Sitting of 8 May 1969

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

    Hunt Committee's Report
    Mr. Speaker: Dr. Gray—Question No. 1.
    Mr. Hall-Davis: On a point of order. Mr. Speaker. May I draw your attention to the fact that copies of the Hunt Report are not available in the Vote Office? Would it be in order if Members fortunate enough to have a copy with them would indicate this to colleagues, so that others may refer to it if necessary?
    Mr. Speaker: That is a helpful suggestion by the hon. Gentleman. I have just been made aware of this difficulty. We endeavoured to obtain all the copies we could of documents that were useful for today. This may be part of the general problem that we have.
    Mr. Higgins rose—
    Mr. Speaker: Order. I hope that we shall not pursue this.
    Mr. Higgins: May I point out also that another document referred to in Questions, "The Task Ahead", is not available in the Vote Office? Would it be possible for Ministers in framing their replies not to refer to specific paragraphs without pointing out to the House what their content is?
    Mr. Speaker: Those are very helpful suggestions by both hon. Gentlemen.
    Dr. Grayasked the Secretary of State for Economic Affairs if he will make a statement of Government policy on the recommendations contained in the Hunt Committee Report.
    Mr. Blakerasked the Secretary of State for Economic Affairs when he expects to announce the Government's decisions on the recommendations of the Hunt Committee Report; and if he will make a statement.
    Mr. J. H. Osbornasked the Secretary of State for Economic Affairs (1) what over-all changes he proposes in regional development policy in the light of the recommendations of the Hunt Committee;
    (2) what changes in the distribution of aid to the development areas and the intermediate or grey areas, respectively, Her Majesty's Government propose to make following the Report of the Hunt Committee.
    Mr. Waddingtonasked the Secretary of State for Economic Affairs what action the Government propose to take in the light of the Report of the Hunt Committee.
    Mr. Bostonasked the Secretary of State for Economic Affairs if he will now give an exact date for the publication of the Hunt Committee Report.
    The Secretary of State for Economic Affairs (Mr. Peter Shore): I have nothing to add to my statement on the Hunt Report on 24th April.—[Vol. 782, c. 668–72.]
    Dr. Gray: Now that my right hon. Friend has had the opportunity of considering the anti-agriculture bias of the Report and the complacency with which it treats the flight of agricultural workers from the country to towns, and in consideration of the fact that agriculture is our largest industry and contributes so much to import saving, will he think again and make a fresh statement?
    Mr. Shore: I am aware of the long-term and continuing movement of people from the land into the towns and cities. This trend was taken into account by the Hunt Committee in the evidence it received and the conclusions it reached. I have nothing further to add on this matter.
    Mr. Blaker: Does the right hon. Gentleman recall that the Committee recommended that there should be a comprehensive review of the impact of existing

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    development area policies? Is it not rather regrettable that he is not prepared to accept this recommendation, especially as there seems to be no evidence of what value for money the Government are receiving from their policies? Should not that be investigated?
    Mr. Shore: We have not yet had sufficient experience of the effects of development area measures on the problems in the development areas. There has not been time. I do not want to embark on a premature review.
    Mr. Osborn: Is it not a fact that although the Report has been welcomed by the Yorkshire and Humberside Region and other regional bodies the Minister's statement has come as a complete disappointment to them? What negotiations are taking place with the regional boards on the impact of his statement, and what progress is being made on delineating the various areas of the development areas that have been outlined already?
    Mr. Shore: It would be wrong to say that the Government's statement was greeted with disappointment in that region. The truth is that as is perhaps inevitable, there has been a somewhat mixed reception in different parts of the country according to whether or not they benefited by the Government's statement or thought that they would have benefited more by the Hunt Committee's Report. As to the follow-up action, I have already seen and discussed with the economic planning council chairmen both my statement and the Hunt Committee's Report. I am now embarking on a more serious and more prolonged consultation with each council.
    Mr. Speaker: Order. Long answers mean fewer Questions.
    Mr. Waddington: Is the Minister aware that there is certainly no great rejoicing in North-East Lancashire as a result of his reactions to the Report? Is he aware that £20 million spread between seven different problem areas is peanuts when considering the very special problems of North-East Lancashire as a result of the run-down of the textile industry, as forecast by the Textile Council's Report, and the probable impact of the new town?
    Mr. Shore: The reaction in North-East Lancashire has been much more favourable than the hon. Gentleman indicated. It is wrong to measure the assistance that the Government can give to different regions and sub-regions simply in terms of financial aid to industry.
    Mr. Boston: Does my right hon. Friend accept that there are certain parts of the South-East which need an extra boost because they do not enjoy the prosperity of the region as a whole? Will he confirm that he will be giving continuing attention to the development needs of these areas, especially the new town development schemes where these are agreed?
    Mr. Shore: I assure my hon. Friend that, although the South-East Region is certainly prosperous judged as a whole, we are aware that there are different conditions within it. We shall be watching the situation and doing our best to assist each part to be as prosperous as the rest of the area.
    Sir K. Joseph: In the light of the Government's regrettable rejection of the Hunt recommendations for a comprehensive inquiry into the effectiveness of development area policy, will the right hon. Gentleman at least undertake to publish the results of the Government's own inquiries into the investment grants system?
    Mr. Shore: I will consider that suggestion. As the right hon. Gentleman knows, the Government have initiated a number of inquiries into the response of firms to development area incentives and I will discuss this matter further with my colleagues.
    Mr. George Jeger: I am glad that my right hon. Friend recognises that the attitude of Yorkshire and Humberside towards the Hunt Report is very mixed, but will he give special consideration to one item omitted from the Report—the plight of the smaller shipyard areas in the non-development areas which are certainly grey in colour and black in tendency?
    Mr. Shore: I am willing to look at any evidence that my hon. Friend would like to put to me but what we are concerned with here is aid to areas rather than aid to particular industries.

    Public and Private Consumption
    Mr. Ridleyasked the Secretary of State for Economic Affairs what has been the percentage growth in public consumption and private consumption, respectively, between 1964 and the latest convenient date.
    The Under-Secretary of State for Economic Affairs (Mr. Alan Williams): Between 1964 and 1968, public consumption in real terms grew by 2·8 per cent. a year and private consumption by 1·9 per cent. a year.
    Mr. Ridley: Is the hon. Gentleman aware that these figures explain why the public are a little apprehensive about the phrase in "The Task Ahead" which blames private consumption for all our economic troubles?
    Mr. Williams: The hon. Gentleman should be aware that during the 12 months following devaluation, comparing the last quarter of 1967 with the last quarter of 1968, whereas private consumption rose by 1 per cent. public consumption fell by 1·2 per cent.

    Industrial Output (Import Content)
    Mr. Blakerasked the Secretary of State for Economic Affairs what progress has been made with his study based on input/output analysis of the import content of the output of various industries.
    Mr. Alan Williams: The import content of industrial output and export levels are matters of considerable concern both to my own Department and to the sponsoring Departments. The application of input/output analysis in this field is one stage in the continuing programme of work on input/output techniques being developed by my Department.
    Mr. Blaker: I am not clear from that reply whether the Department is making such a study. Is the hon. Gentleman aware that, if it is, it will find that the import content of the output of the service industries is considerably less than that of the manufacturing industries? Will he, therefore, press ahead with such a study?
    Mr. Williams: Unfortunately, to some extent, the Opposition have responsibility
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    for the fact that the input/output tables have not been as up to date as they might have been, because when the 1958 census was taken the then Government omitted questions which would have given us the necessary information.

    Regional Special Assistance (Hunt Committee's Report)
    Mr. Hall-Davisasked the Secretary of State for Economic Affairs (1) if he will give the estimated cost in a full year of special assistance recommended by the Hunt Committee to regions which do not at present have development area status;
    (2) what estimate he has made of the cost of implementing the proposals contained in the Report of the Hunt Committee.
    Mr. Shore: The Committee did not give a figure of the total cost of its recommendations. It found it impossible to cost its proposal for growth zones and said that even where estimation is feasible the element of uncertainty is so great that the estimates must be subject to very wide margins of error.
    Mr. Hall-Davis: As the Hunt Committee recommended that a fundamental study should be made of the whole development area structure of aid, would it not be helpful to such a serious study if the right hon. Gentleman were to carry out a costing and make it available? In relation to special areas, if the right hon. Gentleman did not make his decision to reject the Hunt Committee's recommendation to view the North-West structure as a whole on a cost basis, on what did he base his decision?
    Mr. Shore: In my statement of 24th April I made clear the criteria which had led us to our selection of particular intermediate areas. If the hon. Gentleman will study those criteria, I think he will find the answer to his supplementary question.
    Mr. Mapp: To deal with the regrettably modified and rather half-muted policy of my right hon. Friend in regard to the Hunt Committee, what is the total cost he has in mind to be drawn from the rest of the development areas?
    Mr. Shore: In my statement I said that our estimate was for an additional expenditure in the intermediate areas of

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    £20 million a year and that this sum would have to be made available from other areas.
    Sir Frank Pearson: When is the £20 million likely to become available?
    Mr. Shore: I ask the hon. Gentleman to wait until I make a statement on the matter.
    Dr. Winstanley: Since it took the Government only hours to reject the Hunt Report, which took upwards of a year to compile, how does the right hon. Gentleman justify occupying all these important and distinguished persons with so fruitless a task?
    Mr. Shore: The hon. Gentleman knows perfectly well that we received the Hunt Report some eight weeks before it was published, and publication took time because of the admirable maps which the Report contains. I reject the suggestion that the Report was not properly studied by the Government. It was intensively studied, and as a result I was able to announce the conclusions I did.
    Mr. Arthur Davidson: Is my right hon. Friend aware that, contrary to what has been said in certain quarters, North-East Lancashire comes better out of the Government's proposals than it would have done had the Government accepted the Hunt Report in tote? Will he press ahead with his consultations with the North-West Economic Planning Council so that areas within North-East Lancashire which are to be helped can be defined as soon as possible?
    Mr. Shore: I am pressing ahead with this very urgently indeed. As I told the House on 24th April, I have in mind a timetable which will enable me to make a further statement shortly after the Whitsun Recess.

    Employment Activity
    Mr. Gwynfor Evansasked the Secretary of State for Economic Affairs what is the current employment activity rate in Wales and England, respectively.
    The Minister of State, Department of Economic Affairs (Mr. T. W. Urwin): As the information asked for is most conveniently shown in the form of a table, I have arranged for this table to be circulated in the OFFICIAL REPORT.
    Mr. Gwynfor Evans: How does the hon. Gentleman explain the fact that, although unemployment in Wales runs constantly at about twice the English level despite heavy migration from Wales, there is a growing and appalling gap in activity rates as between Wales and England?
    Mr. Urwin: One of the reasons for the lower activity rate in Wales is that there is a relatively high ratio there of self-employment in retailing, small family farms and service trades. Second, in industrial employment Wales has a relatively high dependence on coal mining and iron and steel making. Third, the general ratio of female employment is relatively low and this makes a larger differential between male and female activity rates in Wales compared with England.
    Mr. Fred Evans: Is my hon. Friend aware that the Welsh people are well aware that without massive Government efforts the situation would be catastrophic and that it does no service to Wales when hon. Members try to draw distinctions which are false and based on pure political propaganda?
    Mr. Urwin: I thank my hon. Friend for his comment. Government investment in Wales in the last completed year was £60 million, excluding grants for training.
    The following is the information:

    Employee Activity Rates Mid-1968

    Per cent.

    Wales

    England

    Males

    65·6

    74·9

    Females

    30·1

    40·5

    Total

    47·1

    56·9

    NOTES:
    1. These provisional estimates are based on mid-1968 employment statistics and mid-1968 population estimates projected from the 1966 sample census of population. Mid-year 1966, 1967 and 1968 activity rate estimates will be published later this year.
    2. These estimates are not precisely comparable with those given in reply to the hon. Member's Question of 12th March, 1969, since these were based on the 1961 Census of Population.—[Vol. 782, c. 309.]

    Welsh Economic Prospects
    Mr. Gwynfor Evansasked the Secretary of State for Economic Affairs in view of the estimate in "The Task

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    Ahead" that the reduction of regional disparities will be least in Wales, what plans he has to improve the Welsh economic prospects.
    Mr. Urwin: In his statement on the Hunt Report on 24th April, my right hon. Friend announced the Government's decision to include South-East Wales as one of the intermediate areas to benefit from measures of assistance.—[Vol. 782, c. 668–72.]
    Mr. Gwynfor Evans: Is the hon. Gentleman aware that the only English regions comparable with Wales in this invidious situation is the North-East but that although the situation in Wales is actually far worse than in the North-East of England, about twice as much money has been spent on incentives to industry to go to the North-East as has been spent in Wales for the same purpose?
    Mr. Urwin: I do not accept what the hon. Gentleman has said. I remind him that, in addition to the amount of money to which I have just referred as being invested last year, Government effort to diversify industry in Wales to get away from Welsh dependence on declining industries has resulted in over 100 new firms going there since 1964 and in the expansion of over 600. Even more interesting is that expansion in manufacturing industry was two and a half times greater in Wales in 1968 than in Britain as a whole.
    Mr. Roy Hughes: With regard to the Welsh economic prospects, does my hon. Friend appreciate that his right hon. Friend's announcement on 24th April concerning the grey areas was well received in those affected parts of South-East Wales? Will he now give the House an assurance that he will take early steps to implement these proposals?
    Mr. Urwin: It has been the intention of Government, both before and after the Hunt Committee's Report, to effect a far better distribution of economic development and growth, and we shall continue with this policy.

    Employment, Development Areas (Hunt Committee's Report)
    Mr. Danceasked the Secretary of State for Economic Affairs what is his
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    estimate of the effect of the level of employment in development areas of implementing the recommendations of the Hunt Committee.
    Mr. Shore: The amount of mobile industry is limited and the Hunt recommendations, particularly those for relaxation of the i.d.c. control, would entail a larger diversion of new employment opportunities from the development areas than we consider tolerable.
    Mr. Dance: Will the right hon. Gentleman devote some completely new thought to the Report of the Hunt Committee? Will he give us an assurance that any assistance given to the intermediate areas will not be to the detriment of the development areas, which have their own problems, in particular the high cost of commuting? Is he aware that people living in those development areas must have employment on their doorstep?
    Mr. Shore: As I went out of my way to emphasise when I made my statement on the Hunt Report, I am determined to maintain a large, indeed massive, preference in terms of financial assistance for the development areas, because I accept that their problems are considerably greater. It is a consequence of my determination to maintain this policy that I have not felt able to accept the proposal of the Hunt Committee to relax i.d.c. policy in other, more prosperous, areas of the country.

    Humberside Survey
    Mr. Wallasked the Secretary of State for Economic Affairs if he will now make a statement on the Humberside Survey.
    Mr. Shore: As explained in my statement to the House on 30th April, the Government accept the Report's recommendation that a Humber Bridge should be completed by 1976, and we are currently consulting the Yorkshire and Humberside Council and the local planning councils about the report and its recommendations as a whole.—[Vol. 782, c. 1437–9.]
    Mr. Wall: As the Government's decision to build the Humberside bridge involves a date when they are unlikely to be able to implement the decision, may I ask him today, when Labour is likely

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    to lose control of Kingston upon Hull, when the motorways to that city will be completed?
    Mr. Shore: That is a very different question and I can only ask the hon. Gentleman to put it down for Answer by my right hon. Friend the Minister of Transport.
    Sir C. Osborne: Since Lindsey County Council is utterly opposed to the building of this bridge until the main trunk road from Grimsby to Immingham has been completed—it has a much more important priority—will the right hon. Gentleman listen to what the Lindsey County Council has said? [Interruption.] This is not a matter to laugh about.
    Mr. Shore: The hon. Gentleman's emotion may also be connected with the fact that there is an election today in the area of which he is speaking. With respect to the Lindsey County Council and its views, it is likely to be the case that the economic planning council set up for that region, which has studied this matter intensively, will be able to give us better advice.

    South-East (Development Policies)
    Mr. Bostonasked the Secretary of State for Economic Affairs what steps have been taken on development policies for the South-East since the publication of the Government's review of the South-East Economic Planning Council's Report, "A Strategy for the South-East."
    Mr. Urwin: As my right hon. Friend said in reply to my hon. Friend's Question on 20th February last, the Council's long-term strategy proposals for the region are being tested and followed up by the Joint Planning Study.—[Vol. 778, c. 138.]
    Mr. Boston: Does my hon. Friend accept that these proposals are very welcome? Can he say what further consideration is being given to the "corridors of growth" proposals? Would he accept that his Department's endorsement of the proposals for the development of Sheppey are very welcome? Will he ensure that his Department will add what impetus it can to help maintain the momentum of this and other overspill schemes?
    Mr. Urwin: I am glad to give my hon. Friend the assurance for which he asks.
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    We will certainly expedite as quickly as possible the studies to which he refers. I would also remind him that, as we said in the Government's reply, talks about the expansions of Sheppey have been held by Kent County Council with the Greater London Council and Queenborough in Sheppey Borough Council; a financial study is to be made before decisions are taken about the size of any scheme.
    Sir T. Beamish: Is the hon. Gentleman aware that in many important areas spending is largely at a standstill in the South-East as a result of wholly unjustified delays since the Government came to power?
    Mr. Urwin: That is wholly untrue. The Government have done a great deal in this period. Since the first study of the planning council was published in 1967, they recognised that further studies would have to be undertaken. This is why we set up the South-East joint planning study to follow up this work. That study will be completed early next year.

    Edinburgh (Hunt Committees' Report)
    Mr. Gordon Campbellasked the Secretary of State for Economic Affairs what action he plans to take concerning the Edinburgh area in the light of the report of the Hunt Committee.
    Mr. Shore: I have nothing to add to my statement on 24th April.—[Vol. 782, c. 668–72.]
    Mr. Campbell: Can the Government indicate where the boundary defining the Leith area will be? Will the Secretary of State visit Edinburgh to inform himself of the extraordinary anomaly and the distortions which are being caused by the present curious deliniation?
    Mr. Shore: The hon. Gentleman knows perfectly well that I have already said that we shall be consulting the Scottish Planning Council about the boundaries of the new intermediate area.
    Earl of Dalkeith: Is the generosity of the right hon. Gentleman confined to helping only those areas who do not vote Conservative?
    Mr. Shore: If the hon Gentleman studied the unemployment figures for the Edinburgh area he would realise that

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    although there has been some deterioration in the whole of the Edinburgh area in the last two years, the deterioration is much more marked in the Leith area. It is on this basis that we have said that Leith should be included in the intermediate area.
    Mr. William Hamilton: Is my right hon. Friend aware that the official policy of the Opposition is a policy of growth points? Does he realise that this would mean a considerable diminution in the development area status of Scotland? Will he try to get out of the Opposition what growth points they mean to put into effect in Scotland?
    Mr. Shore: There are very many questions about development area and regional policy which I should like to ask the Opposition—both back benchers and the Front Benchers. Doubtless an opportunity will be found to debate these matters.

    Economic Planning
    Mr. Bruce-Gardyneasked the Secretary of State for Economic Affairs what revisions he intends to make to his economic planning document in the light of the Budget.
    Mr. Shore: None, Sir.
    Mr. Bruce-Gardyne: That is the most extraordinary Answer. Does the right hon. Gentleman not realise that the Chancellor appears already to have shed his target as announced in "The Task Ahead" of a basic balance of £500 million a year? Is not the Chancellor intending to rely instead on his ability to blackmail the Government's overseas creditors into postponing repayment of our debt? Why is the right hon. Gentleman being more royalist than royal?
    Mr. Shore: My right hon. Friend made clear that he was working for a substantial and continuing surplus on the balance of payments. I quoted his words deliberately because they occur in the Economic Assessment for 1972, and were restated by my right hon. Friend in his Budget speech.
    Mr. Higgins: The right hon. Gentleman may say that he is doing that, but could he tell us any measures in the Budget which actually lead to an improvement in the balance of payments?
    Mr. Shore: The basic strategy that we have pursued since devaluation has been to transfer the production resources from home consumption into the balance of payments. This policy—
    Sir Knox Cunningham: Was disastrous.
    Mr. Shore: —was reinforced by the Budget of 1968, together with the November, 1968, measures, and my right hon. Friend's proposals were wholly consistent with the continuation of that strategy.
    Mr. Peyton: If the right hon. Gentleman really maintains that this document does not need any alteration now, is it not true that the only reason for that is that it is just as useless and meaningless and flaccid as himself and his colleagues?
    Mr. Shore: The hon. Gentleman is rather stronger on insults than he is on intelligence. The only conclusion I can draw from his remarks is that he has read neither the Economic Assessment nor my right hon. Friend's Budget speech.

    "The Task Ahead"
    Mr. Martenasked the Secretary of State for Economic Affairs whether, in the light of the first four months' trading figures for 1969, he now proposes to make any alterations in the economic assessment of the balance of payments mentioned in Chapter 3 of "The Task Ahead".
    Mr. Alan Williams: No, Sir.
    Mr. Marten: But are the Government still hopeful of getting a trade surplus of £300 million this year? If so, does the Minister share the Prime Minister's view that if we are to solve our economic problems the Industrial Relations Bill must be passed this Session, otherwise Parliament will have to be dissolved? Does the hon. Gentleman agree with the Prime Minister?
    Mr. Williams: Naturally I agree with the Prime Minister in these matters. Equally, I stand by what my right hon. Friend the Chancellor of the Exchequer said about the balance of payments surplus.
    Mr. Barnettasked the Secretary of State for Economic Affairs what consultations he had with outside bodies about

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    the underlying capacity of British industry before publication of "The Task Ahead."
    Mr. Alan Williams: There were full discusions on the draft document in the National Economic Development Council, and we also drew on the information which is always available from the regular contracts between Government Departments and industry.
    Mr. Barnett: As the report makes it clear that there is insufficient evidence on which to base a forecast of the underlying level of productivity, would my hon. Friend accept that 2·9 per cent. is far too low to be acceptable? Would he consider looking at other competitor countries to see how much growth they have managed to get in underlying productivity, make comparisons and present a fresh report to the House?
    Mr. Williams: We have attempted reasonably to project forward the experiences of the past and to take into account changes which are expected in the working population and in the structure of the working population. After we have had our consultations, we shall possibly come to the House with an amended document, if an amendment is needed.
    Mr. Barnettasked the Secretary of State for Economic Affairs to what extent the change in target for balance of payments as set out in the Budget Statement on 15th April affects the forecasts in the document "The Task Ahead."
    Mr. Shore: There has been no change. As was stated clearly both in "The Task Ahead" and in my right hon. Friend the Chancellor of the Exchequer's Budget Statement, we need a substantial and continuing payments surplus.
    Mr. Barnett: But in "The Task Ahead" my right hon. Friend refers to the figure of £500 million a year. Thank God the Chancellor of the Exchequer has got away from that. Would my right hon. Friend accept that with the re-phasing of the debts which we are negotiating, it should be possible, if we can get away from that neurosis, to achieve a much higher level of growth than has been possible in the past?
    Mr. Shore: I have no comment to make on the information which my hon. Friend believes he has. However, I would put
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    this simple point to him: if there were any rephasing of debts, it would not relieve us of the basic requirement and need to repay those debts; therefore, a very strong surplus is required.
    Mr. Patrick Jenkin: Is it not the case that the Labour Party's Finance Committee has been given more information about the intentions of the Chancellor of the Exchequer than the House of Commons? Has the Chancellor of the Exchequer, as the hon. Member for Heywood and Royton (Mr. Barnett) said, abandoned the target of a £500 million surplus a year?
    Mr. Shore: I have already answered that question. If the hon. Gentleman wants a further answer, he must table a Question to the Chancellor of the Exchequer.

    Regional Employment Premium
    Mr. Ridleyasked the Secretary of State for Economic Affairs if he will now take steps to abolish the Regional Employment Premium.
    Mr. Shore: No, Sir.
    Mr. Ridley: But is the right hon. Gentleman aware that since the Government came into office they have spent £580 mililon on regional policy, with the net result that there are 51,000 fewer jobs in the development districts? This is not value for money. What does the right hon. Gentleman propose to do to give the taxpayer value for money?
    Mr. Shore: That is a very curious conclusion to draw from the policy which we are pursuing in the development areas. As I informed the House not long ago, the important thing is that over the last four years the rate of i.d.c. approvals in development areas has been substantially greater than in the previous four years, and but for that improvement there would have been a serious deterioration in employment in the development areas.
    Mr. Blenkinsop: We very much welcome my right hon. Friend's clear reply, but is he aware that there is serious anxiety in the area because of the campaign waged by right hon. and hon. Members opposite, particularly by those representing constituencies in the South, to damage the aid given in areas like the North-East?
    Mr. Shore: I am sure that the campaign which hon. Members opposite have launched against development area policy can only have a very unsettling effect upon the decisions of industry which we wish to encourage to move into these areas.

    Scotland (Hunt Committee's Report)
    Mr. Eadieasked the Secretary of State for Economic Affairs, if he will consult the Secretary of State for Scotland on joint policy on the recommendations of the Hunt Committee.
    Mr. Shore: I have done so and I shall continue to keep in close touch with my right hon. Friend about further action on this report.
    Mr. Eadie: Is my right hon. Friend aware that when non-development area boundaries are drawn on the basis of labour exchange areas confusion is created in development areas? This anomaly arises in my constituency. Although I know that the matter has been discussed by the Hunt Committee, have the Government given any consideration to how this anomaly can be ended?
    Mr. Shore: There are genuine difficulties in deciding the boundaries of any area—whether they should be based on local authority boundaries, employment exchange boundaries, or travel-to-work boundaries. There is no perfect answer to my hon. Friend's question.
    Mr. Stodart: Would the right hon. Gentleman ensure that these consultations are carried out in St. Andrew's House in Edinburgh? Will he note that the action which he took the other day, which has reduced a tiny island in what is already a vast ocean of development area, has made the position of what is left even more indefensible?
    Mr. Shore: I do not accept that. On the first point, the hon. Gentleman must be aware that the Chairman of the Scottish Planning Council is my right hon. Friend the Secretary of State for Scotland.

    Matlock and Wirksworth (Hunt Committee's Report)
    Mr. Scott-Hopkinsasked the Secretary of State for Economic Affairs if he will now include the areas of Matlock and
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    Wirksworth in those areas to receive additional help following the Report of the Hunt Committee.
    Mr. Urwin: As my right hon. Friend said in his statement on 24th April, the precise boundaries of the new intermediate areas will be announced after the Whitsun Recess, when we have received the views of the regional economic planning councils.—[Vol. 782, c. 668–72.]
    Mr. Scott-Hopkins: Would the hon. Gentleman bear in mind that in this area the traditional industry of stone quarrying is declining and will decline even faster in the near future? Will he review the criteria laid down by my right hon. Friend on which areas should or should not be designated in future?
    Mr. Urwin: That point will be borne in mind. Discussions and consultations with the planning councils are currently taking place, and we shall be in a position to make a statement after the Whitsun Recess.

    Development Area Aid Cuts (Hunt Committee's Report)
    Mr. Scott-Hopkinsasked the Secretary of State for Economic Affairs if he will give details of the proposed cuts in Government aid to development areas amounting to £20 million arising out of Her Majesty's Government's decisions following the Report of the Hunt Committee.
    Mr. R. W. Elliottasked the Secretary of State for Economic Affairs if he will ensure that the decisions of Her Majesty's Government, following the report of the Hunt Committee, to give £20 million in aid to certain areas will lead to cuts in aid only to those development areas where the unemployment level has fallen.
    Mr. Shore: A statement will be made shortly about the form of the savings to offset the cost of assisting intermediate areas.
    Mr. Scott-Hopkins: Surely the Secretary of State should be in a position to tell the House how this will be paid for and what part of the existing money paid to development areas will be cut? It is impossible to formulate any arguments or to have a reasonable discussion unless we know exactly how this will be done.
    Mr. Shore: A statement will shortly be made on this matter.
    Mr. Elliott: Does the right hon. Gentleman appreciate the continuing high level of unemployment in the North-East of England? There is grave concern there lest there should be cuts in the aid being given to the region. Would he accept that many of us believe that available aid should be given where it is most needed as between and within development areas?
    Mr. Shore: I am aware of that. I am most concerned that the necessary savings in development area expenditure should take a form which entails the minimum loss and damage to the development areas.
    Mr. Bagier: While appreciating the Government's long-term planning objectives, particularly in the grey areas, and the fact that had they been carried out in the development districts 10 years ago the problem would not have been so bad today, may I ask my right hon. Friend to examine very carefully how he will achieve the £20 million saving in the development districts and bear in mind, in particular, the serious unemployment in the North-East?
    Mr. Shore: I am considering the matter very carefully. My hon. Friend made a very important point. One of our motives in declaring new intermediate areas is to make sure that problem areas of today are not allowed, through neglect, to become development areas of tomorrow.
    Mr. Higgins: Is not the right hon. Gentleman's initial answer another example of the Government announcing benefits without saying where the money will come from? Will he not follow the precedent created by the Chancellor in his Budget Statement lest this tendency should grow from an unfortunate lapse into a nasty habit?
    Mr. Shore: As the hon. Gentleman knows, the statement I made was a preliminary statement, and I am consulting the economic planning councils about the frontiers of the intermediate areas. I have already made clear to the House that I will make a statement on where the finance is to be found certainly not later
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    than the time when I announce the conclusions of our consultation with the regional economic planning councils.

    Intermediate Grey Areas (Hunt Committee's Report)
    Dr. Grayasked the Secretary of State for Economic Affairs whether he will periodically review the selection of intermediate grey areas made by the Government on the recommendation of the Hunt Committee; and if he will make a statement.
    Mr. Shore: I intend to keep regional policy under close review, including the position of intermediate areas.
    Dr. Gray: Will my hon. Friend bear in mind that the average wages in Norfolk are lower than on Humberside and lower than they are throughout the whole country? As an interim measure before he undertakes the review, will he implement the recommendations of the East Anglian Planning Council on industrial development particularly in the Yarmouth and Lowestoft area?
    Mr. Shore: I will certainly consider all relevant factors in the review which we shall be undertaking, and in the continuing review which we are making of development area and intermediate area problems.
    Sir H. Legge-Bourke: Will the right hon. Gentleman bear in mind that the Hunt Committee's Report has been a grave disappointment to those areas lying in between the four city centres visualised in the East Anglian Planning Council's Report? In the light of this, will the right hon. Gentleman give an assurance that if a local authority can come to an agreement with the Greater London Council about taking overspill from London he will not stand in its way?
    Mr. Shore: That is a hypothetical question about future overspill arrangements. As I have made clear—and this is a matter of great importance to East Anglia—we will ensure that the outflow of industry from London into overspill towns and new towns will not be allowed to fall below the pace of physical development of those overspill towns and new towns.

    Economic Activity (Beckenham)
    Mr. Goodhartasked the Secretary of State for Economic Affairs what plans he has for increasing the level of economic activity in Beckenham during the next 12 months.
    Mr. Urwin: There are no specific plans for Beckenham.
    Mr. Goodhart: As my constituents during the past 12 months have had to cope with record increases in prices and taxes, will the Minister give an assurance that they will not have to cope with record increases in National Insurance contributions?
    Mr. Urwin: I would ask the hon. Gentleman to table a Question on that point.

    Sheffield (Hunt Committee's Report)
    Mr. Hooleyasked the Secretary of State for Economic Affairs whether Sheffield will be included as part of the intermediate area of the Yorkshire coalfield recommended for special assistance by the Hunt Committee.
    Mr. Urwin: My right hon. Friend is consulting the economic planning councils about the precise boundaries of the areas to receive special assistance, and he will make a further statement after the Whitsun Recess.
    Mr. Hooley: Does not my hon. Friend agree that the Sheffield-Rotherham conurbation would provide a natural focus for extra industrial development and activity to provide labour and jobs for the South Yorkshire coalfield?
    Mr. Urwin: We are extremely aware of the problems of the area referred to by my hon. Friend and full attention is being given to the point which he raises.
    Mr. Ashton: Will my hon. Friend take note that the Yorkshire coalfield does not finish on the boundaries of Yorkshire but extends well into Nottinghamshire and that there are three pits in Worksop which are part of the Yorkshire coalfield?
    Mr. Urwin: There is a difficult geographical problem here, and the planning
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    councils' views will be very valuable to us in arriving at a final decision.
    Mr. Scott-Hopkins: Is not it quite clear from the questions asked this afternoon that the criteria upon which the grey areas have been granted assistance are unsatisfactory? Will the Minister recommend to his right hon. Friend that he should review the whole of this exercise as it is so unsatisfactory?
    Mr. Urwin: My answer to the last part of the question is absolutely negative. We have no intention of doing that. As to the decisions, I am certain that those areas which are being designated as grey areas will not adopt the attitude which the hon. Gentleman has adopted.

  POST OFFICE

    Mail (Delivery)
    Mr. Dudley Smithasked the Postmaster-General when he estimates he will be able to guarantee the next-day delivery of letters bearing a 5d. stamp and marked First Class, which are posted before the final collection time, to destinations of less than 100 miles way.
    The Postmaster-General (Mr. John Stonehouse): Overall 94 per cent. next-day delivery is being achieved against an estimated maximum possible performance of 95 per cent. The percentage achievement for destinations within 100 miles is even higher.
    Mr. Dudley Smith: Nevertheless, is the right hon. Gentleman aware that many people are convinced from personal experience that the alleged first-class service is inferior to and less reliable than the old 4d. service, and will he resist any pressure which may be brought to bear on him by the Prime Minister or his Cabinet colleagues on the question of implementing the new report on the two-tier system which would make the postal service even slower than it is now?
    Mr. Stonehouse: I am not aware of that, and it is, in fact, not correct according to all the statistics and the reports we have received on performance. On the development of the two-tier system, we have made public an internal report and we are awaiting reports back on that.

