court of Appeal has said that there may be something to be said for reasons not being given. At any rate, it does not have to give reasons; it can decide the
58
claim without telling the litigant why, and there may be large sums involved. In the Anisminic case the amount of the claim was £4 million. How large are going to be the claims here?
At any rate, from what has been said we know that the Order in Council here is going to be one of great detail and complexity. It is going to segregate claimants into different classes, some on a national basis, some on an issue basis, a contractual interest in some cases, a legal interest in other cases. All these matters have been settled by Her Majesty's Government, normally approved, or at any rate rubber stamped, by Parliament; and surely if the Commission is not to respect those guide-lines laid down in the Order in Council there should be room for an ultimate review of their decision by the local legal courts of justice.
I am very appreciative indeed, and understanding of the need to avoid a delay. It is not only the case of the individual claimant that one has to consider. An individual claimant's claim affects all other claims; so that delay in one may have repercussions on the others, and undoubtedly it is most desirable to try to avoid that so far as possible. The Commission takes its time. Reference has been made to how slow the courts are, but I notice that this Commission took just about four years to deal with the original claim before it in the Anisminic case, before ever the courts got going on it at all. I say that not by way of criticism of the Commission, but to underline the necessity for avoiding delay. But does it follow from that that we must accept a clause so exclusionary, so drastic as that which is contained in the Bill?
I should like to ask the noble Lord, Lord Chalfont, this question. Since 1950, when this Act came into force, how many cases have been dealt with by the Foreign Compensation Commission, on the one hand, and, on the other hand, how many appeals have been taken to the courts? I know of two cases which have come to the courts, one in which there was a failure of natural justice in which the Commission itself had to agree that its decision could not stand. The other is the Anisminic case. If there are others, I should be interested to hear of them. But is it really necessary, in the

59
light of that and of the many hundreds of cases which the Commission has dealt with and which have been thought to be covered quite rightly by the exclusionary clause, to introduce something so radical as Clause 2(4)? Is it not a matter, as my noble friends have suggested, for some much more moderate procedure, some single appeal, one appeal to a court of law? Whether it is a judge alone or the Court of Appeal matters not, but in principle, in view of the importance of the sum concerned, I would myself think that the Court of Appeal was the right tribunal. One appeal and no more, possibly even with a time limit within which the appeal has to be brought. That is the proposal put forward in the joint letter of the President of the Law Society and the Chairman of the Bar Council to The Times to-day, and it surely deserves careful consideration by Her Majesty's Government. I hope that it will be considered before the Committee stage, and that this House will support those who are in favour of as little interference as possible with the normal rule of law.
5.17 p.m.
LORD CHALFONT: My Lords, I fear that we have spent a good deal of your Lordships' time already on this Second Reading, but I think we have had a number of extremely interesting points of view put forward on both the moral and the legal aspects of this Bill and the Agreement from which it springs. Of course, if, as I hope and believe, the Bill is given a Second Reading, then in the light of what has been said here this afternoon, we shall have to give close attention to those points in the later stages. I cannot, and at this stage I would not try to, take up all the arguments that have been made in your Lordships' House this afternoon. That would take up far too much time. I feel that already in dealing with the principal arguments I shall have to ask your Lordships to bear with me for rather longer than I should have hoped initially to speak.
I was taken to task by one noble Lord for expressing the fate of the Baltic States in terms which he clearly thought were under-stated and objective. I can only say that my aim in the opening speech on the Second Reading was simply to lay the historical facts
60
before the House, and had I turned aside to deal one way or the other with the morals of this or that particular course of international action twenty, thirty or more years ago, I might indeed have kept your Lordships here until well into the night.
Perhaps I may deal first of all with the question raised by the noble Marquess opposite, about the status of the three commercial treaties. He asked a specific question about these, to the effect that he wished to know whether they were valid or not and, if not, when they terminated. The facts are that in the Government's view the treaties ceased to be in operation for two main reasons. The first was that British property was seized without any compensation being paid. This would amount prima facie to a material breach of the treaties entitling us to suspend their operation. Secondly, the treaties ceased to be in operation in August, 1940, when the independent Baltic Republics were "incorporated", if I may use that rather euphemistic phrase, into the Soviet Union de facto. From that time, there have been no independent Governments recognised by Her Majesty's Government with whom the treaties could operate. Clearly, there is no need to give notice to the other side that a treaty is no longer in operation when the reason is that the other side has disappeared. The treaties, therefore, in our view, have ceased to operate in accordance with law; that is to say, the International Law on treaties.
The need for an Agreement with the Soviet Union about this has been the subject of a good deal of comment by noble Lords who have spoken. The noble Lord, Lord Conesford, I think took the Government most severely to task for this. I thought that he, if I may say so, damaged an interesting case, as he so often does, by some notable exaggeration. One need do no more than refer to his hilariously predictable identification of UNESCO with the spread of Communist propaganda. In my view this is rather like the 13th stroke of a clock; not only is it incredible in itself, but it invalidates all previous utterances.
LORD CONESFORD: My Lords, I did nothing of the sort. I pointed out that that particular bit of propaganda had been published by UNESCO, and I referred

61
the noble Lord to the Question. If he likes to look at the Foreign Office reply (probably the branch of the Foreign Office that is briefing him to-day may have briefed the Minister who replied) he will see that the reply was that this was much deplored, and that Her Majesty's Government had in fact written to UNESCO complaining of this publication.
LORD CHALFONT: My Lords, I am not resisting that statement at all. I am simply saying that I thought it was predictable that the noble Lord should have brought this up in this context. As I said, it demonstrated what I thought was a somewhat predictable strain in his views on international relations generally.
I think that on this question of the need for an Agreement—why we wanted an Agreement and why it was necessary to pay half a million pounds to the Soviet Union as part of this Agreement—one might say, first of all, that this attempt to reach agreement has not been entirely the business of the present Government. It has been pursued by previous Governments. I know that speculation about the reasons for the actions of previous Administrations is not always a profitable activity, but I can think of several reasons why no previous Government, like this one, have thought it right to embark on a unilateral distribution of assets. For one thing, as I have said earlier this afternoon, I do not believe that any British Government could have assumed that there would not have been a Soviet reaction to the unilateral distribution of the assets.
Some noble Lords have asked: "What about it? What could such a reaction be? What are these repercussions and retaliations that we are so afraid of?" I think I need only mention the Soviet Union's arbitrary retaliation for the original blocking of the gold in 1940, when it suspended payments on the Soviet State Notes, which had no connection with the Baltic States. In the last twenty years or so there have been various points—and the noble and learned Viscount will know this—at which the Soviet Union, if it had been so minded, could have retaliated against Her Majesty's Government for distributing the Baltic assets without its consent.
VISCOUNT DILHORNE: My Lords, so we may take it that one of the reasons we gave the £500,000 was that we thought the Russians might dishonour some of their other Notes?
LORD CHALFONT: My Lords, if the noble Viscount will allow me to continue, I will deal with just that point. I should like first to give a concrete example of the kind of retaliation that might be made, so that noble Lords will not think this is some kind of vague threat left hanging in the air. One such example is the Anglo-Soviet Civil Supplies Agreement of 1947, in terms of which the Soviet Union undertook to pay Her Majesty's Government a sum of £45 million by instalments, the last of which was payable only last year. I believe that noble Lords will agree that no Government could lightly put this sum at hazard, even in the interests of the British post-1939 claimants. I am simply making the point that if we had proceeded with unilateral distribution to meet these claims there could have been retaliation of a substantial and serious kind.
Quite apart from the question of retaliation, there is of course the whole general area of our commercial and political relations with the Soviet Government. I think it is perverse to suggest, as some noble Lords have suggested, that in their attitude and policy towards the Soviet Government Her Majesty's Government are engaging in some form of appeasement. What we are attempting to engage in with the Soviet Government, and have been so attempting for many years, is a civilised policy of friendly relations with a sovereign foreign State of a kind which will enable us to move forward with that State towards a world that has some element of peace, equity and stability in it. This is not appeasement.
THE MARQUESS OF LANSDOWNE: My Lords, is the noble Lord really saying that he thinks it civilised to indulge in bribery?
LORD CHALFONT: My Lords, no; I did not say that it was civilised to indulge in bribery. Indeed, what I am contesting is the fact that this is bribery at all. This is an extremely emotive and not altogether accurate phrase which comes from the noble Marquess and not from me. I have not referred to

63
this sum of money as a bribe, nor do I believe that it is. I am simply saying that we are endeavouring, not to appease the Soviet Union but to conduct our international relations in a civilised and friendly way with countries with whom we are in diplomatic relations. This seems to me to be a fairly unexceptionable view of foreign policy.
Before I deal with the sum of half a million pounds, which seems to have generated such vivid emotion in your Lordships' House, I would deal briefly with the legal considerations in favour of settling the matter by agreement rather than by unilateral action. I have said repeatedly that the Government have not recognised, and do not recognise, as a matter of law, that the Soviet Union has a right to the Baltic assets, or to any part of them. On the other hand, it is a fact—and it might be as well if we addressed ourselves occasionally to the facts in this case—that until February, 1967, the Soviet Union itself pursued a claim to these assets, and in particular to the gold; and in favour of this claim it produced legal arguments. Now, even if we do not regard these legal arguments as valid (and I have had occasion to say this in your Lordships' House about other questions), even if we do not regard them as valid, the Soviet Government certainly did.
What would have happened if we had realised those assets and distributed the proceeds to our claimants without the consent of the Soviet Government? However confident we may have been about our legal grounds for doing so, we certainly would not have been 100 per cent. sure that we should not be open to challenge by, or on behalf of, Soviet interests, either in the British courts or before some international tribunal. But now, by the Agreement, this position is put beyond challenge because the Agreement provides that each Government shall be solely responsible for the settlement of claims and the distribution to its own nationals of the assets which it holds. My Lords, I think that it is against this kind of background that we have to look at the necessity for securing an Agreement on this subject. I have no doubt at all that it was right for this Government, and indeed for successive Governments—and I emphasise this: for successive Govern-
64
ments—to seek to settle the matter in the way that we have now settled it, rather than by unilateral action.
I come now to this question of the half a million pounds and the reason why the payment was made. We have heard it referred to in emotional and exaggerated terms as a "tip" and a "bribe". Well, this is all good political "knockabout", but we are dealing here with the simple facts of an international Agreement. I have already explained, I hope adequately, why it was important and essential to secure such an Agreement. Some time before Mr. Kosygin came to this country it had in fact become clear from the negotiations with the Soviet Government that the very best we could hope to secure from them was an Agreement on the basis that each side, without admitting liability, would undertake not to pursue its claims against the other.
I am afraid that the arguments about the balance of money—the £15 million against the £10 million—are irrelevant, because we were negotiating with the Soviet Union, and this was not the way the Soviet negotiators saw the question.
After the negotiations, which had begun formally in 1959 and in earnest in 1965, there still was not the ghost of an acceptable agreement between the two sides, either on the valuation of the claims or on the question of legal liability. This was the situation when the two Prime Ministers met in February, 1967. The Agreement which resulted from these meetings was much closer to our previous position in the negotiations than to the Soviet one. Whatever noble Lords opposite may say, I do not believe that £500,000 was too great a price to pay for the advantages of an Agreement. I talk now of the advantages to the claimants, as well as in terms of the broader relationships between this countary and the Soviet Union. It is a very modest sum in relation to the total value of the assets which, at I said in my opening speech, were probably somewhere between £6 million and £7 million.
VISCOUNT DILHORNE: My Lords, the noble Lord said £6 million and £6½ million. Has it gone up half a million?
LORD CHALFONT: My Lords, £6 million and £6½ million is still between £6 million and £7 million, the noble Viscount will be delighted to know. It

65
did not involve the recognition of the Soviet title to any part of the assets nor the recognition de jure of Soviet sovereignty over the Baltic States. I believe that this was a small price to pay for an Agreement which I hope is going to result in the end of this long and wretched story for the claimants concerned in this case. I must repudiate any suggestion in this connection that the claimants, or any group of them, have any prescriptive legal right to the assets. This bargain involved a concession, but, as I have said, it was a relatively small one. My view—and I think that many noble Lords will agree—is that most claimants will be much more content at the prospect of receiving some compensation after 28 years. They will be more concerned with that, than with the fact that the total capital sum available for distribution has had to be abated by this relatively small amount.
LORD BALFOUR OF INCHRYE: My Lords, the noble Lord said that it was a small price to pay. Does he mean that we have bought the Agreement for half a million pounds? Is that what he is saying?
LORD CHALFONT: My Lords, it is easy to turn the facts of a case by the use of emotive words. If you wish to say that we "bought" an Agreement, the fact is that we agreed with the Soviet Union that in return for this small and modest sum of money, which I pointed out in my earlier remarks was to be resolved in terms of trade between the two countries, we were able to obtain an Agreement which I think was in the interests of international relations and in the interests of the claimants concerned. This is a matter—and it has been the Government's concern throughout—of satisfying these claims after they have been hanging about for nearly thirty years with the depressing results which were mentioned earlier by my noble and learned friend on the Woolsack.
THE MARQUESS OF LANSDOWNE: My Lords, before the noble Lord leaves the point, is he going to give me an answer as to whom this money belonged; and, if it did belong to Her Majesty's Government, by what legal process? I think this matter fits in here.
LORD CHALFONT: My Lords, perhaps the point fits in here, though I in-
66
tended to come to it later. However, since the noble Marquess asks me now, may I say that this is really a question of what authority Her Majesty's Government had to realise these assets and then to use them in the way they did. I do not think that the question is as obscure as the noble Lord might think, but in order to clarify the matter I shall need briefly to give a little history.
THE MARQUESS OF LANSDOWNE: My Lords, the question is not obscure; it is the answer that I want.
LORD CHALFONT: My Lords, the answer has not yet been given, so I fail to see how the noble Marquess can characterise it as obscure. I think that the position must be obscure to the noble Marquess or he would not have asked the question. I shall now attempt to clarify it. If I am to do so, it is necessary for me to sketch briefly the history of the matter. In 1940, when the Baltic States were occupied by Soviet forces, the Bank of England held the gold to the account of the former central banks of the three countries concerned, Latvia, Lithuania and Estonia. Shortly before the formal incorporation of the Baltic States into the Soviet Union (I am sorry to go on using this objective phrase, but there is nothing sinister about it), the Soviet State Bank represented that it had bought the gold from the Baltic banks. Transfer to the Soviet State Bank was withheld, as your Lordships will know, and the gold was blocked under Regulation 2A of the Defence (Finance) Regulations on July 24, 1940.
Subsequently, when the Baltic States were overrun by Germany in 1941, the provisions of the Trading with the Enemy legislation were applied to the gold, and it was eventually the subject of a formal order vesting it in the Custodian of Enemy Property, with power to sell, under the Trading With the Enemy Act 1939 and the Trading with the Enemy (Custodian) Order 1939. As the noble Marquess will realise, the effect of vesting is to make the Custodian the legal owner of the property. Once the gold had been vested in the Custodian, he was legally entitled to sell it and realise the asset under exactly the same powers. I hope that I have made the position clear whence springs the authority to sell the gold and realise the assets.
VISCOUNT DILHORNE: My Lords, the noble Lord agrees that if the Germans had not occupied these territories Her Majesty's Government would have had no power to dispose of this gold.
LORD CHALFONT: My Lords, the noble Viscount is extremely good at casting hypothetical flies over the Government Front Bench. I am not going to rise to that one at this stage of the debate.
It has also been suggested by noble Lords opposite that we should not have a common pool of assets. I cannot see much force in the arguments adduced in support of this. The assets have separate territorial origins, encompassing both the Baltic States and Ceded Territories, but these separate origins are not now represented by separate sovereign States. This may be regrettable, but it is a fact. Our claim was against the Soviet Union as the de facto Government of the territories concerned. The claims were for payment in full in each and every case, and the Soviet Union in turn laid claim to the assets held in this country, whatever their origin. We did not hold separate negotiations or reach separate agreements about each category of claims in turn. The settlement which we did reach was a global one, and I repeat that it was one in which each side agreed not to pursue its claims against the other. Her Majesty's Government have now to decide what is the best method of compensating all the United Kingdom claimants out of the assets which the Soviet Union no longer claims.
The noble Lord, Lord Trevelyan, asked the question, why are foreign holders of the notes but not of the external bonds to be included? This is a complicated question and it would take a long time to answer in full, but I might say that whilst the Council of Foreign Bondholders, which the noble Lord represents with such great distinction, is competent to represent sterling bondholders, irrespective of their nationality, in pressing foreign Governments to carry out contractual obligations under bond issues, Her Majesty's Government are in a rather different position. We can present claims to other Governments only in respect of British losses, and this is what was done in the case of the Baltic
68
bonds. A State, as your Lordships will know, is not entitled to put forward a claim to another Government—
LORD TREVELYAN: My Lords, may I ask whether we are entitled to accept proposals from the other Government that foreign nationals should be included in those beneficiaries who claim?
LORD CHALFONT: My Lords, I will finish answering the question, and I hope that the point will be clear to the noble Lord. The scope of the negotiations with the Soviet Government was laid down in 1959. The Registration Order in Council of November of that year made provision only for British-held bonds. The fact is that the Soviet Government would not negotiate about foreign holdings of the bonds. They have conducted negotiations with a number of Governments about Baltic claims and always on a basis of nationality. We shall be providing in the distribution to admit bonds in British ownership in November, 1959, when the Registration Order came into force, and not at the dates in 1940 when service of the bonds ceased.
The history of the bonds and the notes is in a number of respects quite different. As regards the notes, in 1959 we were pressing the Soviet Government, as we did throughout the negotiations, to resume service of all these notes—which, unlike the bonds, were obligations contracted directly by the Soviet Union. The Soviet Government did not deny their obligations, but they sought to make resumed service dependent upon the return of the Baltic gold. Clearly, this no British Government could have agreed to. As part of the final terms of the settlement we agreed to make a settlement of the notes, and the position is made clear in the Agreement of January 5.
Article 1 covers the bonds owned by nationals of the United Kingdom. Article 4 provides an undertaking by Her Majesty's Government to settle the notes irrespective of the nationality of the holders. There is, I think, justification for this. The two companies were British companies and all the note-holders suffered loss as a result of Soviet retaliation for British action in blocking the gold.

69
This, as I said earlier, was done in defence of British interests and there is every reason to suppose that, but for this British action, all the notes would have been redeemed by the Soviet Government many years ago. I should have liked, in all fairness, to go further into the points made by the noble Lord, Lord Trevelyan, about the distribution proposals, but if, as I hope, the Bill is given a Second Reading, the noble Lord and I could discuss this at greater length later. Certainly, I can guarantee that if, as I hope, the Bill is given its Second Reading, we shall look closely at all his points, and, indeed, at all the suggestions that have been made this afternoon in your Lordships' House.
There is perhaps one point that I should make, because it is one that has been made with a good deal of feeling by noble Lords opposite. It concerns the question of ratification of the Agreement with the Soviet Union. A good deal of concern, and indeed some violent criticism, was expressed of the fact that this Agreement was reached without being subject to ratification. Perhaps at the outset I should say that neither side in the negotiations wanted to make this Agreement of 1968 subject to ratification. This, of course, is not an answer to the question; but the broad terms of the settlement were reached, as I said, during Mr. Kosygin's visit in 1967 and that settlement was definitive. Both sides were anxious to resolve the question, once and for all. On our side it had been the policy of successive Governments to work for this settlement before disposing of the assets, and in our view—a view which we still hold—an agreement which was subject to ratification would not have formed a sufficiently firm basis from which to dispose of these assets.
VISCOUNT DILHORNE: My Lords, could the noble Lord then explain why on January 23 the Foreign Secretary said that the Agreement would be subject to Parliamentary approval?
LORD CHALFONT: My Lords, the Bill that springs from the Agreement will, of course, be subject to Parliamentary approval. It is the Bill that we are—
VISCOUNT DILHORNE: My Lords, the Foreign Secretary specifically referred to the Agreement. That is quite a different thing from the Bill. We can pass
70
the Bill without having any effect on the Agreement. The Foreign Secretary said that the Agreement would be subject to Parliamentary approval. I asked the noble Lord to say specifically whether that was wrong, and if it was not wrong how does he justify it?
LORD CHALFONT: My Lords, I take the noble and learned Viscount's point. I admit that I cannot answer that question now. I was not aware of the circumstances in which that was said; perhaps I should have been. I will look into the question and will certainly take the earliest opportunity to answer the question, either to the noble and learned Viscount directly or in your Lordships' House.
VISCOUNT DILHORNE: My Lords, I raised this particular point in the course of my speech. I raised it at the very outset of my speech and I was hoping for a reply to it now. It really should not have come as very fresh to the Foreign Office, as the particular statement made by the Foreign Secretary was quoted in another place.
LORD CHALFONT: Then, my Lords, I can only apologise for the fact that I did not realise the exact point of the question when the noble and learned Viscount put it in his speech. I can only say that it was never the intention during these negotiations to have an Agreement subject to ratification. If it had been subject to ratification, there is one very important consideration. This is that after the Agreement had been made the Russians might have failed to ratify it, which would have held up the proceedings still further. However, now that I am clear about the point made by the noble and learned Viscount I will certainly address my mind to it and will let him have an answer, and will let the House have an answer, as soon as I possibly can.
Of the major points that have been raised this afternoon, this leaves only the important question—perhaps the most important one, if the drift of this afternoon's debate is to be an indication—of Clause 2(4). My noble and learned friend who sits on the Woolsack dealt with this clause at some length earlier in the debate, and I am sorry that the noble and learned Lord, Lord Denning, who made a characteristically good-humoured and

71
modest contribution to the debate, was not here to hear my noble and learned friend. As he addressed himself in his customarily authoritative way to the legal aspects of this clause, I shall not attempt to follow him; I should only, I think, make one or two brief points about this question.
It has been said several times in your Lordships' House this afternoon that Clause 2(4) threatens the rule of law, and that is a suggestion which, on behalf of Her Majesty's Government, I must immediately contest. In our view, the establishment of the Commission itself in 1950 was a strengthening of the rule of law. These points have been made by my noble and learned friend. Before 1950 distribution was entirely administrative. Now there is a special tribunal; and, indeed, one manned by lawyers. The question now at issue is: how far is the Commission—charged with this special, indeed one might almost say unique, task—to be subject to judicial review? The noble and learned Lord will know that Lord Justice Russell said in the Court of Appeal:
"… the Executive is dealing broadly with matters not strictly matters of right, and the time-consuming precision of the ordinary judicial processes may well be out of place."
That is also the Government's view. The general power of the courts to supervise inferior tribunals of course remains. What this amendment does is simply to define more precisely the field which is remitted to the Foreign Compensation Commission.
Finally, I should like to underline as emphatically as I can the point made by my noble and learned friend. The interest of the claimants is really what is at stake here. That is what is at issue. It is this that Her Majesty's Government have had at heart throughout these negotiations, throughout the drafting of this Bill and when arriving at the decision to propose this amendment. What the claimants want is for their claims to be resolved as quickly as possible. As I have said several times this afternoon, they have been waiting thirty years for this. Given the high standing of the members appointed by the Lord Chancellor to the Foreign Compensation Commission, we think it appropriate that the final decision should be taken at that level. Whatever the noble and learned Viscount may say,
72
it is our view that this was the intention embodied in the Foreign Compensation Act 1950 and the Tribunals and Inquiries Act 1958, and the amendment does no more than give effect more clearly and emphatically to that intention. As I have said, Clause 2(4) simply deals with that one aspect of the case and is meant in the long run to address itself to the possibility of further delay in the settlement of these claims.
The primary purpose of the rest of the Bill which is now before your Lordships' House is to create circumstances in which after this long and miserable story following the wretched history of the Baltic States, the claims of these people can be settled is equitably as possible. We should like to do this in a way that springs naturally out of the settlement which we reached with the Soviet Union while Mr. Kosygin was here.
I believe the Agreement to be right, and I believe that the Bill which now springs from it is the right and just way to meet the legitimate preoccupations of these claimants. Therefore, as I say, I hope and believe that your Lordships' House will give the Bill a Second Reading, so that we may address ourselves closely and assiduously at later stages of the Bill to the various proposals and ideas that have been put forward in your Lordships' House this afternoon.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.

NATIONAL INSURANCE &c. BILL
5.50 p.m.
BARONESS PHILLIPS: My Lords, I beg to move that this Bill be now read a second time. This short Bill has a dual purpose. First, it enables the payment of flat-rate unemployment benefit to continue to be made to suspended workers during the first week of any period of suspension after March 9, when it would otherwise cease. Secondly, it paves the way for regulations to be made to implement the recommendation of the National Insurance Advisory Committee that benefits should remain encashable for twelve months (I see that the noble Lord, Lord Conesford, has gone, but I apologise to him in his absence for the horrible word "encashable"; I could not find any other word) instead of six months as

73
at present. These are quite separate matters and can best be considered separately.
My Lords, Clause 1 of the Bill follows naturally from the Government's decision, announced in another place on October 14, that more time must be allowed for negotiations with both sides of industry about proposals for legislation requiring employers to make guarantee payments to workers on short time or laid off for a week or less. Workers who are affected by short time or lay-off in this way are at present entitled to flat-rate unemployment benefit in accordance with the normal rules. But Section 3(1) of the National Insurance Act 1966 provides that this entitlement shall cease on March 9. The first purpose of the Bill is therefore to enable the payment of this flat-rate unemployment benefit to continue after March 9 until a day to be appointed by the Secretary of State.
Section 3 of the 1966 Act embodied the principle that financial responsibility for short periods of suspension should be placed upon employers. The Government's view continues to be that this principle is the right one. As your Lordships will know, the purpose of unemployment benefit is to replace the lost income from earnings of those who are wholly unemployed: it is not intended to provide additional income, over and above their earnings, for workers laid off by their employers for brief spells or while they are on regular short time. The Government take the view that it is neither economically nor socially justifiable that the National Insurance contributions of employees in general, many of whom receive less when they are working full-time than others are getting when they are working short-time, should be used to subsidise the earnings of workers in certain industries. With the introduction in October, 1966, of earnings-related benefits, it would certainly have been wrong to pay the improved rates of benefit for part of a week to people who are still in work and are receiving earnings for the remainder of the week.
Because of these economic and social considerations the 1966 National Insurance Act (which, as your Lordships are aware, introduced an earnings-related supplement to unemployment benefit) provided that the supplement should
74
never be paid during short-time or layoff for less than a week. This provision is in no way altered by this Bill. But the 1966 Act went further and provided that three years after it had received Royal Assent—that is, on March 10, 1969—flat-rate unemployment benefit should also be withdrawn for these periods.
My Lords, these provisions with regard to unemployment benefit do not of course stand by themselves: they assume that employers have a financial responsibility for the employees concerned. But at the same time the Government recognised that both sides of industry would need an adequate period in which to negotiate voluntary agreements to deal with financial provision for short-time working within the industrial context. The three-year interval which I have already mentioned provided time for the negotiations of appropriate voluntary arrangements. As a further safeguard, the Government also undertook, in the absence of satisfactory voluntary agreements, to introduce a statutory scheme of guarantee payments.
In the interim, the First Secretary of State has been responsible, first, for encouraging the negotiation of voluntary agreements where they did not already exist and, when it was clear by the end of 1967 that voluntary agreements would not be reached, for initiating negotiations with both sides of industry about the introduction of a statutory scheme. During the course of these negotiations substantial problems have emerged, particularly about the form and level of the guarantee and about the provisions to be made for workers whose suspension from employment is the consequence of a strike. It was also necessary for the Government to take account of related developments, and here I have in mind the proposals arising from the Donovan Commission's Report and the plans for the new earnings-related social security scheme, both of which have recently been dealt with in White Papers. Summing up, Clause 1 enables payment of unemployment benefit to continue after March until a day to be appointed by the Secretary of State, after approval by both Houses of Parliament.
My Lords, the remaining part of the Bill springs from a National Insurance Advisory Committee Report on time