  UNITED STATES OF AMERICA (PRIME MINISTER'S VISIT)
  Mr. Martenasked the Prime Minister when he will next officially visit the United States of America.
  The Prime Minister (Mr. Harold Wilson): I have nothing at present to add to what I said in reply to an almost identical Question from the hon. Gentleman on 13th March.—[Vol. 779, c. 1556–7.]
  Mr. Marten: When the Prime Minister eventually goes, which I assume will be after the Whitsun visit of my right hon. Friend, will he make a particular point of comparing American trades union legislation with the Cabinet proposals, which he is about to put forward before Whitsun, and which he described on Sunday as the greatest advance in legislation this century?
  The Prime Minister: Yes, Sir; we have considered the American legislation and we have nothing to learn from American legislation in respect of what the Government have decided to put before the House. In reply to the earlier part of the question about the timing, the hon. Gentleman may be interested to know that I was originally invited to go to Washington in the latter part of February but, instead, the European visit of the President took place. During his visit we agreed that I would go in April or May, and, at my own suggestion, this has been deferred until later in the summer because four of my senior colleagues have been in Washington since the President's visit.
  Mr. Molloy: Will my right hon. Friend agree that there is something to be learnt from American legislation? It has helped to increase the number of days lost through strike action. That is a lesson which we in this country might learn.
  The Prime Minister: My hon. Friend is entitled to learn all the lessons he wishes from American legislation. We have based our proposals on the facts and the problems that have to be dealt with in this country.
  Mr. Heath: As the Prime Minister will not be visiting the President in the near future, will he tell the House whether he has had any communication with him about four-Power talks on the Israeli Arab conflict, what proposals Her
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  Majesty's Government are putting forward to help bring about a settlement in the United Nations and whether any progress has been made?
  The Prime Minister: We are in continuous touch with the President and his Administration on this question. The right hon. Gentleman will know of the talks which are going on almost from day to day between our representatives at the United Nations. He would not, any more than I would not, underrate the difficulties they have to face, but they are continuing to discuss every aspect of this question in the frankest possible way. [Interruption.] The Middle East crisis is not a laughing matter, even for the hon. Gentleman. The four Powers are discussing this in a real attempt to try to narrow the differences so that they can provide a solution that will give backing to Mr. Jarring in the job which he has been given to carry out the resolution which Her Majesty's Government introduced in the Security Council.
  Mr. Heath: The Prime Minister will appreciate that it has been difficult to obtain any information from Foreign Office Ministers, even about the approach of the Government to this problem. Will he discuss with the Foreign Secretary whether at some reasonable date before the House rises it may be possible to say what is the approach?
  The Prime Minister: I will certainly do that. The approach of the Government was stated by my right hon. Friend the Foreign Secretary in the last foreign affairs debate. We have sometimes heard, not least from the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home), the advantages of secret diplomacy in these matters, and, in view of the serious difficulties that have to be settled between the four Powers, there is a strong case for not making too many public pronouncements. I will discuss with my right hon. Friend whether more can be said.

  IMPORT SUBSTITUTION (MINISTERIAL RESPONSIBILITY)
  Mr. Peter Millsasked the Prime Minister whether he will designate a Minister with special responsibility to promote import substitution, particularly by increasing home food production.
  Mr. Joplingasked the Prime Minister whether he is satisfied with the co-ordination between the Ministry of Agriculture, Fisheries and Food, the Board of Trade and the Treasury in implementing Her Majesty's Government's policies designed to maximise the gains to the balance of payments from increased domestic food production; and if he will make a statement.
  The Prime Minister: My right hon. Friends already work closely together on these matters.
  Mr. Mills: In view of the almost complete failure of present policies to deal with this problem, is not it time that the highest priority was given to import substitution, and will not the Prime Minister agree that agriculture is willing and ready to help?
  The Prime Minister: Yes, this is very much our view. Indeed the question of import substitution raised in this Question goes far beyond agriculture. If there is one disappointment about the economic events of the past year, it has been that, whatever our exporting increases, industrial import substitution has not yet gone as far as it should having regard to the devaluation advantage. On agriculture, this matter was debated by the House recently.
  Mr. Jopling: Did not the Prime Minister read the Report of the Select Committee on Agriculture which said that there are considerable differences of attitude and opinion between the Government Departments concerned? Will not he for once acknowledge his failure and lost opportunity and do something about it?
  The Prime Minister: I did read that Report. I also read the valuable Report of the E.D.C. on agriculture. The hon. Gentleman will be glad to know that the N.E.D.C. at its meeting in April, which I was unable to attend, had a full discussion on import substitution. At its next meeting it will continue that, and it will also have a further report on the agricultural expansion programme. If the hon. Gentleman is suggesting, as was suggested in the House recently, that we shall get more agricultural production by still larger Government expenditure than was proposed in the Price Review, then hon. Gentlemen opposite had better
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  reconcile that with their pledges to cut Government expenditure.
  Mr. Hazell: Would not the Prime Minister agree that in accepting expansion to the extent of an additional £160 million produced from our own soil, the Government have, in fact, accepted the intentions of the Report of the Select Committee and that that objective is to be achieved over the next three or four years?
  The Prime Minister: Yes, my hon. Friend is right, and he himself has played a large part in these matters. The next step will be the general meeting of N.E.D.C., where these matters will be considered further.
  Mr. Stodart: Is the Prime Minister unaware that it is possible to get increased expansion without any additional Government expenditure? Is he not aware that one-sixth of all our imports is of food which we could grow in this country? The Chancellor said the other day that import substitution has hardly begun. Is this not indefensible?
  The Prime Minister: I have just referred to our disappointment about import substitution. I am aware of the other facts and figures put forward by the hon. Gentleman, and these were central to the report of the Select Committee and the E.D.C. But import substitution in this case has to be paid for either by increased subsidies involving Government expenditure, which hon. Gentlemen opposite are pledged to reduce, or by the Conservative proposals about levies which will be paid to an unacceptable degree by the consumer and which the National Farmers' Union itself totally rejects.
  Hon. Members: Rubbish.
  Mr. Heath: As the Prime Minister has now firmly rejected any additional Government expenditure to agriculture to produce expansion, has firmly rejected our proposals for bringing it about without further expenditure through the levy system, but is still firmly committed to large import savings, how will he do it?
  The Prime Minister: By the method described by my right hon. Friend in the debate, by what we have said in acceptance of the propositions of the E.D.C. for agriculture, which will be

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  further discussed. If the right hon. Gentleman insists on greater public expenditure on agriculture, how does he reconcile that with all his other promises?

  PRIME MINISTER OF NORTHERN IRELAND (VISIT TO LONDON)
  Mr. Roseasked the Prime Minister whether he will arrange a further meeting with the Prime Minister of Northern Ireland.
  The Prime Minister: The Prime Minister of Northern Ireland has accepted my invitation to a meeting in London on 21st May.
  Mr. Rose: Would my right hon. Friend impress on the new Prime Minister the need for immediate implemention of electoral and other reform? Would he also stress that ultimate power is vested in Westminster? Perhaps as a quid pro quo would he suggest the possibility of Government aid from this country for a crash programme of economic development for the depressed areas in Northern Ireland?
  The Prime Minister: I do not want to say anything which will make this important meeting more difficult in advance of the meeting. It will be very clear to all who are familiar with Northern Ireland's problems in the last few months, not least to my hon. Friend who has taken a great interest in them, that everyone in a position of authority in Northern Ireland will be only too well aware of what my right hon. Friend and I said to Captain O'Neill and his colleagues when they came over last time. We are not in any sense varying what we said to them. That will be the position from here on. Furthermore, they are fully aware of the need for urgency in this matter. I do not want to go further than that today.
  Mr. Heath: Would the Prime Minister accept that we on this side of the House fully support the reforms which the Government of Northern Ireland are pledged to carry through—[HON. MEMBERS: "Oh."] Indeed, in the same way as the Prime Minister and his colleagues and, I think, the whole House have pledged. Will he therefore agree that the thing
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  now to do is to give the Northern Ireland Government the opportunity to get on with the job?
  The Prime Minister: Yes, I welcome the fact that the right hon. Gentleman has supported the programme of reform. The programme of reform was proposed to the Northern Ireland Government by Her Majesty's Government, and I am very glad that it was accepted by Captain O'Neill. We all know the heavy price he had to pay for the fact that he recognised what needed to be done. It is now important that this programme should continue. I do not think anyone wants to make it any more difficult in advance of the meeting.

  HOUSE OF LORDS (REFORM)
  Mr. William Hamiltonasked the Prime Minister if he will now introduce new legislation to remove the delaying powers of the House of Lords in respect of legislation and statutory instruments.
  The Prime Minister: I would refer my hon. Friend to my reply to his supplementary question following my statement on 17th April.—[Vol. 781, c. 1338–44.]
  Mr. Hamilton: Is my right hon. Friend aware that his answer was not very forthcoming? Will he undertake to introduce a short, simple Bill to destroy the powers of the other place, a Measure which would command universal support on this side of the House?
  The Prime Minister: As in my previous statement, may I say that perhaps if it had not been for the delaying power of my hon. Friend, this legislation would now be on the Statute Book.
  Mr. Sandys: May we assume that in future the Government will not introduce any new legislation, on this or any other subject, without obtaining the approval of the right hon. Member for Sowerby (Mr. Houghton)?
  The Prime Minister: The right hon. Gentleman, whose frustrations in all matters within his own party are well known, must not assume that my right hon. Friend the Member for Sowerby (Mr. Houghton) exercises in relation to this Front Bench what the right hon. Gentleman the Member for Wolverhampton, South-West (Mr. Powell) exercises in relation to that Front Bench.

  COUNCIL OF EUROPE (GREECE)
  Mr. John Fraserasked the Prime Minister what consultations he proposes to arrange with the Heads of Government of the Council of Europe countries about the resolution passed by the Council on Greece's membership.
  Mr. Ormeasked the Prime Minister if he will make a statement regarding the British Government vote on the membership of Greece in the Council of Ministers of the Council of Europe.
  The Prime Minister: I have nothing to add to the statement which my right hon. Friend the Foreign and Commonwealth Secretary made in the House yesterday.—[Vol. 783, c. 458–64.]
  Mr. Fraser: The Prime Minister will appreciate that it would be too early now to hold any consultations with Heads of Government, but when opportunity arises within the next few months to meet other Heads of European Governments, will he ask them to do as much as this Government in persuading the Greek Government to return to democracy before the end of the year?
  The Prime Minister: In any meeting of Heads of Government this is certainly a question that would come up. The right way forward is the one which was proposed by my right hon. Friend the Foreign and Commonwealth Secretary yesterday when he made a statement about the consultations between the Committee of Ministers of the Council of Europe. This is the right way forward—to leave it to the Foreign Secretary.

  RHODESIA
  Mr. Biggs-Davisonasked the Prime Minister whether he will make a statement on his recent exchanges with the Prime Minister of Rhodesia.
  The Prime Minister: On the exchanges with Mr. Smith I have nothing to add to the reply I gave to a Question by the hon. Member for Louth (Sir C. Osborne) on 29th April.
  But hon. Members will have seen Press reports of the speech made by Mr. Smith last night opening his campaign on the
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  referendum for his so-called constitution, aimed at the permanent division of Rhodesia on a racial basis, in which he is reported as saying that it would "sound the death-knell of the principle of majority rule".—[Vol. 782, c. 1152–4.]
  Mr. Biggs-Davison: Is not this drifting apart of Britain and Rhodesia something which we all regret? Is it not in great measure a failure of the Prime Minister—
  Mr. Faulds: Absolute balls.
  Mr. Biggs-Davison:—to respond to the request repeatedly made from this side of the House to try again, after the failure of his "Fearless" efforts, before the referendum became imminent? Was he not aware that Prime Ministers—[HON. MEMBERS: "Speech."]—even in Rhodesia are under pressure, and what has the Prime Minister done with the proposals which were sent to him from Salisbury weeks ago?
  The Prime Minister: In the first place he is not the Prime Minister—
  Sir Knox Cunningham: Nor will the right hon. Gentleman be for long.
  The Prime Minister: In the second place, the hon. Member referred to drifting apart. Last night's speech certainly looked more like a slamming of the door than a drifting apart. The hon. Gentleman will be aware of the lengths to which we went with the "Fearless" proposals. Many hon. Members may think that we went too far, but no hon. Member thought that they went too short of what was required. That was clear from our previous debates. If they were not picked up, we can only draw our own conclusions. Now the hon. Gentleman, who has been the self-appointed spokesman of the régime in the House, can tell the House whether he supports Mr. Smith's speech of last night.
  Mr. Winnick: May I ask my right hon. Friend, first, whether the "Fearless" offer will now be completely withdrawn? Second, would he not agree that, in view of the remarks made yesterday in Salisbury, or elsewhere in Rhodesia, there can be no honourable settlement between Her Majesty's Government and the Rhodesian Front?
  The Prime Minister: I did not quite hear, because of the noise against which

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  my hon. Friend was speaking, whether he suggested that the "Fearless" proposals should be withdrawn or redrawn.
  Mr. Winnick: Withdrawn.
  The Prime Minister: No, Sir. The position of the "Fearless" proposals remains exactly as it did after the end of the Commonwealth Prime Ministers' Conference. Those proposals remain as the British Government's view and the view of most hon. Members in this House of the kind of solution which can one day be picked up. Certainly it is clear from the speech about which we read in the Press this morning that Mr. Smith has now surrendered to the extremists of the Rhodesian Front. This is a tragedy. I think that Mr. Smith had the opportunity of an honourable solution for Rhodesia, and we went to very great lengths, not only on board H.M.S. "Fearless", not only in the visit of my right hon. Friend, but subsequently, in repeatedly offering proposals but always getting the reply that they would not have this or that. Not at any point have we heard what they will accept.
  Sir Harmar Nicholls: Is the Prime Minister aware that his instant interpretation of last night's speech gives the impression that he enjoys the situation? Does he not think in the circumstances, bearing in mind all that is involved, that he ought to have some inquiries made to make sure that he has got the real atmosphere of events in Rhodesia?
  The Prime Minister: I have accurate reports. Far from enjoying the situation, after four years' effort on my part to get the six principles accepted in Rhodesia, which were substantially laid down by the previous Government and applied by us, certainly I do not enjoy any situation where those who have taken authority there reject the six principles. I hope that the hon. Gentleman equally will deplore the rejection of the six principles involved in that speech.
  Mr. Thorpe: Is the Prime Minister aware that, however great the criticisms that may be levelled against him, there are those of us who marvel at the dexterity of those who, on the one hand, support Mr. Smith and, on the other hand, reconcile their support with the oath of loyalty that they have taken in this House to the Crown? [HON. MEMBERS:
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  "Hear, hear."] Is he aware—[Interruption.]
  Mr. Speaker: Order. Noise, even in approval, takes up the time of the House.
  Mr. Thorpe: Is the Prime Minister further aware that, while there would be support for any honourable settlement which ended a situation in which the constitution put forward by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) and the right hon. Member for Streatham (Mr. Sandys) and torn up by the rebels, there are others who will be prepared to support the Prime Minister in sanctions, however expensive?
  An. Hon. Member: Bombs?
  The Prime Minister: While not agreeing with the whole of the preamble, on the main Question the answer is "Yes, Sir". On the last part of the right hon. Gentleman's remarks, the position is that all of us in this House, according to our different conceptions of what should be the answer in Rhodesia, have tried to get a solution in Rhodesia. Sanctions were implied and, indeed, threatened by the previous Government. They have been applied. If, and I repeat if, last night's speech is to be read at its face value as a slamming of the door, the sanctions will continue.
  Sir Alec Douglas-Home: Can the Prime Minister help the House, because there seems to be a slight contradiction between one attitude of Mr. Smith and his latest speech? Is it true that in the latest communications to the Prime Minister from Mr. Smith, Mr. Smith has said that he and his colleagues still stick to the blocking quarter plus one. There appears to be some discrepancy, and perhaps it should be resolved.
  The Prime Minister: There is always a contradiction between what I learn from Mr. Smith in negotiations and what he says in meetings of the Rhodesian Front. This has been a problem that I have had to face, and the right hon. Gentleman knows that he had to face it as well.
  It has been agreed that communications should be kept confidential, but certainly I agree with the right hon. Gentleman that there has been no suggestion by Mr. Smith in any exchanges that I have had

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  with him, on board "Fearless" or subsequently, that he would go back on the principle of the blocking quarter which we discussed and which we prevailed upon him to accept. The right hon. Gentleman now admits that he was wrong in thinking that Mr. Smith offered him any acceptable settlement last year when he was there.
  While conducting these exchanges, Mr. Smith has been moving further and further in the opposite direction, under pressure, to accept a so-called constitution which rejects every one of the six principles, with its particular emphasis on apartheid.
  Mr. Philip Noel-Baker: Is it not clear that Mr. Smith's speech represents the death knell not of majority rule but of his régime. Will my right hon. Friend give us a White Paper showing what the United Nations is doing about sanctions and about any measures that he proposes to tighten them?
  The Prime Minister: On the question of the speech last night, Press reports at present refer to
  "the death knell of majority rule".
  Indeed, it went further, and seemed to refer to the present situation in Rhodesia as something which Mr. Smith intends should last not only for many years, if the quotation is true, but for hundreds of years in the future. That is what the speech suggests.
  I have had no communication from him to say that the "Fearless" terms have been formally rejected. They are there. But any message in terms of acceptance must be read against the basis of his speech last night.
  Several Hon. Members rose—
  Mr. Speaker: Order. Mr. Heath. Business Questions.

BUSINESS OF THE HOUSE
Mr. Heath: May I ask the Leader of the House whether he will state the business of the House for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): Yes, Sir. The business for next week will be as follows:
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MONDAY, 12TH MAY—Remaining stages of the Post Office Bill.
Motions relating to the Fertilisers (United Kingdom) Scheme and the Ploughing Grants Schemes.
TUESDAY, 13TH MAY and WEDNESDAY, 14TH MAY—Committee stage of the Finance Bill.
THURSDAY, 15TH MAY—Supply (19th Allotted Day):
Until about seven o'clock, an Opposition Motion on the Failure of the Government's Housing Programme.
Afterwards, National Insurance Contributions, also on an Opposition Motion.
Consideration of Lords Amendments to the Immigration Appeals Bill.
FRIDAY, 16TH MAY—Private Members' Bills.
MONDAY, 19TH MAY—Remaining stages of the Transport (London) Bill.
Motions on the Import Duties (Temporary Exemptions) (No. 3) Order, the Police Pensions (Amendment) Regulations, the Pneumoconiosis, Byssinosis and Miscellaneous Diseases Benefit Scheme, and on the National Insurance (Industrial Injuries) (Amendment) Order.
If the progress of business allows, it is hoped to rise for the Whitsun Adjournment on Friday, 23rd May until Monday, 9th June.
Mr. Heath: May I ask the right hon. Gentleman two questions? First, he has announced two days for the Committee stage of the Finance Bill next week. Can he tell us that additional copies of the Finance Bill will be available, by whatever means he has arranged, otherwise we shall come to the situation which I described yesterday, in which the House will not be able to proceed with its business.
Second, can the right hon. Gentleman say specifically when the Industrial Relations Bill will be published? Will he recognise that whatever date that is, there must be a proper interval between publication date and Second Reading while the House is sitting so that hon. Members can come together to discuss it if they wish. An interval only of the Whitsun Recess will not be satisfactory.
Mr. Peart: The right hon. Gentleman quite rightly referred to the first matter when questioning me yesterday. My right hon. Friend the Chief Secretary will be making a statement immediately after business questions about the strike and its effect on the Stationery Office.
Master copies of the Clauses and Schedules of the Finance Bill itself have been printed. These will be available by tonight to all hon. Members. Other Bills have also been printed and I am making further arrangements. I am doing all I can. The Deliverer of the Vote is confident that he can meet the needs of the House.
I cannot say any more than I said last week about the date of publication of the Industrial Relations Bill. It is hoped to have it before Whitsun. I understand the point which has been made by the right hon. Gentleman and I will bear it in mind.
Mr. John Mendelson: Referring to pressure on my right hon. Friend to publish the Industrial Relations Bill, does he recall that the week before last, in reply to a question that I put to him he said that he was aware that further consultations were needed with the General Council of the T.U.C. As one meeting will take place on Monday, is it not likely that further meetings will be necessary? Surely this is a serious enough matter not to be hurried. Will my right hon. Friend therefore give an assurance that the Government will reconsider the publication date and postpone it until after the Whitsun Recess, so that there will be plenty of time for these serious negotiations?
Mr. Peart: I cannot give a specific assurance to my hon. Friend.
Mr. Mendelson: Will my right hon. Friend consider it?
Mr. Peart: I will consider it, but I cannot give a specific assurance.
Mr. Sharples: Now that it has been confirmed that the Home Secretary received the Report of the Boundary Commission on 21st April, may I ask whether the Leader of the House can confirm that it is the Government's intention to follow precedent and that the necessary Orders will be laid before Whitsun?
Mr. Peart: The hon. Gentleman knows that two further reports, affecting two other parts of the United Kingdom, are not yet available. We must wait until they are.
Mr. Rankin: Is my right hon. Friend aware that a promise was given that time would be provided for a debate on certain airport navigational charges? Has that been done?
Mr. Peart: Time cannot be provided next week.
Mr. Hirst: The Leader of the House has said that in the circumstances the Clauses and Schedules of the Finance Bill, limited though they be, to be discussed on the Floor of the House will be available tonight. Will he be more specific? It is important that hon. Members should have copies before, at any rate, ten o'clock. Otherwise, many of us will have departed to our constituencies. At the moment, there is only one copy in the Library which we have to queue to see.
Mr. Peart: There will be more than ample copies for all hon. Members.
Mr. Arthur Lewis: Has the Leader of the House seen Motion No. 295,
[That this House congratulates the Prime Minister on his political honesty and courage in resigning from the Labour Government as a protest against the introduction of charges on the National Health Service, supports the remarks which he made on his resignation, in 1951, when he then said, inter-alia: 'The principle of the free health service has been breached, and I dread to think how the breach might be widened in future years'; and deeply regrets that he should have assisted in widening the breach, in the principle of the free health service, by the Government's recently announced 25 per cent. increase in certain health charges.]
Will he arrange for the Motion to be debated, because it is good to have a Motion like that, congratulating the Prime Minister?
Mr. Peart: I know that my hon. Friend is anxious to commit me, but it cannot be debated next week.
Mr. Hirst: On a point of order. I do not think that the Leader of the House heard my question. He said that copies

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would be available. I asked by what time?
Mr. Speaker: Order. I thought that the right hon. Gentleman heard it and answered it.
Mr. Peart: I am sorry. Before the sitting finishes tonight.
Dame Irene Ward: On the Hunt Committee's Report, may we have an assurance that we will know more about where the £20 million is to come from before the House rises for the Whitsun Recess? If the right hon. Gentleman will not give us that information, may I ask whether we could have a debate on it? If the Government decide on £20 million, they cannot do so without knowing where it is to come from. Everyone in the development areas, particularly on the North-East Coast, wants to be assured that nothing is to be taken from the areas which really require assistance.
Mr. Peart: I do not think that I can give a specific promise for next week.
Dame Irene Ward: No, but I wanted—
Mr. Speaker: Order. One bite is enough for each Member during business questions.
Mr. Pavitt: It will be surprising if the Leader of the House has not noticed Motion No. 296—
[That this House recalls the decisions of successive Annual Conferences of the Labour Party, believes in the principle that service to the sick and disabled should be provided by the community free of charge at the time of need, and therefore calls upon Her Majesty's Government to restore this principle to the National Health Service and withdraw the proposed increase of charges for spectacle lenses and for dentures.]
If my right hon. Friend cannot find time next week to debate it, may I ask whether he can give an assurance that we will do so before any Statutory Instrument is laid?
Mr. Peart: My hon. Friend obviously knows that changes could not be made without Statutory Instruments being laid before the House, which provide an opportunity for debate.
Mr. Clegg: May I ask the Leader of the House whether, during the coming
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week, we are likely to have any more interesting statements from the Secretary of State for Social Services?
Mr. Peart: I should hope not. [Laughter.]
Mr. Speaker: Order. We must not drift into the merits at business time.
Mr. Roebuck: Is my right hon. Friend aware that it is some time since the House had an opportunity of debating the work of the Ministry of Technology, which is one of the great success stories of the Government? Will he arrange the business for next week so that we can tell the public the facts?
Mr. Peart: I cannot rearrange the business, even though it would be an interesting debate.
Mr. John Hall: May I draw to the attention of the Leader of the House Motion No. 285?
[That this House, recalling with approval the pledge given on 28th May 1963 by the Prime Minister, then Leader of the Opposition, that grammar schools would be abolished 'only over my dead body' and observing the lack of consideration shown for his Leader's wellbeing by the Secretary of State for Education and Science in pursuing his vendetta against the grammar schools, urges the Prime Minister to make it clear that he intends to honour his word.]
This is attracting considerable support and attention from both sides of the House. It draws attention to the sinister attempt by the Secretary of State for Education and Science to face his right hon. Friend the Prime Minister with two dreadful alternatives, one to honour the pledge to maintain grammar schools and the other to impose on the nation the cost of a State funeral. In view of—
Mr. Speaker: Order. The hon. Member must not drift into the merits of what he wishes to have debated.
Mr. Hall: I was about to say that in view of the appalling difficulty of these two alternatives facing the nation in deciding which is best, may I ask the right hon. Gentleman to arrange an early debate?
Mr. Peart: As I said last week, I find this argument extremely interesting, but it cannot be debated next week.
Dr. Gray: What has happened to the promise to give time to the Divorce Bill? Will the Leader of the House give an assurance that time will be found for it to be put through all its stages in the House before the Whitsun Recess?
Mr. Peart: I cannot give that assurance.
Mr. Wilkins: On a point of order. When was this promise made? We would like to be acqainted with it.
Mr. Speaker: Order. The hon. Member is responsible for what is in his own question. I am not discussing it. The right hon. Gentleman has answered it.
Mr. Ian Lloyd: Since the Leader of the House—
Sir Harmar Nicholls: On a point of order.
Mr. Tinn: On a point of order. I believe that inadvertently the Leader of the House did not answer my hon. Friend's question.
Mr. Peart: We must see how the Divorce Bill goes before any decision is made about time.
Mr. Ian Lloyd: Since the Leader of the House will doubtless have been made aware of the depressing contrast between the publication of the annual report of the Port of London Authority today and that of the Port of Rotterdam yesterday, and since he will further be aware that it is only deep sea British shipowners who may not bring containers into Britain, may I ask how soon the House will have a chance of debating what is fast amounting to a scandalous national situation?
Mr. Peart: I accept the seriousness of this matter. I think that I once made some remarks about it to the House. But I cannot alter the business for next week.
Mr. Hazell: Will the Leader of the House say when time is likely to be found to discuss the Report of the Select Committee on Agriculture?
Mr. Peart: Again, much as I have a deep interest in this matter, I cannot find time for it next week.
Sir H. Legge-Bourke: May I ask a question relating to the next 24 hours? In view of the precarious state of certain foreign exchange markets at the moment, will the Leader of the House say whether
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there is any likelihood in the next 24 hours of the Chancellor of the Exchequer having to make any statement, bearing in mind the difficulty that we had in obtaining a statement from him the last time certain markets had to be closed?
Mr. Peart: I hope that the hon. Gentleman will not press me on this point, for obvious reasons.
Mr. C. Pannell: As the Leader of the House has not announced that we will be debating the Report of the Select Committee on Privilege next week, and that it will probably not be taken before the Whitsun Recess, can he hold out any hope that it will be taken either in this Session or in this Parliament?
Mr. Peart: I want a debate this Session on this important Report. It should be considered by the House and it will be taken.
Mr. Younger: As the Government had to abandon the Education (Scotland) Bill last night because there were not sufficient Members present from their side to carry it through, may I ask the right hon. Gentleman why it is not down for next week's business? Will he say when it is coming?
Mr. Peart: I cannot say precisely, but it will come.
Mr. Ogden: As the debate on Thursday next week is to be cut short at 7 o'clock, will my right hon. Friend use his influence, not only with back benchers, but with Front Bench speakers on both sides, to keep their speeches as short as possible to enable as many hon. Members as possible to take part in the debate?
Mr. Peart: I am always anxious that that should be done, but I have no power to do it. I know that Mr. Speaker appeals to hon. Members to keep their speeches short.
Mr. Tilney: As the 50 per cent. increase in the charge for meteorological services at Liverpool and other provincial airports came into operation on 1st May, can the right hon. Gentleman say when we shall be able to debate the two Prayers on this matter?
Mr. Peart: I cannot say, but I shall convey the importance of this matter

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to my right hon. Friend. There will not be a debate on it next week.
Mr. Arthur Davidson: In view of the interest shown in the Hunt Committee's Report and the Government's proposals, can my right hon. Friend arrange for a debate on them in the very near future?
Mr. Peart: I think that this is an important matter which is worth discussing on the Floor of the House, and I shall convey my hon. Friend's views to my right hon. Friend.
Mr. Goodhart: Will the right hon. Gentleman try to persuade the Home Secretary to make a statement next week about the Boundary Commission's Report, particularly as the Commission's proposals will have a most damaging effect on the size of the Labour vote at Huyton?
Mr. Peart: I have replied to that.
Mr. Speaker: The hon. Member cannot argue merits. He can ask for a debate.
Mr. Peart: I answered a similar question earlier, when I said that we were waiting for two further reports.
Mr. Hector Hughes: Will my right hon. Friend find time for my meritorious Motion which seeks to improve the conditions relating to cars for disabled persons?
[That this House is of opinion that Clause 12 of the regulation relating to disabled persons' cars, which provides that when the child or children of the disabled person reaches the age of 14 years or ceases to depend on the disabled person the car will not be replaced, by substituting a later age which will enable the disabled person to continue his or her care of the relevant child or children.]
Mr. Peart: I know that this is an important matter, and that my hon. and learned Friend tries very hard to keep Ministers informed about it. I shall bear it in mind, but I cannot provide time for a debate next week.
Mr. Edward M. Taylor: Is the right hon. Gentleman aware of the grave anxiety and concern in thousands of Clydeside homes today over the uncertainty
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at Upper Clyde Shipbuilders? Will the right hon. Gentleman give an assurance that a statement will be made next week, or soon thereafter, about a final decision?
Mr. Peart: The hon. Gentleman is right to ask about that. My right hon. Friend promised this, and I shall inform him that a statement should be made next week.
Mr. Russell Kerr: In view of the imminence of a major strike by university technicians at the Imperial College, and elsewhere throughout the country, can my right hon. Friend give an assurance that there will be an opportunity for an emergency debate during the coming week?
Mr. Peart: I cannot say that, but I shall inform my right hon. Friend that hon. Members are interested in this, and perhaps he will keep the House informed.
Mr. Goodhew: The right hon. Gentleman gave the dates of the Whitsun Recess, but he qualified his statement with the remark that they were subject to the progress of business. Is the right hon. Gentleman aware that the lack of progress is due to the failure of the Government Chief Whip to keep hon. Gentlemen opposite here at night to vote for the Government? If that is so, why take it out on the rest of the House?
Mr. Peart: I am anxious that the hon. Gentleman should have a very good holiday.
Mr. Philip Noel-Baker: Will my right hon. Friend bear in mind that within the measurable future the House ought to have debates on Rhodesia and Nigeria?
Mr. Peart: I note what my right hon. Friend has said. Not next week, but I shall bear it in mind and inform my right hon. Friend.
Mr. Bruce-Gardyne: Is the right hon. Gentleman aware that more than 11,000 qualified and experienced teachers in Scotland are today facing dismissal, and that if these dismissals are proceeded with the entire education system in Scotland could be disrupted? Will he therefore ensure that the Secretary of State for Scotland makes a statement to the House urgently on the question of re-registration with the General Teaching Council?
Mr. Peart: I shall draw the hon. Gentleman's point of view to the attention of my right hon. Friend immediately.
Mr. Hugh D. Brown: If the dates for the Whitsun Recess are conditional on progress made with Government business, including the remaining stages of the Post Office Bill, will my right hon. Friend encourage my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) to start his Whitsun Recess from Monday?
Mr. Waddington: Can the right hon. Gentleman say when, if ever, there will be time to debate the Report of the Textile Council, bearing in mind, in particular, the concern felt in Lancashire as a result of the Chancellor's purchase tax proposals?
Mr. Peart: This is an important matter. I cannot say that it will be debated next week, but I shall report what has been said.
Mr. Speed: Does the right hon. Gentleman think that, unintentionally, he misled my hon. Friend when talking about the Boundary Commission? Is the right hon. Gentleman aware that the 1949 Act says that as soon as a Boundary Commission has reported the Home Secretary shall lay its report before the House. Will the right hon. Gentleman reconsider his earlier reply about a debate on Motion No. 292?
[That this House notes that the Secretary of State for the Home Department received the report of the Boundary Commission for England on 21st April and calls upon Her Majesty's Government to implement its recommendations before the next general election.]
Mr. Peart: I have given a reply, but I shall examine the matter very carefully. I thought it was reasonable to suggest that before my right hon. Friend makes a precise statement he should receive the other two reports.
Sir Knox Cunningham: On a point of order, Mr. Speaker. It will not be without your recollection that the Prime Minister's Question Time today lasted for 23 minutes, and that Question No. Q4 dealt with Northern Ireland. Can you say whether there was any particular reason why no Ulster Member was called to ask a supplementary question?
Mr. Speaker: Mr. Speaker has a difficult task to allocate time as between issues as between the two sides of the House. He cannot go back and examine just why he moves from a particular question. The simple fact, however, is that the Rhodesia Question came at 29 minutes past three. If we are on an important Question at that time I usually let it run over. It ran over from 29 minutes past three to about 36 minutes past three. I hope that the hon. and learned Member will understand.