75
limits, which included recommendations for extending from six to twelve months time limits for making claims and for cashing instruments of payment. It is concerned only with changes in the time limits for the encashment of instruments of payment. Changes in the claim provisions can be made by regulations under existing powers, and we are not concerned here to-day with this aspect.
Clause 2 of the Bill will enable regulations to be made for all Social Security benefits extending the period within which these benefits must be cashed from six months to not less than twelve months. This new rule is not only more generous but also more flexible than the old rules. Judging from the present pattern of complaints, the vast majority of people will be covered by the period of twelve months. But the National Insurance Advisory Committee also wanted cover to be given to a small minority of cases where, for example, the person becomes quite incapable of looking after his own affairs because of mental or physical incapacity, and has no one readily available to help him. It is the intention to extend the time limits in such cases indefinitely. The Government intend to introduce the new encashment regulations as soon as Royal Assent has been received. The opportunity will be taken to simplify the existing Regulations so that they are easier to understand and to apply.
My Lords, the time limit on the encashment period has sometimes been opposed in principle. In their Report, the Committee considered carefully whether such a time limit was necessary. They concluded that it was for reasons which carry conviction, the most important of which was the cost. If people had an unlimited period in which to cash their instruments of payment, because of the need to check payments the Department would be obliged to store indefinitely millions of orders and postal drafts and to search through them whenever a late request for payment was made. Even within the present six months encashment period 24,000 people a year claim that they have not cashed their authorisations, and have had to be convinced that they have done so by the production of the cashed instrument with their own signature on it. This storage
76
and searching would be a very expensive business if required over a long period, and the cost would be excessive. Moreover, most benefit payments are not unconditional, and the beneficiary has to sign that he is currently entitled. Such a declaration years after the event would be of little value, and would leave the way wide open for dubious claims.
In short, my Lords, abandonment of the rules would be very hard to justify, but the relaxation of the rules will help those few people who run over the present six months' limit. It will, for example, help those elderly people who like to save up pension orders to meet a periodic payment and who in the past have sometimes overrun the time limit. It provides an adequate solution to these time limit difficulties.
Clause 3 makes a customary provision of National Insurance legislation as regards regulations which are consequential to the Bill. As to unemployment benefit it is intended to maintain in being certain technical rules about payment of benefit for days when a person would not normally work: these rules would otherwise be revoked after March 9. As to time limits, it covers regulations to implement all the changes recommended by the National Insurance Advisory Committee which have to be brought into effect at the same time as the Bill becomes law. Your Lordships will wish to know that the cost of continued payment of unemployment benefit is estimated as approximately £3 million per year. I commend the Bill to your Lordships' House as a minor but beneficial measure. I beg to move.
Moved, That the Bill be now read 2ª. —(Baroness Phillips.)
6.1 p.m.
LORD DRUMALBYN: My Lords, I should like to thank the noble Baroness for introducing so clearly this Bill which is quite small in compass and for making clear matters which are not very clear on the face of the Bill itself. This Bill is a short and, if I may so call it, a two-pronged Bill. The Government have had to bring it in because they needed the first prong to avoid leaving a vacuum. They have sensibly taken the opportunity—and the opportunities are rare—to add the second prong to implement the recommendations of the National Insur-

77
ance Advisory Committee which were made about a year ago. Incidentally, I take it that the words "et cetera" in the Title relate to the fact that the recommendations apply to family allowances which are outside the scope of National Insurance. It is not a very elegant Title, but it is shorter than saying "National Insurance and Family Allowances Bill".
So, while we should not wish to oppose the Bill, perhaps your Lordships will permit me to probe it a little. May I first deal with the second prong—Clauses 2 and 3, which are more straightforward than Clause 1. As I am already on record in your Lordships' House as favouring an extension of the time limits—and I was castigated by the Government for saying so—I am naturally glad that the National Insurance Advisory Committee has recommended 12 months instead of 6 months as the time limit, both for the cashing of benefits—and I suggest this to the noble Baroness as a phrase—and for the admission of claims for retrospective payment where "continuous good cause" is shown and where the entitlement (whether to sickness benefit or retirement or widow's pension) continues up to the time of the claim. The Committee records in paragraph 8 of their Report that their attention was drawn
"to comments made by the National Insurance Commissioners indicating that they on occasions regret their inability to accept for a past period of more than six months although they are satisfied that good cause for not claiming existed for a longer period".
As has been said, I appreciate that hard cases make bad law; but 24,000 hard cases are quite a lot. I do not say that all are hard cases; but, equally, I think it true to say that it is bad law if too many hard cases are made. I am sure that in this respect the law can be improved so as to lessen the feeling of injustice that sometimes arises from a refusal to honour payment orders or to accept retrospective claims.
The noble Baroness said that the Bill deals only with the cashing of benefits because the Minister already has power to extend the period in which claims for retrospective payment must be made. She did not say in terms that the Government intended to do that; but I take it that the Government accept the recommendations of the Advisory Committee in their
78
entirety and will bring in the necessary regulations. Perhaps the noble Baroness could tell us at the same time whether this would mean one big, block regulation or separate regulations dealing, on the one hand, with claims for retrospective payment and, on the other hand, the extension of the period for cashing benefits. I am also glad that the National Insurance Advisory Committee has recommended that the adjudicating authorities should have discretion to allow encashment of benefits even after the period of 12 months has expired where the contributor was incapable of obtaining payment during the period or of getting someone else to obtain it for him. I would ask the noble Baroness to confirm that in this case the "adjudicating authorities" means the insurance officer with an appeal to the local tribunal and from there to the National Insurance Commissioner.
My Lords, I turn now to Clause 1. As the noble Baroness has said, Section 3(1) of the 1966 Act provides that as from March 10, 1969, the first six days during which employment is suspended, as distinct front being terminated, are not to count as days on which the employee is entitled to flat-rate unemployment benefit. As Sundays are disregarded, I take it that "six days" means, in effect, a week. The noble Baroness has told us that the saving resulting from this provision will be about £3 million. That is a sizeable sum, although it is less than 0·2 per cent. of the combined flat-rate and Exchequer contributions. Clause 1 postpones the coming into operation of the provision indefinitely; that is, until a day to be appointed by the Minister. I would ask the noble Baroness whether this means that the Government are still hopeful, as they appeared to be in 1966, that voluntary arrangements will be made between employers and employees and will go on being made; and whether there is, in the Government's view, any prospect of this being done right across the board to make it unnecessary to bring in legislation. I am not sure that I can agree with the noble Baroness that the principle that responsibility for short periods of suspension should rest with the employers is valid in all circumstances. I take it that what is meant by "short periods of suspension" is, as in the Bill, six days or less.

79
The Minister of State said in another place, and I think the noble Baroness said much the same to-day when introducing this Bill:
"Unemployment benefit is primarily intended to provide for the wholly unemployed."
Primarily, no doubt; but the principle that enabled unemployment and sickness benefits and retirement pension to be brought together in a single unified scheme was the principle of making insurance payments where work is interrupted; that is, where employment is suspended through sickness or other causes beyond the control of the contributor. The noble Baroness referred to the Royal Commission on Trade Unions whose Report recommended that where there is a strike at an employee's place of work that employee should no longer be disqualified from receipt of benefit simply because he is a member of the same grade or class of those workers there who are actually participating in the dispute or helping to finance it, or are otherwise directly interested in it, even if the employee himself is not in any way participating in it.
I shall not argue this point here. I will merely mention that an employee in the same grade or class may stand to gain from the strike to the extent that its objectives are achieved even although he is not in any way participating in it. If that recommendation were to be accepted as things are at present, and were to be brought into force now (and I think this is the easiest way of expressing it) then many more employees in such circumstances would be entitled to benefit than can do so at present; but after the appointed day they would be deprived of benefit unless the strike lasted for more than six days. It is true that unemployment benefit would not be paid for the first three days of an interruption of work caused by a strike unless there were at least 12 days of unemployment in the 13 weeks. But it must be remembered that it is not only employees at the same place of work who are concerned: in some cases men employed elsewhere may also have to be laid off as a result of the stoppage. And where they are, of course, both employers and employees suffer.
80
I should have thought it inconceivable that the Government would transfer entirely from the National Insurance Fund to the employer the responsibility for paying these men unemployment benefit. Men who are laid off because of a strike elsewhere have their employment suspended through the cause of the strike, not by their own employer; and this, I should have thought, is just the sort of risk that employers and employees ought to, and do, join together to ensure against in the National Insurance Scheme. The noble Baroness used the present tense in saying that this is not intended to be covered. But, my Lords, it has been covered for many years by the National Insurance Scheme, and it is a risk of this kind which ought to be spread over the whole contributing community and not just borne by particular employers on whom it happens to fall.
The noble Baroness also spoke of the cases where employers and employees—but perhaps here I ought rather to refer to what was said by the noble Lord, Lord Bowles, when he introduced the 1966 Bill. He said:
"At present workers who are on short time or are temporarily laid off can qualify for unemployment benefit, subject to a complicated set of rules. But these have caused difficulties and anomalies, and in some industries arrangements for short-time working have been manipulated to get round the benefit rule."—[OFFICIAL REPORT, 28/2/66, col. 491.]
I am aware that employers and employees in some industries have negotiated agreements about short time which took into account unemployment benefit in a way that probably was not intended under the National Insurance Act. In some cases this may have been done as an alternative to making a substantial proportion of the work force wholly unemployed. It was necessary to continue with short time in order not to lay off workers altogether. I wonder how much of the £3 million which these payments for short-term suspension are said to cost a year would have been paid out in longer-term unemployment benefit if these arrangements had not been made. I also wonder how many strikes might have resulted if some men had been paid off, instead of all the men working short-time, and what those strikes would have cost. I should have thought it would have been several times more than £3 million, so I am not sure that the £3 million has not been well spent.

81
My Lords, I should like to ask the Government what they expected to happen in the three-year period which is now running out. Did they really expect that in every single enterprise in the country agreements would be negotiated to take the place of National Insurance benefits? Perhaps the noble Baroness would tell us a little more about what guidance was given to these enterprises as to how to set about reaching agreement. She said that the First Secretary had been in charge of this aspect. Perhaps she could tell us also a little more about what is the state of play now. What are the Government doing now; and what do they intend to do? There have been reports that they were on the point of introducing legislation, to use the words used by the noble Lord, Lord Bowles, on February 28, 1966 (col. 492), "to make guaranteed week agreements compulsory."
I am all in favour of guaranteed week agreements to cover period of short-time working, but how on earth can one compel people to agree? Those were the words used: to "make … agreements compulsory". Is this really the purpose of legislation? Obviously there is no alternative to accepting Clause 1 of the Bill, because Section 3(1) of the 1966 Act cannot be brought into operation by March 10, 1969, as planned. In other words, the Government's plans have not worked out. In this case I suspect it was because the Government were not sufficiently clear in their minds at the start when they legislated about the objectives to be achieved and the steps needed to achieve them.
My Lords I would only add that if the Government's intention about legislation corresponds in any way with what I have heard here and there, it will be no great loss if the appointed day never dawns. At least this Bill gives the Government time to think again, and to think better; and to negotiate with industry in the meantime. And for that reason we certainly shall not oppose it to-day.
6.15 p.m.
BARONESS PHILLIPS: My Lords I should like to thank the noble Lord, Lord Drumalbyn, for at any rate welcoming the Bill generally. I will endeavour to answer the various points he raised. On the question of the Title, the noble Lord was quite correct in
82
assuming that "&c."—which I must say is not my favourite expression—included the other matters he mentioned, and obviously that goes a little wider than the title "National Insurance", The noble Lord made the point that after the 1966 Act the Government should have been busy looking into the question of getting voluntary agreements and so on. I am sure he will realise that extensive negotiations have been going on, but I think the more general reasoning which the noble Lord has presented to us to-day will show that there are definite lines of conflict on the very point he has raised, which is only one of many, on the question of suspended workers and so on.
Added to this, my Lords, we have had the new Donovan proposals. I think I should go no further with the Government's case than to say that the Government are sympathetic towards the objective of avoiding disqualification for unemployment benefit for people remote from an industrial dispute. Those, I think, were some of the people to whom the noble Lord referred. But these recommendations need further consideration in the light of comments so far made by the C.B.I., the T.U.C. and the nationalised industries. The Government intend to resume consultations on this matter as soon as possible. In other words, consultations are now in process of being resumed on some of these very "knotty" points—if I may use such a colloquial term—which the noble Lord has raised.
I can give the noble Lord a definite assurance that all the recommendations of the National Insurance Advisory Committee have been accepted. There will be one block of National Insurance regulations which will cover both late claims and the encashment. The adjudicating authorities, as the noble Lord suggested, are the insurance officer, the tribunal and the commissioner, in that order. The hard cases to which the noble Lord referred were not the 24,000; they were people who thought that they had not cashed these orders when in fact they had. I noted the noble Lord's suggestion that the £3 million should be spread over the whole of the contributing community. I am not sure whether there is any real difference between employers or the community meeting certain things, as I have a feeling, as a consumer, that

83
some of this must inevitably come back to us. But I take the noble Lord's point. The Government are anxious to get voluntary arrangements—
LORD DRUMALBYN: My Lords, if the noble Lady will allow me to interrupt her, may I say that up to a point what she has said is perfectly true. But surely this may happen in one part of the country, and it will be people in competition, employers in other parts of the country, who are quite arbitrarily hit by a strike for which they have absolutely no responsibility at all.
BARONESS PHILLIPS: My Lords, I take the noble Lord's point, having been in one section of the car industry where I saw this happening. It is because of this point, which has been raised so eloquently by the employers and to a certain degree by other sections of the negotiating bodies, that we cannot give a categorical answer now. The voluntary arrangements are those which the Government would seek for preference, and these are also under discussion. The noble Lord raised other specific points to which I will let him have a reply during the process of the Bill, or at any rate in writing. I should like to thank him for his general welcome and commend the Bill to your Lordships.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.

EGGS (PROTECTION OF GUARANTEES) ORDER 1968
6.20 p.m.
LORD BESWICK: My Lords, I beg to move that the Eggs (Protection of Guarantees) Order 1968, a copy of which was laid before the House on December 19, 1968, be approved. The 1968 Order makes only one major change in the provisions for the protection of the guarantee: that is in Article 3, which removes the obligation on the packing stations to stamp first quality eggs on the shell with the weight grade, if they are hen eggs, or the word "Duck" and the packing station code number, and lays down an alternative method of identifying eggs eligible for subsidy. The arrangements for the testing and grading of eggs at the packing station are not
84
affected by this change. Another change which is made by the Order is contained in Article 4. This is purely consequential on the removal of the stamp.
Subject to a modification in the wording made necessary by the removal of the stamp, it effectively continues a prohibition which has been in operation since 1961 on the sale or use for hatching of eggs which have attracted subsidy. A further consequential change is the addition of a definition of "container" in Article 2. The remaining Articles of the Order deal with such matters as the keeping and production of records, the right to demand production of books, accounts and records and the service of notices. These Articles are primarily concerned with audit requirements and consolidate the provisions in the previous Orders.
It is generally known that during the last year or two there has been increasing pressure from the industry for the removal of the stamp. It has been argued that there has been growing evidence of a strong consumer preference for unstamped eggs as such, and that the sale of packing station eggs has therefore been unfairly handicapped. From the point of view of the protection of the guarantee, it was part of the original justification for the stamping requirements that they operated as an automatic safeguard against the fraudulent representation of eggs which had already attracted subsidy. For some years, however, the prices the Board pays the producer have been normally below the Board's wholesale selling prices so there is effectively no financial incentive to offer eggs to a packing station a second time.
The removing of the stamp raises issues going much wider than the protection of the guarantee. It was tabled in the wider context of egg marketing arrangements generally by the Farmers Unions and the Egg Marketing Board in the course of discussions with the Agricultural Departments in the first half of 1967. It was as a result of the far-reaching proposals put forward in those discussions that Ministers came to the conclusion that a fundamental reappraisal of marketing arrangements was called for and decided to set up the Reorganisation Commission. The conclusion of the Commission was that the case on marketing grounds for the removal of the stamp had been established. Their broad conclusion was

85
that the requirement to stamp was proving an increasing handicap to the sale of packing station eggs since it had effectively led to the creation of two markets, with the unstamped market increasing year by year and the stamped market showing a tendency to decline. The artificial separation of the markets for stamped and unstamped eggs has therefore been to some extent an accidental by-product of the statutory stamping requirements and the Board's own arrangements. The case for the removal of the stamp on marketing grounds has been strongly supported by most sections of the industry. From the standpoint of the protection of the guarantee, the case for retaining the stamp as a deterrent against fraud has lost its force.
It will still be necessary, of course, to ensure that testing and grading standards at the packing stations continue to be strictly enforced, and for this a satisfactory method will be required of identifying the eggs which are being passed for subsidy at the packing stations. We are satisfied that this need will be met by the marketing requirements in Article 3 of the Order. These apply to the bulk containers into which the eggs are packed at the packing stations, and require the packers to mark the containers of first quality eggs with the weight grade of hen eggs or the word "Duck" and the packing station code number. The present quality control and audit inspections at the packing stations will naturally continue.
My Lords, this Order is concerned solely with the protection of the guarantee, but the Reorganisation Commission recommended the removal of the stamp as part of a complex and far-reaching series of proposals for the marketing and distribution of eggs. Among the Commission's proposals were a number relating to the protection of the consumer. We are well aware of the importance of this and shall be giving further consideration to consumer protection aspects generally in consultation with the interests concerned. The Egg Marketing Board have been one of the leaders in the campaign for the removal of the statutory stamping requirements. As such they naturally withdrew their own stamping requirements as soon as the present Order came into operation.
86
Thus the whole of the purely artificial element in the distinction between the markets for stamped and unstamped eggs has now been eliminated. So far as the Order is concerned, the changes which it has brought about can be justified not only in their own right but also as a useful first step towards the objective of a basically free market for all home-produced eggs. I beg to move.
Moved, That the Eggs (Protection of Guarantees) Order 1968, be approved.—(Lord Beswick.)
6.27 p.m.
LORD NUGENT OF GUILDFORD: My Lords, may I thank the noble Lord, Lord Beswick, for explaining the technical effects of this Order and some of its implications. As he says, it is the first step towards the big changes which have ben foreshadowed by the Minister of Agriculture in the statement which the noble Lord gave us two weeks ago. There are one or two aspects on which I should like to make comment. First, I would welcome this Order. I am sure that it is a sensible step to eliminate the evolution of two different markets for stamped and unstamped eggs. I think it will be in everybody's interest to see the artificial barriers removed, with the disappearance of the "Lion" stamp. With regard to consumer protection, about which the noble Lord spoke, I think that the healthy lines of competition which are developing among the wholesale and retail trades in the marketing of eggs and in the branding of the consumer packs in which they are put up will be a powerful measure to protect the housewife from being supplied with other than first-quality fresh eggs.
But the effect of this measure is a first step towards the removal of the price guarantee structure of this commodity and therefore has far-reaching effects for the egg production industry. Here I should declare that I have a considerable interest in this matter on my own farm, as well as an interest in the industry generally. The removing of a commodity from the first Schedule of the 1947 Act is without precedent and nobody can predict exactly what will happen. Therefore, there is great anxiety among egg producers. The noble Lord spoke about the need to protect the consumer but I am sure that he will understand when I say a word from the point of view of

87
the producer. The long transition which the Government are providing—two years with the existing structure and three more years with some new structure under a new central authority—and at the same time the introduction of a system of import control by minimum import prices, seems to me a sound approach, giving long enough in the transition to make sure that it can be conducted in an orderly fashion.
The practical point which I should like to put to the noble Lord is that the Government must bear in mind that if they remove the subsidy they are in fact removing 6d. a dozen on every dozen eggs sold through the packing station. Obviously, if that were removed in one movement, all the producers selling their eggs through official channels now would be in danger of being either bankrupted or very hard hit. I am certain that the Government have no such intention. As I say, I think the lengthy transition indicates that it is the Government's wish to make it possible for this egg-producing industry to find a new equilibrium without subsidy.
During this transition period three things will be happening. First, with the disappearance of the machinery of the Egg Marketing Board to implement the assured price and assured market there will be big economies in transport and marketing costs. Secondly, the admirable trend to reduce basic egg-production costs will continue—though I suspect that the scope is narrower; and thirdly, the retail selling price in the shops will rise enough to give a reasonable profit margin for efficient producers after taking account of the first two factors. These three points are simply stated, but, of course, they are immensely complex in a large national industry like this, and have far-reaching implications.
To bring about this transition without causing hardship or disaster to the industry will require wise and skilful management by Her Majesty's Government, acting first through the Egg Marketing Board and, later, through the new Central Authority. The National Farmers' Union, as the noble Lord knows, are entirely opposed to this change, but in my opinion the majority of specialist egg producers who produce the bulk of the eggs, including the British Egg Associa
88
tion, recognise the logic of the Government's decision to make the change.
After all, subsidising a commodity whose production with modern methods could be doubled within twelve months makes little sense in the interest of either the producers or the taxpayers. In conditions of plenty, a subsidy has the effect of disturbing the natural balance of the market found by supply and demand, equating at a price sufficient to give a fair return to an efficient producer and a fair price which the consumer is willing to pay. So I think that when this transition is completed egg production will be put on the same basis as the highly efficient table poultry industry, which to-day is producing the cheapest meat on the market, and without costing the taxpayer a penny. Everything depends on this transition being made in a careful and orderly way, and on the effectiveness of the future import controls. I hope that the noble Lord, Lord Beswick, will be able to say in answer to these points that this is indeed the intention of the Government.
There are two or three questions that I should like to ask the noble Lord. The new Central Authority will have a difficult and important task in acting as a limited support power. Will the members be appointed by the Minister; and, if so, will they be chosen primarily for their trading and financial skill? Secondly, the Minister's Statement said that eggs will remain within the guarantee arrangements until March, 1974. Will the noble Lord explain what kind of guarantee arrangements will continue after the existing Board goes out of existence in March, 1971?
Thirdly, after March, 1971, will individual producers cease to have the right to require a packing station to buy their eggs? And will packing stations cease to have the right to require the Central Authority to buy surplus eggs for which they cannot find a market? Does this mean that after March, 1971, both producer and packing station will be responsible for finding their own egg markets? I imagine so. Fourthly, will the Government please reconsider their intention to raise a levy from the industry to finance the new Central Authority? All experience shows that the farming world is highly resistant to paying levies, and that this method of financing would

89
gravely prejudice the work of the new Central Authority.
I should like to conclude by paying a small personal tribute to the Egg Marketing Board, who really have done a great job for the poultry industry. They have made valued efforts to adapt the existing structure to meet present-day conditions, so different from those in which the Scheme was set up. Finally, in giving my support to the Order, I should like to say that I have confidence that the industry will measure up to this major change in its economy and continue to provide the nation with a plentiful supply of fresh eggs at highly competitive prices.
6.35 p.m.
LORD LEATHERLAND: My Lords, it is probably unexpected that one should rise from these Benches to say a few words in support of the Order which my noble friend has introduced. But we all know that this particular proposal, which is one that I welcome, is part of a large and rather complex pattern of reorganisation of the egg industry. I feel that it would be desirable that the full story of that new pattern should be made publicly available, particularly for the benefit of the industry, as soon as possible, and that we do not have it coming out in little dribs and drabs, possibly creating a sense of uncertainty among some of the egg producers.
This is a complex industry. It is becoming a large-scale industry—indeed, almost a factory industry. The days when the egg production of a farm was looked upon as the perquisite of the farmer's wife, and she collected her 50 or 60 eggs each week to give to a man who came round and haggled with her, are gone. We now have huge organisations, perhaps half-a-dozen of them in the country, producing chickens by the million and eggs by the tens of millions. It is a fact that this industry has got a little out of balance. Some of these big organisations are finding that the competition in the chicken industry has reached a stage of (shall I say?) maximum production, or over-production; that prices have been coming down and the chicken breeding industry is not so profitable as it used to be. In fact, some of these big organisations are switching over from the production of chicken for meat to egg production, and are looking forward to
90
being able to increase their activities on an enormous scale in the next few years. Therefore I think it is more essential than ever that the Ministry should be able to make available to these organisations as quickly as possible full information about the whole picture of the new scheme.
I have only one final comment to make. The noble Lord, Lord Nugent, who similarly welcomed this first step in the scheme, asked that on the new Board there should be members with trading skill. That is all right. But we do not want a system of syndicalism here. We want all kinds of people represented on the new Board. I suggest that the consumer must have a powerful voice, and one that is perhaps as powerful is that of the producer. I support the Motion.
6.39 p.m.
LORD BESWICK: My Lords, I must thank the noble Lord, Lord Nugent, for the welcome he has given to this Order and the changes with which it is connected. The noble Lord declared his interest in these matters. I think he might just as well have acknowledged his experience and knowledge; and the fact that he has this experience means that the welcome which he has extended is doubly agreeable to me, speaking for the Government. I should like also to thank my noble friend Lord Leatherland for what he had to say. His was an unexpected intervention, but nevertheless an interesting and useful one.
I was asked about the transition period. I agree with the noble Lord that there will be a time when there has to be a careful balancing of the phasing out of the old and the bringing in of the new. The noble Lord, Lord Nugent, asked for an assurance that it was the Government's intention that this change should be carried out in an orderly way, and that the future import control would be effective. So far as assurances go, I can satisfy the noble Lord. I give him the assurance that it is the intention of the Government to do this carefully and in an orderly fashion; and I think that spreading it out over the years to 1974 will enable precisely the kind of trouble-free change that we seek to obtain.
My noble friend Lord Leatherland said, "Let us not have information coming out by dribs and drabs". I appreciate the point he has made. At the same

91
time, I believe that if we can take one step at a time, as it were—and we are already taking one step by this Order—then that will be helpful to the producers. I have no reason to believe that the producers and all those concerned will not be kept informed as the changes are considered and brought about.
I was asked about the sort of people who will be appointed by the Minister—and they will in fact be appointed—to the new Authority. The noble Lord, Lord Nugent, was right in saying that we shall need people with trading experience. And, if I may say so, I think that my noble friend Lord Leatherland was also right when he said that we shall need on that Authority people with some consumer experience. It is the intention of the Minister, when making these appointments, first to consult all the interests concerned—packers, producers, distributors and the consumer organisations.
I was asked by the noble Lord, Lord Nugent (I am grateful to him for giving me an indication beforehand that he was going to raise this point), about how the system would work up to March. 1971, and between 1971 and March, 1974. At the present time the payments to the Board on behalf of the producers under the agricultural guarantee arrangements are taken into account by them in fixing the weekly minimum prices which they pay to producers. These central price-fixing arrangements will obtain up to March 31, 1971, and will cease as from that date. After that date prices will be determined by market conditions. But the central fixing of prices by a body such as the Egg Board is independent of the guarantee arrangements under the Agriculture Act; and subsidy payments under these arrangements—that is to say, under the Act—will continue to be paid to the industry after the demise of the Board, up to 1974.
LORD NUGENT OF GUILDFORD: My Lords, 1971?
LORD BESWICK: It would pay to the industry after the Board ends, up to 1974. The Board itself will end in 1971, and then there is still the period up to 1974.
As I announced in my Statement on January 22, the subsidy will be put on
92
to a flat-rate basis, being determined annually and paid to the new central body. The cost of support buying undertaken by the Authority will be the first charge on this payment, the balance being disbursed as a flat-rate subsidy to producers in respect of first-quality eggs sold to the packing stations.
The noble Lord asked whether the egg producers and packing stations will be responsible for finding their own markets for their eggs. After March 31, 1971, producers and packers will have to find their own outlets under normal commercial arrangements for the disposal of their eggs, apart from any taken up by the new Authority under its support-buying arrangements. The precise nature of these arrangements, of course, will be largely a matter for the new Authority, and I cannot go into details now.
The noble Lord referred again to-day, as he did when I made a Statement earlier, to the levies and the fact that they were unpopular in the farming community. I think I indicated then that I was not surprised he should raise this point; but he also will not be surprised to find that it is necessary to find money somewhere if this new Authority and the new arrangements are to be financed. He will agree, I think, that the new scheme is welcomed generally by the industry. He himself has indicated his support for the scheme, and the fact of the matter is that you either raise money by a levy or you have to go to the Treasury for additional money. As the propagandists of the Conservative Party are not slow to tell us, there is a limit to the amount of money the Treasury can collect from the consumer for the purpose of supporting agricultural products. I think, therefore, that on balance he will probably agree with me that if there is to be a levy it will have to be raised from the industry in whose support it will be expended. All I can tell him here, as a kind of solace, is that, while I acknowledge the sensitivity of the agricultural community on levies, they will be fully consulted as to the way in which this money will be raised. My Lords, I hope that I have answered the questions put to me, and that we can now approve this Order.
On Question, Motion agreed to.