H.M.S.O. PUBLICATIONS WAREHOUSE (INDUSTRIAL DISPUTE)
The Chief Secretary to the Treasury (Mr. John Diamond): With your permission Mr. Speaker, and that of the House, I should like to make a statement about the industrial dispute at the Cornwall House publications warehouse of Her Majesty's Stationery Office.
After a pay claim by Her Majesty's Stationery Office employees at the warehouse who are members of the Society of Graphical and Allied Trades, discussions have been proceeding about a proposed pay and productivity agreement.
The S.O.G.A.T. chapel at the warehouse came out on strike last week. It has refused to return to work until a final agreement is concluded. The details of an agreement have been extensively discussed in negotiations which are temporarily adjourned while various points are considered.
The House will understand that it is difficult for me to say more at this stage without possibly prejudicing the negotiations. In the meantime, all possible arrangements are being made to avoid undue inconvenience to Members.
Mr. Iain Macleod: On the industrial dispute side of that statement, is the right hon. Gentleman aware that as discussions are proceeding the only comment that I wish to make is to invite the right hon. Gentleman to keep the House closely informed, either through himself, or through the Department of Employment and Productivity, whichever is appropriate?
Can the right hon. Gentleman go a little further on the point about undue inconvenience to Members? Does the

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right hon. Gentleman realise that this is not just a case, for example, of the Finance Bill, but that this afternoon there were no copies of the Hunt Report, or of "Task Ahead", although both were vital to the Questions before the House this afternoon?
Does the right hon. Gentleman agree that the only way to deal with this is for Ministers to look ahead to see when their business is coming before the House and to make advance arrangements so that the minimum inconvenience is caused? Can he assure us that those instructions have gone to all Ministers in the Government?
Mr. Diamond: I am grateful to the right hon. Gentleman for his opening comments.
On the second question, the right hon. Gentleman is right when he says that one should take every possible step to anticipate difficulties as they arise. This has been done for the Finance Bill itself, and more particularly for the Clauses which are to be debated, and no doubt amended, in Committee. The same comment applies to the Bill that we are to discuss this afternoon, and to other Bills.
I take the point made by the right hon. Gentleman. Instructions have gone to all Departments that the very thing requested by the right hon. Gentleman should be done. I hope that the inconvenience of hon. Members will be minimal. I regret that it is not possible completely to avoid inconvenience.
Mr. Murray: Does not my right hon. Friend agree that the Government and Parliament should do nothing that encourages any blacklegging against the printers of Her Majesty's Stationery Office and that Government servants should be placed in no different position from other industrial workers? On whose initiative have the talks been adjourned? When does my right hon. Friend expect them to be resumed?
Mr. Diamond: Talks cease when two parties find it inconvenient to carry on talking. I regret that talks are not proceeding, but they are not for the moment. It is not a question of printing. It is a question of the warehouse; it is a question of distribution only. Printing is continuing. Distribution direct from the printers to the House under customary
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procedure is carrying on. Public distribution which goes through the warehouse is not taking place.
Mr. Thorpe: Without in any way intruding upon the merits and the details of the matters which are the subject of discussion, as we are dealing with a dispute in Her Majesty's Stationery Office and as there is, therefore, Ministerial responsibility, may we know whether the Government are in any way represented at those talks, and, if so, by whom and in what capacity?
Mr. Diamond: Yes; there is Ministerial responsibility. I am speaking as the responsible Minister, because H.M.S.O. is the departmental responsibility of the Treasury and, therefore, I appear as the employer, as it were. In the usual way, officials of my right hon. Friend the First Secretary's Department are participating in the discussions.
Mr. Boyd-Carpenter: Does the right hon. Gentleman's supplementary answers to the hon. Member for Gravesend (Mr. Murray) mean that the copies of the Finance Bill have been printed, but that the Government find themselves unable to obtain possession of what is, I suppose, their own property from their own servants?
Mr. Diamond: A number of copies of the Finance Bill were printed and distributed to all right hon. and hon. Gentlemen—[HON. MEMBERS: "Oh."] I am sure that the House would wish me to give a full reply—to all right hon. and hon. Gentlemen who applied for them.
This left those other right hon. and hon. Gentlemen who had not applied in the position that they could go to the Vote Office. After a certain amount of time the number of copies ran out at the Vote Office. There were clearly some hon. Members—it does not matter how many, because it is great inconvenience, as I explained when I moved the Second Reading of the Finance Bill—who suffered inconvenience. That position is now changed. A number of copies have been recovered. Arrangements have been made to distribute them to every right hon. and hon. Gentleman. [HON. MEMBERS: "Answer."] Arrangements have been made to distribute a copy to every right hon. and hon. Gentleman who did not apply individually for a copy.
Sir Harmar Nicholls: Is the right hon. Gentleman aware that he seemed to be evading the principle behind the question asked by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)? Were these documents—Government property—in the warehouse and available? Could not someone have had authority to collect them, or was the position that they were there but because the right hon. Gentleman was taking a very understandably cautious line Parliament's priority had to go by the board?
Mr. Diamond: Parliament's priority is a matter for you, Mr. Speaker, and you have ruled on it.
As to Ministerial responsibility, I am sorry if I did not make it absolutely clear that the strike is taking place at the warehouse, and therefore there is no distribution from the warehouse. Before attempting to interfere in that situation one must think carefully whether interference would be beneficial in the long run.
Sir A. V. Harvey: How many hon. Members received Bills automatically by post or delivered to them out of the 630? The impression gained on this side was that a great number of hon. Members did not receive a copy of the Bill. Will the Chief Secretary confirm that on Tuesday there were several hundred copies of the Finance Bill in the warehouse? What attempts did the Government make to obtain possession of those copies?
Mr. Diamond: I cannot give the precise number, but my understanding is that approximately 600 Members received their copies direct.
Sir A. V. Harvey: No.
Mr. Diamond: If the hon. Gentleman has better information, I do not know why he asked me. The best information I have is that it was approximately 600 and that there were at that time 30 Members seeking copies. Fifty Members have been sent copies. Some Members get a copy and then part with it, as was explained at the time.
Mr. Iain Macleod: Will the Chief Secretary return to the very important point which was made by my right hon. Friend the Member for Kingston-upon-Thames
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(Mr. Boyd-Carpenter) and which has been taken up by others of my hon. Friends? Are there copies available in the warehouse? Have the Government sent for those, and, if so, have they been refused?
Mr. Diamond: There are copies in the warehouse both of this Bill and of other matter which has been printed and which goes to the warehouse as part of the normal method of distribution.
If the right hon. Gentleman is suggesting that one should take the power into one's own hands to take a van and go there and take copies and start distributing them, without going into the question, as I am not a lawyer, of whose property they are, although I assume that they are the Government's property, all I would say is—and I return to what the right hon. Gentleman first said—that when negotiations are proceeding the least one says and the least one does may be the most helpful in the long run.
Mr. Russell Kerr: On a point of Order. Would you tell us, Mr. Speaker, how it is possible for the House to protect itself against this spate of triviality, particularly as we have a very important Bill to discuss this afternoon?
Mr. Speaker: Order. That is not a point of order. The hon. Gentleman will know, as every hon. Member knows, that the House is facing some very difficult problems of having the literature that it needs for its work, and hon. Member have a right to ask questions. I hope that the House will not press questions on too long, however.
Sir D. Walker-Smith: The right hon. Gentleman said that he was not a lawyer. Is the position that the Government are prepared to acquiesce in the tort, certainly of detinue and probably of conversion of Government property, indefinitely, without taking any action?
Mr. Diamond: As I am not a lawyer, I would not like to pronounce on detinue precisely. One has to take the responsibility of taking the view that the House would like this strike settled and the inconvenience ended in the shortest possible time. I have to take the responsibility of deciding which is the best method of achieving that. I am fully aware of the inconvenience to which the House is being put. More importantly, perhaps, I

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am aware of the much greater inconvenience to which the public is being put, because, whereas we are getting many copies, and sometimes all the necessary copies, the public is getting precisely nothing. I am doing everything that I can to bring this strike to as early an end as possible.
Mr. Michael Foot: Does not my right hon. Friend think that if we put all these and kindred delicate matters into the hands of the lawyers we would very quickly have industrial chaos from one end of the country to the other?
Mr. Thorpe: On a point of order. May we take it that it would be your Ruling, Mr. Speaker, that whatever the merits of this case there is no wish to subvert the law and, therefore, the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), who suggested that there might well be an actionable tort, wholly overlooked Section 3 of the Trade Disputes Act, 1906?
Sir D. Walker-Smith indicated dissent.
Mr. Speaker: What the right hon. Member for Devon, North (Mr. Thorpe) has said is not a matter for me.
Mr. Ronald Bell: Why does not the Chief Secretary come clean over this? Why not send somebody to collect these documents? If one set of people will not deliver them, why not get another set to do so? Or is the truth of the matter that the right hon. Gentleman is afraid of certain trade union jungle rules?
Mr. Diamond: I am not sure that I heard all of the last part of the hon. and learned Gentleman's supplementary question, but I gather that in the first part he asked why I had not sent a van to collect the documents. The short answer is that any fool could have done that.

ORDERS OF THE DAY

  IRON AND STEEL BILL
  Order for Second Reading read.
  The Minister of Power (Mr. Roy Mason): I beg to move, That the Bill be now read a Second time.
  It is, of course, customary and right when introducing new borrowing powers Bills to give the House a general survey of the state of the industry. It is especially welcome that the House should have a further chance to discuss the affairs of an industry like the nationalised steel industry, which is now in the process of important and rapid changes. I shall try to bring the House up to date on the problems and prospects of the industry and to give an account of how I see its future.
  Last year, 1968, was a good production year. It rose from 24 million ingot tons in 1967 to an annual rate of 27 million tons by the end of 1968 and is expected to be still higher this year. For 1969 as a whole, national production—that is, public and private—should be at a record level and it has already exceeded previous records in Scotland and Sheffield.
  On production generally, therefore, the picture is an encouraging one. I must record, however, that it is less encouraging on the balance of payments. It is true that there has been a steady increase in exports over the last few years; in 1968, they exceeded 5 million ingot tons for the first time. But imports have also been rising, and in 1968 they, too, reached the record level of almost 3 million tons.
  The steel industry is still a substantial net exporter, with a favourable trade balance on products of well over £100 million last year, but this steady rise in imports can only cause concern. It adds point to what I shall say about the imperative need for the industry to be fully competitive.
  During my speech I shall have no occasion to refer to the private sector of the industry. This is not because the Government are unaware of its importance or are indifferent to its progress. I am keenly interested in this side of the steel industry. My Department has made a point of establishing cordial relationships with the British Independent Steel

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  Producers Association and in its policy for the steel industry there is no bias against the private sector. I have also met representatives of B.I.S.P.A. What I am after is the prosperity and efficiency of the industry as a whole. Today, however, we are concerned with a Bill dealing directly only with the British Steel Corporation.
  The Bill arises out of the work done so far by the British Steel Corporation. Since it took over the nationalised industry less than two years ago, the corporation has been engaged on two main tasks: first, it had to organise the transfer of the nationalised companies and form them into a coherent organisation; and, secondly, it had to develop long-term policies for the future of the nationalised steel industry.
  I need not dwell on the importance of this task. Everything has had to be looked at from the beginning. All policies had to be reconsidered. What was right for the old—and, by modern standards, small—companies was not necessarily right for the corporation, one of the biggest steel producers in the western world; and what was right for the 1960s is not necessarily right for the 1970s. Everything had to be considered, moreover, against a fiercely competitive international background. I am glad to say that the preliminary work of reappraisal by the B.S.C. has now been completed.
  With so much to be done, the first phase of the corporation's existence has involved arduous work and a heavy strain for all engaged in the corporation's management. I am glad of this opportunity to express my appreciation of the effort that it has put in; and I pay special tribute to the leadership which Lord Melchett has provided during the first two extremely difficult and exacting years. I was particularly glad to invite him to remain as chairman so that the corporation could continue to have the advantage of his leadership.
  I was interested to learn in the Press of the undertakings which Lord Melchett is supposed to have obtained before reappointment, covering steel prices, closures, and a host of other matters. While I admire the fertile imagination which must have created these rumours, I assure the House that I have given no
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  undertakings on such matters, and nor were they sought.
  As regards the short-term, hon. Members will have seen the corporation's Second Report on Organisation, which recommended that the multi-product groups should cease to exist and that there was a strong case for organising their activities on a product basis. The corporation, as is known, has been urgently examining the feasibility of such a system and, if this is established, it will go on to consider the precise arrangements for constituting product divisions. It will then present its proposals to me.
  I will only say now that, like the corporation, I am anxious that these questions should be resolved quickly and that the organisation decided on should provide fully for rationalisation and optimum utilisation of the corporation's assets. I am also concerned, again like the corporation, to ensure that in any rearrangement, Scottish, Welsh and regional interests are fully considered.
  The Report on Organisation also recommended that the assets of the publicly-owned steel companies should be transferred to itself and envisaged their consequent dissolution. With nationalisation, the companies now play no real part in the running of the industry and I agree with the view expressed in the corporation's report in paragraph 30 that keeping the companies in being as shells is not justified.
  The corporation's staff need to be free to concentrate their effort on making the industry fully efficient and competitive. Hence, Clause 8(1) of the Bill empowers the Minister to transfer these companies' assets, and Clause 8(2) to dissolve them, subject to Parliamentary procedure.
  In encouraging the corporation in its move towards the dissolution of the companies, it is important to ensure that it does not incur fiscal penalties along the way. I have, therefore, included in the Bill, in Clauses 9 and 10, provisions for certain accumulated tax losses and allowances of the companies to be available to the corporation, and for any capital losses of companies which are dissolved to be set against chargeable gains of the corporation.
  Similarly, Clauses 11 and 12 provide for payment to the corporation of the

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  equivalent of investment grants which would otherwise have been payable to any of the companies had they not been dissolved or their undertakings and assets transferred to the corporation.
  Mr. Peter Emery: Before leaving the reorganisation question, would the right hon. Gentleman comment on a fact which is now widely known; that it is the intention of B.S.C. to reduce the 14 companies and 200 associates into four product groups? This is a matter of major importance from the reconstruction point of view, about which he should comment.
  Mr. Mason: I will, of course, be dealing with that point.
  If the hon. Gentleman has read the Second Report on Organisation—I have reported on this matter to the House—he will be aware that it has been decided to abolish the four groups and to consider whether product divisions make sense. The report on product divisions is not yet before me. However, I assure the hon. Gentleman that I will be commenting on this matter.
  The corporation's work on long term reorganisation and development is described in the explanatory brochure "Finance for Steel", published in support of the Bill, but I know that hon. Members take a very close interest in it and I shall, therefore, treat the matter at some length. Few Bills could have come before the House with such advance material, including the Second Report on Organisation, the annual report and accounts, the brochure from B.S.C. and the Explanatory Memorandum from my Department in addition to the Bill.
  The first requirement, as I see it, must be to create a pattern of production which allows the optimum use of the assets of the nationalised sector taken as a whole, rather than, as previously, of relatively small units.
  The optimum size of ironmaking, steelmaking and finishing units has been steadily rising for some years now. Steelworks in Japan and America are in existence, or being planned, with an annual capacity of 5 million tons or more, and, indeed, up to 10 million tons. Between 1961 and 1966, Japan added eight more works with an annual capacity of 2 million tons and the Common Market
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  seven. We built one, to bring our total number to two.
  In productivity also, we appear to be behind. It is generally accepted that in 1965 the United States steel industry used about half as many men per unit of output as us and that the Japanese and the Italian industries used about two-thirds. Subsequent trends in Europe have not been to our advantage either.
  What is right in their conditions is not automatically right in ours because we must take into account our own plant heritage and the specialised nature of some production, especially in alloy steels, where advantages of scale are not too important. But even so, optimum use of the industry's resources must involve greater concentration than ever before on very large works exploiting the latest processes.
  There are benefits to be gained from the size of management units as well as the size of plant. The B.S.C., in terms of crude steel output, is the second largest producer outside the Soviet Union. It can turn this to advantage by bulk purchases of materials at home and abroad, by co-ordinated development of new capacity, and by economies in the use of existing capacity. It has already made substantial savings in this way, but it is vital that it achieves more if it is to meet this fierce international competition.
  Sir Spencer Summers: Before the right hon. Gentleman leaves the point about concentrating production for greater efficiency, for which he is seeking the power and authority from the House, will he tell us which works in the process of concentration are to close?
  Mr. Mason: No, I cannot say that, but if the hon. Member has read and fully considered the four documents before the House in alliance with the Bill he will have seen that the British Steel Corporation has said that there will be generally four major producing units, in Wales, on Teesside, in Scotland, at Scunthorpe and, with general development in special alloy steels, in Sheffield. That is the general plan.
  We all knew that the concentration of the steel industry, like any other, can have social implications. Any changes should therefore be carried through only

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  after genuine consultation with the unions and after full account has been taken of these implications.
  I am glad to say that the corporation is consulting the unions fully on all its work on development, and will continue to do so. As a trade unionist myself, I hope that the unions will respond to the need for rationalisation. The steel unions always have done in the past—and will doubtless see that the process I have just described is necessary if the country is to gain all the benefits of bringing the bulk of the industry under one ownership.
  I should here like to pay tribute to the men on the shop floor. Steel-making has always been a skilled, arduous and responsible task, with, like coal-mining, a proud tradition. As technology advances, the nature of the work is continually changing, but it will remain challenging, and the environment of steel-making, with its shift work and with operations at high speeds and high temperatures, will not appeal to those who prefer a quiet and easy life.
  In my visits to steelworks, I have been impressed not only with the skill and care that men devote to the task, but with their wider interest in the future of their works and that of the industry as a whole. We must remember that, however much effort goes into the planning of development and operation of the industry, the ultimate result will depend on the work of the men of the shop floor.
  Apart from the direct consequences for employment of the rationalisation of the industry, there are also the implications for regional development. On these, the Government are keeping in close touch with the corporation which is very conscious of the importance of its works to the well-being of the localities where they are situated.
  In talking of planning, I should make it clear that there is no single "plan", no black book of closures, for example. I do not think that it would make good sense to try to establish in one's mind, or in the mind of the B.S.C., a list of plants which for various reasons may close. To list them now would have a damaging effect on morale and would put the industry back on its knees. The
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  work done so far has been mainly directed at general strategy and identifying all the relevant issues.
  The status of the plan is, therefore, such that no specific decisions about, for example, the future location of production have yet been taken. But a great deal is becoming clear about the likely shape of the industry. There will be a sizeable increase in production as home demand rises and also as export opportunities are properly exploited. The corporation has estimated that its production, as distinct from national, will rise from 23·6 million tons in 1968 to between 30 and 34 million tons in 1975.
  There will be increasing concentration on the L.D. process, with growing use of very large converters; as a result, the bulk of production is likely to come in the next few years from large L.D. plant on or near the coast in Wales, Teesside, Humberside and Scotland. The iron-making plant will be supplied by ore brought to new terminals in very large carriers and the corporation is building, or is considering, terminals in all the areas I mentioned. For special steels, rather different considerations apply, and the corporation has already said that it will be undertaking continued development in the Sheffield area.
  On prices, the corporation completed its major price review—there had not been one for the past 30 years—at the end of last year, and the Government referred the proposals to the National Board for Prices and Incomes, whose report is expected shortly. There have, I know, been many representations from consuming industries about these proposals and their effect on consumers is obviously one of the considerations we must take into account. But we must also take into account the financial position of the steel industry, both public and private at the moment. The House will not expect me to comment further until we have the Board's report before us.
  A major preoccupation of the corporation and the Government has been to establish the right financial basis for the future progress of the industry, and the Bill proposes both changes in capital structure and increases in the borrowing limits.
  As the Memorandum on the Bill explains, the corporation's long-term

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  capital at the end of September last totalled £1,042 million consisting of £834 million commencing capital debt; £180 million borrowings from the Minister; and £28 million pre-vesting borrowings. The corporation requested, and the Government have agreed, that £700 million of this shall be converted into public dividend capital and the Bill provides for this in Clauses 1 and 2 on an experimental basis.
  It is the Government's policy that this form of capital, the remuneration of which is by way of variable dividend based on the industry's earnings for a particular year and its reserves, rather than by way of fixed interest, is appropriate for those nationalised industries which are fully viable, but which are subject to fluctuating returns because of their trading conditions and the nature of their assets. The House will recall that p.d.c. was first adopted for the British Overseas Airways Corporation as an experiment in 1966.
  The B.S.C. is in competition with many other producers both in this country and abroad. It is engaged in an industry which, because of the cyclical nature of its market is always subject to sharply fluctuating returns, but most of the corporation's competitors have a capital structure which reflects and can accommodate that fluctuation. If the corporation is to compete successfully as a commercial venture it, too, should have a financial structure like that of its main competitors who enjoy a substantial element of equity in their capital and whose success is often judged by the rate of dividend they declare.
  For as long as the corporation is financed entirely by loan capital, its results will not be capable of comparison and may indeed at times fail to give a true reflection of its actual performance. The corporation is rightly concerned that this could affect its relationships with customers at home and overseas and fear that morale in the industry could suffer in consequence.
  The corporation took over the industry at a low point in the industry's fortunes, but, already, we can see a distinct improvement in its trading position. Looking at the next few years as a whole, there would seem to be ample justification for this further experiment with public dividend capital.
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  If it is right for the corporation to have p.d.c., it is right that it should have it from the start and not be saddled with an inflexible financial structure which is not properly geared to its needs. Moreover, the new structure should be seen to operate effectively from vesting date so that the corporation's position can be clearly judged from the very beginning.
  I have described this capital reconstruction as a further experiment. It is an experiment which I feel confident will succeed. Nevertheless, so that there shall be an opportunity to review its suitability for the steel industry after a reasonable period of time, the relevant provisions in the Bill are to be effective, in the first instance, only until the end of the corporation's financial year, ending in 1974.
  The Minister will, however, have power to make an Order, subject to Parliament's approval, for the provisions to become permanent or for their operation to continue for a further period. If no Order is made, the £700 million will revert to commencing capital debt, and any other p.d.c. invested in the corporation will from then on be treated as loan capital.
  Before leaving this subject, perhaps I should say a word or two about dividend policy. In doing so, I would stress that I am not in any way prejudging what the dividend should be in any particular year. That is something I must decide at the time in the light of discussions with the corporation and the Treasury. However, as a broad statement of my intention, my general policy on reserves, provisions and dividends will be, initially, that, as a minimum, all profits, after clearance of any past losses, should be paid as dividends until the Government have received, by way of dividends and corporation tax, a sum equivalent to the interest which would otherwise have been paid on the p.d.c., had it been in the form of fixed interest capital.
  Thereafter, I will be prepared to consider on merits proposals from the corporation for the allocation of some amounts to reserve against contingencies other than fluctuation of dividends; otherwise, profits should continue to be paid out as dividends.
  As the House knows, the corporation's borrowing powers were extended last July to the existing limit of £400 million in the 1967 Iron and Steel Act. It was

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  realised then, however, that this could be no more than a stopgap because over £270 million had already been used in meeting pre-vesting obligations taken over by the corporation; £13 million has been used up to now for interest on the remaining commencing capital debt of £134 million; and meeting day-to-day requirements and financing capital expenditure took about £70 million in 1967–68. In fact, at 30th September, 1968, the corporation was within £66 million of its present limit of £400 million and, clearly, an increase is needed if it is to finance its development programme.
  After very careful consideration, I have concluded that an increase to £650 million is appropriate to carry the corporation over the next five years, and I accordingly invite the House to agree that the present statutory borrowing limit of £400 million be increased ultimately by £250 million. The House will, however, wish to review the corporation's requirements some time during the course of this period.
  The Bill therefore provides for a limit of £500 million in the first instance and for the balance of £150 million to be available only by Order subject to an affirmative Resolution of the House. In addition, of course, the level of investment will be subject to annual Government approval in the normal way.
  The calculations on which these figures are based are fully set out in the Memorandum. Briefly, we assume capital requirements for this period as £1,130 million and internal resources and capital receipts as £20 million less than this. Allowing a notional £295 million for dividends on p.d.c., this leaves £315 million to be financed externally. When this is added to the existing borrowings at September, 1968, of £335 million, the proposed limit of £650 million results.
  I hope that that is as slow and clear an explanation as I can give—
  Sir Keith Joseph: The right hon. Gentleman will surely be aware that the figures which he is giving from the Memorandum are contradicted in every detail in "Finance for Steel", on page 8. My hon. Friends and I would be very much helped if he could new explain the differences, which amount to £140 million in cash flow
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  over the next four years. He must be aware of this contradiction.
  Mr. Mason: Yes, but I could not go into it in so much detail now as to be able to explain how these slight diferences come about. But I must try to help. What I am saying at the moment happens to be what the House must agree upon and not what might be—if there is one—a minor difference—
  Sir K. Joseph: It is a big difference.
  Mr. Mason: —on page 8 of "Finance for Steel".
  If I may repeat what I just said in a different form, the British Steel Corporation needs £1,130 million for general expansion and replacement over the next five years. Provision must be made—
  Sir K. Joseph: The Minister has just said—he read it from that document—that the B.S.C. requires £1,130 million to a set date for capital investment, but the B.S.C.'s own document, "Finance for Steel", says, on page 8, that, to exactly the same date, it needs £875 million. This is £255 million less than the Minister is telling us. This is not a small difference. There are differences in every figure in the two tables—one in the B.S.C.'s document and one in the Government's document. Surely we are entitled to an explanation.
  Mr. Mason: All I am asking the House is that it should, first, listen to exactly the figures which I am quoting, as distinct from the variations which there may be in "Finance for Steel". Then, if the House wishes, in Committee, these financial points can be pursued. I must repeat that, so far as the House and the Bill are concerned, the corporation needs £1,130 million for general expansion and replacement over the next five years. Provision must be made for £295 million, because, if the B.S.C. does well, £295 million would be expected to be paid on its p.d.c., which would bring the total to £1,425 million. It is expected that it will generate from internal resources and capital receipts about £1,110.
  The difference, therefore, between self-generation of funds and the anticipated requirements is £315 million. The authorised borrowing so far is £335 million and, therefore, the total borrowing over the next five years that I am

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  asking for in the Bill—as distinct from what the right hon. Gentleman is quoting from "Finance for Steel"—is £650 million.
  I hope that that will now straighten the matter—
  Mr. Nicholas Ridley rose—
  Mr. Mason: On the subject of borrowing, I am—
  Hon. Members: Give way.
  Mr. Mason: I see no reason to give way again on that point. I have answered it twice. I have told the right hon. Gentleman that there may be a minor variation—
  Sir K. Joseph: It is not minor.
  Mr. Mason: —and that it can be pursued, if necessary, in a discussion of the financial parts of the Bill.
  While on the subject of borrowing—
  Sir K. Joseph: On a point of order. The Minister specifically boasted of the documents before the House in preparation for the Bill. We have studied these documents, but it appears that he himself has not. Will the Minister please give an explanation of the vastly different figures behind the Bill in the B.S.C.'s own document? Otherwise, we shall have to move to adjourn this debate.
  Mr. Deputy Speaker (Mr. Sydney Irving): That is not a point of order. It is a matter which the right hon. Gentleman must pursue in debate.
  Mr. Ridley: Further to that point of order—
  Mr. Deputy Speaker: I have ruled that it was not a point of order.
  Mr. Ridley: On another point of order. The Minister has just said that the corporation requires £1,100 million—
  Mr. Deputy Speaker: Order. The hon. Gentleman is seeking in another way to pursue the same point of order.
  Mr. Mason: I see no reason to pursue the matter. I have tried to give an explanation. If there is a variation, there is no reason why it should not be pursued in Committee. I have given the figures of what I am seeking in the Bill, and that is exactly what the House must
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  agree upon—the Bill and the figures which I have given.
  While on the subject of borrowing, I am taking this opportunity to ask Parliament to grant the necessary powers to enable the corporation and, for as long as they remain in being, the companies, to borrow from sources other than the Government in foreign currencies. This has already been done—
  Mr. Emery: On a point of order. Would you assist the House, Mr. Deputy Speaker? The Minister is presenting certain figures—
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman is not going to use a point of order to raise a matter which is more appropriate to the debate.
  Sir K. Joseph: On a point of order—
  Mr. Emery: But I am still on one.
  The Minister has given certain facts—let us forget about the figures—in the presentation of his case. These facts are entirely negatived by the—
  Mr. Deputy Speaker: Order—
  Mr. Emery: May I finish the point of order?
  Mr. Deputy Speaker: Order. The hon. Gentleman must challenge the Minister's facts in debate if he catches my eye.
  Mr. John Mendelson: Further to that point of order—
  Mr. Deputy Speaker: Order. I hope that the hon. Gentleman is not entering into the debate by way of a point of order. He cannot do that.
  Mr. Mendelson: May I ask your protection, Mr. Deputy Speaker, for those hon. Members who represent steel workers and management, and who hope later to put a point of view for those who earn their livelihood in the industry. I hope that we may get away from these points of order. The point has been made from the Opposition Front Bench that should be made.
  Mr. Deputy Speaker: Order. I hope that the debate can proceed.
  Sir John Eden: On another point of order. One of the documents now being considered in the debate is "Finance for Steel". Is it not

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  a fact that it is on the Table, or are we to understand from the Minister that he is taking no part in the presentation of the document in any way?
  Mr. Deputy Speaker: Order. The hon. Gentleman is seeking in another way to raise a matter which I have ruled not to be one. There is a limited time for the debate, and many hon. Members wish to speak. I hope that hon. Members will wait for their opportunity in debate to challenge the Minister on this question.
  Sir K. Joseph: With the greatest respect, it is surely a matter of substance for the Chair that the Minister deliberately presented four documents to the House but refuses to answer questions on major differences between two of those documents. How can the House debate—
  Mr. Deputy Speaker: Order. I understand the right hon. Gentleman's difficulty, but he cannot raise this as a point of order. The right hon. Gentleman will be making his own speech, and I am sure that he will be able to deal with the matter most effectively.
  Mr. Mason: As we have wasted time. I must move on.
  Powers to borrow from sources other than the Government in foreign currencies already exist for the Air Corporations, the Gas and Electricity Councils, the Scottish Electricity Boards, and there is provision in the Post Office Bill. It is the Government's policy to encourage the nationalised industries to take the opportunity to borrow in foreign currencies if they wish, and the Bill confers this power on the nationalised steel industry.
  Each borrowing will be subject to the Minister's consent and the approval of the Treasury, both as to the source and terms of the loan in question, and in considering each borrowing the Government will be guided by the circumstances prevailing at the time. The provisions about the aggregate limit on borrowings and Treasury guarantees will apply.
  There remains to be mentioned a minor provision concerning the corporation's financial year. For reasons connected with the character of the industry, many steel companies end their year in
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  September. On taking over the industry, the corporation wished to continue this practice so as to avoid unnecessary dislocation and keep down the burden on its accounting staffs—and after much consideration I agreed to its request by prescribing 30th September, 1968, as the closing date of its first financial year under Section 59(1) of the revived portion of the 1949 Act.
  It would also have helped the corporation if its accounting period could always end on a Saturday, as it has long been found administratively convenient in much of the industry to draw up accounts and statistics at the end of the last working shift on a Saturday. I would have liked to agree to this, but as the law now stands it cannot be done, though there is no doubt that it would greatly assist the corporation's accountants. I have, therefore, included in this Bill a provision which in effect prescribes the Saturday nearest the last day of September as the closing day for future financial years of the corporation.
  There could, however, be no denying the advantages that could accrue if the corporation's financial year could coincide with that of the Government and the greater part of the public sector. While I have no intention of forcing the corporation to move in this direction I have, nevertheless, taken the opportunity to include in Clause 13 the necessary power to prescribe a different period by Statutory Instrument subject to annulment by Resolution of either House of Parliament against the possibility of eventually being able to change from September to March.
  Apart from the points of order and interjections, and the variations between the Steel Corporation's brochure and my figures, I have described the work so far done by the corporation.
  Mr. Ridley rose—
  Mr. Mason: The corporation will be the first to recognise that much remains to be done. The upward movement of costs must be checked. Productivity must be increased. Arrangements for redeployment of men must be perfected, and the corporation's finances must be strengthened. The Bill puts the industry in a position to master the industry's problems and achieve success.
  Mr. Emery rose—
  Mr. Mason: I shall not give way. I have been speaking for a long time.
  Mr. Deputy Speaker: Order. The right hon. Gentleman is not giving way. The hon. Gentleman must not persist.
  Mr. Mason: I have been speaking a long time and I am eager to give those hon. Members with steel interests the opportunity to make a contribution, rather than those hon. Members who rise to make party political points or to niggle about the brochure.
  I note that the Opposition intend to divide the House on the Bill. I do not yet know what they are opposing, but I hope that it is not to give heart or hope to those within the steel industry or without that the embers of denationalisation still glow. There is hardly a flicker left, and the quicker this is realised by all the better.
  The British Steel Corporation wants to be rid of this niggling party political interference, and rightly so. On behalf of the nation it has a major job to do. On its success so many others depend, and while I am in office it will be given its chance.
  Mr. Emery rose—
  Hon. Members: Order.
  Mr. Deputy Speaker: Order. I hope that hon. Members will leave matter of order to the Chair.
  Mr. Mason: The corporation stands for British Steel, and internationally must be seen to do so. Its image will brighten only by success, and it will need Parliament's backing for that—and that means all of us.
  In asking the House to give the Bill a Second Reading we are enabling the B.S.C. to weld itself into a strong, internationally-viable steel industry, and from the passing of the Bill there can be no turning back. I hope that the House fully understands that.
  4.46 p.m.
  Sir Keith Joseph: There must be a simple explanation, and I shall offer one, of the differences revealed in the interjections during the Minister's speech between the White Paper and the British Steel Corporation document, "Finance for Steel". We on this side of the House are not the least
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  surprised that when two documents serving slightly different purposes are put before the public there are differences in them. What absolutely amazes us is the Minister's failure to do his homework. We have done ours, and I have a long list of other differences.
  The Minister grins, but he has not done his homework, and he has tried to cover that up by riding off a most important set of differences between the figures. These are not trivial Committee points, but huge chunks of taxpayers' money, totalling more than £200 million. I am sure that they can be simply explained, but the Minister should be able to do so. I will gladly give way to him if he chooses to give the explanation during my speech. It would be courteous if he did so. I hope that someone will help him to understand.
  My right hon. Friends and I oppose the Bill, and I shall explain why. I hope that nothing I say will be taken in any way as a criticism of the management of the B.S.C. It is not the managers or men whom we have occasion to criticise, but the Government, and the system that the managers and men have to work. I hope that, having said that, I shall be freed from any thought that I am imputing ill will, malice or incompetence to the managers, which I am not doing for a moment when I criticise what lies behind the Bill.
  Let me summarise the reasons why we oppose the Bill. We disapprove, first, of the wholesale power the Bill gives the Minister to scrap companies and trade names even before the B.S.C. has firm proposals to put before the Government What will replace them?
  We distrust the borrowing powers. We distrusted them before the debate began, and we distrust the calculations behind them even more now that the Minister has revealed that he does not understand what he is asking the House to approve. We distrust these borrowing powers for the very good reason that neither the corporation nor the Government have yet arrived at any development programme. We do not necessarily criticise them for that. But they are asking virtually for a blank cheque for a great deal of public money before deciding what to do with it.
  We oppose the Bill because we have no evidence whatever that enough is being done to increase the competitiveness and