ROADSIDE RUBBISH DUMPING
6.46 p.m.
LORD HAWKE LORD HAWKE rose to ask Her Majesty's Government whether they are satisfied that the existing arrangements are adequate to cope with the problem of the dumping of large items of rubbish by the roadside. The noble Lord said: My Lords, I have twice before raised this subject in your Lordships' House, but not for a number of years. I thought it was about time that I returned to the charge, for in the meantime I do not think the problem is getting any better and the incentive to dump rubbish in the countryside is all the time increasing. I quote from an American paper:
"The recent rapid growth of the affluent society gets a large share of the blame for the rising tidal wave of garbage. The affluent society is a spending society, one in which making do with an old television set for as long as possible is no longer fashionable".
However, if one wants to be unfashionable and keep something working for a long time one is up against what the general public believes to be a form of built-in obsolescence which appears to be a feature of so many of the products of modern industry.
The combination of an increasingly affluent society and early obsolescence is building up enormous problems for those responsible for getting rid of Britain's discarded rubbish. They may be able to cope with the ordinary day-to-day refuse collections—in fact if they could not do so there would be a serious health problem in the country—but in the field of consumer durables, the large empty containers, et cetera, present problems which it is often much easier to overcome by dumping on a dark night than by going through the official channels. It is not possible to quantify the problem with any certainty, but these figures may be illuminating, or indeed in this particular respect may be rather ominous. There are about 14 million vehicle licences running in this country; about 15 million television licences; refrigerating and washing machines are each sold to the extent of about 600,000 a year; and cookers to the extent of over a million a year. Every one of those items will eventually have to be disposed of. Of course, the old "banger" is the thing that always comes first to mind. There
94
will soon be something like a million a year of these to get rid of as the higher output of the 'fifties begins to pack up.
In Circular 8/65 of February 11, 1965, the Ministry wrote to all the local authorities, full of wise words and helpful platitudes; and I read one section, Section 11(3), from that circular:
"Section 74 of the Public Health Act 1936 empowers local authorities to make a charge if they think fit for accepting a motor car for disposal, but private owners will be most likely to make use of the disposal arrangements if the service to them is free. Old cars are usually abandoned by people who are no longer able or willing to incur any further expense on them, and even a nominal charge may prove to be a deterrent. If cars are accepted at the Council's depots or yards, more people are likely to bring them along if the depots can be kept open outside normal working hours, e.g. at fixed times and on Saturday afternoons and Sundays."
Those are words of unexceptionable wisdom and one wonders how many local authorities have followed this advice. But, of course, the old car is only a fraction of the problem. There are parts of cars, there are old oil drums, tins, tyres and various motor trade relics. Then there are the household discards—beds, bedding, bicycles, the remains of home decorating, wallpaper scrapings, paint tins and so on. Then there are appliances such as cookers, washing machines, refrigerators, television sets, wireless sets and the like. There is a rising tide of these things, reflecting increased sales in the last dozen years, and built-in obsolescence.
Then one finds stuff which appears to come from builders' operations—broken basins, lavatory pans, paint tins. Then there is the smaller stuff which somehow manages to escape the dust cart: waste paper, food tins and—horror upon horror!—one of my noble friends has told me, as a brewer, that there is a rising tide of non-returnable beer bottles Which is shortly about to burst upon us. In this context one has to remember that there are increasing numbers of people who, even if they had the space to have a bonfire, are not allowed to do so by the laws of this country.
When I have raised these matters in the past I was well aware that the arrangements for collection of what might be termed "abnormal rubbish" left much to be desired. First of all, the private householder either had to make

95
arrangements for a special collection, which might take a long time to come about, or else had to get written permission to take his rubbish to a council tip and probably pay a fee, and go there during working hours when he himself was working. That is all rather frustrating. If one was a trader one had to pay twice for the stuff to be removed: first in the rates, and secondly a special fee for taking away trade rubbish. I hope the noble Baroness who is to reply will tell us what is being done at the moment, though one must remember that her reports will sometimes be based on what people think they are doing rather than on what other people think is actually being done.
What do we know about what is being done? One's knowledge is always confined to small areas, and I do not think the situation is any different from what it was four or five years ago. I note from the Press that at the end of 1965 the Westminster City Council was offering to remove cars for £2. The previous February they should have received a circular from the Ministry suggesting that cars should be taken away free. I wonder what they are doing to-day. In the Financial Times of October 16, 1967, Mr. Wellings, the Managing Director of the George Cohen 600 Group, wrote:
"Within a matter of months the South of England will no longer have a scrap car problem. Instead of being a nuisance, abandoned cars will become highly desirable sources of top quality steel scrap."
He was writing of a plant at Willesden to deal with up to 400,000 cars a year—a very large figure. The problem is, do they all get to Willesden? If not, why not? From my observations I think Mr. Wellings may have been a little optimistic.
However, cars are only a part of the problem. All in all, the temptation to go out on a dark night and dump is considerable, and so far as I know it is rare for anyone to be caught. Perhaps the noble Baroness will have some information on this subject. There must be tens of thousands of "dumpers" during the course of a month, and I wonder how many of them are caught. The local authorities have their difficulties. They are short of vehicles, they are short of staff, they are short of tipping space. But
96
the whole system of finance tends to discourage the proper tackling of the problem. Most of the rubbish obviously originates where most of the people live—that is, in the urban areas—and if the urban local authorities do not provide an acceptable alternative to dumping at the source of the stuff then dumping will take place, and it will take place largely in the rural areas. Thus the poorer rural local authorities are expected to clear up the mess left on them through the shortcomings of the richer urban authorities. In the circumstances, the urban local authorities may say, "Why should we spend money? Provided the stuff is dumped outside our boundaries, we have no further interest in it".
What about America? I summarise from an American paper of July, 1966, and another article written in that same year. There were then 40 to 50 million automobiles on the nation's scrap heaps. Twenty-five thousand a year were being left in New York streets alone. There were special sites to which the public were invited to bring their scrap cars, but the response was poor, and the city had to remove them at a cost of $4.95 each. But there was no guarantee that those cars could be turned into scrap, as it was becoming increasingly uneconomic to do so. The question of the economic value of scrap is a fluctuating one: sometimes scrap is highly economic while at other times nobody wants it. The Ford company was arranging for two Luria plants at Dearborn at $350,000 each, to provide pure steel scrap. I wonder whether they were a success. General Motors company was making a study of the problem. American Motors gave $1,000 a year to the person who made the most significant contribution to the problem. I do not know what the British automobile industry is doing in that respect. New York was thinking of sinking the cars at sea to provide cosy corners for fish.
When one comes to garbage in general, which of course includes the subject of this debate but goes rather beyond it, the problem is severe on the other side of the Atlantic. Chicago estimated that its land-fill area will be exhausted within two or three years. New York's incinerators put 17,000 tons of soot into the air every year and had to be closed down at times because of the dirt it

97
caused. Belgium has doubled its production of waste in ten years. Tokyo has trebled it in ten years, and Philadelphia and Chicago are both considering a plan to rail rubbish up to 250 miles to fill in old mines and quarries. America is undoubtedly the society of "Buy and scrap". But everything that the Americans do to-day tends to find its way across the Atlantic, sometimes immediately, sometimes some years later, so we must be prepared; and are we prepared?
I summarise from an article in the Sunday Telegraph of November 3, 1968, entitled "Losing the battle against dirt". The Westminster Director of Cleansing was reported as using words to the effect that we are paying for cheeseparing in the past, and in two or three years' time people will have to wake up to the problem. The article also claims that British makers of a revolutionary rubbish disposal plant, selling for some £400,000 apiece, had export orders worth £20 million but they could not sell one in Britain. Perhaps they have since that date; the noble Baroness may know.
To sum up, we have as the basic problem a growing and increasingly prosperous society, owning more and more goods which appear to be becoming less and less durable. We are trying to cope with the resulting increasing volume of discard by methods which we have thought satisfactory in the past but which in fact we know perfectly well have not been satisfactory. We have reinforced this system by laws and penalties against dumping which are virtually unenforceable. Dumping is now the cheapest and easiest way to get rid of large, unwanted articles. To clean up the resulting mess must cost more than the provision of a proper collection at source. The trouble is that the cost of collection and the cost of cleaning up the countryside does not fall on the same authorities. If it did, the problem might not exist. If we want to solve the problem we must produce a system of collection which is just as cheap and convenient to the individual as dumping. We are far from being on top of the problem now, and unless we are careful it may get on top of us in the future.
7.3 p.m.
EARL JELLICOE: My Lords, I am very glad that my noble friend Lord
98
Hawke has brought this matter to your Lordships' attention this evening. It is not for the first time: I think he had a Motion littering the Order Paper for quite a long time on this general subject. But it was far from a rubbishy Motion, because this is an important matter, and I am very glad that he has this evening reinforced what he said in the past. I am glad, too, to have the opportunity of reinforcing, in so far as I am able to do so, what he has said. I note that the noble Lord, Lord Byers, has a Motion down in about two weeks' time drawing our attention to:
"the increasing threats to man's environment and the quality of life."
I can think of no threat more immediate than the problem of disposing of the rubbish which our modern industrialised society tends increasingly to throw up.
I should like, if I may, to quote some words from an admirable Report by that admirable organisation the Civic Trust, a Report which I am sure the officials, with their usual solicitude, have brought to the attention of the noble Baroness. In that Report it is stated:
"In an age of few landmarks there is one that is more familiar and less appealing than any other. This is the illegal rubbish dump. Its appearance is unmistakable. Above a treacherous deposit of broken glass and rusty corrugated iron probably partly hidden by nettles, rears a grotesque still life of empty oil drums, discarded cookers, leaky water tanks, dismembered bicycles, treadless tyres, decomposing furniture and disintegrating prams."
All those are items of which my noble friend reminded us, and he reminded us of many more. But, of course, these cookers and bicycles, furniture and prams, which may have been things of beauty when new, are not a joy for ever, and certainly not when they find themselves on top of a rubbish heap in the middle of our countryside.
I confess some personal interest in this matter. I had the honour to pilot through your Lordships' House a couple of years ago the Civic Amenities Act, the brainchild of my right honourable friend Mr. Duncan Sandys, and I should like to acknowledge the help the Government extended, in the person of Lord Kennet, to the passage of that Bill. I think that on that occasion we received more than wise words and helpful platitudes from them. I know that this matter is exercising the Government's attention.

99
There was, for example, the working party on Refuse Collection which recently reported. Against that background I would remind your Lordships of the provisions of Part III of the Civic Amenities Act, in particular, since my noble friend referred a great deal to the increasing problem of disposal of our old motor cars, and the problem of general rubbish. Section 18 of that Act lays on local authorities the duty to provide rubbish dumps. Section 19 provides for increased penalties on the individuals who dump. Section 23 confers a power, but not a duty, on local authorities to remove rubbish of this nature.
I should very much like to ask the noble Baroness, avowing a certain paternal interest in this child, how the child is faring. In general, are the Government satisfied that the provisions in this respect of the Civic Amenities Act are working? More specifically, following up my noble friend's point, what about the provisions regarding disposal of motor cars? Again, how are the specific sections to which I have referred, about more general rubbish, operating? Are the Government satisfied with the working of Section 18, the provision of suitable rubbish dumps? I think that local authorities, unless they received an express extension from the Minister, had until July of last year to provide these rubbish dumps. Have they done so? Have the dumps been properly sited? Have the local authorities combined intelligently together to provide these essential rubbish dumps, as the Act provides for?
Have they brought this legislation, the Civic Amenities Act, to the attention of the people concerned, the potential dumpers? I was disquieted at what the Civic Trust Report said: that two-thirds of the local authorities concerned had done nothing to publicise the provision of rubbish dumps. Again following what my noble friend has said, may I ask how many prosecutions have been brought under Section 19, first dealing with motor cars, and then the more general part dealing with more general rubbish? What about Section 23, this power, but not mandatory duty, given to local authorities to remove the rubbish which is cluttering up our towns and countryside?
100
I have fired a number of questions at the noble Baroness, and I do not necessarily expect to receive this evening specific answers to all of them. But I should very much like to know what the Government's general thinking is about the operation of this not unuseful Act.
That brings me to my final point, and that is to ask what are the Government's views about a collection service for more bulky refuse. It is a big problem; it is a big physical problem. Again I am referring to what I have read in this report from the Civic Trust. It refers to one London borough's experience in operating a free collection service for old furniture. In one year that one London borough has collected over 4,000 tons of old furniture. I reckon, by a process of quick but no doubt faulty arithmetic, that if all the London boroughs were operating a free service of that sort they would collect in one year 120,000 tons of old furniture—the weight of the two Queen Elizabeths. So it is clear that we are dealing with a very large problem, in both physical and financial terms.
I am also worried in this respect to read that, of the 1,361 local authorities who replied to the questionnaire submitted to them by the Working Party on Refuse, nearly 80 provide no facilities at all, whether free or paid-for, for the collection of bulky domestic refuse—the sort of items that will not go into one's garbage bin.
LORD HAWKE: My Lords, may I ask my noble friend one question arising from this Report? Did they by any chance say whether, if any of the 4,000 tons could have been put up for auction at Sotheby's, it would have paid for the whole cost of collection?
EARL JELLICOE: My Lords, I fear that at Sotheby's these items would be knocked down for a small price, even in these days of inflation and rising prices. More generally, I should very much like to ask the noble Baroness what are the Government's views on this large problem of the collection of the larger items of domestic refuse; and what are their views on what their own Working Party has said about that particular problem. It is a difficult one, not only in physical terms but also in financial terms. But

101
I should like as clear an indication as possible of the Government's thinking about this problem.
As I have said, I am glad that my noble friend Lord Hawke has again ventilated this matter, I hope not for the last time. I make no apology for my brief intervention, because I believe that this is an important question, an important matter for all those who care about the visual beauty of these still beautiful Islands. And I hope that the Government not only attach as much importance in theory as does my noble friend to this matter, but also that they are determined to do something practical about it to help both the local authorities and the individual and voluntary organisations concerned to clear up the mess which at present litters these Islands, and the mess which is still to come.
7.13 p.m.
VISCOUNT FALMOUTH: My Lords, I should like to intervene briefly in this matter to congratulate my noble friend on once more asking and calling our minds to this Question. We have the Civic Amenities Act 1967, Clause 19 of which deals with wrongful dumping, but this seems to have done little or nothing to stop the dumping of old cars in our district. Hardly a fortnight goes by without my finding, or my head woodman reporting to me, another car dumped in some part of the woods in my neighbourhood in Kent—though I should like to say that we in Kent get the greatest help from the local rural district councils in this matter, acting, I imagine, under the Civic Amenities Act. Nevertheless, the problem is a real one to those who value the tidiness of their woods and properties, and the clearing up leads to a great waste of time for foresters and their staffs who would be much better employed in planting and maintaining plantations.
I say, as it must have been said a thousand times before, that nothing mars the beauty of the Garden of England in May more than a broken television set, an old electric cooker, the bones of a car picked clean by those vultures, the spare-part acquirers, flung to the roadside by an orchard, giving some truth to the old thought that "only man is vile." To help mitigate this nuisance I would ask the Government to try to see that local county councils and road authorities take
102
no more land than is absolutely necessary when making road improvement schemes, thus preventing the possibilities of rubbish dumps developing. Rubbish tends to gather rubbish where it has been tipped before.
I would enter a plea also for greater publicity of the facilities for disposing of old cars, perhaps through colour photographs of bad spots, and posters in the towns. I would suggest especially that they be put on view at garages and local petrol pumps. I greatly hope that the Government will do everything in their power to prevent this unnecessary defacement of the beauty of our land, and will give encouragement to all those who enjoy seeing and keeping our country trim and tidy.
7.16 p.m.
LORD AUCKLAND: My Lords, the despoliation of the countryside through this menace which my noble friend Lord Hawke has mentioned is, I think, of concern to all lovers of rural areas; but I should like to discuss this matter briefly from a rather different angle. As a Vice-President of the Royal Society for the Prevention of Accidents I know how concerned the Society are at the dangers which particularly these dumped cars present to children if their curiosity causes them to go and tinker with them. In a spinney near where I live in Surrey, there has been for a number of weeks a car of unknown vintage, and two or three times when I have taken my children for a walk on Sunday afternoon in this particular area, my small son has shown a curiosity to go and take a look at it, Fortunately, I have so far been able to restrain him.
These are objects which have a natural curiosity particularly to small boys, and as any simple-minded scientist will know, rust can gather quite easily on these objects and children can cut themselves on the jagged ends of wings of these cars and other objects and may receive a nasty injury. This is not to set aside the dangers of an explosion which may take place. I wonder whether the noble Baroness has any figures of accidents which have been caused by this means. Obviously, I do not expect her to have figures available this evening, because I have not given her notice of this particular question, a matter for which I