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  efficiency of the industry and we note that the Bill makes no contribution to those purposes. We oppose the Bill because we see the corporation as a monopoly and we observe that, not surprisingly, since this is the normal behaviour of monopolies, it appears relatively insensitive to the needs of customers. We see it as a monopoly which is ready perhaps to compete unfairly with its dependants in the private sector. We regard the public dividend capital as the merest window dressing. These are the reasons, each to a greater or lesser extent covered by the Bill, why we shall vote against it.
  I come now to various aspects of the policy of the corporation and the Government covered by the Bill, and the first is investment. There are apt, from time to time, to be criticisms of the comparative productive performances of the steel industry compared with those abroad. I hope that the Government realise that, owing to their political treatment of the industry, the investment capacity of British steel has been delayed by between five and seven years. I am not, and I shall be seen not to be, pretending for one moment that everything was perfect in the past. But investment programmes had been decided by individual companies which could have been put into effect and would have been financed and would have been producing competitive steel today for the benefit of the nation had not the Government embarked upon nationalisation.
  We have no clear investment decisions now before us. The only clear decision is the negative one—and I do not quarrel with it—that there shall be no green field site development. What we are presented with in the corporation document is a mass of alternative projects—coastal site development, ore terminals; enlarged capacity in a number of places, for example—a number of possible ways of spending money but no particular choice between them. We know that the difficulty of decision making is choosing between alternatives and establishing priorities. The corporation mentions a number of new techniques, such as spray steel, continuous casting and others, but does not choose between them and does not allocate resources between them.
  Mr. George Darling: Some are alternatives.
  Sir K. Joseph: Some are alternatives and some are not. But the point is that we have no development programme. I am not seeking to rush the corporation, but the Government are coming to the House with a borrowing requirement without telling us what the money in general is to be spent on.
  Then we come to the question of the structure of the industry. Here again, the Government and the corporation are equally vague. We intensely dislike monopoly centralisation and the principle of having a single investment-decision-maker in any industry, because no human beings are infallible and if there is only one decision-maker and it makes a mistake, the industry and the nation suffer. We want the industry to be competitive, responsive to the market and enterprising. We doubt whether it will be these things while 90 per cent. of it is in State hands. But that does not mean as the Minister sought to imply, that we think that the right answer is to go back to the precise position as it was before nationalisation.
  The Bill is brought to the House without the corporation or the Government having decided on the structure of the industry. At the moment, there is regional grouping. That may be transformed, we are told, when the Committee under Dr. Finniston has made its recommendations and the corporation has decided whether to move over to product grouping. We have the gravest distrust of product grouping. It gives us the impression that, instead of having one centralised monolithic monopoly handling all steel products except those in the private sector, we are going to have perhaps four monolithic monopolies, each responsible for one product group, with no one such monolith competing with another monolith. This is no help to British steel consumers.
  Do not the Government realise that half the output of British steel goes into British exports and if British steel is not competitive British exports will not be? Do not they realise that, unless there is some scope for competitive enterprise, decentralisation of management, vigour, competitiveness and enterprise, the customer and the nation will suffer?
  We fear that the over-centralised structure of the industry which lies behind the

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  Bill will sap the industry of management initiative. We fear that the industry, whether it remains as it is now or is broken up into product groups, will become more and more remote from the market and more and more insensitive to the needs of consumers. We must add the fear that to impose upon the industry so shortly after the nationalisation upheaval yet a further upheaval in a shift from regional to product grouping may take the heart out of management and men.
  Mr. Eddie Griffiths: While the right hon. Gentleman is on the question of the competitiveness of the steel industry, will he recount for us the evidence of Mr. Judge to the Monopolies Commission and say whether this was in the interests of the consumer?
  Sir K. Joseph: I said that the industry was not perfect before. [Laughter.] Hon. Members may laugh, but debate would be livelier in this House if they were a little more humble about what they defend. We accept that, while there is nationalisation, the corporation must carry out at least the functions of a holding company and, of course, control capital investment, set a target on capital employed and control trading policies and top management selection, but we fear that it is going far beyond this into an excessive degree of centralisation.
  Does not all this make us ponder the complications that nationalisation brings with it? Decisions in this complicated world are inherently difficult enough even when made by independent companies responsible for their own results. How much more difficult do decisions become when they have to be made in the glare of publicity, when Ministers and Parliament have to be persuaded that they are right, when they all occur in the midst of public debate! Is it surprising that, as a result of all this, decisions are delayed, investment opportunities missed and the edge of management blunted? How much harder management becomes when the rigmarole of nationalisation is added on to it!
  Every change in this industry is to be made—the Parliamentary Secretary grins, but I was not attempting a technique other than that of debate. I am very willing to answer any point where I can be shown to be wrong. I was dealing with
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  the changes that will be carried out in the industry. The Minister and his predecessors have stressed that there must be changes. In future these will have to be made by central decisions, approved by the Minister and the Cabinet, and possibly by Parliament. Where is the scope for spontaneous speed in reaction to changing needs? It is all gone because of nationalisation and the industry is in danger of becoming ossified.
  What a bitter paradox it is that, but for nationalisation, many of the changes necessary in British steel would already have occurred spontaneously. I will tell hon. Members how they would have occurred. Some of the private companies would have flourished, some would have faltered and some might have gone bankrupt, because that is how the private enterprise system should work. None of that has happened and the whole industry has been left inert, waiting for Government and centralised corporation fiat.
  The country has suffered. Instead of some companies flourishing, some faltering and some going, either into reconstruction or worse, now all companies must go, because the Bill gives the Minister power to authorise the B.S.C. to abolish all companies and all trading names. I am not saying that every company and every trading name should be preserved, but in many cases there were links of loyalty between companies and managers and men. All sides of the House should value that. Some of the products of some of the trading names are world-renowned. Surely the Minister will reassure us that he will not allow the B.S.C. to abolish the companies and trading names, particularly before the new organisation to take their place has been decided, without seriously considering the damage that might be done.
  It looks as if the Government are encouraging B.S.C. to centralise as much as possible and to dismantle all potential for decentralised enterprise before the day of judgment, before the next election. Will this Bill and the policies behind it help? [Interruption.] Will this Bill—[Interruption.] The hon. Member for Ebbw Vale (Mr. Michael Foot) doubts the day of judgment is coming?
  Mr. Michael Foot: I do not doubt that the day of judgment is coming, but I hardly expected that Her

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  Majesty's present Administration would hold office right until that day.
  Sir K. Joseph: We do not think that this Bill will help the efficiency or competitiveness of the industry. We have no evidence that the B.S.C. is making the progress we should like to see it making in reducing costs. Nationalisation has not yet begun to justify the claims made for it, that it would rationalise British steel far more quickly than private enterprise.
  The Minister at least did not boast that productivity has risen. Productivity always rises as the productive cycle rises. What we want to know is what productivity will do next year when the production cycle stabilises. The Minister rightly told us of the rising import trends, reflecting on the competitiveness and capacity of the industry. We are told that there is to be a cut in the manpower of the industry by 50,000 men by 1975, and that much of that reduction will be achieved by wastage and retirement. We hope that the Minister will be able to tell us that it will not be long before the benefit of increased efficiency is harvested by the British steel users and the public.
  We fear that the B.S.C. is demonstrating the normal attitude of a monopoly. It is concentrating on price rises and deferring cost cuts. While deferring the cost cuts it has made application to the Prices and Incomes Board for a whole range of price rises. Half of British steel goes into British exports and it will be no comfort if B.S.C. makes tolerable profits by monopoly methods, while at the same time the shipbuilding, motor and engineering industries cannot export as much as they would otherwise have been able to.
  I am glad to see that those advertisements are no longer appearing, claiming that B.S.C. is not a monopoly and does not exercise monopoly powers over many products. It is just not practical for many British steel users to obtain reliable and alternative steel from abroad, of the quality and to the time that they require. To that extent B.S.C. employs a monopoly power and we hope—although that is a very weak weapon against monopoly—that it will not exploit its position. The Minister has told us that the P.I.B. Report is expected soon and we cannot comment
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  on the price rise further until we know what the Government's decision will be, and what are the recommendations of the report.
  I turn to the borrowing powers contained in the Bill. I should not have thought that the unhappy experience of the debate of 12th July, 1968, would have been repeated today. Then the Parliamentary Secretary failed to explain to the House with any great clarity why the Government had to come so soon to raise the borrowing powers of the B.S.C., in contradiction to the prediction given by the Minister who nationalised the industry only the previous year.
  The comments of the Press on the performance of the Government, particularly the comments of the Economist, were very rude indeed. They said that the B.S.C. was badly served by the presentation, on its behalf, of its borrowing needs by the Minister concerned. What had happened was that the Government had to reveal that in nationalising the industry they had totally underestimated the amount of capital required and they had therefore arranged borrowing powers which proved within a year to be grossly—by £150 million or more—inadequate for the purposes that should have been known by the Government at the time of nationalisation. The refinancing of existing borrowing by the companies that have been nationalised had not been fully considered. The poor Parliamentary Secretary had to face the storm for that.
  The explanation no doubt had not been given to him. My hon. Friends and I would have expected that, at least the lesson of that experience, that humiliation last year, would have been learned by the Minister and his colleagues, yet we have had just the same today, another complete failure to do homework, another lack of understanding of the documents that the Minister has put before the House.
  I hope that the Chief Secretary will give us the answers to my questions. Will he confirm that all the calculations assume that the price increase now before the P.I.B. is granted in full? I think that is the assumption. It is mildly presumptuous. No one would have objected to it if it had been made with a suitable qualification, but I have not seen a qualification in the documents. Secondly, will the Chief Secretary

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  explain the contrast between the table on page 5 of the White Paper and the table on page 8 of the B.S.C. publication "Finance for Steel"? I will not go into the figures now, they will leap to his eyes. There is a contrast between the capital expenditure predicted and the cash flow. Therefore, the borrowing requirement is different in each case. It appears from the documents that the time covered by both tables is the same.
  Our interpretation is that the B.S.C. has based its figures on one end of the increased capacity spectrum. One of the documents predicts that there may be an increase in productive capacity of between 5 million ingot tons and 9 million ingot tons between now and 1975. It is open to the corporaton to take one end of that spectrum in its assumptions about investment finance needed and for the Government to take the other end. It may be that that is all there is between these two tables, but it would have saved a lot of confusion if the Minister had known that the tables differed one from the other and why.
  The third question which I wish to ask is whether, and to what extent, the capital forecasts assume that the corporation will be a net buyer or a net seller of steel capacity. Will it sell more of its existing capacity back to private enterprise—what are called fringe operations or boundary rectifications—or will it expect to buy from the private sector more than it sells to it? Would the Chief Secretary give the assumptions within the investment programme?
  I come to the capital structure. The Minister did not mention the huge fact of revaluation. The corporation revalued its assets. Perhaps the Minister does not know that. Does he know it? I wonder if he does. The corporaton had vested assets to a book value of over £1,000 million. It shows in its accounts that it wrote those down—and that may have been the sensible thing to do commercially—to near its commencing debt of £834 million. This was a big write-down. Would the Chief Secretary explain where the £130 million referred to in the bottom paragraph on page 43 of the accounts features? So far as I can see, the £130 million does not come within the more than £250 million write-down shown in note 9 on page 47 of the glossy version of the Annual Report and Accounts. Is
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  a further write-down of £130 million intended, or has it taken place and I have failed to find it in the accounts? The Government will agree that these are large figures. I hope that the Chief Secretary will give us the necessary information.
  I come to the question of the public dividend capital. We do not for a moment blame Lord Melchett for seeking to convert part of the capital from fixed interest. Fixed interest is a very inflexible burden for any trading organisation to bear. The Minister said that British Steel was burdened with what he called an inflexible structure of fixed interest capital. But who imposed that burden only a few months ago? Why did not the Government think of all this when they nationalised? Why did they not think of it and not nationalise? Public dividend capital is the merest window dressing.
  The Minister's explanation that people abroad might misinterpret the level of dividend or the lack of dividend by British Steel was the most disingenuous of explanations. We are dealing with sophisticated people. The Minister may not understand the accounts, but the people who deal with British Steel mostly do. In case it is thought that I am being arrogant, I confess that there were many parts of the accounts on which I had to take advice. But the Minister has advisers and he should have asked for advice before introducing the Bill today.
  Public dividend capital is a sort of bastard equity. It is a bogus equity; it is a sham equity. The essence of equity is that the shareholders effectively own the business and act as a discipline on management. That is the function of shareholders—to take the chance of profit, the risk of loss, and to exercise discipline on management. I do not say that they always do so, but there have been some encouraging instances recently when they have.
  It is no use the Minister saying that the taxpayer is the equity holder of British Steel. That is so diffuse a truth that it loses all bite. The corporation, if it had equity in the proper sense, would have to seek finance from the market and satisfy its shareholders that management was effective. But the p.d.c.—
  Mr. Ridley: I may be wrong, but I thought that "p.d.c." means "payment deferred constantly".
  Sir K. Joseph: I fear that that description has a lot of plausibility.
  The Minister is unlikely to refuse finance to the corporation. We hope that the Minister will, so far as he can, carry out some of the functions of a shareholder. We hope that at least he will fix a realistic target for the p.d.c. yield. The Minister has the power to impose the target, but he is not required to publish it. Nevertheless, we hope that the Minister will tell the public what target he gives to the corporation for its dividend yield, because unless that is known we cannot tell whether he is using his powers realistically. If the target is not realistic, the corporation will be allowed to trade with the benefit of subsidy and there will be unfair competition with its dependants in the private sector.
  We have tried to analyse what the dividend payment may be from the forecasts in the various papers. It looks as if there might be a payment of dividend, if all is well, of £70 million in 1970–71. But we cannot tell what yield that would represent because we do not know what the p.d.c. will amount to. The Minister has power to treat loans as fixed interest capital or as p.d.c. I wish that the Minister had told us what he intended to do.
  For many reasons, we do not like the Bill. We dislike its background. We dislike there being one centre for making decisions for virtually the whole of British Steel. We dislike centralisation and the degree that British Steel is, we think, centralising. We dislike monopoly. We dislike the threat to great trading names and the employment links of companies. We dislike Government financing of industry which should be financed through the market. We dislike the sham equity, the pseudo-financial arrangements.
  It would be possible to imagine a real equity stake in some or all of the corporation. It would be possible to imagine management depending on the market for finance and on the approval of shareholders, with their own money at risk, for reappointment. That would be real equity—quite unlike this bogus p.d.c. We want a flexible, competitive steel industry, and that is why we shall make any changes
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  necessary and practicable to provide the disciplines of competitive enterprise for steel. We shall restore a competitive framework for steel.
  For the reasons I have given, and particularly because of the power to eliminate trading names and companies, I hope that my right hon. and hon. Friends will go into the Lobby against the Bill.
  Mr. Deputy Speaker: Many Members, including all Members for the steel constituencies, wish to speak in the debate. I appeal to those who are called to make reasonably brief speeches.
  5.20 p.m.
  Mr. Eddie Griffiths: It is right and proper that I should declare my interest in the debate. Before I entered the House last year I spent 16 years on the shop floor at a steel works in North Wales. I am proud to represent a steel constituency, and one of the greatest steel cities in the world, Sheffield. I am sponsored by the biggest industrial union in the steel industry, B.I.S.A.K.T.A., and I can, therefore, rightly claim to speak on behalf of steel workers. Although some of my comments will be critical of the British Steel Corporation I hope that they will be taken as constructive and not, as were those of the right hon. Member for Leeds, North-East (Sir K. Joseph), destructive.
  The profitability of the steel industry up to 1968, judged on the ratio of profits after depreciation to capital employed, in the late 1950s averaged about 16½ per cent. Over the six years from 1962 to the present it averaged 5·2 per cent., and the last financial statement shows that it has reached the appallingly low figure of 1·9 per cent. This is a sad reflection on the operation of management in the private sector prior to nationalisation. Prior to nationalisation accusations were made against the private steel owners of nepotism, lack of planning, not pushing exports sufficiently, lack of investment and lack of funds for research. The drop in the return on capital employed suggests that there had been neglect.
  On nationalisation, the then Minister of Power, my right hon. Friend's predecessor, invited Lord Melchett to be Chairman of the British Steel Corporation. I believe that a big mistake was then made by the B.S.C. when Lord Melchett surrounded himself, I assume in

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  consultation with the Minister, with the old steel bosses whom my hon. Friends had been decrying and criticising. These people were taken on as part of the corporation more or less on their own terms.
  During recent discussion on salaries in the nationalised industries, and the Steel Corporation, in particular, it came as no surprise to me that the managing director of the Midland group received last year £27,200. No wonder that Lord Melchett has been pushing the Minister to improve his, in comparison meagre, return of £16,000 up to £25,000. It has been a great error, which is recognised on this side of the House and is now recognised by Lord Melchett, that these old steel bosses were taken in. I could name them; Mr. Cartwright of South Wales, Mr. Peech of the Midland Group, Sir Richard Summers, Mr. Craig and Mr. Macdiarmid, some of whom spent many thousands of pounds fighting nationalisation. It was a great mistake in tactics and management of the B.S.C. to take these people.
  Mr. David Lane: Is the hon. Gentleman suggesting that in preference to this Lord Melchett should have filled all the top posts on the British Steel Corporation with people who had no practical experience of the industry?
  Mr. Griffiths: I have mentioned nepotism. Most of these people were there not because of their outstanding knowledge of the steel industry, but because they had the good fortune to be born in certain beds. If we were to look at the levels below the principals in these firms we would have found up and coming managers and future directors who would have done this industry credit.
  I am not a financial wizard, and I accept the decision of the Minister to recommend that the British Steel Corporation has the public dividend capital, because it has inherited the burden of debt incurred by the private companies.
  On the dissolution of the companies, the individual companies' debts and liabilities were taken over by the corporation. For the past 18 months, apart frdm statutory obligations of meeting periodically they have been of no useful purpose to the corporation and it is, therefore, wise and sensible that the companies should be dissolved. The Minister
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  has made it clear that if the corporation considers it expedient to use the names of the companies—which often bear no resemblance to the originators of the companies—for commercial reasons, this is a good thing.
  It is absolutely vital that the companies should be dissolved because it is time once and for all that the steel industry was taken out of the political arena. The right hon. Gentleman said that they have been neglecting capital investment because of doubts and fears about nationalisation. Bearing in mind the lessons of the past, it is essential to let the corporation get on with the job of running the industry without fear of political disruption.
  Two powerful factors have come to bear on the performance of the group system. Apart from any good points about product divisions, there are two disadvantages which must be in the forefront of the mind of Lord Melchett and the British Steel Corporation. The first is that the powerful steelmasters have been the king-pins in their own region. They have not taken kindly to the authority of the corporation and its chairman. Little empires have been built around them, and they have not missed an opportunity of flying the regional flag whenever they could. For instance, the Colville group made an announcement about a plan for a £300 million steel plant. The announcement was made without authorisation from the corporation, it was premature, and it has done a great deal of harm to morale in the industry.
  The second disadvantage of the group system is the great bitterness which has been created in individual groups. Eighteen months ago, from the works of John Summers, where I was employed, I took up very strongly the fact that in the Scottish and North-West group all the plum jobs on the long-term planning committee, and so on, were going to Colville's personnel. In South Wales there has been great bitterness between Port Talbot and Llanwern, Llanwern feeling that Port Talbot had the edge in the group administration. In the Midlands it has been felt that the United Steel Company carried substantial sway over the English Steel Company. There has been bitterness created and for this reason it is a good thing that the various groups will disappear.
  Mr. Emery: Does the hon. Member argue that by doing away with the company name there will still not be regional rivalry? Is he saying that if the Scots are left out the Scottish personnel will not be annoyed, or that if there are to be only people from Cardiff, or from Scunthorpe, or wherever it may be, there will not be rivalries? Surely they will still continue.
  Mr. Griffiths: I am grateful for that intervention. What will happen is that the power vested in the product groupings will be far less than at present in the geographical group system. Therefore, the power vested in those product groups will take second place to the general administration from the B.S.C. headquarters.
  I come now to deal with the corporate plan. On this, I speak for every steel man in Great Britain. This, to me, is the great non-event of 1969. I can tell the House that steel men from most areas of the country have been perched precariously on the ends of their seats waiting patiently for the great announcement about the "broad brush" plan the corporate plan which was to show exactly where development was to take place so that they would know exactly where they stood. But I regret to say that all we have had is a series of "ifs" and "buts" and possible alternatives. Indeed, the corporate plan, as submitted for this debate goes little further than what was known to all of us from the Benson Report.
  For that reason, when one considers that the B.S.C. have been looking at this problem for some two years since vesting date, there has been great anxiety in practically every plant in the country, with men wanting to know the future of their plant. A good deal of unrest has been created by the B.S.C. itself. I remember appearing on television with Dr. Finniston, who had just come back from Japan. He talked of green field sites, and one got the impression that any steel plant which was not two feet from the sea shore was done for and would be out of existence in a few years. That idea now seems to have gone by the board, certainly in relation to the period up to 1975. That sort of talk emanating from the B.S.C. can only do a great deal of harm to steel workers, who are my biggest interest.
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  My right hon. Friend spoke about buoyancy in the industry. I do not feel that we can lay credit for this on the B.S.C. It has been caught up in the upsurge of demand, a demand which it is unable to meet. I agree that production has gone up—not to record tonnages for the tonnages have been achieved in the past—but exports have not increased very much in the last two years, and imports have risen from 1·6 to 2·5 million tons in 1968.
  Indeed, the B.S.C. at the moment is suffering the indignity of shopping round the world for ingots, slabs, plates and, to put the top hat on it, for scrap to keep our mills going. I am not laying the blame completely at the corporation's feet, but at the feet of people who have been associated with the industry for the past 10 or 15 years. Indeed, in 1968 we even imported a quarter of a million ingots so that we could process further and keep our customers happy.
  In the works with which I was associated I remember the general manager saying to us that the only way we could keep going without redundancy was by ensuring that material was to be delivered within three weeks of the date of receipt of the order. We have now reached the stage when the only way we can keep customers happy is by lengthening the delivery date. I believe that in its assessment of capacity the steel industry, as opposed to the corporation, has tended to go for the troughs in the cyclical movement of demand and has not aimed at higher capacity to meet peak demands. I sincerely hope that we shall get increased capacity which is likely to come from Port Talbot, Scunthorpe and Teesside, possibly some of it during the next 18 months. The criteria for good management is not to plan after the harm has occurred, but to be able to look forward and to predict likely trends with some sort of accuracy.
  I am sad that in the report there is no mention of a comprehensive steel scrap policy. The Rotherham and Sheffield area has had the indignity of having to curtail excellent levels of production because of a shortage of scrap. Up to 18 months ago a substantial tonnage of scrap was being exported at something like £11 a ton. Today the B.S.C. is buying in American scrap and other scrap at probably approaching double that price. It

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  would seem to be a simple remedy that the B.S.C. and private owners should have stocked scrap; they should have bought it in for occasions when production went up. It is history repeating in the steel industry. As soon as production reaches a certain level there is an embarrassing shortage of scrap, and a lengthening of delivery dates.
  I am sorry that there is no mention in the report, among all the other technical advances, of the feasibility of transporting hot metal. This may be of great importance to a number of plants in the near future. Nor is there mention in the report of plans or experiments in the transporting of iron ore from the docks to the plant by belt system. I am told that in the United States they can transfer iron ore by this method using a system of belts anything up to 50 miles. I am disappointed that there is no mention of that advance.
  My right hon. Friend made reference to regional interest, which is mentioned in the report. It says that "the corporation recognises the great importance of the steel industry to the economies of Scotland and Wales" in ensuring that specific attention is given to Scottish, Welsh and regional interests. I suggest that we have our priorities a little back to front. Scotland and Wales combined employs only 38 per cent. of the B.S.C. work force. I should prefer the statement to have read that we shall always be concerned about the regional interests, including those of Scotland and Wales.
  I should like briefly to touch upon the question of morale in the industry. At the moment, morale in the steel industry is very low, and a great deal of the responsibility lies with the B.S.C. It is no good Lord Melchett or anybody else going around saying that 50,000 jobs will be lost in the industry and then, in the next moment, saying that there may be development of steel plants abroad. Possibly both matters are equally valid, but why couple them together? It appears to be rubbing salt into the wound.
  It is no use the Minister saying, "The B.S.C. has said that it will give six months' notice for plant closure and up to two years for any major works closures." The steel worker is an honest man, who wants to see a good future for his children, as does a worker in any
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  other profession. He wants to be able to say to his son when he leaves school, "There is a future for you in the steel industry." Although in the corporate plan there is mention of Port Talbot, Scunthorpe, Teesside and Sheffield, what about the other works? What about the other works? What will steel workers at such places as Ebbw Vale, Barrow, Workington, Shotton and Corby think tomorrow morning about the full implications of the corporate plan on them? There is no indication that their futures are as secure as the works where the main investment is to take place.
  I want now to give hon. Members what might be termed a visual demonstration. I am holding two copies of a very well worth while document. It is an edition of Steel News, the monthly newspaper of the Steel Corporation. The copy in my left hand is the edition intended for the head office staff. Hon. Members may be able to see that it is printed in bold black on a very white background. I imagine that the paper is fairly expensive.
  In my right hand I have the same edition intended for the Midland group employees. It carries the same story with the same black lettering, but it is printed on what I would describe as a dirty-white background. Why is there this difference in finish? After all, the document is of interest to steel workers everywhere. There may be a simple explanation. However, whether a man is a brusher-up or one of the top people in the sales department of the corporation at head office he is an employee and worthy of the same sort of treatment.
  The report talks about company names and company loyalties. The loyalty of employees to individual works is well known in some areas. I hope that in time the same loyalty will accrue to the Steel Corporation. But loyalty cannot be transferred in the same way as profits and losses from one side of a page to the other. Loyalty will only be won if it is deserved. In my remarks about the corporation, I have tried to be constructive. It will learn by its many mistakes. The same loyalty will come to the corporation, but it will have to earn it.
  5.43 p.m.
  Sir Spencer Summers: It is now over 40 years since I was first

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  associated with the steel industry. It so happens that it was with the same firm as the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths)—John Summers & Sons. However, this is the first occasion on which I have dared to intervene in a steel debate. I do so now because I am no longer connected with the company and am freer from the taint of vested interest. Incidentally, when I was connected with it, I did not realise the future fame of one of its employees who has just given us the benefit of his advice.
  He told us that what was wrong was that so many of the former experienced people in the steel industry were still associated with it. I can only assume that he would have preferred a series of totally inexperienced people introduced into the industry to take their places. If ever there was a more obvious claim for bureaucrats to take the place of experienced people, I have yet to hear it. That was the sum total of the speech to which we have just listened.
  Mr. James Tinn: The hon. Gentleman has misunderstood my hon. Friend's point, though I am sure not deliberately. Replying to an intervention, my hon. Friend attempted to make it clear that he envisaged the B.S.C. looking to existing management people who were perhaps without the benefit of family connection but who had a real stake in the industry and the ability to serve it.
  Sir S. Summers: I will not be drawn into the dangers or otherwise of nepotism. The hon. Gentleman's complaint was that there were far too many of the old steel bosses, and names were mentioned, most of whom had nothing to do with the fact that they belonged to a certain family or were born in a particular bed.
  I listened carefully to the Minister's speech, and I thought that it was quite disgraceful. Every word of it was read, and it was patently obvious that every time the thread of his discourse was interrupted by an intervention, he was thrown off stride because he did not know the subject that he was here to represent. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has already alluded to the fact
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  that the Minister did not do his homework. If this is the way in which the Government are to seek to defend the permanency of nationalisation, when next time the topic is raised I hope that they get a better advocate.
  I want to concern myself more with the Bill than with the state of the industry. In the main, it deals with two points—the revised financial structure of the Corporation, and the constitutional position of the companies. I propose to spend a few minutes dealing with those two points.
  I think that everyone will acknowledge that an industry faced with world competition ought not to be saddled with 100 per cent. fixed interest bearing capital. Therefore, I do not complain about the principle of changing this situation. However, why was not it dealt with when the corporation was first set up? What mysteries have been explained, and what facts have come to light through ownership by the State? What has become apparent that was formerly obscure, and what has changed since the setting up of the corporation? The answer is nothing. It was all known before.
  Why was not it done before? There is little doubt that the reason is that it would not have been a very attractive proposition when steel was nationalised to tell the public that there was a danger that the interest on the capital employed, taking one year with another, was unlikely to be met, but to ask the public, notwithstanding that, to underwrite the proposition that in future the public would be the shareholders of the enterprise instead of those who were formerly there. In short, the public was deliberately deceived and, in my view, the nationalisation of steel was put forward on a false prospectus which it is now too late for the public to intervene and put right.
  I said that I accepted the proposition that 100 per cent. fixed interest bearing securities was wrong, but I am not sure that swinging the pendulum so far the other way as to leave only 16 per cent. fixed interest bearing securities and have the so-called dividend capital amount to 84 per cent. is not carrying matters a bit far.
  Under this arrangement, we are told that at 6¾ per cent. the prior charge on

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  the industry will be some £11 million and that anything over that, by inference, would be an unreasonable and an intolerable burden. However, there is capital of some £800 million and a turnover of over £1,000 million. Is it really to be argued that anything in excess of £11 million per annum will be an intolerable burden for the industry? It may be inappropriate to the steel industry if I use the term "feather bedding", but, frankly, that is what it amounts to.
  In private enterprise, equity capital from time to time has to go without any interest for various reasons. In subsequent years management and companies frequently try to make good to their shareholders what has been lost during the lean years. In short, they try to average it out.
  Here we are to have dividend capital. I am confident that there will be some years—I suspect the early years—during which an inadequate dividend will be paid because of the results of the industry. Any attempt to average out, so that the Treasury over a long period may be said to be having a fair deal, will in practice be quite impossible, because, the moment that high dividends on the steel industry are recommended to average out over a period, the pressure from consumers, and perhaps from wage earners, to pay lower dividends and leave more resources and cash in the industry will be so great as to be irresistible. In short, the Treasury will sometimes get the right amount, sometimes less, but will never get more. It is as well that the public should be alerted to that fact.
  I now turn to the future of the companies. This notion of eliminating the companies and substituting what is called product groups is in my view a mistake of the first magnitude. It has nothing to do with the argument that the Minister sought to advance, whereby concentration in a limited number of plants will breed great economies. This may well be so, but to talk about concentrating in Wales, where there are already a series of highly sophisticated plants, is quite meaningless. If there is to be concentration in Wales, I ask: in which part? If the plant is 20 or 120 miles away, the advantages of the economies sought by this argument are lost.
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  I was glad that the hon. Member for Brightside, who is no doubt well placed to know this, said that morale in the steel industry is very low. This is my experience from such limited contact as I have. It is low, because staff and management do not know whether the plants in which they serve have a future. It is low, because many in the middle management who have looked to promotion see the ladder that they had in front of them removed and replaced by a completely obscure ladder involving great changes of location and uncertainty as a result.
  It is not as though this was a change brought about from private enterprise days to this situation. It had tremendous change in between. We had a series of people telling the Minister in the early days the way that they thought the steel industry should be developed. He came to this House and said, "I have no preconceived ideas. I have some very wise, experienced people who will tell me the sensible thing to do." By and large what they recommended was done, but it has lasted the twinkling of an eye. It is now to be replaced with something else. Who is to know that the next one will have any more permanency than the one it is now seeking to replace.
  I fear that this notion of setting up a series of individual monoliths, as they were described by my right hon. Friend the Member for Leeds, North-East, according to the several products, will deny any choice or alternative source of production to the customer who comes along to buy British steel. I am not satisfied when we are told that this has the great advantage that the site where it is most economical to roll a sheet, a plate or a girder will be chosen by the British Steel Corporation and economies will follow from it. Is the customer to have no say where his material is to be made, the degree of supervision, the degree of research that is to be applied, etc?
  Mr. Eddie Griffiths: At the moment we respect the wishes of customers both at home and abroad who specify to the B.S.C. particular works, even though export sales are centralised. It is only if it is impossible to get suitable delivery at that works that an alternative supply is suggested.
  Sir S. Summers: The hon. Gentleman cannot have it both ways. Either he says that the preference of the customer shall have priority, in which case this notion of concentrating where it is most economical to make a particular product goes by the board, or the reverse takes place. It is not possible to roll a steel product in the interests solely of the manufacturer and simultaneously to choose where the customer wishes to have it done. These two things are incompatible in many cases. I fear that paying insufficient attention to the link with the customer, the good will of the customer and the overseas agent will damage our results.
  Mr. Frank Hooley rose—
  Sir S. Summers: I do not want to dwell on this point very long.
  Mr. George Lawson: Will the hon. Gentleman say whether evidence was brought forward that, prior to nationalisation, in a number of cases within my own knowledge, customers were afraid to complain to the steel works because they thought they might be blacklisted for supplies?
  Sir S. Summers: I do not understand what lies behind what sounds rather like a barbed question. No customer ever hesitated to complain to the company with which I was associated for many years if he thought that quality or delivery was inadequate for his needs.
  I cannot help feeling that a lot of this policy now recommended by the British Steel Corporation derives from a visit to the United States where there are several large corporations each with as great an annual tonnage as the whole of the British steel industry. But the position in America is different. If a customer does not like the product of one vast corporation he can go to another. Here, if a customer in Norway, Sweden or some other part of the world does not like the treatment or the quality of British steel there is no alternative. It is central buying and central manufacture.
  Mr. Hooley: He can go to Germany.
  Sir S. Summers: Therefore, it is unwise to pay so little attention, as apparently is now being paid, to the loyalties of and the links with overseas buyers and
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  agents which are liable to be completely destroyed.
  I end with a personal comment. In the middle of the last century my grandfather was in a small way of business in Stalybridge on the outskirts of Manchester. He earned his living, with a handful of men, cutting up sheet metal into horseshoe shaped pieces to put on the clogs of the operatives in the cotton trade in Manchester. He went to the Great Exhibition of 1851 and put his life's savings into the purchase of a machine which stamped out the same horseshoe shaped pieces of metal. He made a profit from it. With that profit he bought a mill. He again made a profit and bought another mill.
  Then 10 brothers pooled their resources and founded John Summers and Sons, of Shotton, where the hon. Member for Brightside earned his living. Since that date they, and those who followed, have created an undertaking with £100 million assets employing 15,000 people being paid over £20 million in wages every year. Now these brothers have all gone. Two were Members of this House, albeit Liberal Members. I do not know what the Liberal Party will do today, but I am sure, Liberal Members or not, that if those 10 brothers were here they would join me in the Opposition Lobby tonight.
  6.0 p.m.
  Mr. Gregor Mackenzie: I must apologise to the hon. Member for Aylesbury (Sir S. Summers), because I missed the first few minutes of his interesting speech. This debate has been like a re-run of the Second Reading debate on the nationalisation of the steel industry. I am not disappointed; there are those of us who relish the prospect of such a re-run. Some of us have some specific points to put because we want the industry to be as successful as possible.
  Unlike the hon. Member for Aylesbury, I welcome the abolition of some of the boundaries we have had in the industry over the years. Now we can look at the industry as one, and assess the value of any schemes put forward for modernisation, and rationalisation. Even those of us who are not as closely involved as some of my hon. Friends who worked in the industry know that we have to look at the prospects of the industry with very

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  great care. From the reports that I have read, and it has been difficult to digest such a great mass of documents, it seems to me that the industry is grasping its opportunities. It realises that there is the need for change and rationalisation and technological change if we are to meet the challenge from overseas competitors.
  While I have no fear of real and profitable rationalisation or technological change, or of broad plans for the industry over the next 10 or 20 years, there is cause for concern in many areas of the country among the men who work in the industry, men who have given a lifetime of service. In my area coal is closely linked with steel. Jointly these industries are the biggest employers. It is no reflection on the present Government—more on the previous Government—but our experience of the run-down in coal has not given some of my constituents a lot of confidence about what will happen to steel. They want to be satisfied that this will be tackled in a different way and there will not be a run-down in the industry without a replacement of jobs.
  The first thing I want to tell the Minister is that he must not see this problem in complete isolation. When we look at the problems of the steel industry we should see them as a matter for regional planning, and the various agencies concerned should be consulted and make their assessments and plans based upon the important rôle that the steel industry has to play in the community.
  I was pleased to read in the B.S.C. annual report something which seemed significantly different from anything I had seen or heard about the operations of the industry in the past. This was to do with the obligations it had to the community and to individuals members of the industry. There is one case which affects my family. A very close relative worked in the industry for 46 years, and when he went out of that industry at about the age of 60 he got nothing at all—no job or prospects at his age. This can happen; it can cause confusion, and it worries people.
  I am particularly concerned to read that there is to be this tremendous run-down and want some assurances on this point. I realise the methods of achieving this, such as wastage and retirement,
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  but this may not be how it is seen by some of the young people in the industry. I compliment the corporation upon having one of the best industrial training schemes for craftsmen that I have ever seen. One of the problems in Scotland, and I have no reason to think that it is not a problem in other areas, is that these young craftsmen are well trained, but once they are trained, because of wage conditions, they move into another industry or another part of the country. Because of the worries about the future this process may be accelerated. It is happening in my area and it worries me.
  The annual report of the corporation says that the industry has a place in the community and social obligations to the community. I represent an area which has spent a great deal of money on the infrastructure of the community based upon the work provided by the Steel Corporation and the previous owners. In my area there is an advanced programme of house building, school and hospital building, all dependent upon the success of the industry and upon the industry remaining where it is. I hope that the leaders of B.S.C., before taking these decisions affecting so many areas, will look closely at their obligations to the local authorities and to others who have built up such a large infrastructure around the industry.
  This brings me to two specific problems of my country. I do not like the term "regionalism". Neither myself nor my fellow Scots are being nationalistic, but we are concerned that the Minister, together with his other right hon. Friends who control Scottish affairs, transport and trade, will soon come to a decision on the important question of the iron ore terminal on the Clyde Estuary, as proposed by the Clyde Port Authority. We in Scotland very much appreciate the visit of the Minister to examine these problems for himself, to see the work at close hand and we hope that in his discussion with leaders of the Steel Corporation in Scotland and the Scottish Ministers he will have realised that we feel this to be a key point not only for the Scottish steel industry, but for the whole Scottish economy.
  I do not apologise for putting forward the hopes of the people of Scotland about this iron ore terminal. It is fair to point out that the iron ore terminal is

  719
  not only important to the Scottish steel industry, but to the Scottish economy as a whole. I also believe, like many who have looked at it, that this question is important to the steel industry as a whole.
  This is an important point which must be carefully examined. My right hon. Friend the Secretary of State for Scotland has often said that the heavy industry in the West of Scotland was based on geology and geography. That is true. The steel industry in Scotland owes a great deal to this. The changing pattern of things is such that we hope that, whilst in the past we flourished on the geology of the West of Scotland, we can now flourish on some of the advantages of the deep-water harbours which we are able to offer on the estuaries of the River Clyde.
  I know that this has been, and is likely to be for some time, a matter of controversy between the various areas of the country. I know that we now have Port Talbot, and I hope that it will be successful, but I shall be interested to hear how the proposed channel is to be costed, and how high are the dredging costs. I shall be interested to hear, too, how high the costs would be for doing this work on other estuaries, and whether, even after extensive dredging, they could provide the facilities that we are able to offer on the Clyde.
  We have many natural advantages, and I think that we could make a good case for this terminal in our area, not only on the basis of saving capital, but on the basis of reducing the normal working costs to the industry. I have said that we have natural advantages, but I have heard in the arguments about deep-water harbours, it being said that what is needed is not merely deep water, but a lot more as well. It is said that there is a need for the associated services of dry docking, that tidal conditions must be considered, as must be the width of the channel and the space available for these large vessels to operate.
  All that evidence suggests that the Clyde Estuary compares more than favourably with any other estuary in the United Kingdom. Therefore, not only from the point of view of its natural advantages, but because of the conditions which obtain in that area, we hope that the Minister
  720
  will give serious consideration to siting this installation there. I know that when considering this terminal my right hon. Friend has to consider the whole question of the hinterland of the terminal and all that goes with it. I do not intend to comment on whether we should have green field development or brown field development—I leave that to others of my hon. Friends—but I hope that consideration will be given to this important question and the social and economic consequences of such a project. I ask my right hon. Friend to examine with great care the social consequences of all this, particularly in the West of Scotland.
  I welcome the Bill as an earnest of the intention of the Government and the corporation to improve the industry and hope that my right hon. Friend will stress to the corporation the urgency of building an iron ore terminal on the Clyde Estuary.
  6.13 p.m.
  Mr. John H. Osborn: I value the opportunity of taking part in this debate and listening to the Minister's account of progress in the steel industry, but I regret the last few paragraphs of his comments which degenerated into a political diatribe. I had hoped that this subject would be taken out of politics.
  Since the 1967 Act was passed I have been somewhat diffident about taking part in debates on the steel industry, because, like the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths), I have an interest to declare. I am associated with a company in the private sector, and because I have an interest which may be interpreted as different from that of companies in the public sector I have not spoken on this subject for two years, but there are two factors which have prompted me to intervene in this debate.
  Firstly I have for 25 years been a member of the Iron and Steel Institute which celebrated its centenary not long ago. On that occasion I found that those in the industry, whether public or private, home or overseas, customers or suppliers and their advisers, talked about technology and the future of the world's steel industry. They talked, too, about administration and management, and I now consider that if it is correct to discuss the steel industry with the Iron and Steel Institute, it ought to be appropriate to make

  721
  observations amongst those who legislate for and control the industry in this country.
  Secondly, as a Member of Parliament I find that many of my constituents work in both the public and the private sector of the industry. Many of them have approached me, generally privately—some from the shop floor, trade unionists, junior management and management—to ask what the Bill is about, and how it will affect them. Because this Bill will affect the livelihood of many of those who live in my constituency, it is proper that I should intervene.
  What do we know about the performance of the British Steel Corporation to date? The Minister has given us a certain amount of information, but the results are disappointing, and I am sure that I am not the only Member who takes that view. Last year, because of a miscalculation in the original programme to nationalise steel, the borrowing powers were raised to £400 million. The corporation's record shows a loss of about £12 million, after a remarkable profit record in the preceding year.
  The difficulty is that for three or four years up to 1967 the steel industry has been in the cockpit of politics, and no one has been able to take the decisions necessary to make the industry competitive and keep pace with the technological changes which have been taking place. I do not wish to disparage the new management. Since then it has had to take stock of a situation which is the result of the passing of the 1967 Act.
  The steel industry has gone through violent technological changes in the last decade. In a recent paper delivered in Sheffield Dr. Finniston not only dealt with new materials and new specifications, but he said that there were new techniques of electric steel-making; that large-scale continuous casting was commonplace, and that there were now opportunities for using high-grade iron ore from overseas. The significance of all this was referred to in the Benson Report, and was known to leaders of the steel industry before then. The Minister referred to this in his speech.
  About four years ago we on this side of the House warned the Government that the industry had to be at its most flexible to meet this international competition and
  722
  technological change. The fact is that the industry was held back, and shackled by the very process of nationalisation. I do not wish to criticise the chairman, Lord Melchett, the deputy chairman, or the board of the B.S.C. for what they have not done. Rather, I commiserate with them on the immense task which they and their financial advisers have had to face in planning for the future. In fact, I go so far as to associate myself with the Minister's congratulations to them on what they have achieved against almost impossible odds.
  As the hon. Member for Brightside said, morale in the industry is low due to uncertainty among those in the industry, and this has been reflected in Sheffield. The corporation's first Report said that it was the corporation's intention to break the divisions up into geographical groups, and this has been done. At one time it was hoped that each of these groups would have complete autonomy and would manage its own affairs. In fact, it was hoped there would be competition between the groups, but this has not materialised and there has been excessive centralisation.
  The very process of implementing the recommendations of the first Report, let alone the effects of nationalisation, has brought about unheaval in the industry. This is not realised except by those who live and work in the steel-making areas. Drastic change is sometimes essential for a modern industry, and we in Western Europe have been made well aware of this in the past decade. However, persistant change only creates uncertainly and insecurity in top and middle management; and, if it creates those feelings there, what effect must it have on the men on the shop floor? With the steel industry in its present state of turmoil, workers may not even know their foreman and departmental managers. If they are to be confronted with a new set of bosses every year, they will soon become completely demoralised. This has already happened and will happen again if there is further change.
  This brings me to Clause 8, which applies to the transfer of property, and the Memorandum issued with the Bill, paragraph 14 of which indicates that the present group structure is to be replaced by a small number of product divisions. However, immediately after

  723
  that announcement in the Memorandum there is reference to the fact that the corporation's staff may be diverted from their present work. As I pointed out, another drastic change, particularly if it diverts the corporation's staff away from the work they have been doing, could create great turmoil.
  Many of those who have been affected by the recent upheaval have approached my hon. Friends in the hope that the next Conservative Government will not denationalise the steel industry, at any rate for some time to come. They have pointed out that there has been sufficient change and that the industry should be allowed to settle down. Many people in Sheffield view with abject horror the contemplation of yet another major upheaval—notably into product groups—occurring so soon after the first reorganisation. They fear that such a step would mean more jockeying for position and a further moving about of personnel.
  The Minister has slightly drawn aside the veil covering the future, but he has not outlined what the product groups are likely to be. He said that he did not know, but the B.S.C. must have made comments from which one can make a reasonable guess about what may happen. Indeed, it is easy, if one has a knowledge of the industry, to make a reasonable calculation.
  There could, for example, be a sheet and tinplate division and this would involve the Steel Company of Wales, Richard Thomas and Baldwins, John Summers and Colville, at Ravenscraig on the Clyde. There could be a tube and pipe division, with Stuart and Lloyds at Corby and Scotland, coupled with a part interest in Round Oak.
  A possible division which is of particular interest to Sheffield is in the alloy and stainless steel division. There might be a number of Sheffield alloy firms with, perhaps, Clyde Alloy in Scotland and firms such as Brymbo in North Wales.
  We then have the bulk steel sector, which might include in one section, blast furnaces, melting furnaces and cogging and, in another sector, light rolling mills, including bar and various other sections.
  This is conjecture, but something along these lines must have been put to the Minister, who might have indicated what
  724
  these product groups are likely to comprise. He should say how such an arrangement might affect a city like Sheffield.
  It is obvious that product groups involving steel, tinplate, heavy plate, tubes and pipes will not involve Sheffield at all. However, the creation of an alloy and stainless steel division would raise implications for my constituency in that Samuel Fox, in the public sector and Firth Vickers and Shepcote Lane are companies partly in the private and partly in the public sectors. Also in Sheffield there could be a steel melting and cogging division as well as bar rolling mills. This would mean a different headquarters for the different companies and a complete reorientation of the industry. If this is to happen, I hope that the Minister will outline what may be in store. Indeed, he should have done so before presenting the Bill.
  From the national point of view, such a step would create a number of monolithic, monopolistic activities and there would be no competition between them. From Sheffield's point of view, there could be an alloy division in competition with the private alloy sector. It is in this connection that I speak with some diffidence. But I return to a point which I have made before; that fair competition between the public and private sectors in this sphere is difficult, if not—
  Mr. Ridley: It is impossible.
  Mr. Osborn: I was about to say—if not impossible.
  The B.S.C. has exercised price leadership, the Minister said, for the first time in 30 years. This activity has been challenged by the private sector and, of course, all our calculations are dependent on the outcome of the report of the Prices and Incomes Board in this respect. The B.S.C. is in a monopolistic position in bulk steel and is likely to raise prices considerably. In these steels where they are in competition with others, they are lowering their prices.
  Mr. Ridley: Has my hon. Friend thought of the implications of the various branches of the B.S.C. having public dividend capital, on which they need not pay interest, competing with private firms in his constituency? Is not this a new dimension in competition?
  Mr. Osborn: It certainly is a new dimension and I hope that my hon. Friend will emphasise that when he speaks.
  As I said, I have no desire to express my personal views, which are strong, on this issue. The Senior Warden, Mr. Mark Balfour, on the occasion of the 333rd Cutlers' Feast, is reported to have said:
  "Relations between the public and private sectors of the steel industry had started well. But the current attempt by B.S.C. to use their privileged position to discriminate against some sections of the industry was tragic and threatened to fan the inevitable atmosphere of reserve into open hostility … Hallamshire's industries are undergoing a traumatic series of changes".
  That observation has a bearing on the remarks of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).
  To summarise, the Minister is, of course, dependent on the verdict of the Prices and Incomes Board because, first, the whole programme of capital investment and Government borrowing is dependent on that report—and this, in turn, is dependent on the prices at which steel is sold—and, secondly, because the Restrictive Trade Practices Act is having an unusual effect on the relationship between the public and private sectors. The private sector cannot compare notes, so to speak. The public sector provides a large area of comparison and that is why the Minister has a price list. The Restrictive Trade Practices Act became ineffective within the B.S.C. once the Government created such a vast public sector.
  Let us not forget that the fixing of prices under arrangements concluded with the Iron and Steel Board provided the main plank of the original plan for the Labour Party's determination to nationalise steel. That was criticised at the time. Those criticisms bear out what is happening now since, under nationalisation, there is a greater degree of price fixing than ever before.
  I had intended to comment on the capital reorganisation of the steel industry and whether the process has been tackled adequately. I will only reiterate that, initially, I was not hostile to the concept of equity capital. However, equity capital without the normal control of shareholders, especially in this
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  type of organisation, is bound to create anomalies with which the industry will find it difficult to live.
  It is announced in the Bill that there will be facilities for overseas borrowing. Is not this tantamount to adding to our national indebtedness? After all, these funds are to be guaranteed by the Government. If private companies wish to raise money overseas, the money raised can be regarded as an investment by an overseas company or institution in Britain and does not count against our national indebtedness.
  This tactic of increasing our national indebtedness must receive the attention of the Government, and I wish that the Financial Secretary were in his place. I trust that the Treasury will take note of this aspect, since the sums which are to be raised in this way must, in the long run, appear in the nation's accounting. Overseas borrowing of this type must increase our national indebtedness—this at a time when we should be doing everything in our power to reduce our debts.
  Any other group of companies as diversified as the B.S.C. wishing to embark on capital expenditure for the sort of activities envisaged in the Bill would study its business activities carefully to see how much money could be generated by its own resources without having to borrow. We have the accounts of the publicly-owned companies in this volume I hold. Under each of the publicly-owned companies we find a number of subsidiary activities. Is not the British Steel Corporation in business to manufacture steel even if under a degree of State protection? If so, why is it in business for stockholding and merchanting, making concrete pipes, brick making, pipework, engineering, structural and general engineering, making wire, plant and machine tool manufacture, mining, quarrying and what-have-you? Any management placed in a position of financial stringency such as faces the nation particularly at the present time, would not find a banker willing to loan it money without first demanding that it put its own house in order. Such a management would have to decide what it can do best, and then dispose of its other activities to generate capital for its own reorganisation.
  Mr. Hooley: Will the hon. Member take the trouble to read paragraph 36 in the report on reorganisation? It says:
  "Diversification is common among steel companies throughout the world. In some countries abroad, and particularly in the United States of America, Europe and Japan, it is more widespread than in the United Kingdom and increasing rapidly."
  Mr. Osborn: The hon. Member has fallen right into my hands. They can go to the public to obtain the money for such diversified activities and they are measured by the profitability of their undertakings. The nation is in such difficulty because we have people at the helm who have no knowledge of these repercussions. The wrong decision has been taken.
  This has been an interesting debate, but the observations and reactions of hon. Members opposite fill me with gloom, I can assure them that their incompetence and incapacity to understand the industry will cause great gloom throughout the country and disillusionment among those who put them into office.
  Parliament once again by this Bill is to give the Minister a blank cheque because it is impossible for us at this moment to control the Executive, largely because of the complexity of the issue. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), accused the Minister of not having done his homework. I have tried to do some of my homework. We have not had the benefit of the observations of the Select Committee on Nationalised Industries, but we have been well documented.
  What of the future? Denationalisation is becoming more and more an impossibility if these product groups are to be formed. The single-purpose monoliths will undoubtedly suffer the fate of the dinosaur and other prehistoric monsters. The nation cannot afford this. The creation of product groups will prove unsatisfactory from the national point of view. I had hoped that the British steel industry would eventually become part of a European and international steel industry. It is becoming inward-looking and cannot take part in international developments. The monolithic nature of these monopolistic product groups will enhance this tendency to be inward-looking. Indeed, nationalisation itself will make the benefit international capital, in spite
  728
  of the arrangements the Minister has made for borrowing, become more and more illusory.
  I oppose the Bill because of the method of financing further borrowing, because of further reorganisation, the break up of old names, and the creation of a monolithic structure.
  Several Hon. Members rose—
  Mr. Speaker: Order. Again, I remind the House that I am anxious if possible to call all hon. Members from steel constituencies who wish to take part in the debate. If speeches are reasonably brief I shall be able to do so.
  6.34 p.m.
  Mr. John Mendelson: The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) started his speech by accusing the Minister of having put some politics into his peroration. The hon. Member must apparently have had his own peroration written for him by someone else and he saw it for the first time when he delivered it in the House.
  We listened to the right hon. Member for Leeds, North-East (Sir K. Joseph), who spent 80 per cent. of his time on piffle and propaganda before discussing the Bill. I must not use the term "tedious repetition", because that would be a reflection on the Chair, but the right hon. Gentleman engaged in boring repetition, making the same point over and over again and indulging in the same kind of propaganda.
  The right hon. Gentleman, who did not show any real sign of a knowledge of the industry—that probably was his handicap and why he repeated himself so many times; he spent a great deal of time on the position of the steel industry before nationalisation. His picture of an industry that was able to obtain any amount of capital in the market would have made all the old steel owners laugh if they could have heard it. I was a Member in 1962 and I remember that we were asked by hon. Members opposite to allow two loans to be made. One was for £70 million to Thomas Baldwin's and the other was for £50 million for Coalville's. They were to be guaranteed from public funds as loans on specially favourable conditions.
  The right hon. Gentleman, who now attempts to speak on steel, should go

  729
  back into the recent history of the industry and learn something about it before making such assertions. He tried to capture our benevolence by saying again and again that, of course, he was not claiming that the industry was perfect under private enterprise. I have never heard a more Dickensian statement in this House, which is sometimes full of Dickensian statements. It was the understatement not of the year, but of the century. With that facile statement the right hon. Gentleman hoped to do away with all the difficulties which the industry experienced.
  The hon. Member for Hallam, with me, was a member of the Standing Committee on the steel nationalisation Bill. He knows that capitalisation of the industry is one of its major problems and that many of the senior men of the industry said, "Get on with the job now that the decision has been made. We were not able to raise capital and we need £800 million over the next 10 years. Now at last let us have it with the help of the public". That was the message from the senior directors.
  Mr. Michael Shaw rose—
  Mr. Mendelson: I cannot give way because I wish to respond to Mr. Speaker's appeal.
  I am glad to have the approval of the hon. Member for Hallam, who was with me on the Committee.
  I shall spend most of my limited time dealing with the problems of the industry about which those who work in it are most concerned. I begin by challenging the statement of the hon. Member for Hallam about morale being low. Of course, it is low among some in the industry, but it is not universal. I know that the hon. Member quoted my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths), but there are variations on this theme. I have been in Stocksbridge, where I found there has been a great improvement in morale over the last 18 months at all levels. Many people including some in managerial positions are convinced that the decision has been a good one and that the industry is making good progress.
  The problems I wish to raise apply to the whole of South Yorkshire and to parts
  730
  of the industry beyond that area. What concerns me is the announcement by the head of the British Steel Corporation that there will be a number of inevitable reductions in the jobs available in the industry. I need not waste time on the need for rationalisation. The Minister again this afternoon gave good reasons for that. I do not know anyone in the industry, which is forward-looking, who would not regard that as agreed.
  But when there are to be reductions in job opportunities the head of the corporation has told the country that he hopes those who are most involved will be absorbed, there was one problem with which he failed to deal; and it was a very serious one. If, for instance, 560 jobs disappear in a particular place, it does not follow that those jobs will be replaced in that place. The statement that it is hoped that most of those who lose their jobs through technological changes and advances will be absorbed leaves a serious problem in that place.
  This was strongly stressed to me only last Sunday at a meeting of the joint committee of the Stocksbridge steelworkers' representatives. I was urged to make this point in the House to the Minister. My right hon. Friend will realise that it is a serious point and I hope that, either today, through his hon. Friend, or on a early occasion when he next addresses the House, he will be able to say something more about that.
  Another point which concerns those who work in the industry and which is allied to my previous point is related to different areas of the country which may have twin economic problems. In an area like, for instance, the West Riding, there is a declining coal industry, which means that—I need not labour this point with the Minister—there will be a serious loss of job opportunities. At the same time, for the opposite reason—because the steel industry is developing and going ahead and therefore undergoing serious technological changes—there will equally be loss of job opportunities.
  What we have not yet heard, either from the head of the corporation or from the Minister, and what the people who work in such areas in the industry are concerned about is whether my right hon. Friend has made sure that he is making proper arrangements with heads of other Departments and people responsible for

  731
  the policy of general economic development to ensure that the interests of those who belong to these industries are safeguarded and future job opportunities planned for them by those Departments responsible for economic planning. My right hon. Friend will agree that there are decisions here which he cannot possibly take by himself.
  I think that I will carry with me hon. Members who represent areas in a similar position when I stress that this point is of the greatest possible importance. Both these matters point in the direction of a continuing responsibility of the Minister for those who, because of technological changes, will inevitably lose jobs which they have held for years.
  I turn now to what has recently worried some of us. I will mention the scrap situation only in passing, because my hon. Friend the Member for Brightside has already referred to it. I want to say something negative and something positive. First—the positive point—a number of hon. Members who are concerned about this, and of whom I was not one, had discussions with the senior officers of the corporation and found a willingness to receive people and discuss the situation. This is a positive development.
  None the less, it cannot do away with the sad realisation that—to put it mildly—the planning ahead could not have been at its best—my hon. Friend the Member for Brightside investigated this problem—if it allowed such a situation to arise. We have a public duty, in the first debate in which we can put this on record, to tell the Minister that there is severe criticism of this aspect. He has considered it, but he must reassure those working in the industry that this will be done much better in future and that the same difficulties will be avoided.
  The twin point is the fluctuations in the demand for steel. This is a matter which I have been raising in the House for about 10 years. I dealt with it at great length when I moved an Amendment on the subject to the Iron and Steel Bill of 1967. We all know that, whether under private or public ownership, fluctuations in the demand for steel are inevitable. They are a result of our general economic system and they have to do with many
  732
  factors which are not under the control of those who make steel or of a Minister responsible for the steel industry.
  That creates a very serious problem for those who work in steel. Because of the trade cycle and the ups and downs of economic development, within comparatively short periods there is a glut of steel, through which people are forced on short time work, which is then replaced by an ever-increasing demand for steel, with lengthening delivery dates and people crying out for home-produced steel and unable to get it in time.
  I had an experience the other day in a hotel in Sheffield, when a gentleman said, "You do not know me, but I have recently heard you talking about steel at a meeting and I want to let you know that I am a businessman in a minor way. I know that you are interested in steel fluctuations. We now find that we have very long delivery dates, even for small amounts of steel." I and others hon. Members have proposed over the last 10 years that, under the Government's inspiration, the Steel Corporation should adopt a policy of stocking steel.
  When I moved my Amendment on this subject to the previous Iron and Steel Bill, we had a very long debate, and this was adjudged by hon. Members on both sides a matter which should not be a political plaything but which was a practical problem, for which a solution must be found. The then Minister promised the Committee that this would be gone into and action would be considered, although it would not be possible to do it immediately.
  The fluctuations in steel must, of course, be considered in two different ways. There is the bulk supply and there are the special steels. Anyone who knows anything about the industry knows that this is a much more difficult proposition for special steels than for bulk steels, but it can be covered in both sectors. It has rightly been suggested that it is much easier and cheaper to stock steel than to stock coal, so it is possible, with a slight addition to the final selling price, to have quantities of steel in stock, so that, when the demand increases—it does so sharply when the economic position improves, normally within three or four months—there should not be this lengthening of delivery dates.