103
must apologise. But there is a real danger, not only from old cars and so on, but from broken glass and other objects which litter the countryside. If people step on them, or otherwise come into contact with them, injury can be caused and our hospitals may be put under even more strain than that to which they are subject now. I think this is an important aspect of my noble friend's Question.
I should also like to ask the Government whether they are aware of the good work done by the "Keep Britain Tidy" movement. I happen to be a rather inactive representative of ROSPA on this particular organisation, and in many areas they have organised young people to go to fetes, and to other places where litter is freely scattered, and to clean up the mess. Of course, one of the main difficulties must be the shortage of labour which local authorities face. I would ask the noble Baroness again how many complaints there are from bodies—particularly in respect of main trunk roads, where litter bins are emptied so infrequently—that old picnic remains and the like litter the roadside. My Lords, I hope that, in addition to the very important points which my noble friends have raised in this short but very valuable discussion, the question of safety will also be considered by the Government.
7.21 p.m.
BARONESS SEROTA: My Lords, I must first join with other noble Lords in thanking the noble Lord, Lord Hawke, for raising this matter again to-day. I feel that he should make no apology for doing so, because we all appear to be agreed that this is a problem that requires continuing attention if we are to deal successfully with the bulky waste assets of modern industrial society which can so disfigure our urban and rural environment. As the noble Earl, Lord Jellicoe, reminded us, it gives us a welcome chance to look at the important amenities legislation dealing with this subject which came on the Statute Book only 18 months ago in the shape of the Civil Amenities Act, to which the noble Earl himself acted as a foster parent and which he successfully piloted through your Lordships' House.
Your Lordships will recall that the Act goes far beyond the specific matter
104
that we have under discussion to-night as a result of the Question raised by the noble Lord, Lord Hawke. Parts I and II of the Act deal with the setting up of conservation areas, and the preservation and planting of trees. It is Part III of the Act which deals with the subject of the noble Lord's Question to-night. I think the trouble in the past was that there was no comprehensive code of legislation which dealt with the problem of abandoned rubbish. In the absence of such a code it resulted in the public being in something of a dilemma. It is easy for us to say that the way in which people used to leave old cars by the wayside, or dumped other articles wherever they fancied—and some, I am afraid, still do—was deplorable and irresponsible, but if there is anything at all which can be said by way of extenuation it must be fairly said that people simply did not know what else to do with their bulky, unwanted property. This dilemma has fortunately now been resolved by the 1967 Act, which imposes on each local authority—in London on the Greater London Council and elsewhere on the county boroughs and county district councils—a duty to provide places where its residents may conveniently leave, free of charge, their old vehicles and other articles which otherwise they might be tempted to abandon.
I would tell the noble Lord, Lord Hawke, and the noble Earl, Lord Jellicoe —indeed I think the whole House will be interested to know this—that to date only three authorities have been temporarily excused this duty, and these postponement orders will cease on August 1, 1969. One is a borough authority, one an urban district, and another a rural district. Having thus removed any possible excuse for the irresponsible dumping of unwanted things in unauthorised places, the way was paved by this Act of Parliament for providing heavy deterrents against anyone who, despite the facilities provided by local authorities, still behaves irresponsibly, and the Act provides severe penal sanctions for those convicted of abandonment.
I have been asked whether I can give figures of prosecutions and penalties imposed. In the inquiries I made when I knew that this Question was being asked I myself naturally asked the same questions. I am afraid I cannot give a specific

105
answer to your Lordships to-night because, unfortunately, the figures have not been collected in relation to this part of the Civic Amenities Act 1967, but I can give your Lordships an undertaking that they will be available by 1970. Although it is not for me to encourage the noble Lord, Lord Hawke, to go on "nagging" I have little doubt, in view of his past record on this subject, that he will continue to press for the outcome of this particular legislation.
LORD HAWKE: My Lords, may I put one point to the noble Baroness. She is giving an ideal picture, as I said she would, but in my particular area I have never heard of these wonderful rubbish dumps which are alleged to exist everywhere. I have seen no notice saying that there is a rubbish dump and I have seen no notice in the local paper. I rather think that her picture is an idealistic one and that the general public do not know about these things.
BARONESS SEROTA: My Lords, unless the noble Lord lives within one of the three temporarily exempted districts I have just mentioned, I will undertake personally to find out for him where his rubbish dump is.
EARL JELLICOE: My Lords, I apologise for interrupting the noble Baroness, but it seems to me that it would be highly advisable that the local authorities should undertake adequate publicity, pointing out and bringing to the attention of those who live within their boundaries where the rubbish dumps are. It is a point to which I know the Civic Trust have attached great importance, and rightly so, and I was wondering whether the noble Baroness would ask the Ministry concerned—and I think it is quite possible for her to communicate without undue difficulty with the Ministry concerned—whether they would consider bringing the need for publicity to the attention of local authorities.
BARONESS SEROTA: My Lords, I take the noble Earl's point and I will certainly draw my right honourable friend's and my noble friend's attention to the concern that has been expressed in the House to-night about the need to make this knowledge readily available to ordinary citizens in all the areas where the provision has been made.
106
The noble Lord, Lord Hawke, spoke with particular reference—and quite naturally in view of the growing problem involved here—to the special provisions which we need to make to deal with abandoned motor vehicles. Here, again, the 1967 Act puts local authorities under a mandatory obligation to remove any motor vehicles abandoned in their area, with only one exception. This was the point which my noble friend Lord Kennet made during the Committee stage of the Bill, and I do not think there is any need for me to repeat the particular points he made then. I would remind the House that these provisions of the Bill have been in force only since July 27, 1968, and in the case of the removal of abandoned vehicles there is only one authority in the country that has been temporarily excused this duty. Noble Lords may well question why a year was allowed to elapse between the passing of the Act and the implementation of this section. It was felt, and I hope your Lordships will agree, that it was prudent to give local authorities a year of grace after the enactment of the Bill in which to prepare themselves for this and the related duties under the Act.
The noble Lord, Lord Hawke, made particular reference—and drew here on experience in America and in other parts of the world—to the introduction of car crushing and waste consuming and salvage plants. Your Lordships may be interested to know that at present there are already in operation in this country three very large pulverisation plants designed to shred within seconds a complete motor car to what I understand to be fist-sized fragments. The shredding process is followed by magnetic extraction of the valuable ferrous scrap. A worn-out motor car can, therefore, be regarded in the future as perhaps something of value rather than something that people want to dispose of quietly and secretly on a dark night. It may be that when the new process is more generally available it will largely end abandonment by removing its cause. The three plants that already exist in this country are situated in London, Waltham Cross, and St. Helens.
I was asked by the noble Earl and by the noble Lord, Lord Hawke, to say whether the Government were satisfied with the present situation, and I have

107
already indicated that the particular provisions of this Act have been in force for a very short period. To sum up the Government's approach here, they are satisfied with the tripartite attack which is made on this problem of abandoned rubbish by Part III of the Bill. First, the Bill has imposed a duty on local authorities to provide places where rubbish may be deposited by the public; second, it outlaws dumping by heavy penalties; and third, it requires local authorities to remove abandoned vehicles and gives them wide powers to remove other abandoned rubbish. I am sure your Lordships will agree that arrangements in the Act, which were welcomed generally from all parts of the House, are both a great advance on the previous situation and thoroughly constructive in scope. It is early days yet to judge what will be their full effect, but so far as is known to the Government there has been nothing specific from local authorities or the public to suggest that they are not matching up to the needs. Nevertheless, noble Lords have drawn attention to certain specific points concerning them, and I will do my best tonight to answer the particular questions which have been put.
The noble Earl asked about the general attitude of the Government, and particularly the Ministry, on help and guidance to local authorities, and about the Government's views on the provision of a free service. He asked whether it is felt that sufficient progress has been made by local authorities over the whole scope of Part III of the Act since it was passed some eighteen months ago. Immediately the Act came into operation my right honourable friend issued a circular asking local authorities to begin to make provision to implement the various provisons which were made in it, and in October, 1967, that admirable body, the Civic Trust, held a one-day conference in London to discuss the implementation of the Act. My right honourable friend was present at the conference—indeed, he opened it—and it was widely attended by local authority organisations and others concerned. Appropriate regulations have been made under various sections of the Act, including the detailed procedures to be followed by local authorities when they remove and dispose of abandoned vehicles. The re-
108
port of the Working Party on Refuse Collection, to which the noble Earl referred, has been the subject of a circular by my right honourable friend commending it in broad terms to the local authorities and asking them to implement it wherever possible.
I was asked about the attitude of the Government to free collection. It is true that some progressive authorities make provision for free collection from individual householders; other authorities do not do so. But, as was pointed out at the Committee stage of the Bill, there is little doubt that any attempt by the Government to impose—if any Government were prepared to do so—on local authorities a mandatory duty to provide a free collection throughout the country would create difficulties, particularly at this time of considerable economic stringency. My right honourable friend, in circulars and in guidance to local authorities, has encouraged them in this direction. And there is little doubt that there is much greater incentive to people not to dump their large items of rubbish if they are collected by a door-to-door service. I would stress again our hope that, now that we have a system where, in all but three areas, local authorities have made provision, people will take their items of refuse to these large dumps, and so avoid incurring the penalties provided in the Act, until some such time as a fully free service is made available.
EARL JELLICOE: My Lords, the noble Baroness referred to the facilities which have been provided in all but three areas. What puzzles me is how the unmotorised citizen gets his rubbish, if it is hulk rubbish, to these dumps. It seems to me to be important that, in addition to the provision of dumps, there should be facilities for the collection of bulk rubbish at home, whether they be free or paid for. What also worries me is the fact that in a number of authorities no such facilities are provided. Is it the Government's view that such facilities should be provided, even if they are not provided free?
BARONESS SEROTA: My Lords, many authorities already provide facilities on payment. I do not have the figures with me; I will find out the latest position and let the noble Earl have them in writing. Clearly, there is a problem with elderly people who have no motor car

109
and who require a collection of this kind. It would be of great advantage to them if it could be provided on a door-to-door basis, but I will make inquiries and let the noble Earl know the result.
The noble Viscount, Lord Falmouth, raised an individual case in his own area, and I personally should welcome any individual examples of the kind he gave, so that they could be looked at by the Department in conjunction with the local authorities concerned.
Finally, the noble Lord, Lord Auckland, raised the general question of danger to children in the context of abandoned vehicles. If I were not speaking from this particular position, I might raise this matter in connection with other large items of abandoned rubbish as well. This is a serious problem and one that has caused considerable concern. Indeed, during the Committee stage of the Civic Amenities Bill several noble Lords questioned the need for the provision in the Bill requiring local authorities to wait for seven days until they remove a wreck. I think it was the noble Lord, Lord Silkin, who mentioned the danger of children throwing a match into a petrol tank which still contained petrol. This matter clearly presents a difficulty.
On the other hand, it was the general feeling of the Committee at that time, when dealing with that particular clause, that seven days was the minimum notice one must give to an owner before a vehicle wreck was removed from the place in which it had been abandoned. Abandoned vehicles not only cause dangers of that kind: any stationary vehicle on a public highway can be a danger, in that it can block access and impede ambulances, fire vehicles and other emergency vehicles. The noble Lord's point has been taken; the House has already discussed it, and I personally hope that local authorities will be constantly aware of it.
My Lords, I hope that I have dealt with most of the specific points which have been raised. We all join in thanking the noble Lord for raising this matter to-night; it is one of which we constantly need to remind ourselves. I hope that this short discussion will serve to remind private citizens, local authorities, and indeed the public at large, that this is a
110
matter on which we must be eternally vigilant. I hope that it will encourage local authorities to continue to improve their provision, and certainly it should be a reminder to all of us, as individual citizens, of our responsibilities in this matter.