  733
  I have said nothing about imports of steel, which is an obvious point. I am talking about the shortages for our manufacturers who are waiting for steel. There are no excuses for further delay in working out a proper stocking policy.
  In the period before 1964, when the right hon. Member for Bridlington (Mr Wood) was Minister of Power—I had a great respect for the right hon. Member and still have it—I made the same proposal. In reply to a debate, he said that his Department had made inquiries of the firms concerned and had received a negative answer. The firms were not prepared to work a policy of stocking to meet fluctuations in demand, because, they said, it would be too expensive. That was the only answer which the Minister could give. He was not opposed to the suggestion and saw some sense in it, but could not get co-operation.
  One of the purposes, I thought, of public ownership is to deal with a problem like this. We should not be obstructed by those who are afraid to add a little capital for an operation of this kind, even though they feel that there might be beneficial consequences.
  Shortly after the industry was nationalised, with the co-operation of the then Minister, I went to the Ministry of Power and had an interview with one of the heads of the sections dealing with steel. I discussed the stocking of steel with him and he said that he had information from the board of the Steel Corporation that after one or two even more urgent problems on organisation had been dealt with, this was to receive a high priority in the board's considerations and conclusions were to be reached. Did the corporation proceed with this inquiry? What conclusions, if any, has it reached, and is my right hon. Friend prepared to say that the policy favoured by most members of the Committee through which the nationalisation Bill passed will be implemented?
  One of the most novel provisions which we wrote into the Bill in Committee had to do with workers' participation in industry. My hon. Friends the Member for Poplar (Mr. Mikardo) and Barrow-in-Furness (Mr. Booth) and I drafted an Amendment which met with the support of all members of the Committee representing this side of the House. We established the principle of access to books,
  734
  reports and papers, for the first time I believe in a nationalisation Measure. There has been some implementation of this policy since then. The Minister accepted the policy, slightly amended and brought it forward on Report.
  We have had the development of the directors in the local groups being representatives of those working in the industry, on the shop floor. Two problems arise now. It is proposed to reorganise the industry on the basis of product groups and the first question is: what will happen to these local directors? What consequences will there be as the result of the reorganisation in this element of participation? The second point is more critical. There has been a good deal of appreciation of the work done by these representatives. There has also been some very considerable and serious criticism of the board of the B.S.C. because of the limited amount of participation that has been possible.
  The amount of participation of the part-time directors, compared with the full-time members has not been satisfactory. We had a disagreement in Sheffield recently over the creating of a new joint company, arranged between privately-owned companies and a mill which was publicly owned by the B.S.C. I will not go into the rights and wrongs of this operation, although I expressed my opinions at the time and, more important, all the local representatives of trade unions were strongly on the record as opposing the measure. They felt it ought to have been a different arrangement, with a 51 per cent. share publicly owned and a 49 per cent. share privately owned, instead of a 55 per cent. share privately owned and 45 per cent. publicly owned.
  I received definite information that the part-time directors on the board were not consulted about this merger, did not take part in the discussions leading to the final decision, and did not hear at it any earlier than I did, who received a letter from some of the local directors involved informing me, the day before a Press conference, at which the announcement was made. This was a very bad position for these part-time directors to be in.
  I hope that my right hon. Friend has seen to it that this position will be corrected in future. While I believe, like

  735
  many in the factories, that this element of participation is not sufficiently far-reaching, that it ought to be much more widespread and direct, we would be doing great damage to what we have so far achieved and to any hopes of extending it, if we created a position in which there was grave doubt about the usefulness and the position of the people allowed to take part as part-time directors.
  I conclude on a general point. I commend the Minister and the Steel Corporation for the arrangements they are making, in organising the industry in such a way that it is rational, and with that there is hope that it will in future cease to be the plaything of our political changes. We have now established that the industry is publicly owned, and will remain that way. At the same time, while we could not reach agreement, either with my right hon. Friend the Minister or with Lord Melchett over the question of the merger, because we thought the correct policy would be to go more into the public sector, rather than the other way, I hope that in future mergers of this kind, this merger will not be a model. Where rationalisation is necessary I hope that it would be organised in such a way that it increases the public sector.
  6.57 p.m.
  Mr. Peter Emery: I will not follow the hon. Member for Penistone (Mr. John Mendelson) in his comments except to elaborate later on the steel stockholding point, which is very important.
  Will the Minister please ensure that in the winding-up we have an answer to the obvious divergence of figures between those given in "Finance for Steel" and those in the White Paper? If we do not get this answer I do not believe that the Government are justified in asking the House to proceed with the Bill. The answer must be given before we vote.
  Product groups are now known to be the type of structure which the B.S.C. will adopt. I am sorry that the Minister would not deal with this in his speech. He suggested that he did not know. If that is so he is badly informed, because anyone else who knows anything about
  736
  the steel industry has had this information for a considerable time. What worries me about this structure is that, while all of us want to ensure that the B.S.C. can be as efficient as possible, and want to see modernisation, to achieve this efficiency, there are still considerable doubts about the provision of these product groups which must be aired in the debate.
  The first and major worry concerns the selling of steel. The major steel producers are concerned that they will not know from which plant their orders will be filled. If this goes forward in the new structure there will be a central selling department and no one will be able to specify, other than the particular qualities and specifications that they require, from which plant they want deliveries. The Minister must realise that over many years there has been built up a loyalty between certain producers and buyers.
  At the same time—and much more important—certain industries concerned with electronics and electrical manufacturing and with sonic manufacturing in general claim that, though specifications may be identical as between one plan and another for certain steels, there are differences in manufacture. Such firms have, therefore, specified that they want their steel to come from a certain plant and have not bought from anywhere else. They have often carried large stocks to ensure that they would always have the quality of specialist steel required from the firm they prefer. If the present proposals go forward, all that will be cut out and will create considerable problems and anxiety.
  The same applies to selling abroad. Many overseas customers have built up good relationships with such firms as Richard Thomas and Baldwin's, Colville's and Dorman Long. They still have considerable delight in doing business with the old names. Although there is need to streamline the industry this should not mean getting rid of a managerial structure which can be of use in selling British steel, both at home and abroad. The streamlining which hinders sales could not be of advantage to the corporation or to the economy.
  A problem which concerns all of us in this House is that of the cartelisation of steel. Will the Minister answer two questions? What arrangements which

  737
  might be considered to be restrictive in nature have been made between the corporation and other international steel firms outside this country? What unofficial discussions have taken place between the corporation and overseas firms on the limitation of marketing in certain sectors? In Europe, there is considerable fear of a movement towards cartelisation in steel markets throughout the Continent. If there is such a movement, then it would be wrong for the corporation to be associated with it. I am sure that both sides of the House would wish to condemn cartel arrangements. It is not just rumour. There are examples which I will not put before the House now, but which I can give to the right hon. Gentleman in private if he is concerned. But it is important that the Minister should make it plain tonight that the corporation is not to be associated with any cartel practices in Europe.
  I want now to deal with the small buyer and his problems and the question of steel stockholding. A problem which the small manufacturer will have to deal with, and immediately, is that there is likely to be an 8 per cent. increase in price for small order quantities. That is a major rise for small manufacturers, who make up between 60 and 70 per cent. of industry. The corporation should consider again the problems of delivery of small orders. I would not object to its suggesting that the lead time for supply of orders should be much greater for small batch orders. That would be a reasonable objective for it to set in order that its deliveries could be built up, including deliveries of small amounts, which are, of course, costly.
  An 8 per cent. increase would mean ensuring that many firms would not want to buy directly from the corporation but would go to the steel stockholders. A considerable argument is going on about the fact that the corporation is not encouraging the growth of steel stockholding on as large a scale as one sees, for example, in the United States, where the steel stockholder is an intermediary factor for the delivery of steel to small buyers throughout America.
  I believe that it could well be to the advantage of small manufacturers, and perhaps many larger ones, as well as to the B.S.C. if we could have efficient steel stockholders available to the corporation.
  738
  but there is considerable concern that the corporation is not willing to encourage individual firms to set up in such business. If that is so, it is important that the Minister should do all in his power to overcome the problem.
  The Memorandum on the Iron and Steel Bill says, on page 4:
  "A more specific financial duty will become appropriate if the Corporation has public dividend capital …".
  I do not know what that sentence means. Does it mean that, previously, the corporation has not had, as a public duty, to consider the use of its money? Does it mean that, because of public dividend capital, the corporation will suddenly have a greater financial responsibility? It is a strange sentence and it goes deep in condemnation of the Bill. Even before the hon. Gentleman's speech, I felt that the Government have not even the ability or capacity to run an old iron shop at a profit, let alone the nationalised steel industry. For that reason, as well as for the others I have given, I oppose the Bill.
  7.9 p.m.
  Mr. George Lawson: It always surprises me that hon. Members opposite, most of whom are reasonably intelligent—and I regard the hon. Member for Honiton (Mr. Emery) as a very intelligent man—can talk in such terms as to suggest that they are completely one-sided in their approach to a problem. For example, their approach to the steel industry now that it is nationalised seems so very different from their approach before. Why, for example, should anyone want to shackle the industry if it wants to enter into agreements abroad? I am not arguing for those agreements, but, if private enterprise is allowed to enter into agreements abroad, why is it not a good thing for a nationalised industry? I merely say that that is the kind of double approach to an industry that I deplore.
  Mr. Emery: I am not trying to indulge in double-think on this. My view is that any cartel arrangement, whether by a private or nationalised industry, is bad. I have always said that.
  Mr. Lawson: I return to another aspect of the approach of hon. Members opposite to an industry just because it happens to be nationalised. The hon. Gentleman expressed something like horror at the

  739
  possibility of the steel industry being organised on a product basis. I am not arguing for or against this, but surely it is recognised by all hon. Members, certainly on the benches opposite, that many large-scale private industries are organised on a products basis. I understood that the organisation on a product basis of very large modern industries was considered to be among the most advanced form of managerial techniques.
  The hon. Gentleman also expressed a feeling of distress that ancient, long-standing, honourable names of companies that people respected for a long time and wished to trade with may be blotted out. But is not that happening all the time when mergers take place? The electrical engineering industry, for example, has experienced merger after merger. The recent great merger was only a development of many others, and each merger resulted in the disappearance of long-standing and in many cases honoured names. These are commonplace things in industry.
  Hon. Gentlemen opposite might have advanced better arguments than they have so far. I like to hear good arguments. I sit here anxiously waiting for them, but until now I have heard very few. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) argued that it was impossible to have fair competition between a nationalised industry and a private industry. He nods agreement. But I wonder what hon. Members opposite think about coal and oil, for example. Oil is still a private industry, and it does not seem to be finding a great deal of difficulty in competing with the coal industry. I wonder what hon. Gentlemen opposite think about road transport, which is mainly private and does not seem to have a great deal of difficulty in competing with the nationalised rail transport system just as it had no difficulty in competing with the previous privately owned rail transport system.
  We insist on placing burdens and obligations on nationalised industries, expecting them to behave far differently from the way in which we expect private industry to behave. Perhaps it is right that we should, but let us recognise that this is so. When coal mining was a private industry we did not expect it to
  740
  deal as carefully and humanely with its workers as we expect the nationalised coal industry to do. We did not expect the steel industry when it was private to deal with its workers so carefully.
  There could be exceptions—perhaps the firm of the hon. Member for Aylesbury (Sir S. Summers) was one, but it is not customary to expect that a private concern would carry that obligation. It would say to a worker who was leaving, "We are sorry. You have been with us for 40 or 50 years and we will give you a gold watch—perhaps. But we must pay our way. We have no obligation towards you. We thank you. Well and truly done."
  We all insist that if the steel industry has to cut down on the number of its personnel it must deal with the matter in all sort of circumscribed ways. I do not object to this, but we should recognise what we are asking. If we are to insist on such different standards for a nationalised industry we should treat it differently and be prepared to measure its results differently.
  For years and years hon. Gentlemen opposite protested every time there was a suggestion that a railway station should be closed, but every time there was any suggestion of the railways not making money they also denounced the waste of public money and so on. That kind of thing is all too common, and it is time we got beyond it.
  I am not a steel man. I respect the knowledge of the hon. Member for Aylesbury and his whole lifetime of experience and the experience of his family. But I think I am reasonably informed on what happens in industry, and I am in contact with many steel men; I have represented my area for a long time. We must recognise that the steel industry, whether or not it was nationalised, was having a rough time. When it was privately run the Americans reached the stage where they were producing twice as much steel per man employed. This was not any fault of nationalisation. It is just what had happened with all the scope that private enterprise steel-making had. It is only recently that even the threat of nationalisation emerged. Year after year the industry dropped behind other countries. What advantages did Japan, Germany

  741
  and America have? It is true that in many cases they had the advantages of larger scale, but they showed the enterprise that has not been shown for a long time among those who have been running our industry, with some exceptions.
  This country will not be able to maintain anything like its standards of life unless we can get the steel industry on to a basis where it can look other steel industries in the face, and it cannot do that just now. That is our main argument here, and instead of returning to the old argument about nationalisation, hon. Members opposite should have come on to this theme. It does them no credit to denounce nationalisation but at the same time not to tell us that they would denationalise if they returned to power.
  I would respect them if they said that nationalisation would never enable the nation to solve its problems, and that, therefore, they would scrap it and return to private enterprise. But there has been no such suggestion. There have been manoeuvres here and there perhaps, but no suggestion of denationalising the steel industry. If they think that nationalisation as such is such a bad way to run important industries, they have an obligation to denationalise them, but they are not going to denationalise steel, coal, the railways and so much else. That is part of what I mean when I talk about their double-talk and double-think.
  I do not want to speak for long, because I know how anxious hon. Members can be when they want to enter the debate. They almost find it impossible to listen to other Members if they are anxious to speak themselves.
  I welcome the proposed change in the capital structure of the industry. This is another example of expecting nationalised industries to operate under standards we would never expect of a private industry. Earlier nationalised industries carried an enormous debt burden from the beginning, a debt burden in perpetuity. Even when they were paying the interest on the debt, this could be represented as no profit being made, because usually after the interest had been paid there was no profit. This was a quite different standard from that applied to private industry. There was no question of deception in the change of approach to this matter in terms of the capital structure of the industry.
  742
  I suggest that the hon. Member for Aylesbury should consider each industry which has been nationalised. If he does, he will find changes have been made in the structure. There has been not a rigid doctrinal approach to the structure—I know that there is a fair amount of doctrine on this side of the House as well as on the benches opposite—but continuous modification to meet certain problems as they arose.
  I am convinced that those engaged on pushing through the Bill had no thought of reorganising the capital structure of the industry so that it had a large block of equity. I was one of those who urged the previous Minister to consider this matter with great sympathy. I accepted from the beginning that that was a good thing.
  Sir S. Summers: The hon. Gentleman says that no thought was given by the Government to changing the capital structure. My complaint is that there was no forethought. The Government should have foreseen the need at the time.
  Mr. Lawson: I do not very much quarrel with that. We could benefit from a great deal more forethought than I sometimes see evidence of. But I also realise the position on the benches opposite. It is customary that we do not think very much beyond our noses. Only when we come up against a problem do we begin to consider a way round it. That is the case here.
  As a result of this modification in the capital structure of the nationalised steel industry, it will be possible to measure the results with the results in steel industries abroad and large private industries at home. Hon. Members opposite cannot object to that. I welcome the Measure which has been adopted. It could lift the burden on the industry which was such a burden on the coal industry, in which it had to be lifted in part, and on the railway industry and which has caused so much disgruntlement. Men in the industry became conscious of the burden, not the public. The public are not very interested in these details, but the men at work are.
  I have mentioned the control structure. Whether it will prove to be good or not, it is not something which has come from the dream world of people running the steel industry. It is a well-established type of control in large industry. Many

  743
  combinations of units are managed on the basis of products as distinct from geographical areas. I am merely making this point without arguing it with great vigour one way or the other. The steel industry is a remarkably diverse industry, with a host of products and by-products.
  If this type of control is a good thing in certain large-scale private industry, it might be a very good thing to adopt in the steel industry. It would not necessarily mean that the control was all centred in London, Wales, Sheffield or even in Scotland. But I would expect that control, based on products—and this is very reasonable when we think in terms of selling those products—to be shared in certain measure in its controlling headquarters.
  I would expect a nationalised industry—and this is where we ask of a nationalised industry what we would not dare to ask of a private industry—to show far greater concern for the peripheral areas than private enterprise. I can see no serious objection to this type of control, provided we keep in mind that area interests must be safeguarded.
  I turn to the green field-brown field argument. My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) expressed dismay about the lack of a plan for the future. In some cases, we suffer from far too large plans with little body in them. There is a great deal of sense in what has been called "the brown field approach" and in considering whether what we have is being used to capacity and how we can get the most out of it with the least expenditure. That is a fair approach, provided we do not forget the future and drop behind, as we have been doing for so long, developments elsewhere. I cannot think of a better way of deciding how we can produce the largest amount of steel possible by considering where we can expand most rapidly, economically and cheaply. Provided we are thinking of the future, this is a common-sense and reasonable approach.
  I know from information given to me as well as printed information that there is a great deal of unused capacity in my area. Political pressure resulted in the building of the great Ravenscraig strip mill. There is the great modern cold rolling plant at Gartcosh, incorporating
  744
  very expensive equipment. It has never been used to anything like capacity. It is being used more now than ever before, but there is still plenty of spare capacity. We need to build up that capacity and to make the most use of it.
  A limitation on the possibilities of using capacity to the full in Scotland is the means of importing raw material. All the imported iron ore in the area comes up the Clyde to the general terminal quay in Glasgow, which can take ships of no more than about 21,000 tons. It is an excellent terminal, and a very fine transport system has been developed between the quay and the works in Lanarkshire. Nevertheless, it is very limited. It is working at about capacity now. It is important that a decision is taken to ensure, not only the continuance of existing capacity, but the development of future capacity which we all agree is so necessary. It is not possible for this development to take place unless we break this bottleneck of the limited channel through which the raw material comes.
  Developments in this area are necessary. We must make the fullest use of natural advantages—rock-bottoms which never shift, and there is no need to dredge, sheltered sea approaches so that there is no need to build large sheltering walls or to take ships into enclosures of any kind. There should be a minimum of delay and a maximum of safety.
  When the Benson Report was published in July, 1966, reference was made to a maximum size of about 65,000 tons. Since then, we have had on order two ships of 165,000 tons deadweight capacity. That shows the speed with which the change is taking place. If we are to bring rich iron ore from Australia right round the world, which is what the Japanese are doing, we shall require vast ships, not ships of 100,000 tons, but of 200,000 tons or perhaps 250,000 tons, and we must have somewhere to put them.
  This perhaps is for the future, but if the Scottish area is to develop according to the "brown field" plan, it must break the bottleneck of its restricted source of import supply. This can be done on the basis of a terminal that the port authorities have offered to build at a cost of £12 million. The future must

  745
  take care of itself, but we must have something of this sort now.
  I apologise for arguing with my hon. Friends, but we are all concerned with our respective areas. It is perhaps not usual for a Scot to say this, but we should be thinking in terms of British interests. I have argued here against Scottish Nationalism and in terms of Brtish interests, and I am doing so again. This is necessary in terms of Britain's interest. We should be thinking in terms of putting the British steel-making industry on a basis of such efficiency that it can look the Americans, the Japanese and the Germans in the face, and it must be done along these lines. I commend what is being done by the Steel Corporation, but I hope that the corporation will go a little further and move along the lines which I have described.
  Several Hon. Members rose—
  Mr. Speaker: Order. I again remind the House that many hon. Members who have sat here all day wish to speak. Reasonably brief speeches will help.
  7.33 p.m.
  Mr. Nicholas Ridley: I will not touch on the points raised by the hon. Member for Motherwell (Mr. Lawson) now, although I shall refer to many of them as I make what I hope will be a brief speech.
  I should like to complain about the way this sloppy Bill was sloppily presented by the right hon. Gentleman. I do not understand how two documents, one from the British Steel Corporation and one from the Government, giving totally different figures to the tune of £275 million could be published simultaneously and why the Minister should have no explanation for it.
  I should further like to complain that no financial target is included in the Bill, nor was one mentioned in the Minister's speech. We are asked to write off £700 million without being told the target for the return, if any, which we may expect upon it and what financial control will be imposed on the British Steel Corporation. We accept that the Minister wants flexibility, but he should tell us what is the present target and, if he wants to change it, we will accept that it will be changed, but to give no idea what return we are likely to get on £700 million is the height of financial irresponsibility.
  746
  I want almost to confine myself to objecting to public dividend capital. The intention is to pass the dividend this coming year, probably next year and perhaps even the year after that. It is strange that this proposal should be introduced on the ground that this is a fully viable industry but subject to fluctuating returns—I quote from the White Paper. Surely the industry will never be in a better position than now. We are told that the industry has not sufficient capacity to meet its requirements, it is booming, the mills are full and we are having to import. Why cannot it pay a dividend now? This is the most likely time for it to be able to yield 10 per cent. on its capital. But, instead of £70 million interest, we are told that there is a £12 million loss. The chances of getting a dividend in a slump year when the industry is running at 60 per cent. capacity are extremely slender.
  As we have been talking so much about the salaries of the board members of the British Steel Corporation, might not the Minister find it useful to gear the rate of return of the board members to the rate of public dividend on the capital employed? This might be a useful incentive to the board members of the British Steel Corporation to turn in a profit for the investors who put so much money into the industry.
  I accept that public dividend capital is not of major importance. What is lost in terms of capital is lost, and what profits are made in the future are made, and, naturally and inevitably, accrue to the shareholders, who are the taxpayers. Calling it one sort of dividend or another, or one sort of capital or another, will not alter the financial fact of profit and loss, and that I accept. What it amounts to is a decision about who will acknowledge that a loss has been made, whether it be the British Steel Corporation or this honourable House of Parliament. The British Steel Corporation may say, "This year we will pay no dividend", or "This year we will pay 10 per cent. dividend", which means that it has taken unto itself the decision whether or not the capital shall be written down.
  The capital value on the Stock Exchange of the £700 million of equity which we are being asked to pass, if it were quoted, would be barely £100 million, because there is no prospect of earnings to pay a dividend, and the future

  747
  looks very dim. It may be that the Government paid too much compensation, I do not know, but if this commencing capital debt cannot be met—I am not being partisan here—it would be much more sensible for them to come to the House and ask to have it written off. Parliament would then have control of the matter, instead of being left in the intolerable position that we are being asked to put forward £700 million worth of capital without a clue what return there will be and what financial objective will be put upon it.
  There are two substantial further objections to public dividend capital. The first was raised by my hon. Friend the Member for Aylesbury (Sir S. Summers). In good years the profits will be pre-empted by the workers in the industry—I do not blame them, good luck to them—and in bad years the taxpayer will get nothing as a return on this capital. So I am extremely sceptical whether we will see any of this money back.
  The second point is on competition, and here I come to the first point in the speech of the hon. Member for Motherwell. I said that it was impossible to envisage fair competition between public and private concerns in the same industry. In trying to rebut my argument he quoted two examples, the argument of coal versus oil and road versus rail, but in each case the successful competitor—road transport and the oil industry—has not been allowed to win. A vast amount of public money has been pumped into the coal industry. We recently wrote off £415 million, and we are losing more.
  Look at what is happening to the railways, with some £200 million of their capital being written off. Successful competitors who are winning the competition have not been allowed to win. If it had been the other way round nobody would have shed a tear for the oil industry; there would have been no public subsidies for it. The only possible result of competition between public and private concerns is that one or both will lose a good deal of money. Experience has shown this to happen.
  It is difficult, and indeed frightening, for competitors in the private sector of the steel industry to be told that the units of the B.S.C. with which they will
  748
  be competing will be put on to a public dividend capital basis, so that they do not have to pay dividends on their profits or interest on their captial—apart from the £135 million which is still on a fixed rate of stock basis, whereas the poor private competitor has to service his capital. I cannot believe that this is meaningful, without coming down on one side or the other as to which is the best system.
  I invite hon. Gentlemen opposite to recognise that we must firmly draw the line. It is an impossible position if the private sector wins and we have to go on pouring taxpayers' money into the public sector. It is equally impossible, if the public sector wins, to drive all the private competitors into the ground. None of these solutions is acceptable to either side of the House. I know that generalisations are often wrong, but I have attempted to define the situation.
  My last objection to public dividend capital is the curious desire which I find on both sides of the House to make nationalised industries commercial. The hon. Member for Motherwell was schizophrenic about this. Half the time he was saying that one must look after one's workers better, and that one must build iron ore quays in Scotland, because he happened to represent a constituency there which seemed to me to be a not very commercial reason. He said that one must put all sorts of welfare facilities there, which no doubt he would find convenient to him when he went up to his constituency. Then he said: "We must beat the Americans. We must look the Americans in the eye and bring down the price of steel below their price".
  Which does he want? He cannot have both. The Americans do not site iron ore terminals in their constituencies. They put them in the right place. They follow the disciplines of the market. They go to any extent to make sure that they have the most efficient type of production facilities.
  On the matter of commercialism, hon. Gentlemen opposite ape tycoonery. They want to think of themselves as launching great industrial enterprises which will beat the world—the Americans, the Germans, the Japanese. They are always seeking to cut off publicly-owned industry from the control of Parliament, from

  749
  Ministers, and from such tiresome interference as having to pay interest on capital.
  The amount of times hon. Gentlemen talk about the crushing burden of debt which industries have to carry! It is somebody else's savings. It is money which has been put up. It is not a crushing burden of debt to those who have to put up the capital. One cannot say that this inherited debt is something which should never have happened. One has to honour one's obligations to capital as well as to labour.
  Hon. Gentlemen opposite have the desire to make industries more commercial. My right hon. and hon. Friends always try to move nationalised industries back into the private sector by saying "Make it more commercial. Let us split it into separate, competing groups". What they are trying to do is to move towards denationalisation, without having to say so. I agree with part of the hon. Gentleman's speech. One cannot have the advantages of a private enterprise system without private ownership. One cannot have the advantages of the public ownership system without public ownership.
  We all seem to be trying to get the worst of every world by pushing ourselves into a position where there is no control at all, either by the shareholders in the private system, or by the Minister and his staff through the detailed control which is exercised over nationalised industries.
  When one sees the first signs of the B.S.C. beginning to rough up the shipbuilders with its new pricing structure, picking on people who cannot get competition to whizz up the price by as much as they dare, by keeping prices low where it is competing to try to frighten off competitors, or, as my hon. Friend the hon. Member for Honiton (Mr. Emery) said, by starting cartelisation schemes on the Continent, one is giving birth to a rogue elephant, a great industrial bull in a china shop. We shall have terrible trouble with this great animal, unless we take steps to control it.
  There are two ways of controlling it. We can control it either with the Socialist solution, by tying it with bits of string, by harnessing it to the Ministry and telling it what to do. But that is not consistent with commercial freedom. Or we can denationalise it and sell it back
  750
  to the private sector. That gives the advantages of commercialism, but does not give the hon. Gentleman the advantage that he can build an iron ore quay in his constituency in time for the next election.
  We can choose between these two alternatives. The point I make is that public dividend capital is a decisive move in the only direction which will get us nowhere further at all.
  7.48 p.m.
  Mr. James Tinn: I, like my hon. Friend from Sheffield, Brightside (Mr. Eddie Griffiths), have strong roots in the steel industry. As a steel worker and a member of the National Union of Blastfurnacemen and representing a steel constituency I am grateful for the opportunity to make a contribution to this debate. I shall try to be brief although, having experienced in this debate some rather long speeches, it is a little tempting to reply to many of the points which have been made.
  I wish to deal constructively and seriously with the industry and its importance and will try to be objective. But I cannot resist the temptation to take up one or two of the points which were made by the right hon. Gentleman the Member for Leeds, North -East (Sir K. Joseph), especially some of the party political points which he made. He lay much of the blame upon the lack of capital investment in the British steel industry as compared with the rest of Europe and this is most noticeable when one looks at the figures. When one looks at the comparable graph showing capital investment in E.E.C. countries compared with the United Kingdom one sees a lag. The right hon. Gentleman sought to explain this lag in terms of the uncertainty which he claimed was created in the privately owned steel industry because of the threat of nationalisation which had deterred investment plans.
  I find this a flimsy excuse for what is admittedly an appalling performance by the private steel industry in the capital sector. One conclusion to be drawn is that it makes the continuance of public ownership essential. We have heard a good deal in past debates about the damage done by uncertainty. The party opposite makes its contribution to the removal of future uncertainty by dropping any idea of denationalising steel.

  751
  I was not impressed by what appeared to be crocodile tears over possible abolition of company names. Let us face it, what customers want and what establishes a good relationship between a firm and the customer is its ability to supply a cheap product—perhaps I should say a competitive product—on time at a suitable quality accurate to specification. These are the kind of things which determine the relationship. If these factors are not present, or if they are and they disappear, no thoughts of loyalty will keep a customer dealing with this country. My hon. Friend the Member for Motherwell (Mr. Lawson) made the very valid point that names are changed frequently in mergers, in any event.
  A point was made about monopoly power and the importance of exporting industries not being priced out of their markets or put in difficulties as a result of rising steel prices. It is not so long ago that the publicly-owned coal industry, particularly in North-West Durham which produces some of the finest coking coal in the world, produced the coal at a loss and thereby sold it at a loss to the then privately-owned steel industry. That was a case of subsidy if one likes. Now, I suspect that some right hon. and hon. Gentlemen opposite would like the publicly-owned steel industry to perform a similar service of below-cost supply. But I see no reason why it should be regarded as an inherent feature of publicly-owned industry that it should subsidise the private sector.
  I turn then to the steel industry's contribution to regional development and, since I am the first speaker from the North, perhaps I might be allowed to make a point about that region. In the corporation's thinking, it appears that there are suggestions that, with the new product divisions in its reorganisation, it may provide opportunities for the setting up of a product headquarters in Wales and another in Scotland. However, not a word has been said about the North, and, through the Minister, I want to draw the attention of the corporation to the simple facts. In the Northern Region as a whole, there are over 61,000 steel workers of all kinds. In Scotland, there are 27,000 and in Wales there are nearly 72,000. Unless one thinks only in nationalistic terms, there appears to be a
  752
  strong case for a headquarters in the Northern Region.
  Then I want to express my concern at a passage which apears on page 11 of "Finance for Steel". It says:
  "The possibility of developing existing plant at Tees-side provides a major alternative option to that of the development proposed at Scunthorpe."
  That strikes me as being a little odd. I thought that all the development scheduled for Teesside was fixed and determined, except for the possibility of an ore terminal, to which I turn now as my hon. Friend the Member for Motherwell has claimed it for the Clyde. I hope that the industry will find that it needs three terminals, because I recognise the anxiety on the Clyde. But we have to face the possibility that only one more will be required and, briefly but I hope effectively, I want to make the case for Teesside.
  As a result of dredging work undertaken principally on behalf of the large oil refineries on both banks of the river, the Tees is capable of handling vessels of up to 85,000 tons deadweight, and I can assure my hon. Friend that it is capable of being dredged at a reasonable cost to take vessels in excess of 200,000 tons deadweight. What makes it almost unique among estuaries—and I do not give way to the Clyde on this—is that it has the additional advantage that there is an abundance of flat sites on either side. There is plenty of land available which is ideally situated, with a large-scale steel industry nearby. As a result of maintenance dredging, there has been a great deal of land reclamation, the size of which can be indicated by saying that the ordinary maintenance dredging of the river alone gives us an additional 100 acres a year.
  I now turn to the proposals about switching to product divisions. I have tried to keep an open mind, but I have not been able to see a prima facie case for them which counterbalances one or two of the practical arguments which I can see. It will be helpful if hon. Members can be given more information about the reasons why it is thought that this change is so desirable.
  It is important that uncertainty which is created by the proposed change should not be prolonged any more than is necessary. Bearing in mind that steel works

  753
  usually are built on an integrated basis to produce a fair range of products, I find the proposals difficult to understand. These plants are in existence. In the country as a whole, we are not starting from a "green field" situation. We are not starting from scratch. What does one do with a large and efficient plant which is producing more than one kind of product? Will it be operated under more than one management, or will it be run down? I hope that the latter is not the intention. It may be that my doubts are groundless. However, I have not seen the arguments in favour of the proposal, and I would like to have them put to me. Clearly there is every objection to change simply for the sake of it.
  Then there is the matter of competition. One of my hon. Friends made the very fair debating reply, quoting Mr. Judge's evidence to a commission, that there was no competition in steel and that it was not wanted. That was a fair point, but the fact that there was no competition in private steel is not conclusive proof to me that publicly-owned steel should not try to be competitive. I am still not convinced that the geographical divisions cannot compete with each other and provide a rough yardstick of efficiency. I am not convinced that that should not be continued.
  I would like some more information about the proposed overseas investment which is envisaged. I gather that it is mainly concerned with the preparation and safeguarding of raw materials on the one hand and the distribution, marketing and stocking side on the other. That would seem to be a reasonable proposal. However, there is the danger of exporting jobs by setting up production units abroad. I hope that that is not the case.
  My final point concerns labour relations, which are almost without parallel in industry. Labour relations are exceedingly good. If those of other industries were as good, the Government would not be considering the sort of legislation that they are. There are many problems and difficulties, but when they arise at plant level there is a set procedure which is followed. Small ad hoc committees are set up, with members from both sides and with neutral chairmen, and their findings are honoured. In view of the fact that relations are so good and that, since the war, the men have co-operated so well
  754
  and so loyally in the technological changes which the industry has faced, surely they are entitled to a reverse loyalty from the corporation.
  We realise that we are facing redundancy in future years. I recognise the difficulty of solving that problem. Steel has a pattern of employment based on seniority. I am desperately concerned at the position, for example, of a man who has given his lifetime to working in steel and, at the age of 50, has a fairly good established job. What does one do with such a man? He cannot be transferred to another plant, because under our system he must again start at the bottom. Generosity and imagination is required from the corporation at least equalling and matching that shown by other publicly owned industries which have faced similar problems—particularly the Coal Board.
  Subject to one or two reservations which I have mentioned, I believe that the Bill will assist the corporation in performing its task and I shall have no hesitation in supporting it.
  8.1 p.m.
  Mr. Patrick McNair-Wilson: The last time that I had an opportunity of contributing in a debate on steel in this House was my maiden speech in 1964. I was, unfortunately, involuntarily kept away from the House when the Bill to nationalise the industry passed through.
  I have found the debate extremely disappointing, since the Minister clearly had no idea of the detailed facts regarding the important borrowing powers which we are being asked to pass in the Bill. Today's debate will go down in history as an occasion when the Minister stuck to his brief, was asked an important question, could not answer it, and the only moment when he used his own initiative was in that display of political venom at the end of his remarks.
  To use a cinematographic term, this is a 3-d Bill: damaging, dangerous and deceitful. It is damaging to the industry, because of what it does to the structure of the corporation and the companies. It is dangerous, because we now have figures which are entirely meaningless to the debate, and it gives the corporation the opportunity of borrowing abroad, about which we have had no clear statement.

  755
  It is well known that the steel industry the impression of restructuring the finances of the corporation in a commercial way by converting the £700 million to p.d.c. when we know perfectly well that the ultimate decision about the return is left with the Minister. He is, therefore, captain, mate, bottle washer and cook on this ship, and he is also the principal shareholder. This is an extremely deceitful way of trying to persuade the general public that we are putting the corporation on a commercial footing.
  It is well known that the steel industry is vital to the economy of the country. It always has been and, I believe, always will be. The steel industry has always done a good job for Britain. I am far from convinced that it is in any way doing a better job now than when in the hands of private enterprise. The hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) blew away some of the pink smoke that we have had puffed at us by the Minister by getting down to the real facts about what the corporation is doing and underlining some of the serious problems which it is facing.
  It is not a commanding height, as was once suggested by the Labour Party when in opposition. It is an industry which is subject to every sort of variation in the economic structure and policies of a Government. Some hon. Gentlemen opposite have criticised hon. Members on this side for introducing politics. The Labour Party brought the steel industry into politics. The Labour Party brought discussions on the steel industry into the highest political forum in the land. Of course, it is a political subject, and it has to be looked at in that light.
  I should like to examine the three areas that I have mentioned. First, the dissolution of the company structure and the product groupings. I should like to take up the point made by the hon. Member for Cleveland (Mr. Tinn), who talked about company names, and one of his hon. Friends who also said that company names were frequently changing in other industries. Being professionally involved in publicity I know the importance of brand images, the importance which can be attached to good publicity, and the goodwill stemming from it. The Steel Corporation is very
  756
  publicity-conscious. We have seen much in the Press about its advertising campaign. Indeed, it has been quick, since it has been in being, to issue advertisements saying, "Who calls the B.S.C. a monopoly?" I do, but that is neither here nor there. The point is that publicity is important.
  The hon. Member for Cleveland tried to dismiss company names as in any way relevant. They are very relevant as a selling aid, because of strong established links with customers who have been buying from companies using those names for a long time.
  Mr. Tinn: I was arguing about the realistic factors—quality of the product, time of delivery, and so on—holding a customer and accounting for goodwill. If the hon. Gentleman is right in saying that publicity is more important, then we can change the names, switch on this tremendous publicity campaign, and get goodwill that way.
  Mr. McNair-Wilson: The hon. Gentleman is making a fair point in that one cannot sell a bad product. I am saying that it is a pity to throw away goodwill when it has already been established.
  That raises another point. We know why these company names are to disappear eventually. It is a purely political reason. It is to remove, once and for all, any landmarks which could ever lead anybody back to denationalising this industry. The Bill is intensely political. Nevertheless, I should like to speak about selling and companies names.
  Frequently, particularly in export businesses, it is found that customers of British steel companies have established links such as those to which I have referred. When those links disappear and the corporation trades exclusively as the Steel Corporation, we could have a situation, in countries where we do not enjoy the best of political relations, in which we might find good orders being denied to us because people were unwilling to trade with the corporation per se. We can all think of countries where the Government are finding life rather difficult. For instance, South Africa. I regard what is being done in the Bill as unnecessarily damaging.
  I turn to the financial aspect. First, the failure of the Minister of Power to

  757
  answer the point about the missing £275 million. I hope that the Government will make sure that this point is answered when the debate is wound up. It is not good enough to dismiss it as a small, almost typographical, error. This is the most cynical disregard for the taxpayer and his money. It must be made crystal clear, by the end of the debate tonight, what has gone wrong in these figures.
  Predictably, this industry is coming back for more money. It is less than two years since the original borrowing figure of £300 million was fixed, and here we are with a limit of £650 million—more than twice as much—being set in the Bill. This well-trodden path to the taxpayer's pocket is once again being travelled by a nationalised industry. This is something which has to be examined in the greatest detail, and I assure the Minister that that will be done in Committee.
  It is probably the fact that at the end of each financial year the Minister will have an opportunity to decide on the return which is to be paid. This is what takes nationalised industries out of the realm of private business, because in a private business real disciplines exist. Nobody in his wildest dreams could imagine the Minister refusing this industry finance if it required it. No one can therefore ever see a situation where the corporation will be faced with the real disciplines which exist in private industry.
  That is particularly unfortunate, because it means that the corporation will be operating in a totally different sphere from the members of the British Independent Steel Producers' Association, the private sector, because they are still subject to real commercial discipline, and it is this element which makes it impossible for a person, like myself, who is involved in private industry ever to be able to come to terms with this sort of Bill.
  My last point on the financial part of the Bill is concerned with borrowing abroad. We know that the Government have borrowed about £3,000 million. We know, too, that to pay that back we need a balance of payments surplus of £50 million every month for five years. Yet here we are in this Bill once again giving the Government an opportunity,
  758
  through the corporation, to get foreign money.
  This is a most dangerous part of the Bill, because it allows the increase in total indebtedness to be pushed up by the corporation. We do not know anything about the terms upon which this borrowing is to take place. We do not know how it will be affected—by changes in exchange rates, or whatever—and we are enabling the Government to borrow money which they probably could not get in any other way from organisations like the I.M.F. I find this Clause extremely dangerous and distasteful.
  There is no doubt that the steel industry and British steel are vital to Britain. After reading the Bill and listening to the debate there is equally no doubt that the steel industry is entirely dependent on the British taxpayer, and in the Bill, and in this debate, we have been given nothing like sufficient evidence, clarity, or explanation, to lead the taxpayer to feel that his money is being wisely spent.
  The Bill places an additional burden on the people of Britain. It is a bad Bill, it is intensely political, and it will be with great pleasure that I shall support by party in the Lobby to vote against it.
  8.13 p.m.
  Mr. Frank Hooley: The hon. Member for New Forest (Mr. Patrick McNair-Wilson) will not expect me to echo any of his anachronistic doctrinaire statements. Of all that we have heard from the benches opposite tonight, the hon. Gentleman's attitude is the least constructive and the most out of date.
  The only point of substance that has come from the benches opposite concerns this curious discrepancy between the financial statement and the Bill, and I think the Minister owes the House an explanation about it. The discrepancy is not £275 million. That is a gross exaggeration. It is the difference between the net requirement of £200 million in the financial statement, and the net requirement of £310 million in the Minister's memorandum. Allowing for the fact that they cover different periods, the one five years and the other five and a half years, the discrepancy is about £95 million. Nevertheless, this discrepancy exists, and I am sure that my hon. Friend will explain it.

  759
  Listening to some of the speeches one would imagine that the steel industry was tottering into some sort of decline. In 1965 it achieved an all-time record output. In 1968 the output was only just a fraction short of that, and all the present indications are that output in 1969 will exceed that figure. Thus, in three of the past five years we have had record production, which hardly justifies some of the rather miserable comments made during the debate.
  The purpose of the British Steel Corporation is not to make profits, but to make steel, to provide this country with the most important basic raw material for our manufacturing industries. The success of the corporation will be judged by its ability to install modern capacity, to use up-to-date technological methods, to get rid of old plant where this is necessary, and to employ qualified scientists and engineers on a sufficient scale, which is what they have not been by private industry in the past. It is on the ability of the corporation to build up a massive capacity of modern steel-making plant that its success will be judged. Whether we get 1, 2, 3 or 10 per cent. on dividend capital is a secondary consideration. We must have the steel.
  My hon. Friend the Member for Penistone (Mr. John Mendelson) talked about stocks. I suspect that the real answer is to have sufficient reserve capacity to meet a surge in demand. I am not sure whether, from a physical or practical point of view, or from the point of view of the great variety of steels that we require, we can hold sufficient stocks against a surge in demand. What we need is a reserve capacity of steel-making plant which can be brought into production fairly rapidly when there is a substantial upturn in the demand.
  Mr. Tinn: Does my hon. Friend realise that that would involve having a surplus capacity of labour, that men would be out of employment during slack periods? There is a certain rigidity in the production of iron and steel. It is not possible easily to close down a blast furnace, a coke oven, or a steel furnace. There are good technical reasons for trying to preserve a steady output.
  Mr. Hooley: I take that point, but there is a wide variety of techniques for making steel not all of which involve the use of blast furnaces. We must have sufficient capacity to deal with fluctuations in demand. There may be some merit in what has been said about stockholding, but the basic need is to have capacity to meet all reasonably foreseeable demands.
  The borrowing capacity as provided by the Bill is about £200 million a year over the next five years. I shall be interested to know what discussions have been held with the steel plant manufacturers to make sure that they can provide the equipment on which this money will be spent as the new plant is built. They have been complaining about the slowness of the corporation's capital programme, but in the meantime some of them have built up important export orders, and I should like to be assured that if this capital programme gets under way the steel plant manufacturers will be able to continue to meet their export commitments and provide all the equipment that the corporation will need.
  I propose to deal next with the hiving off of extremely important and valuable assets of the corporation to private industry. This is not an academic point. My hon. Friend the Member for Penistone mentioned the episode of the Sheffield rolling mills. We handed over to private enterprise the most modern and up-to-date rolling mills in Europe and formed a company in which the private sector's contribution was the handing over of obsolescent plant. In spite of repeated and determined questioning and correspondence, I am still unable to discover what percentage of the plant contributed to the deal by the private sector is obsolescent and will be written off. I suspect that it is a high percentage of what private industry put into the deal. In exchange, it got 55 per cent. of the equity, while the public sector got a 45 per cent. holding in exchange for the most valuable and up-to-date steel making plant in Britain.
  I want to be assured that this kind of deal will not occur again. When the taxpayer has put up vast capital sums and the plant has been built, I want an assurance that it will remain firmly in the public sector. We may want rationalisation, we may want reorganisation, and

  761
  there may be fringes between the private and public sectors, but I want an assurance that the control of any company of that kind will stay firmly in the hands of the public and that the taxpayers' money will not be used in future to provide a sort of public-private dividend-capital for private shareholders and companies in the private sector.
  I echo what my hon. Friend the Member for Penistone said about information on such deals. This deal was kept very quiet until the very last minute. My hon. Friend quoted the astonishing fact that even some of the part-time directors on the board of the corporation were not informed that the deal was going through.
  I share some of the hesitation which has been expressed about the proposition that the corporation should borrow abroad. I hope that we shall receive assurances on this point. It is one thing to expect overseas enterprises to put risk capital into Britain's economy. If they want to do that, fair enough. If their enterprise flourishes, it may be useful in certain circumstances. It is quite another thing to ask for foreign money to which we then give a gilt-edged guarantee. If such funds are attracted to Britain, will the Government give a guarantee about changes in the parity of currencies? I would object to any investment in which a foreign investor was given, not only a gilt-edged Government security, but also a guilt-edged guarantee against any change in the parity of the two currencies.
  According to this week's Press, Lord Melchett made an announcement in which he suggested that the corporation would set up steel-making plant abroad. I do not know how far this was an official statement on behalf of the corporation or how far Lord Melchett was flying a kite. It is an extraordinary proposition. I should take the gravest exception to any suggestion of capital put up by the British taxpayer being used to finance a plant in South Africa or some such nonsense.
  I wonder what Lord Melchett was talking about when he made this proposition about using Britain's scarce capital for creating new plant and steel-making industry abroad. Which countries did he have in mind? What is the object of the exercise? Why should the British taxpayer be expected to provide
  762
  capital to create such plant overseas? If it is merely a question of obtaining more efficiently raw materials which do not exist here—such things as high-grade iron ore—it is understandable. The phrase quoted in the Press this week was "steel-making plant". The Government should give an explanation of this curious proposition.
  Much has been said about the importance of retaining the names of the old companies. I do not think that this has any great bearing on the corporation's efficiency. Austin and Morris became B.M.C. B.M.C. became B.M.C.-Leyland. However, there are still Austin cars and the Morris Minor, for instance. The merger made it possible for B.M.C.-Leyland to organise its production on a sensible and rational basis without losing those names, if it is thought that the names have a significance. Names such as Firth in Sheffield and Vickers could be retained if it was thought that they had some value. It need not in any way inhibit a sensible rationalisation of the production process.
  The corporation's Organisation Report talks about legal protection for the use of company names and trade marks. The Bill does not mention this. Has this point been overlooked in the Bill? Is this a serious issue, as I am tempted to think that it is from the fact that the corporation mentions it in its Organisation Report?
  I regard the question of diversification, on which I had an exchange with the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn), as of considerable importance, for several reasons. The corporation clearly regards this as being of some importance, because it draws specific attention in paragraphs 34–36 to the very diverse activities which the corporation already undertakes and points out, for example, that in terms of capital employed the diversified activities—that is, the non-directly steel making activities—account for 16 per cent.; in terms of turnover they account for 10 per cent.; and in terms of manpower they account for 12 per cent. The corporation's not directly iron and steel activities form a significant fraction of its total activities.
  I again quote paragraph 36:
  "Diversification is common among steel companies throughout the world. In some countries abroad, and particularly in the

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  United States of America, Europe and Japan, it is more widespread than in the United Kingdom and increasing rapidly."
  The corporation would not have gone out of its way to make that statement in its Report unless it had regarded is as a factor of significance. I regard it as a factor of significance, because I believe that here lies part of the answer to the problem of the rundown of manpower.
  In the past the nationalised industries—particularly the National Coal Board, and it will occur with steel—have been forced, for technological and efficiency reasons, to run down their total manpower but have been inhibited in creating new sources of employment, of wealth, and new activities by the conditions imposed upon them by the Act.
  I see no reason why the nationalised industries should not have the same powers to diversify their activities as private industry has often had, particularly in steel, where it might prove to be part of the solution to taking up the slack in manpower which will necessarily occur through the general technological change. This appears to be envisaged in a statement in which the corporation says that, although it is thinking in terms of a loss of 50,000 jobs, it hopes that 12,000 new jobs will be created in the course of the reorganisation of its activities. I regard the question of diversification as being extremely important and I hope that no limitations will be placed on the corporation as to the way in which it may sensibly use this capital.
  The contraction of manpower is an important subject with which many hon. Members have dealt. I regret that the corporation found itself unable to resolve the dispute which arose between what are broadly the white collar and manual workers. My union, the Clerical and Administrative Workers' Union, was involved. I regarded the attitude of the six major unions as not particularly constructive or happy and I was not convinced that the corporation handled the matter in the best possible way, although I recognise that it was a complex and serious problem which did not lend itself to an immediate and obvious solution.
  In general, I do not take the obscurantist view that unions must hang
  764
  on desperately to their individual identities in all circumstances. The creation of a major new body in the steel industry was no doubt an opportunity to rationalise the union structure in the industry. I was not happy at the behaviour of the manual unions, which simply amounted to an attempt to maintain their particular interests, along with a calculated attempt to drive out, for example, my union—which has a long history of organisation in the steel industry, in Sheffield and in other parts of the country—and also to undermine the position of the other union involved. I hope that the corporation will look carefully at this problem to see if a solution acceptable to all concerned can be reached.
  8.30 p.m.
  Mr. David Lane: Some hon. Members are critical of the proposals in the Bill, even to the point of voting against them. However, all of us—plus the invisible legions of our colleagues who will soon be returning to vote—want to see a strong, prosperous and expanding steel industry. I particularly feel that way, having worked in the industry for a number of years after the war.
  My hon. Friends have made it clear that we have never maintained that everything in this industry was or is perfect. However, I find astonishing the blind eye which many hon. Members opposite turn to the fine achievements of the industry since the war. Its best plant is as good as one can find anywhere in the world, and I was glad to hear the hon. Member for Sheffield, Heeley (Mr. Hooley) mention the superb rolling mill plant in Sheffield. It was planned and constructed several years ago—those very years when, according to hon. Gentlemen opposite, the industry could do no good.
  For more than 20 years the steel industry has never been out of political controversy. The fact that so much good has been achieved by it is the greatest credit to the people concerned at all levels, both management and men. I pay tribute to the record of harmony in industrial relations, of which the industry is rightly proud, and I, too, hope that, after the current troubles have been settled, that harmony will soon be restored.

  765
  I shall be voting against the Bill because I do not believe that at this time we are, on the information before us, justified in giving what amounts to a blank cheque.
  I intend to comment on only three aspects; public dividend capital, borrowing powers and organisation. On the first, I am not against public dividend capital in principle for this industry. I do not want the industry to be saddled, as some other nationalised industries have been, with an excessive burden of fixed interest capital. However, the Government are going much too far in these proposals, which are equivalent to well over 80 per cent. of the total capital being in the form of private dividend capital.
  We do not always praise the Treasury, but in this instance we look to that Department to be the guardian of the taxpayers' money. In the booklet "Finance for Steel" published by the B.S.C. I was interested to read on page 6 a reference to the views of the Treasury, as given to the Select Committee on Nationalised Industries, about this question of public dividend capital. The Treasury's evidence included this comment:
  "If the experiment with B.O.A.C. proves successful E.D.C."—
  as it was then called; it is now p.d.c.—
  "may be extended in the future to certain other industries"
  I want a clear statement from the Chief Secretary that the Treasury is entirely satisfied with the arrangements now proposed for the B.S.C.
  How far are the Government prejudging the current price review by the Prices and Incomes Board? The Minister said earlier—I was astonished to hear him say this; I wonder whether I heard him aright?—that this was the first price review that the industry had had for more than 30 years. I suggest that that is totally wide of the truth. I recall, from the years that I worked in steel, being on the receiving end of at least two major price reviews from the then Iron and Steel Board. This is another cloudy area of our debate which I hope the Chief Secretary will clear up.
  The financial arrangements in the Bill add up to a quite inadequate financial discipline for the industry at this time. I entirely support what the B.S.C. wants to do about putting itself into a more
  766
  profitable financial structure, but the structure proposed is altogether too easy and favourable for it. Added to that is the total vagueness of Clause 5 about targets to be set for the industry. I make no apology for mentioning this again, for it is of fundamental importance. Not only has nothing sufficiently specific been said by the Minister about what he has in mind, but the Bill merely says that the Minister "may" set targets; it does not put a compulsory duty upon him, and it should.
  As has been mentioned in talking about financial discipline, we still have too little evidence of the results of the attack the corporation is making on its costs. In the booklet "Finance for Steel", the corporation refers to
  "extensive measures to improve efficiency".
  Before we leave Second Reading, I should like to be told a lot more about some of the measures the corporation has been considering.
  The borrowing powers we are to raise from £400 million ultimately to £650 million under the Bill; this will be many times the maximum possible amount of public money which might have had to be put into the industry under the former privately-owned régime. It is unsatisfactory to have to vote this sort of increase when we are still in ignorance of what the investment plans are to me. This point has been mentioned from both sides of the House several times. We know from the booklet, that an investment programme has been submitted to the Minister. The point was made, I think first by the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths), that we are all impatient for decisions on these vital questions.
  It is over two years since the Act was passed and nearly two years since vesting date. What has happened about the major scheme for development on the Clyde? I hope that my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) will catch your eye, Mr. Speaker, soon. I have no doubt that he will have something to say about this. I have a sentimental interest in it. What reassurance can be given to some districts which are particularly dependent on steel production? Many of them have been mentioned, and I add to the list, Consett. There is a natural anxiety in those districts to know what plans are to be put forward. Also, there are

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  the problems of overseas development and diversified activities, and we want further explanation of what is meant by recent stories about the B.S.C. doing more to tidy up the edges between the public and the private sector.
  Turning to organisation, the industry is now facing its second major upheaval since nationalisation. I find disturbing the signs in this Bill and in the accompanying documents that arguments for centralisation appear to be winning. I also find it disturbing that there is an apparent change of mind in the corporation's thinking within little more than a year. In its first Report on Organisation, the corporation dealt with this problem and came down in favour of groups broadly—but not purely—on geographical lines. I will quote two significant sentences from the report, issued in 1967. Paragraph 56, talking about the possibilities of a product grouping said:
  "On the other hand, the customer's freedom of choice would be limited, the scope for competition between Groups reduced and the Groups made more dependent on a single type of product."
  The report said, in paragraph 64:
  "The spur of competition other than in price between the groups or between the units below them is in our view highly desirable."
  Now, it seems—the corporation says this frankly in paragraph 54 of its Second Report—that it has moved from this philosophy, but this shift in view cannot increase our confidence in the corporation's judgment of these problems.
  I have the gravest doubts about the product organisation. I know that this used to be the basis of the organisation of the former British Iron and Steel Federation, but I am far from ocnvinced that it is the right system for the new structure. In the first place, this could lead to confusion at some of the multiproduct works like those of Samuel Fox, in the constituency, I believe, of the hon. Member for Penistone (Mr. John Mendelson). Again, I can see difficulties in the regions, in Wales and in Scotland. If they were merely the outposts of a nation-wide product division, there would be a loss of the sense of identity which is so strong in the Welsh and Scottish industries, which would do morale no good.
  But my main doubt rests on the position of consumers. It is amazing that
  768
  there was hardly a word in the Minister's speech about the position in which steel consumers are now placed as the organisation of the nationalised industry develops. They will, in effect, have to face one supplier if this product division system comes about. There will be an end to the valuable customer-supplier relationship at works level and customers will have, in effect, no choice. There are disturbing signs—I will not take more time to quote what I would have liked from the Report of the Iron and Steel Consumers' Council last September—of rather brusque treatment, to put it mildly, of consumer organisations by the corporation.
  All this suggests the shadow of a monolith creeping steadily over the British steel market. Monopoly has been mentioned a good deal. The hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) recalled the statement of Mr. Judge in the debates over restrictive practices several years ago. But may I counter that by reminding him and others of the key point which will now affect consumers? In former days, if the consumers were dissatisfied with the delivery or service or quality of Dorman Long, he could go to South Durham or to Colville's or United Steel. In future, he will deal with one product organisation, probably in London, and will get it more and more on a take-it-or-leave-it basis—
  Mr. Eddie Griffiths: The customer does not have to go to the B.S.C. at the moment. He can go to the private Sector and even abroad.
  Mr. Lane: In certain cases, that may be so, but this is a very limited area of choice. I am disturbed by the growing take-it-or-leave-it attitude which I am afraid will be the result of these proposals.
  I feel great disquiet at the total of these proposals, and I suspect that the Government are not entirely happy with them. Far too many questions have been left unanswered for the Bill to be allowed to pass unchallenged. Perhaps, under nationalisation, we will never have satisfactory answers to some of these questions, which merely underlines the unwisdom of the Government's action a few years ago.

  769
  I should like to end on a more optimistic note. I hope that some, at least, of our fears and doubts will prove unfounded. I have tremendous faith in the potential of British steel, and it will be a tragedy for Britain if the fine spirit of this industry is squeezed out by the heavy hand of nationalisation.
  8.44 p.m.
  Mr. Michael Foot: The hon. Member for Cambridge (Mr. Lane) has at least succeeded in striking a slightly more hopeful note than some of his hon. Friends, and we certainly welcome that. All of us with steel constituencies take part in these debates partly to refer to the affairs of our own areas, and I propose to do so later.
  Like all my hon. Friends, I welcome the Bill because it offers the prospect that the publicly-owned steel industry shall not have to endure throughout its life the chains and shackles which were imposed on the publicly-owned coal industry. All of us know very well, particularly those of us who come from mining constituencies, that the coal industry had its prices fixed—in the public interest, maybe—while having to be subjected to all the propaganda as if it could act in a free market. These two circumstances cannot be combined successfully.
  In our predominantly mixed economy it is unfair to say to the steel industry, as it was unfair also to say to the coal industry, that its prices shall be kept at a level which helps to subsidise the rest of industry but that it is to be pilloried every day in the House or in the capitalist newspapers for not making fat profits. We must make up our minds.
  I hope that the Government will bear some of these factors in mind when they receive the report of the Prices and Incomes Board. I do not know what it will say, but the Board also has an incentive to try to make itself popular in many quarters, as have others in our public life, and the most popular thing it can say is that prices should be kept down. I am not saying that there may not be circumstances in what that should be decreed, but there may also be circumstances in which there is a good case for putting up prices.
  Therefore, I hope that the Government will not be intimidated by the Board when they receive the report on the steel
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  industry. Whatever criticisms may be made about them, those who run the steel industry know more about it than the people on the Prices and Incomes Board. We are rapidly coming to a time when a Motion should be moved in this House, "That the influence of the Prices and Incomes Board has increased, is increasing, and ought to be diminished". I urge the Government to take into account very strongly the representations about the pricing structure which have come from the publicly-owned steel industry, and not to be intimidated by the prestige and the interested proposals that may come from the Prices and Incomes Board.
  We were all staggered by the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph). That kind of stuff has not been heard since pre-Cobden times. He said that there may be some problems in the steel industry, but the way to solve them is to let the weak go to the wall; let us have a few bankruptcies and see how that helps the industry. I have not heard such elegant nonsense since I was instructed by a prehistoric professor at Oxford on the theory of perfect competition.
  The steel industry above all industries does not work in this way. The right hon. Gentleman praised the industry's record since the war very highly, but most of the money poured into it since then has been public money. Whether at Port Talbot, Llanwern, Ravenscraig, or the rest, in one form or another it has been public money. No sensible person in the Government, whether that Government was Labour or Tory, thought it conceivable that we could have decisions about investment in the steel industry made solely by the claims of the market. The Tories kept the Iron and Steel Board in operation partly so that it should decide questions of investment, precisely because they knew that these matters were of such wide concern that no one would dare to leave them to the haphazard claims of the market.
  Let us have no nonsense of the sort the right hon. Gentleman talked. In Ebbw Vale we know very well how the system of bankruptcies worked. The steel industry was closed there for many years, and we had 50 per cent. unemployment. We had the free market system fully in operation during those years. Then, by

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  the genius of Sir William Firth and some others, we started a new steelworks, the most modern in the whole of Europe, and the people we had to fight more than anybody to keep it in being were the financiers in the City of London. If they had had their way they would have closed it down after three years, and all the steel which came from Ebbw Vale which helped Britain to win the Second World War would not have been produced.
  Since then, the plant has made high profits. It has been a highly profitable concern ever since the market judgment of the City of London would have closed it down. I hope that, whenever we have discussions on the desirability or otherwise of reintroducing a free market economy, it will never be argued that it should be reintroduced into steel. The steel masters did not reintroduce this proposition. They know better. I hope that we shall hear nothing more of such a suggestion.
  The right hon. Gentleman made a lot of the awkward problems which the steel Corporation has to face. He spoke as if these problems would not have existed if the steel industry had not been nationalised. That was the inference, even if he did not spell it out in words. But we all know that these difficult decisions would have had to be taken in the industry whether nationalised or not. What was the meaning of the "deathbed" Benson Report, if it was not that? Some of us thought that its suggestions were not the right approach—and I hope I have the support of the hon. Member for Aylesbury (Sir S. Summers) at least in that.
  We would like to see that report buried. It was produced in haste to impress gullible hon. Members opposite that the steel industry had a plan. It was not a very good plan, but it was at least an indication that the steel owners themselves thought that some plan was needed, with someone taking the awkward decisions about which works were not to be sustained and which should attract new investment.
  These are extremely difficult problems and I do not blame the corporation for deciding to go more slowly in taking its decisions. It is right. It is more sensible to make the right decisions more slowly than to come up with grandiose decisions at the beginning. But, there again, the
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  right hon. Gentleman was much less fair than he should have been to a new corporation tackling some of these problems with intelligence and imagination and determined to make a success of the job with which it has been charged by the nation.
  Ebbw Vale itself faces difficult problems. I do not think that any hon. Member criticised more strongly than I did some of the appointments to the corporation. I made them because I thought it right that those who would be making these awkward decisions should be absolutely above suspicion. I agree with my hon. Friend the Member for Sheffield. Brightside (Mr. Eddie Griffiths) that severe criticism could be made of some of the choices of the Government. I made my criticisms to the Prime Minister and from him downwards. Incidentally. I also made them to the faces of the persons concerned. I do not like saying things behind people's backs and I informed them of my criticisms and that they should make their judgments all the more careful and scrupulous on that account.
  But, having said that, I believe in the principle which Charles James Fox laid down—that you trust a man until he does you a dirty trick. My experience is that those on the corporation have and are dealing fairly with these matters. We at Ebbw Vale have made the strongest possible representations to them. We have made it clear that we will fight and fight and fight again to prevent any major closure at Ebbw Vale. We have made it clear that our aim is to sustain Ebbw Vale as a fully integrated steel plant carrying out all the functions of an integrated plant, and detailed plans for the necessary investment to achieve that have been put up on that basis.
  These are not vague plans, or plans that have not been worked out with care, but plans that have been fully worked out, in detail, by those who have spent their life in the industry. These are practical plans by which we believe the whole of the works could be sustained and the employment of our people fully sustained, and good profits made for the corporation at the same time. What we demanded from the corporation, and what it has given us, is the assurance that those proposals will be most carefully and objectively examined, not only by the South Wales group,

  773
  but by the highest authorities in the corporation. That is the procedure which is going forward.
  Those proposals, which would involve investment of £20 million or £25 million or more in Ebbw Vale, are now being carefully examined. That is one of the reasons why some of us are so angry when we see the attempts, perhaps of some interested parties, we do not know, to try to say to the people in Ebbw Vale and elsewhere that decisions have been made quite contrary to this procedure. There was a report this week, and I have every right to protest about it in this House, in the Western Mail—on Tuesday—indicating that fresh decisions had been taken about Ebbw Vale which would involve a loss of jobs for 4,000 people working in my constituency.
  That was the purport of the headlines splashed right across the front of that newspaper. But no such decisions had, in fact, been taken. That morning I went to see Lord Melchett and he received me most courteously and promptly, with other members of the Steel Corporation. They denied absolutely the statement which appeared in the Western Mail. They confirmed to me that the procedure and the pledges that they had given to me as to how our Ebbw Vale plans were to be considered was in full operation, in the spirit and the letter of the agreement.
  I accept their assurance absolutely. As we are determined to fight to maintain an integrated plant in Ebbw Vale, and as we will not have it turned down by the corporation, we will certainly not have the plant closed down by the Western Mail.
  In dealing with this difficult problem it is not only the leaders of the steel industry or the trade unions, or the others who have to look to their responsibilities. The newspapers, too, must look to their responsibilities. Not only were those headlines in the Western Mail shockingly inaccurate and misleading, but they were also callous in the extreme, callous to thousands of people in my constituency, and they caused the gravest disturbance. We have had to take immediate action to kill this rumour and I hope that it is now dead. I hope that by stating the facts here I have helped further to kill it.
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  I repeat that the statements which appeared in the Western Mail on Tuesday have been repudiated by Lord Melchett and other members of the board in the clearest possible manner. They have reaffirmed that the principle they have stated to us time and again will be closely followed, and that our plans for sustaining that works will be examined according to the procedure stated to us. We will fight and use every means open to us to maintain this fully integrated steel works, which has contributed so much over so many years to pioneering advances in steel.
  No other works in the country has done more pioneering work than Ebbw Vale and we propose to preserve that situation. We have a very good basis, because no works in the country is more profitable. I know that in many other parts of the industry industrial relations are very good. They are extremely good in Ebbw Vale too. Whereas there are some difficulties in some other areas, in Ebbw Vale those responsible have conducted industrial relations on an extremely intelligent and smooth basis for many years. We have the basis of an extremely efficient, enthusiastic and effective works, and the plans for the future are put up by people who know their business and who have been responsible for this success. We hope that there will be others who will recognise their responsibilities in making these difficult decisions that have to be made in a great industry of this nature.
  I join my hon. Friends in wishing the corporation the best of success. I want to see this great publicly-owned corporation succeed. The spirit shown on the benches opposite has been churlish and pedestrian. The Opposition are utterly incapable of seeing not merely the industrial but the human possibilities of what we are doing. They want to conduct the old debates of the past. We want to make sure that this publicly-owned industry succeeds. I believe that it has made a very good start.
  9.0 p.m.
  Sir John Eden: As the Minister made clear, the Bill is about the general framework and future organisation of a very big business which occupies a central position in the British industrial and economic scene. With a

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  total labour force of more than 200,000 and an annual turnover of more than £1,000 million, the British Steel Corporation is the largest steel producer in Europe and the second largest outside the Soviet Union. Given such a massive concentration of power, it is right that we should study most carefully the proposals in the Bill and the Government's policies towards the industry.
  The Minister proudly proclaimed that we have a wealth of documents to help us in our task. He said that not many Bills come before the House with such backing material. He must be regretting that so many documents appeared. Perhaps it would have been better from his point of view if the corporation's image-makers had not been so prolific. However, having got them before him, it is fantastic that he did not study them before coming to the House today. He did not even seem to be aware that there are differences between his document and that produced by the corporation which are not just niggling, fiscal matters but which involve sums of money of considerable magnitude.
  The Government have calculated the corporation's external financing requirements on certain assumptions. We wish to question them a bit further. In the memorandum, the Minister gave the capital requirements of the corporation to March, 1974, as £1,130 million, whereas in its own paper, "Finance for Steel", the corporation made it £875 million—a difference of £255 million. What is the explanation? Perhaps, as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said, it is perfectly simple. Has the corporation based its figures on the assumption of a 5 million ingot tons increased capacity whereas the Minister has taken the higher figure of 9 million ingot tons? I am sure that the Chief Secretary will be able to give a full account of how these different figures appear in the two documents.
  In the same tables the corporation estimates its receipts from internal resources net of dividends as £675 million, but in the memorandum the figure is £815 million—a difference of £140 million. Again, there is no doubt a perfectly simple explanation; but the Minister should have given it when he was challenged earlier.
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  How much of the difference in these amounts will be used to finance further excursions into the private sector? My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) and my right hon. Friend the Member for Leeds, North-East properly questioned the Minister on this point. Is it the intention that the corporation shall sell back to the private sector more of its present fringe activities than it intends to buy from them?
  If the Government's figure of £1,130 million and the corporation's assessment of its capital for internal financing at £675 million are both correct, presumably the difference of £140 million will have to be met by further Government borrowing. These are not the only discrepancies or differences between the two documents. At later stages we shall have an opportunity to examine these two documents side by side in greater detail, and we hope that we shall have a proper explanation from the Minister how these differences have come about.
  We have heard much about the nature of this industry. It differs in many respects from other public sector utilities. It is a manufacturing industry; the nature of its business is particularly subject to cyclical trends; it has to face tough international competition. It is argued therefore, that it should in its capital structure and in other regards be much more like a normal private sector company. The only thing that seems to have emerged in all the discussion about this point is that those who are engaged in running this massive enterprise find the fact of nationalisation thoroughly irksome to have to bear. How absurd it is that, having gone through all this dismal process of compulsory purchase, we are now spending our time trying to model the industry as closely as possible on the private sector from which it has so recently been wrenched.
  Great significance in this context is being attached to the corporation's capital structure and the proposal to change a substantial part of it to what is called public dividend capital. It is claimed that without it the corporation would be unique among large steel concerns, both private and public, in the western world in having no equity capital. But as my hon. Friends have made clear, notably my hon. Friends the

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  Members for Cirencester and Tewkesbury (Mr. Ridley) and New Forest (Mr. Patrick McNair-Wilson), the use of the word "equity" in this context is extremely misleading. Perhaps it is deliberately intended to be so. Perhaps, as my right hon. Friend said, it was planned purely as a piece of window-dressing. Whatever was the motive for it, it is clearly intended by those who use it to imply that the corporation would be subject to the same disciplines and pressures as are experienced by private sector companies seeking capital in the market. But that will not be the case. In the private sector a company is answerable to its shareholders. They expect a satisfactory return on their investment. If it does not materialise, the company's shares are adversely affected, new money is difficult to raise and the board of directors is at risk. The device of p.d.c. puts the Minister in the place of shareholders, and I want to press him to answer this point.
  If things go wrong, what sanctions will the Government exercise? Will they stop the flow of capital? Of course not. I do not think one single hon. Member would imagine that they would do that. Mr. Silberstone, a part-time member of the coporation, writing in the March issue of British Steel gave the answer. He points out that the one fundamental difference between nationalised and private industry is that the nationalised industries can obtain their long-term finance only from the Treasury. Their requests are carefully scrutinised,
  "but they can in the end normally obtain finance for most of their capital expenditure projects. In addition, however great the losses they make, they cannot be declared bankrupt. Private firms on the other hand, however large, are subject to much stronger constraints."
  There you have it. That is the discipline of the market. That does not and cannot exist in the case of nationalised industries as at present constituted. But the need for this kind of discipline is even more important in the public sector. That is why we are determined to bring effective competition back into steel.
  In the place of the compelling forces of competition within the United Kingdom, we have today the whim of the Minister and the diktat of the Treasury. Since it is the Government's aim to erect their own set of standards, we should at least be told by what criteria they judge
  778
  the performance of the industry. This ought to be clearly spelt out.
  Yet Clause 5 of the Bill, which empowers the Minister to establish a target rate of return, is in the vaguest possible terms. It says:
  "The Minister may from time to time determine … the rate of return on net assets … which the Minister considers it is reasonable for the Corporation to achieve in that period …"
  It is most important to get this right, for unless the target set represents a reasonable return on assets, the servicing of capital will be inadequate and the corporation will have a further unfair advantage over the private sector.
  In our view, the Act should oblige the Minister to publish the target. So far, all we know is that it is the Government's intention to convert £700 million of the corporation's original debt to a form of variable return capital.
  Why have the Government gone so far as to convert 84 per cent. of the commencing capital debt to p.d.c.? There is no magic about the exact ratio between fixed interest and variable return capital, but there must be some explanation for the Government having opted for so high a proportion. I hope that the Chief Secretary will be able to explain.
  In March of this year, when the Government's acceptance in principle was announced, The Times commented on Lord Melchett's
  "long behind-the-scenes battle with the Treasury to win this concession".
  What was the battle about? What were the principles which were at stake? Did the Chief Secretary feel that the Corporation was moving too fast? It is early days yet, and perhaps he needed some convincing as to their ability to service their capital.
  There is little proof as yet that they are working on the right lines. They have already had borrowing powers up to £400 million. The bulk of this has been absorbed or earmarked, apparently without providing anything more than the initial finance to enable the corporation to carry on its acivtities. Now here they are again, asking for the total limit to be raised to £650 million. At the same time 84 per cent. of the original debt is to be freed of regular interest payments.