DEMOLITION OF CHIPPING NORTON HOUSES
7.38 p.m.
LORD MOLSON LORD MOLSON rose to ask Her Majesty's Government whether the decision of the Minister of Housing and Local Government to allow the demolition of certain houses in New Street and the Market Place in Chipping Norton represents a departure from its previous policy as stated in Circular 61/68 dated 4th December, 1968. The noble Lord said: My Lords, in a letter dated January 2, in which the Minister of Housing and Local Government indicated that he was prepared to acquiesce in the destruction of certain houses, he referred to Chipping Norton as an "historically important Cotswold town." In the same letter he mentioned that the Council for British Archælogy regards it as exemplifying a well-preserved ancient town plan, still containing a number of attractive old houses and buildings. That is why the Georgian Group and the Society for the Protection of Ancient Buildings are particularly indignant that acquiescence should be shown by the Minister in the destruction of these buildings. The Minister also emphasised that this is a town specially deserving of conservation under the provisions of the Civic Amenities Act.
The proposal to which the Minister has agreed is to demolish a number of typical old houses—not perhaps of outstanding architectural or historic merit, but nevertheless charming houses, and again, in the words of the Minister: "at least one, namely, No. 11 Market Place, of statutory list quality". And all this is to be done for the purpose of road widening. The argument is that this widening of the road will make for road safety. It is not contended for a moment that it will be a satisfactory or permanent solution: it is merely a temporary expedient. It is not clear that it will in fact reduce the danger of accidents.
Eighty per cent. of the traffic using this road is through-traffic. That was shown in a traffic survey organised by the Oxfordshire County Council. The effect of doing away with these houses will of course be to encourage even more through-traffic to pass through Chipping Norton, and it will be able to do so at an increased speed. It is not at present a dangerous place. The county surveyor has given us the figures of the accidents during the last few years. The accidents were: In 1957, one slight one; in 1958, one slight one; in 1959, two of which one was serious; in 1960, three of which two were serious. In 1961, 1962 and 1963, there were no traffic accidents at all; in 1964, there was a slight one; in 1965, there was none, and in 1966 there were two slight accidents. And, my Lords, 7,000 vehicles use that road every day.
I am not unduly impressed by the pressure of the Ministry of Transport for the widening of this road. I was myself for two and a half years Parliamentary Secretary to the Ministry of Transport. I was Chairman of the Road Safety Committee; and deeply concerned I was to reduce the number of accidents, especially the particularly tragic accidents to children. But I was not of the opinion that facilitating rapid transit of through-traffic in built-up areas was the best way of reducing the danger of accidents of that kind. As you go about London, your Lordships must have noticed in how many cases pavements have been extended at corners, not to facilitate easy movement of vehicles but to obstruct them. That is done in order to reduce the number of accidents and the gravity of the accidents that take place. There may often be buckled mudguards in a congested area, but because vehicles find it impossible to travel at a great pace there is a comparatively small number of fatal, or even serious, accidents.
The Minister, in his letter of decision, said that this widening of the road was not a solution, and the noble Lord, Lord Kennet, emphasised this when answering a Question in this House on January 29. He said:
"… a relief road to take through-traffic … is the ultimate solution for Chipping Norton's traffic problems".—[OFFICIAL REPORT, 29/1/69, col. 1163.]
112
When he was further pressed upon the subject he came back to the same point and said:
"… as I said in my original reply that"—
and "that" is a by-pass…
"is the only proper solution; but unfortunately it is a somewhat long-term solution and in the meantime the risk was unacceptable."—[Col. 1165.]
I have contended that there was no great risk in the short period and the experience of the last ten years shows that that is so.
The demolition is to take place before the conservation survey. Irreparable damage will therefore have been done before we know whether or not it is necessary. That is what is being done. That is the policy to which the Minister has given his agreement. The purpose of this Question is to ask whether and how the Minister reconciles this with Circular 61/68 dealing with the new Town and Country Planning Act. This was sent out to all local authorities as a guide on how they were to act. In paragraph 8 of this Circular the Minister directs local authorities to notify specified persons of any application for consent to the destruction of listed buildings. He goes on to give a number of bodies who are to be notified—the Ancient Monuments Society, which objects to this proposal; the Council for British Archeology, which objects to this proposal; the Georgian Group, which objects to this proposal; the Society for the Protection of Ancient Buildings, which objects to this proposal; the Victorian Society, which objects to this proposal; the Royal Commission on Historic Monuments, England, which objects to this proposal.
Then, in paragraph 6, the Minister gives guidance to the local authorities as to how they are to conduct themselves:
"Local authorities should be specially vigilant for preservation."…
the authority concerned here is the Oxfordshire County Council.
"As owners of many listed buildings themselves, they should set an example to other owners: and in this there have been too many failures—some of them flagrant."
The houses that are going to be demolished have been acquired by the Oxfordshire County Council. This Circular also refers to an earlier Circular that was sent out, dealing with the Civic Amenities Act.

113
In paragraph 14 of Circular 53/67 the Minister said:
"… the Government and local authorities have a special responsibility in this matter, not only because the powers of control are in their hands, but also because they are themselves the owners of many listed buildings"—
as the Oxfordshire County Council is the owner of these listed buildings in Chipping Norton—
"and thus able to set an example to other owners".
THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET): My Lords, I wonder whether the noble Lord would yield for a moment. Although the local authority owns the buildings, they are not listed.
LORD MOLSON: Just to complete my quotation:
"They lay particular emphasis on this last point".
On January 29 the Parliamentary Secretary said, at col. 1163:
"… this corner is a pleasant part of the townscape, although only one of the houses to be demolished is listed as being of special architectural or historic interest".
That is what the noble Lord is reported in Hansard to have said.
LORD KENNET: My Lords, I think it may be for the assistance of the noble Lord and the House if I say now what I would have said later, which is that in saying that I inadvertently misinformed the House. There are no listed buildings at all in this group of houses. The one in question, No. 11 Market Place, is of listable quality but has not been listed. I shall be explaining the circumstances later.
LORD MOLSON: My Lords, I am very much obliged to the Parliamentary Secretary for correcting me, or shall I say for correcting himself, because in point of fact that is what he said and I thought it permissible to quote it. I do not think that in substance it matters very much whether the building in question had been listed, which means that it had been approved for the purpose by the Minister, or whether it was of listable quality and had been recommended by an inspector for that purpose. In point of fact, I think what happened was that it had been recommended for listing but the legal pro-
114
cedure had not been carried out. That does not seem to me to be a matter of the greatest substance, but I am glad now to know that I should describe it as of listable quality and not as listed.
Paragraph 3 of Circular 61/68 says —and this is particularly important because I have not claimed that these buildings are of really outstanding quality; nobody has suggested they are in Category 1 for listing:
"In some cases a building may be important because there are only a few of its type in the neighbourhood; while in other cases its importance may be enhanced because it forms part of a group or series. Attention should also be paid to the contribution made by a building, particularly in conservation areas, to the local scene;…"
That exactly and precisely covers the case of these buildings which, without being individually of outstanding merit, are a harmonious and attractive part of a town which the Minister has insisted upon being considered for conservation purposes.
In paragraph 12 the Minister says this:
"It is being increasingly appreciated by all concerned with preservation that to decide on the preservation of individual buildings is not enough. In the first place, preservation of buildings must be related to their environment, in the sense both of the immediate townscape and of the area or town of which they form part. It is for this reason that local authorities have been empowered to designate conservation areas under the Civic Amenities Act 1967."
In paragraph 18 the Minister calls upon local authorities to co-operate with voluntary bodies, and says:
"… local authorities should co-operate with voluntary bodies, both national and local, concerned with the protection of historic buildings and the preservation and enhancement of amenities."
I have already quoted the amenity societies which were to be consulted before any demolition took place, and I have indicated that without a single exception they are opposed to what the Minister is doing on this occasion.
It has been argued that the houses in question are no longer of great interest or value because they are in a state of decrepitude. That is of course the result of the neglect and negligence, if not deliberate neglect, of the county council. The Minister, in his Circular,

115
which was very comprehensive and farsighted, referred to just this kind of thing when he said:
"The destruction of listed buildings is very seldom necessary for the sake of improvement; more often is the result of neglect, or of failure to appreciate good architecture."
My Lords, the promise of the Oxfordshire County Council to undertake a conservation study has been accepted by the Minister as a reason for authorising the demolition of these houses which, in the opinion of all the amenity societies mentioned in Circular 61/68, ought to be preserved. This seems to me to be so completely illogical and irrational that I can hardly believe that it was inadvertently done by the Minister. I can hardly feel that, after he had issued a statement of policy on the lines of this Circular, he could have authorised a destruction which was so completely at variance with all these different pieces of advice which he had given to local authorities. I therefore feel that this must represent a change in the policy of the Minister, and I shall be very glad indeed to be assured that that is not so.
7.58 p.m.
LORD CHORLEY: My Lords, I should like to say, to begin with, that it is a shame that such an important subject as this should have to be taken so late in the evening after a heavy day's work and in such a thin House. It is much too late to give to this important circular the attention which it deserves, although my noble friend Lord Molson has certainly brought out some of the important matters which derive from it. There are two points involved here, as he has pointed out to your Lordships. The first is the serious damage which is going to be done to this delightful and historic town of Chipping Norton; but the other is the more important one—and it is this, really, which during these last three or four weeks since the Minister's decision on the matter was published has been worrying all the amenity societies, not only the ones to which my noble friend has referred, which are specifically mentioned in the circular, of course, but the Council for the Preservation of Rural England and the other organisations which are very much concerned with the protection of the beauties of our land, both town and country.
116
This is an important circular. This part of the Act, which we passed through Parliament only last year, was hailed as an important addition to the strength of the amenities movement, and the circular from the Ministry from which the noble Lord has quoted, which was issued at the beginning of December, on the face of it appeared to be a well argued and promising document which, to any ordinary person reading it and taking it at face value, would have conveyed the impression that the Ministry was now to take a serious line about this sort of thing. It starts by, in effect, saying that historical England is disappearing rapidly, that the local authorities must bear a good deal of the responsibility for it and that the time has now come, and come very emphatically, when this situation must be brought to an end. Action is called for now, at the very beginning of this important circular, or these ancient, historical and attractive towns will disappear from our country.
It was emphatically expressed, very well expressed and very well received by all the organisations of people who spend their lives struggling to protect the beauties of England—and then, within a month, the Minister deliberately destroys the foundation on which that is built up. Everybody now considers this to be the usual thing: gobbledy-gook; just words. When faced with the acid test of an important historical town, a town which goes back to the time of the Anglo-Saxons, a town which was important in the time of Alfred the Great, he destroys, or gives the local authorities power to destroy, the centre of that important town. How can we rely any more on this circular, on the Ministry and on the Minister having the serious intention of implementing this Act of Parliament to which we gave so much time, both in the Lower House and in your Lordships' House, only a few months ago?
Those really are the points which are raised. I should like to discuss them at some length, but there is obviously no time, and I must content myself with making three or four points as shortly as possible. Two which I shall make are in respect of the town of Chipping Norton itself. I hope not to cover too much of the ground that has been already covered by the noble Lord. Lord Molson. The others are of a more general character,

117
for the purpose of which I take Chipping Norton as an example of the sort of thing which may be happening all over the country if other local authorities model themselves upon this—dare I say it?—dastardly conduct of the Oxfordshire County Council, in the expectancy that ministerial control will be equally supine.
Reading through all the papers that have been put before me in this case I gather, as the noble Lord. Lord Molson, apparently gathered, that the Oxfordshire County Council are the villains in this piece. I come to very much the same conclusion myself. It would be obvious to any sensible person looking at this situation that the only solution to the traffic problem of Chipping Norton is a by-pass road. Indeed, the Minister says so in his decision; but he says that it is going to be two or three years before that can happen and, that being so, that he is content for the sake of two or three years to see the Chipping Norton centre destroyed, because it is dangerous. That is a flimsy case. It is clear from the figures produced by the Oxfordshire County Council itself that it is not dangerous. It is true that in 1959–60 there were two or three serious accidents, but that is all over a period of more than ten years.
Obviously, at the time of those serious accidents the scheme for this destruction originated in the minds of the road enginer for Oxfordshire and his staff. This scheme has been gathering force ever since. This is clear from the documents. When this business came into the light of day in 1967, very nearly two years ago, it was then said that it would be about five years before the by-pass road could be completed. We are in the way of having exhausted two of those years—only three are left according to the figures then given—and the argument is based simply on this minute number of accidents, because no other argument has been produced and the Minister himself, in answer to the Starred Question last week, produced nothing except this. When the noble Viscount, Lord Esher, from Oxford brought out clearly that the accident rate was negligible, he really was unable to answer the point. Therefore I say, in the first place, that it really is a crime that, for the sake of saving two or three years in getting this by-pass
118
ready, this beautiful and ancient town should be subjected to destruction in this way.
It is clear, as has been said before, that the County Council, having made up their mind some years ago to get this thing through, were prepared to stick at nothing in order to get it done. At the beginning they wanted to do it by means of compulsory purchase; then they discovered that they could prevent an inquiry if they could enter into a contractual arrangement with the owner of this property to purchase it. So they purchased it. In that way, so far as they were concerned, and so far as the Minister of Housing and Local Government was concerned, they evaded inquiry. But the local people who were vigilant for the protection of Chipping Norton then went to the Ministry of Transport—which is very often the villain of the piece on occasions like this. But the Minister of Transport looked at it and said, "This is a case for an inquiry". It is significant that in the autumn of 1967 the Minister of Transport actually ordered a public inquiry. Then, somehow, during the next few months, as a result of the fact, brought to his attention, that the County Council had purchased the property, he then decided that an inquiry was not necessary; and the decision that there should be an inquiry was revoked by the Minister early in the spring a year ago. This again, I think, is very significant because it shows that the Oxfordshire County Council were really prepared to stick at nothing in order to get this plan of theirs carried out.
I think that this business about the inquiry is a very important matter indeed, because if ever there was a case where it was essential that there should be an inquiry, where it was essential that the pros and cons of this matter should be argued out, with proper evidence being given before an impartial inspector, this is the case. Here we have a new Act of Parliament to be implemented; here we have an important Ministerial circular isued; here we have the very first case raised under that new Act of Parliament and, under that new circular, a case in which, if the Minister himself, on the papers before him, had decided that there was a proper case for the clearance to go ahead, he should nevertheless have held an inquiry in order that everybody else should be satisfied.

119
There is an important clause in the circular in which it says that public opinion should be borne in mind and that there should be the involvement of the people concerned. I am not sure that the noble Lord, Lord Molson, referred to it, but it is a very interesting and important, and, I think, very significant paragraph. After a reference to "the importance of good public relations", the paragraph (it is No. 18 on page 7) proceeds:
"The Minister wishes again to emphasise the importance of securing the greatest possible measure of public participation."
My Lords, how do you get this if you go about it in this hole-and-corner way, persuading one Ministry after another not to allow a public inquiry? It is impossible to get public participation unless there is a public inquiry. I suggest that it was a very serious mistake on the Minister's part to decide that a public inquiry was not necessary. As we have often been told, it is just as important that justice should be seen to be done as that it should in fact be done, and I think it was a gross error of judgment on the part of the Ministry and the Minister to decide in this first case when this Act of Parliament was going to be used and this Circular brought into effect, that an inquiry was unnecessary.
Obviously—or so I should have said if he had not in effect said that it was not so—the deduction I should have made was that the Minister who is answering for the Government to-night took the same point of view, because when the matter was taken up with him by the local Member of Parliament he very properly said that nothing would be done until a "conservation study" had been made, and the need for a conservation study in cases of this kind—
LORD KENNET: My Lords, I am very interested to hear the noble Lord's account of what I said to the Member of Parliament. How does he know?
LORD CHORLEY: My Lords, because it has been reported. It may be that the Member of Parliament gave a wrong interpretation of what was said to him by the Minister, and the Minister will have the opportunity of explaining what in fact happened. But whether he said it or not, I suggest to your Lordships that
120
this was obviously the sort of case where a "conservation study" was absolutely essential and they had not even begun on it. In the Answer which the Minister gave to the Question only last week he said that the county council had promised that during the year they would do a conservation study. During the year! After these houses have all been pulled down and a very important part of the conservation study is no longer of any interest or use to anybody, then they will get on with the conservation study. I suggest that this is really an outrageous way to go about the preservation of these ancient houses which the Minister is drawing to the attention of local authorities as so necessary and so important.
Obviously, my Lords, that is what ought to have been done. A conservation study ought to have been made and got on with, and it should then have been brought before an inspector at a public inquiry so that the people concerned and interested in this matter should have had the opportunity to give their evidence in public on both sides and of being subjected to examination and cross-examination. The whole matter should be properly argued out instead of being dealt with in this hole-and-corner way as has been described to us to-night.
I will not take up more of your Lordships' time. Obviously, the best way in which the Minister could prove to the country that he is in earnest about the implementation of the Act and about the carrying through of the terms in the Circular which he has sent round to all the local authorities would be to revoke this decision which he has made. I am not sure that the Minister has the power to do so now. In the regulations at which I have been looking, there is a power on the part of the local authority, with the consent of the Minister, to revoke an Order which has been made in respect of a listed building. But whether the Minister himself still retains that power is not at all clear. Having once given his decision, I doubt whether he can withdraw it. But if he can, the best way in which he can convince the country that he is serious about this would be to withdraw the Order at once. If he cannot withdraw his decision he will find it very difficult indeed to persuade the local authorities that he is really in

121
earnest with this policy, and even more difficult to persuade those of us in the amenity societies who have spent our lives trying to defend England from onslaughts of this kind.
8.15 p.m.
VISCOUNT ESHER: My Lords, as a member of the Royal Fine Art Commission and of the various societies which have objected to the demolition of these buildings I should like, very briefly in view of the lateness of the hour, to say why we did so. If one looks at these buildings now, boarded up, empty, suffering from a planning blight of many years, one may well wonder what the fuss is about; and one can well understand the views of local people, and indeed the local borough council, that the sooner these poor old things are decently removed the better. It would, of course, be quite wrong, as I am sure your Lordships would agree, to accept that view from that quarter alone. After all, the most lamentable and regrettable destruction in our historic town centres has nearly always been—has always been —with the consent of, and nearly always at the instigation of, the local authority.
These buildings that we are discussing this evening, as noble Lords have said, are not distinguished by conventional listing standards. The four in the Market Place that are most important and most effective are, first, the one on the corner, No. 11, which is a very solid and handsome mid-eighteenth century house of, I would say, considerable distinction. Next to it is what I have only once seen elsewhere South of the Trent, a curtain-wall building of the late nineteenth century in an English market town; one which I myself have often used when talking to students of examples of the fact that one does not have to use Cotswold stone in the Cotswolds. Next to that is a rather pompous Victorian mansion; and, fourthly, there is a little seventeenth-century public house, though no longer used as such. What these buildings have, my Lords, is character, diversity and a proper scale—qualities which commercial developers, the kind of people who will be developing this site, have found it so very difficult to achieve.
The noble Lord has told us that women with prams will benefit from the proposals of the Oxfordshire County Council, and I have no doubt that they
122
will. I am told that there are at least two other ways of achieving this same result without touching No. 11, the corner building, which most people regard as the best of the four. I should like the noble Lord, Lord Kennet, to tell us, if he can, whether these alternatives are known to him and whether they have been investigated. But this is not the main point. The main point, clearly, as noble Lords have said, is that in a potential conservation area—and none could have greater potential than this, though it has not yet been mapped—no buildings, whether they are statutorily listed at the time or not, should be demolished except in the context of a plan.
My Lords, a few days ago I was reading the letters from India of Sir Patrick Geddes, whom we all regard as the founder of modern planning and I came across this little passage. Geddes wrote:
"The general level of civic thought and town planning knowledge amongst Government authorities and municipal bodies is well illustrated by a passage from a letter I have recently received from a distinguished civic servant, an engineer in charge of one of the most historic and beautiful cities in India. In acknowledging my report he regretfully explains that as both water and drainage schemes are in contemplation, the city must deny itself the luxury of town planning."
That was fifty years ago, and of course we can all think of contemporary examples of what I regard as the great British vice of putting the part before the whole—not a vice in all fields, but a vice in the field of planning.
We have Stansted Airport. In my own county of Oxford we have proposals for a motorway across the Chiltern escarpment, necessary only because the Wycombe bypass has been brought to a position from which no further progress can be made except at the cost of one of the most beautiful landscapes in England, although only three miles along the ridge there is the Princes Risborough Gap, which a hundred years ago the Victorian engineers had the sense to use for the railway. We all know examples, from towns up and down the country, of buildings demolished or set back for highway improvements which have never had to be made and which are now precisely the opposite of what we all want to see.
I have gone up and down the country giving this simple message to civic societies and students—the cliché of

123
planning: that survey must precede plan, and that a plan must precede any irrevocable action. In conveying this important but often unpopular message, we need all the support we can get. I know that everyone in my profession has come to regard the noble Lord, Lord Kennet, as a real leader in this field of conservation. I would merely ask him what has gone wrong in this case.
8.21 p.m.
LORD CONESFORD: My Lords, the noble Viscount, Lord Esher, has expressed with such skill, truth and charm the points which I should have wished to make that I shall do little more than formally support him. I agree that we could not have to reply to this debate a Minister of whose sympathy we are more sure than the noble Lord, Lord Kennet. I hope very much that he will find it possible, late though the hour is, to investigate whether there is this further possibility that the noble Viscount has suggested. There is nobody who knows the Oxfordshire countryside and towns better than he does.
I think that in the short interchange that took place last week, what must have struck everybody was the insanity of having a survey but doing the destruction first. There have been so many cases where people have seen the alternatives, in the interest of traffic, of either tearing some of the guts out of ancient places or making a bypass. In the end, invariably we have done both. Though it is realised that the only proper cure is a bypass, instead of making that bypass we first "improve" a town from the point of view of through-traffic by doing some destruction in it. It is never successful, and always disastrous.
I do not wish to say more to-night than to beg the noble Lord. Lord Kennet, to give the most careful consideration to the proposal made by the noble Viscount, Lord Esher, and to see whether it will be possible to preserve at least the most precious of the buildings concerned.
8.25 p.m.
LORD KENNET: My Lords, first of all, let me put some facts on the record about the detailed situation on the ground at Chipping Norton. I should like to get
124
out of the way one or two misapprehensions. My noble friend Lord Chorley asked whether it was not possible for my right honourable friend the Minister to revoke the order in respect of these listed buildings. It ought not to be necessary for me to put right such a fundamental misconception. There are no listed buildings and there has been no order. My noble friend also made the point that since a by-pass was coming in three years, it was wrong to demolish any houses in this historic town. I do not know where he got the figure of three years. If a by-pass had been coming in three years, there would have been a different situation. Unfortunately, my right honourable friend the Minister of Transport is not able to say when he can slot the Chipping Norton by-pass into his programme. If he were to do so within three years, it would mean the unslotting of a by-pass in some other historic town, or town where there is risk of loss of life, and then we should have another debate in your Lordships' House on that.
May I also take a moment to correct a false impression which has arisen in the Press about the conservation study which it is the intention of Chipping Norton Borough Council to make? The noble Lord, Lord Molson, wrote to the Daily Telegraph complaining that my right honourable friend had abandoned his intention of withholding his consent to this demolition until the conservation study was made—made rather than undertaken. My noble friend Lord Chorley has raised the same point now about the difference between the conclusion and the inception of the conservation study. Either noble Lord could have picked up a telephone at any point and inquired from me about that. There was never any understanding between my right honourable friend or I and the local authorities concerned that the conservation study must be completed before this road widening project could go ahead. The understanding was that its inception must be undertaken within a definite period and, as I told the House last time we discussed this subject, the Oxfordshire County Council have now undertaken to do the conservation study this year.
LORD CHORLEY: My Lords, before my noble friend leaves that point, perhaps he will say what the purpose of a conservation study is, if it is not for purposes of this kind.
LORD KENNET: My Lords, it is to develop a canservation policy, and any Minister will naturally feel more inclined to retain his "say-so" over a given demolition or action if the local authority are not undertaking any study directed towards the formulation of a policy, than in cases where they are.
The street concerned, the corner of New Street and Market Place, has a carriageway 16 feet wide and pavements 2 feet wide. Over the last 10 years, there have been ten accidents, three of them serious and six of them involving pedestrians or cyclists. It is normal for commercial vehicles when passing one another to overhang those two-foot pavements and it is common for them to mount upon the pavements with their wheels. My right honourable friend and I have been advised by the highways authority that the continuation of this situation involves a concrete likelihood of death resulting. That is one given element.
On the other hand, we have a handful of houses—thirteen—which had been acquired by the local authority by agreement, and not by compulsory order, for the purpose of road widening. I think that there is no real question of redevelopment here. The noble Viscount, Lord Esher, made the point about the regrettable inability of modern developers to reproduce in proper scale and appearance houses common in our towns in the 18th and 19th centuries. This is not a case of redevelopment but of road widening. Of these thirteen houses, none is listed as being of historic or architectural interest on any statutory list.
I would repeat what I said in an interruption of the speech of the noble Lord, Lord Molson. I regret that inadvertently I misinformed the House about this the other day, and said that one was. None is. The one is of listable quality, and that is No. 11 Market Place. It has not been listed because when there is active discussion about whether or not a building is to be demolished, and everybody is aware of the position,
126
there is no particular point in listing if there is any possibility of demolition being permitted. Of the other 12—that is, apart from No. 11, which is of statutory quality—8 are on the supplementary list, which I would remind the House has no statutory force whatever: these are merely houses the existence of which is drawn to the attention of local planning authorities; the Minister has no power over them whatever, and the local authority has no special power over them whatever.
What does this mean in real terms? It means that all those houses, with the one exception of No. 11 Market Place, are below 110,000th place in the merit list of English houses. There are 110,000 houses on the statutory list, and these houses are below that place. So we are not dealing with anything of very great architectural or historic importance. The noble Viscount, Lord Esher, mentioned the presence of four houses in Market Place—and I think there may be some mistake here. It is only the corner house, No. 11, which has to come down. The others beyond it in Market Place do not have to come down for the purposes of road widening. Their future is somewhat indefinite, but they are not inevitably included in the road widening scheme.
The question before my right honourable friend—and I want to emphasise this to the House—was not a general one of whether or not to demolish the centre of Chipping Norton; it was not even the general one of whether or not to permit the demolition of the centre of Chipping Norton: it was whether or not he should take unusual emergency action to put No. 11 Market Place on the statutory list. If he had done so, it would have had the effect that the local authority would have had to seek his consent before demolishing in the interests of this road widening scheme; and he could, of course, no doubt after a public inquiry, have refused his consent. That is all that we are talking about now. He could not put any of the other 12 houses on the list, because his statutory advisers had told him that they were not worth it. They are not worthy of inclusion in the 110,000 best buildings in the country, and do not, therefore, merit any statutory protection whatever.

127
The terms of the Question, therefore, which refer to these houses, are not entirely in accordance with the situation. What we are talking about is one house, No. 11 Market Place. At this point my right honourable friend and I had to consider the lie of the land in general social terms, in terms of the general fabric of local authority and auto-determination. We found the County Council, the highway authority and the Borough Council, as an expression of local opinion within the town, unanimous and determined that the right course of action was to demolish the houses for the sake of the avoidance of a concrete risk to life in that street. That was a difficult situation to face, even given the existence of the circular which the noble Lord so eloquently quoted and with the drawing up of which I had something to do. When it comes to life against 13 non-listed houses, I, for one, know what I consider to be the right decision.
If the House will permit me, I should like for a moment to stand back and say that we are making rather heavy weather of what is a small matter. I believe—and I think this Government have the right to take credit for it—that there has been a transformation in private and public opinion and in our statutory arrangements about the preservation of buildings and towns of architectural and historic interest. I would remind the House that it is only eight years since the Euston Arch was demolished. This is the great shibboleth and paradigm of Philistine demolition in our century in London. It was not the present Government that did it. It is only eight years since the Coal Exchange in the City of London was demolished. Again, it was not this Government that did it. The noble Lord, Lord Molson—and I give him full credit for it—protested against those demolitions, against a Government of his own Party which did it—which in one case carried out the demolition, and in the other permitted it.
It was not this Government which set Sir Leslie Martin's terms of reference for his Whitehall plan, which included the understanding that the Foreign Office was to be demolished, so that he was not even empowered to consider that
128
question. It was not this Government which reviewed the development plan for Bloomsbury in 1962 in terms which made inevitable the demolition of Woburn Square for the benefit of London University.
Returning to the scale of events at Chipping Norton, I would ask the House to remember that we are talking of 13 unlisted houses, one of which might be designated. It was not this Government which allowed the town of Gosport to demolish 105 of its 130 listed buildings in the ten years following 1955. I regret that some of these old decisions are still working through: there is nothing we can do to stop them, but there are not many left.
It was, on the other hand, this Government which doubled the number of investigators of buildings of historic and architectural interest from 8 to 16. It was this Government which increased the Historic Buildings Council moneys for the preservation of historic buildings by 20 per cent, in the middle of a major economic crisis. It was this Government which appointed the four consultants, of whom the noble Viscount, Lord Esher, is, in one sense, the first, to carry out conservation studies of four major historic cities. It was this Government which undertook a central Government responsibility to help people find uses for listed buildings by the creation of the Historic Buildings Bureau, to which all vendors and seekers of historic buildings have free access and the services of which are available free to all those. It was this Government which reactivated the forgotten powers under the Land Fund for central Government to acquire, restore and dispose of buildings of outstanding historic and architectural interest. It was this Government which found Parliamentary time for Mr. Duncan Sandys to introduce the Civil Amenities Bill, and which helped him to draft it—which he himself could have done when he was Minister of Housing and Local Government, but did not.
Lastly, it was this Government which introduced Part V of the recent Town and Country Planning Act, under which, for the first time, the owner of a listed building does not merely have to state his intention of demolishing it in such a way that if the letter goes astray he is virtually free to do so: he has to have

129
express permission from the planning authority, and behind them the Minister, if they are in doubt, to do so. I would remind the House that this Part V of the Town and Country Planning Act 1968 introduces a veritable revolution in the protection of our ancient buildings, in that we now have a situation where local authorities can compel the owners to repair, and if they do not they can purchase the buildings; and if is is proved that the owner has been deliberately neglecting them for the sake of profit on the site, the authorities can purchase them, minus the development value.
If I may return for a moment to Chipping Norton, I think all Members of the House will agree that we cannot preserve everything over a hundred years old. The question then arises: in what circumstances should we refrain from preserving something more than a hundred years old if it looks nice? I myself think that we should refrain from doing this when there is a risk of people being killed. That is when one abandons one's desire to preserve everything. And in this case there was such a risk. In future cases there may again be such a risk, and I cannot undertake to the House that in such cases I will take, or advise my right honourable friend to take, a decision any different from that which he took this time.
Lastly, my Lords, I am not defending the decision of the Oxfordshire County Council. It is their method; it was their decision. There is very hot feeling on both sides about it. What I am saying is that this was not a case in which the Minister should have intervened, or should have used his statutory power over one house on the corner to frustrate the considered decision of local democracy in this matter. To have done so would have been to set a clamorous precedent
130
towards detailed and dubious intervention in the web of local democracy, on which, I would remind the House, all our attempts to preserve what is best in our heritage must in the last resort depend.

  FORESTRY PLANTING ON SCOTTISH HILL FARMS
  FORESTRY PLANTING ON SCOTTISH HILL FARMS