  779
  The requirement to meet a fixed interest charge as interest on at least a reasonable proportion of the capital loaned is in my view not only an important discipline on management. It is an essential yardstick by which to judge performance. When it is removed, to what else can one turn?
  There is, the Chief Secretary might say, the annual "dividend" which the Minister has power to determine. I do not know how he will set this or what criteria he will use, but I have a nasty feeling that the whole thing will be settled cosily over coffee and brandy. But the Treasury as distinct from the Minister of Power, is likely to take a much tougher line. Indeed, I hope it will.
  Therefore, I ask the Chief Secretary what return, or dividend, does he expect to get from the British Steel Corporation? Is it to be at the same rate as the corporation had understood it would have to pay on its full commencing capital debt, namely £56 million a year or 6·7 per cent.? The corporation makes it clear that if it were required to pay interest on the money it has borrowed, it would be in deficit by September this year to the extent of £100 million.
  So the Government propose to let it off the interest. What will take its place? What "dividend" can we expect? Clearly, we are in for one or two lean years. My hon. Friend the Member for Cirencester and Tewkesbury said that there is to be no dividend this year, and it appears from Command 3995 that we shall get only £10 million paid by March, 1970.
  It is true that there is the promise of better days to come. This is being flashed before us. We are told that, in the long-term, the really meaningful returns will more than compensate for their absence now. It is a case of borrow now, pay later.
  However, from the information published so far we cannot be too sanguine that there will even be any payment in the immediate years. The average rate of return between September, 1971, and March, 1974, cannot be greater than 9·7 per cent. If part of the new lending is to be in the form of p.d.c., the equity element will be increased above the £700
  780
  million. The "dividend" will, therefore, be correspondingly less.
  It is said that the purpose of the public dividend capital is to enable the corporation's financial results to be evened out over good and bad years. However, it should not be seen as a means by which to get capital on the cheap, giving the corporation still greater advantages over the private sector. The Select Committee on Nationalised Industries pointed out that the main significance of this form of equity capital is psychological rather than economic or administrative. No doubt the Chief Secretary will agree with that.
  It is in that context that the corporation is particularly keen to get it, for it sees it as an opportunity to raise morale within the organisation and to make people outside it apparently believe that it is doing better than it is. But while it hopes to boost morale by one measure, it is in grave danger of damaging it through another.
  The Second Report on Organisation differs remarkably from that published in 1967, and I want to compare the two documents for a moment because they make interesting reading. We were told in 1967 in Command 3362 that in a geographical grouping leading to the formation of multi-product groups there would be "more scope for competition". Whilst grouping on product lines would make it easier to
  "concentrate management expertise the customer's freedom of choice would be limited, the scope for competition between groups reduced, and the groups made more dependent on a single type of product".
  In its present document, after this massive study, we are told that
  "this system impedes rationalisation and the optimum utilisation of the corporation's units".
  It goes on to say that, as soon as possible,
  "the present type of multi-product group organisation should cease to exist".
  Hon. Members will have noticed that there is no mention of the customer, and no reference to competition. The industry is to be reorganised into a series of product monopolies, and one of the few remaining disciplines—customer choice—is to be stopped.
  Perhaps the real motive behind all this is to complete the demolition of the

  781
  companies themselves. As Lord Melchett very fairly commented in a recent speech which hon. Gentlemen opposite might care to note:
  "British steel was not in such a bad shape before nationalisation. Many companies were the equal of any in the world."
  Now these same companies, renowned throughout the world, are to go. The men who gave their loyalty to such famous names as Stewart and Lloyds, United, Dorman, Summers and others will be working for the corporation.
  My hon. Friend the Member for Aylesbury (Sir S. Summers) told us most movingly of the contribution that has been made to our national prosperity by some of the great families engaged in the steel industry. These companies are now to be destroyed.
  It is not for any nostalgic reason that I look back at the past for a moment. If something good is to go, we want to be certain that something better is to take its place before any firm plans are made for the future. The Government are, however, seeking powers to destroy assets of considerable value. It takes many years to win the confidence of the men in the industry and to earn the good will of its customers. But their destruction can all too easily be accomplished overnight.
  My hon. Friend the Member for Hallam reported on the feeling among people in the industry in his constituency. He has had long experience of it and knows the people well. He, like the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) told graphically of the impact of the continuous changes and of the uncertainty on the morale of the men working in the industry. These changes inevitably lead to insecurity both among middle management and on the shop floor.
  My right hon. Friend the Member for Leeds, North-East spoke eloquently of the difficulties of management in the public sector and of the dangers inherent in the very system of nationalisation which inhibits spontaneous reaction to changing market needs. It is this factor which makes us nervous about the process that is taking place in this major manufacturing industry. By drawing all the power into the centre, it is making the task of management more complex, it is making the possibility of error very
  782
  much greater, and it is making it less possible for management further down the line meaningfully to identify itself with the work that it is doing. There is a grave danger that the spirit of the men will be destroyed as effectively as the corporation is now writing off the companies.
  We have looked at this industry from a different vantage point from that taken up by right hon. and hon. Gentlemen opposite. We do not seek to go back to where we were before, as some have indicated. This is not a question, in our eyes, of once again shuffling the pack or starting all over again. This must not and will not happen. We want a rationalised steel industry, answerable to shareholders, flexible and competitive. Instead, for solely doctrinaire reasons, we have 90 per cent. of the industry concentrated in the hands of a State-appointed authority, subject to the arbitrary fluctuations of Government policy.
  On Third Reading of the Iron and Steel Bill in January, 1967, the then Minister of Power said:
  "The position in the British Steel industry today is both serious and extremely urgent."—[OFFICIAL REPORT, 26th January 1967; Vol. 734, c. 1799.]
  But over the last four years, because of their politically motivated disruption of the industry, precious time has been lost. Too much effort has gone into strengthening the centre, not enough into modernising capacity and reducing costs.
  Once again, the policies of a Labour Government are seen to be damaging the best interests of the nation. Once again, in this House and throughout the country, a massive vote of no confidence will be recorded against them tonight.
  9.25 p.m.
  The Chief Secretary to the Treasury (Mr. John Diamond): In the time available to me, for which I am grateful, due to the courtesy of the hon. Member for Bournemouth, West (Sir J. Eden), which is substantial, I shall seek to answer all the main questions and the main arguments which have been put, but before doing so perhaps I might make two preliminary points.
  First, I recollect well that I had the privilege of speaking on the winding up of the debate when we passed the steel nationalisation Bill of 1967. Those who

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  have been in the Chamber on and off for most of the day and recollect the difference in keenness, in anxiety, in heat, and in political outlook, will agree with me when I say that one argument which is as dead as the dodo is the argument which we then debated.
  The hon. Member for Bournemouth, West, and his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) in opening the debate for the Opposition, did their best to revive the issue in some carefully chosen words, as the right hon. Member for Altrincham and Sale (Mr. Barber), the present Chairman of the Conservative Party, did on that occasion, trying as hard as could be to be more royalist than the king, and more baronial than the steel barons themselves, but I do not think any of us is frightened. If I understand the hon. Gentleman aright, he said that we do not want to go back, that we want an efficient rationalised steel industry. For that I am grateful to him, and I hope that we shall join forces in our labours to achieve that for the benefit of the country and its interests, and for the steel workers themselves.
  Second, I want to congratulate both the hon. Gentleman and his right hon. Friend on their speeches. Neither of them could have better achieved the task of making bricks without any straw whatsoever. I know that comparisons should never be made, but I hope that the hon. Member for Bournemouth, West will forgive me if I say that I thought that the right hon. Member for Leeds, North-East did the job rather better than he did, but the right hon. Gentleman ought to have done so, because it is in his blood. He gets from his ancestors, as I do, this capacity to make bricks without straw.
  I was asked to explain the figures, and I shall be glad to do so. Perhaps I might start by inviting the House to look at this glossy paper "Finance for Steel". I have been asked to explain and to reconcile the apparent difference between certain figures in this document which is put forward by the British Steel Corporation, and the figures for which the Minister is responsible and on which he is asking the House to act.
  On the left-hand side of page 8 there is a heading,
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  "Investment proposals for next five years".
  A few lines lower down it says:
  "The investment proposals envisage capital expenditure during the five years ending March 1974 amounting to approximately £775 million and that expansion of business will require about £100 million more working capital, making a total of £875 million."
  In the next column there is a table setting out the £875 million and showing how it will be financed, and ending in the last line by saying:
  "Additional cash required to March 1974"—
  being a period of five years—
  "£200 million."
  I think that we are all marching together so far.
  Sir K. Joseph: That is the easy bit.
  Mr. Diamond: That is so. I have a very intelligent class, I can see.
  I now invite the attention of the House to the top of page 9, where it says:
  "It is, therefore, essential that the Corporation be provided win borrowing powers on a scale which will enable it to take advantage of all the opportunities of profitable development which may arise during the next five years. The amount of the additional borrowing powers should be substantial and should be appreciably greater"—
  I ask the House to note the word "greater"—
  "than the £200 million referred to above …".
  I now invite the House to look at my right hon. Friend's White Paper. On page 5 there is a table. The right hon. Member for Leeds, North-East quoted figures erroneously from the second column in the table, but I am glad to say that he was corrected by his hon. Friend. It says, "Capital requirements, £1,130 million". Above that for everybody to see is written, "5½ years Sept. 1968—March 1974".
  The first thing to which I must draw attention is that if one is publishing a document with regard to five years and there is also a document with regard to five-and-a-half years, unless nothing whatsoever was to happen during the intervening six months one would expect the figures to be somewhat different. I therefore want to reconcile the two figures. There is a figure of £875 million in the corporation's assessment. The corporation wants a figure
  "appreciably greater than the £200 million referred to"

  785
  and we have quantified that in a figure of £150 million. So we say that the B.S.C. figure for investment starts off at £875 million. We add £150 million—a probable figure—to arrive at £1,025 million. That is still a little different from £1,130 million—£105 million in two easy steps.
  The first is the difference of six months and £65 million. The second is the item to which my right hon. Friend referred as a niggling fiscal amount. It is, in fact, a figure of £40 million for the re-financing of the pre-vesting loans by the companies which are not counted against the borrowing limit. If anybody describes that as different from niggling, I would not agree.
  So I have reconciled the figures. The answer is that there is £1,130 million in the five-and-a-half years from September, 1968, to March, 1974, which is shown in the White Paper, for which the Government accept full responsibility, and I have reconciled it with the other paper to show that there is no difference if one takes a figure of the kind I have.
  Sir K. Joseph: We are most grateful for the Chief Secretary's explanation. Will he deal with two points? One table—that in the Government White Paper—allows for £295 million for dividends—p.d.c. dividends. There appears in the B.S.C. paper to be no provision for dividends, at least on the surface. Are we to take it that there is a concealed difference, in addition to the differences the right hon. Gentleman has explained, of a further £295 million, or are we to assume that before the B.S.C. calculated its cash flow it took off a p.d.c. dividend? The second question will be easier for the Chief Secretary to answer. It is simple: why did not the Minister of Power himself tell us?
  Mr. Diamond: Again, the figures are for a different period. Therefore, one cannot compare cash flow for one period with cash flow for a different period. The reason why my right hon. Friend did not attempt to go into this detail was that I invited him not to, as I am the Minister responsible at the Treasury for this.
  Sir K. Joseph: It is the Minister of Power's Bill.
  Mr. Diamond: If the right hon. Gentleman would be good enough to interrupt me as much as I interrupted him, he will
  786
  find that he will not interrupt me at all. I invited my right hon. Friend to leave it to me. [Interruption.] The right hon. Gentleman must not say that it cannot be true. I am telling him so. My right hon. Friend had responsibility for the White Paper and laid it before the House and gave the right hon. Gentleman repeatedly the right figure in the White Paper.
  The right hon. Gentleman was asking my right hon. Friend for a lot of niggling detail seeking to reconcile one figure with another figure for a different period. It is not my fault if the right hon. Gentleman had not read it and had not done his homework and, therefore, could not appreciate the figures. [Interruption.] Now he has the figures.
  Sir K. Joseph rose—
  Mr. Diamond: I will give way to the right hon. Gentleman shortly.
  If the right hon. Gentleman had read it and had seen that there was a difference he would not have placed himself in the silly position of asking why two different periods did not have the same figures.
  Sir K. Joseph: I acknowledge that I did not recognise the six months' difference, which is 7½ per cent. of the time. Is the Chief Secretary really asking us to believe that his right hon. Friend the Minister of Power knew the answers the whole while and refused to give them in response to requests by hon. Members simply because he, the Chief Secretary, had asked him not to do so?
  Mr. Diamond: I am telling the right hon. Gentleman that my right hon. Friend has full responsibility for the Bill and full knowledge of all the details which he is asking the House to approve. It is my responsibility, from the Treasury, to put myself at the service of the House and to give any details that hon. Members require, and I am giving the figures. I am sorry if the right hon. Gentleman does not like it. It is not my fault if he did not do his homework and did not read the document. I have given the House the full information and I am sure that it has been of value. I am grateful that hon. Gentlemen opposite now understand the position. In any event, it has not been a point of any importance.

  787
  I turn, therefore, to the important arguments which have been adduced by hon. Gentlemen opposite. I think that they object to the Bill on four main grounds. The first is the power to scrap names, as the right hon. Gentleman put it; the second is the borrowing powers, which he described as a request for a blank cheque; the third is the public dividend capital, which he criticised in many respects; and the fourth is the monopoly question or lack of competition, in which connection he threw his classics to the wind and talked about this company being four monopolies.
  Sir K. Joseph: That is right.
  Mr. Diamond: On the first, there is absolutely no relationship whatever between what is proposed for the reconstruction of the steel industry, and its organisation and what the right hon. Gentleman called scrapping names. These are shells of companies. They have nothing whatever to do with the organisation and the only purpose of removing these shells is that one must transfer assets and liabilities.
  It could be done in the normal process, each company separately, which would give a great deal of work to the lawyers and accountants in relation to transfer documents, winding up procedures and so on. I have some sympathy, from my professional point of view, on that score, but, as Chief Secretary, I would regard it as a gross waste of money to do that. My right hon. Friend has, therefore, invited the House to be good enough to do it in the cheap and expeditious way, and this will get rid of the shells.
  This procedure does not affect the organisation one iota. It does not reduce the goodwill or the right to use that goodwill. [Interruption.] As the corporation has explained, it does not affect the right to use names, and everything that constitutes goodwill which should be maintained continues. There is no reason why the corporation, if it wanted to carry on a part of its works or a factory, should not do so under an old name—
  Sir K. Joseph indicated assent.
  Mr. Diamond: I am glad to see the right hon. Gentleman nodding assent.
  I come to the question of borrowing powers and this business of a blank
  788
  cheque. I was asked to explain the statement in the White Paper in paragraph 6(d):
  "A more specific financial duty …"
  I was asked whether that meant a financial target and, if so, why we had not said so. The answer is, it does, and the reason one uses those words is that those are the words used in the Bill. We are sticking to the same words to avoid misundersanding.
  I was asked whether the financial target will be published. The answer is, yes it will be. The borrowing powers are required in connection with the investment proposals. It was suggested that these were not sufficiently firm or clear and that, therefore, the House is being asked to sign a blank cheque. I shall go over these figures a little more carefully. At present, the House has authorised £400 million in borrowing powers. We are inviting the House to give authority to approve borrowing powers up to another £100 million. That is all, because for the further £150 million beyond that we have to come to the House again. My right hon. Friend thought it proper only to ask for £100 million. Everybody knows how far £100 million goes in the steel industry, which is very capital-intensive.
  The firm plans that have been put forward amount to more than £100 million. They amount to £135 million for the near future. They consist of about £70 million for iron and steel making and associated facilities such as coke ovens, a further £70 million for primary and finishing mills and about £25 million for services and other items such as computer installations, a total of £165 million. We are asking for an extension of borrowing powers of only £100 million. In those circumstances, it is utter nonsense to describe my right hon. Friend's request as a request for a blank cheque.
  I have been asked: what is the financial target and what are the checks on this? As everyone knows, there is at the moment an inquiry in regard to prices. It would be ridiculous to fix a financial target in advance of fixing the price. It is necessary to find what price is regarded as appropriate to find what is a sensible return on the net assets. I hope that the House realises that no one is more concerned that I am to get a full return on these assets. I am responsible

  789
  to the House for these finances and no one is more concerned to get a full return. We shall agree a financial target with the corporation once the price has been agreed, and we shall announce it.
  For the individual investments the process is that, first, the Steel Corporation carefully prepares plans and then submits them to the Ministry. The Ministry, so far as it approves them, submits them to the Treasury and we agree to the extent that we are satisfied that the return is right and in accordance with the White Paper the Government themselves issued two years ago.
  Mr. Emery: Does the right hon. Gentleman want the House to believe that the right business approach is to set the price and then decide what the return is? That is the one way to bankruptcy. What we have to do is to decide what return one could properly get on one's assets and then set one's price.
  Mr. Diamond: That may be the hon. Member's view, but it is not mine, certainly not so far as a nationalised industry is concerned and certainly not so far as my responsibilities to this House are concerned. If the prices are high one would expect where there is a large share of the market open to the industry a larger return than if the prices were low. I am unable to understand why the hon. Member does not agree with me in that simple proposition. The higher the price the larger the net return in respect of those assets. It is as simple as that. [Interruption.] An hon. Member asks, "Are they controlled by world prices?" I do not know whether he was present when I explained that there is an inquiry. We are waiting for the results of that inquiry by the Prices and Incomes Board. Then we can fix the proper return in consultation with the industry.
  The next item which caused anxiety was the public dividend capital, which was described, among other things, as window dressing. It was suggested that it was not very important. I entirely agree: it is not very important. If, instead of "window dressing", one said that one of the main reasons for it was presentational, I would agree. It is not very important because it cannot be acceptable to the Government except under the terms which the Government have announced, and the Government made
  790
  it clear that public dividend capital would apply only—and even then only as an experiment—in circumstances in which the Government were satisfied that, over a period of years, it would make no difference to the return which the Government were to receive, but where there were fluctuating returns such as would cause difficulty and misunderstanding at the bottom of the cycle.
  Everyone has referred to the cyclical nature of this industry, so I say that this makes no difference whatsoever over a period of years. We shall expect at least the same return as we the Government, the Exchequer, on behalf of the taxpayer, would have received had there been 100 per cent. loan capital, fixed-interest capital, from the Government. I hope that I have made that absolutely clear.
  But it would be wrong to leave the reason purely as presentational. The House knows that the corporation took the view that one very easily misunderstands the success or otherwise of a company if one strikes an abnormal balance and it would be abnormal if the figure of profit or loss were struck after providing a return on the whole of the capital. The answer to the hon. Member for Bournemouth, West, who seemed to go along with that, and said that it would be misleading if the proportion of fixed capital to equity was unusual, is that it has been fixed at two-thirds, which is what it approximately is, because that is the average for steel works in this country and abroad.
  We tried to get a figure as near as possible to the average in comparable cases to make sure that, where there is competition, as there is here, and particularly where there is competition from abroad, as there is here, a quick look at the accounts would give an accurate answer comparable with other industries.
  Mr. Michael Shaw: Could the right hon. Gentleman explain the return which the Government are expecting on the new stock, as distinct from the loan stock? Is it to be the same in both cases, whether the Bill goes through or not? Does that take into account the different treatment for corporation tax purposes?
  Mr. Diamond: I am grateful: it must take that fully into account. When I say, "received", I mean received in one

  791
  case in return and in the other case in interest and corporation tax.
  The fourth and final argument was the one of monopoly, of lack of competition. I do not know how anyone who has looked at the document, as the right hon. Member for Leeds, North-East clearly had, and at the first page, with its graphic description of the ways in which the corporation competes in a host of different products could say that, even at home—forgetting the problems of exports and foreign competition—this corporation does not compete.
  Frequent use has been made of the phrase "90 per cent. publicly owned". That is a very misleading figure. It is 90 per cent. publicly owned in terms of volume, and 75 per cent. publicly owned in terms of value. In terms of value, therefore, there is three-to-one competion. One quarter of production is in private hands, and that is very real competition. There is also the freedom to import steel of every kind, which is very real competition, and the fact that the corporation has to export against other steel industries, some of which are, sensibly, nationalised but others of which are privately owned only.
  The right hon. Gentleman added that the corporation is insensitive to shareholders' control, and he wanted it to have that. I would ask him two questions of which I have not given him notice. First, does he own any shares in any company?
  Sir K. Joseph indicated assent.
  Mr. Diamond: Second, how often has he been to an annual meeting of a company and addressed it in the same incisive terms as he addressed the House this afternoon? How often has he had the privilege of having the matter debated for about six hours, and had the chairman and financial director give him a full reply, and supply him with such a mass of literature as is available now?
  Mr. Michael Shaw rose—
  Mr. Diamond: I was not asking my professional colleague.
  Hon. Members: Give way!
  Mr. Diamond: Of course I shall give way. I always do.
  Mr. Michael Shaw: I am most grateful to the right hon. Gentleman, and I am sorry to have two bites at the cherry.
  Does he realise that his reply to my earlier intervention still does not mean that he is putting the corporation on an equal footing with its competitors? He admits that the return on the share capital is lower than it would otherwise be because it takes account of the fact that it is treated as being lower by the saving in corporation tax that would have been made by interest had it continued to be paid.
  Mr. Diamond: I hope that I have not misled the hon. Gentleman. We are making the corporation exactly comparable. The Government would receive in either event at least the same amount, and without that assurance and that confidence on the part of the corporation we would not have agreed to public divident capital. The only difference is that as the industry's fortunes fluctuate there are good reasons for having the return corresponding more with the good years and less with the bad years, as everybody has admitted that the industry is of a cyclical nature.
  The right hon. Gentleman, regrettably, did not respond to my request.
  Sir K. Joseph: If a public company had produced reports and results and prospects such as are shown in the papers before us, the board of management would have been seriously at risk from the shareholders. The company would have found it impossible to raise money on the market and it would have been at risk of being taken over.
  The Chief Secretary is dealing in half truths in all that he has said. He seriously misleads himself as well as the country if he imagines for a moment that public enterprise is subject to any of the management discipline of private enterprise.
  Hon. Members: Oh.
  Mr. Speaker: Order. We have had through the day a rational debate in almost deathly silence. Let us finish it that way.
  Mr. Diamond: I accept some responsibility for the noise, Mr. Speaker.
  Notwithstanding that the right hon. Gentleman had a little time to think the question over, I did not regard his

  793
  answer as very convincing. He is seriously saying that he is opposed to the nationalised industry, not the Bill. Nobody has said anything in opposition to the Bill. The right hon. Gentleman continues in his traditional attitude of being opposed to the industry for one main reason, and that is monopoly.
  The right hon. Gentleman says that the industry is not sensitive to shareholders' control. I have invited him to tell us how often he, with his ability, has followed his investments in other companies in the same detail and with the same criticism and has had the same full information given to him. Of course, the answer is, "Never".
  I have not yet even referred to the fact that the House has the Select Committee on Nationalised Industries, which probes as much as the House wants it to and which consists of right hon. and hon. Members from both sides. It is ridiculous nonsense to talk about a nationalised industry being less subject to control of the owner than a private company.
  What the right hon. Gentleman is really speaking in favour of is the system which he describes as a better system—where there are a number of companies in the same field and where some prosper, some falter and some are made bankrupt. He believes that that is the real test. In other words, if one wants to know whether someone can swim, throw him into the river. If he gets to the other bank, he can swim and if he drowns then apparently he cannot. That is the system that the right hon. Gentleman believes in and promotes. I can think of no more rough, tough and wholly ignorant way of trying to ascertain whether an industry is best run in
  one way or the other for the benefit of the nation.
  What happens when a company goes bankrupt? I have had a little experience of clearing up the mess. What happens to the employees? Of course, the right hon. Gentleman is concerned only with a system under which a company takes account of its narrow commercial interest and no account of its social responsibilities in addition. That is not the kind of company we are looking to for the kind of organisation we are promoting. The steel industry is one which recognises its full responsibilities, having first of all full regard to value for money, and one would have thought that, by now, the right hon. Gentleman's argument would have been stone dead.
  I invite the House to listen to the view of The Times a short time ago. It said that the corporation
  "… comprises the 13 steel companies and undertakings which were taken over on nationalisation a year and a half ago. The Government's reason for proceeding with nationalisation had been transformed by then from political dogma into the impeccable industrial logic of providing a central management for an industry desperately in need of reorganisation."
  That is why I ask the House to support the Bill.
  Mr. Charles Grey (Treasurer of Her Majesty's Household)rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the Bill be now read a Second time:—
  The House divided: Ayes 288, Noes 228.

  Division No. 203.]

  AYES

  [9.59 p.m.

  Albu, Austen

  Binns, John

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

  Allaun, Frank (Salford, E.)

  Bishop, E. S.

  Butler, Herbert (Hackney, C.)

  Alldritt, Walter

  Blackburn, F.

  Butler, Mrs. Joyce (Wood Green)

  Anderson, Donald

  Blenkinsop, Arthur

  Callaghan, Rt. Hn. James

  Ashton, Joe (Bassetlaw)

  Booth, Albert

  Carmichael, Neil

  Atkins, Ronald (Preston, N.)

  Boston, Terence

  Carter-Jones, Lewis

  Atkinson, Norman (Tottenham)

  Bottomley, Rt. Hn. Arthur

  Chapman, Donald

  Bacon, Rt. Hn. Alice

  Boyden, James

  Coleman, Donald

  Bagier, Gordon A. T.

  Bradley, Tom

  Conlan, Bernard

  Barnes, Michael

  Bray, Dr. Jeremy

  Corbet, Mrs. Freda

  Barnett, Joel

  Brooks, Edwin

  Craddock, George (Bradford, S.)

  Baxter, William

  Broughton, Dr. A. D. D.

  Crawshaw, Richard

  Beaney, Alan

  Brown, Rt. Hn. George (Belper)

  Crossman, Rt. Hn. Richard

  Benn, Rt. Hn. Anthony Wedgwood

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

  Darling, Rt. Hn. George

  Bennett, James (G'gow, Bridgeton)

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

  Davidson, Arthur (Accrington)

  Bessell, Peter

  Brown, R. W. (Shoreditch & F'bury)

  Davies, Ednyfed Hudson (Conway)

  Bidwell, Sydney

  Buchan, Norman

  Davies, G. Elfed (Rhondda, E.)

  Davies, Dr. Ernest (Stretford)

  Jeger, George (Goole)

  Parkin, Ben (Paddington, N.)

  Davies, Ifor (Gower)

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

  Parkyn, Brian (Bedford)

  de Freitas, Rt. Hn. Sir Geoffrey

  Jenkins, Rt. Hn. Roy (Stechford)

  Pavitt, Laurence

  Delargy, Hugh

  Johnson, Carol (Lewisham, S.)

  Pearson, Arthur (Pontypridd)

  Dell, Edmund

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

  Peart, Rt. Hn. Fred

  Dempsey, James

  Jones, Dan (Burnley)

  Pentland, Norman

  Dewar, Donald

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

  Perry, George H. (Nottingham, S.)

  Diamond, Rt. Hn. John

  Jones, J. Idwal (Wrexham)

  Prentice, Rt. Hn. R. E.

  Dickens, James

  Jones, T. Alec (Rhondda, West)

  Price, Thomas (Westhoughton)

  Doig, Peter

  Judd, Frank

  Probert, Arthur

  Driberg, Tom

  Kelley, Richard

  Pursey, Cmdr. Harry

  Dunn, James A.

  Kenyon, Clifford

  Rankin, John

  Dunnett, Jack

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

  Rees, Merlyn

  Dunwoody, Mrs. Gwyneth (Exeter)

  Kerr, Dr. David (W'worth, Central)

  Reynolds, Rt. Hn. G. W.

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

  Kerr, Russell (Feltham)

  Rhodes, Geoffrey

  Eadie, Alex

  Lawson, George

  Richard, Ivor

  Edelman, Maurice

  Lee, Rt. Hn. Frederick (Newton)

  Roberts, Rt. Hn. Goronwy

  Edwards, Robert (Bilston)

  Lee, Rt. Hn. Jennie (Cannock)

  Robertson, John (Paisley)

  Edwards, William (Merioneth)

  Lee, John (Reading)

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

  Ellis, John

  Lestor, Miss Joan

  Rodgers, William (Stockton)

  English, Michael

  Lewis, Arthur (W. Ham, N.)

  Roebuck, Roy

  Ennals, David

  Lewis, Ron (Carlisle)

  Rogers, George (Kensington, N.)

  Ensor, David

  Lipton, Marcus

  Rose, Paul

  Evans, Albert (Islington, S. W.)

  Lomas, Kenneth

  Ross, Rt. Hn. William

  Evans, Fred (Caerphilly)

  Loughlin, Charles

  Rowlands, E.

  Faulds, Andrew

  Luard, Evan

  Ryan, John

  Fernyhough, E.

  Lubbock, Eric

  Shaw, Arnold (Ilford, S.)

  Finch, Harold

  Lyons, Edward (Bradford, E.)

  Sheldon, Robert

  Fitch, Alan (Wigan)

  Mabon, Dr. J. Dickson

  Shore, Rt. Hn. Peter (Stepney)

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  McBride, Neil

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

  Fletcher, Raymond (Ilkeston)

  McCann, John

  Silkin, Rt. Hn. John (Deptford)

  Fletcher, Ted (Darlington)

  Macdonald, A. H.

  Silkin, Hn. S. C. (Dulwich)

  Foley, Maurice

  McGuire, Michael

  Silverman, Julius

  Foot, Michael (Ebbw Vale)

  McKay, Mrs. Margaret

  Skeffington, Arthur

  Ford, Ben

  Mackenzie, Gregor (Rutherglen)

  Slater, Joseph

  Forrester, John

  Mackie, John

  Small, William

  Fowler, Gerry

  Mackintosh, John P.

  Steele, Thomas (Dunbartonshire, W.)

  Fraser, John (Norwood)

  Maclennan, Robert

  Stewart, Rt. Hn. Michael

  Freeson, Reginald

  MacMillan, Malcolm (Western Isles)

  Stonehouse, Rt. Hn. John

  Gardner, Tony

  McMillan, Tom (Glasgow, C.)

  Strauss, Rt. Hn. G. R.

  Garrett, W. E.

  MacPherson, Malcolm

  Summerskill, Hn. Dr. Shirley

  Ginsburg, David

  Mahon, Peter (Preston, S.)

  Taverne, Dick

  Gordon Walker, Rt. Hn. P. C.

  Mahon, Simon (Bootle)

  Thomas, Rt. Hn. George

  Gray, Dr. Hugh (Yarmouth)

  Mallalieu, E. L. (Brigg)

  Thomson, Rt. Hn. George

  Greenwood, Rt. Hn. Anthony

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

  Thornton, Ernest

  Gregory, Arnold

  Mapp, Charles

  Thorpe, Rt. Hn. Jeremy

  Grey, Charles (Durham)

  Marks, Kenneth

  Tinn, James

  Griffiths, David (Rother Valley)

  Marquand, David

  Tomney, Frank

  Griffiths, Eddie (Brightside)

  Mason, Rt. Hn. Roy

  Urwin, T. W.

  Griffiths, Rt. Hn. James (Llanelly)

  Maxwell, Robert

  Varley, Eric G.

  Griffiths, Will (Exchange)

  Mayhew, Christopher

  Wainwright, Edwin (Dearne Valley)

  Gunter, Rt. Hn. R. J.

  Mellish, Rt. Hn. Robert

  Wainwright, Richard (Colne Valley)

  Hamilton, James (Bothwell)

  Mendelson, John

  Walden, Brian (All Saints)

  Hamilton, William (Fife, W.)

  Mikardo, John

  Walker, Harold (Doncaster)

  Hamling, William

  Millan, Bruce

  Wallace, George

  Hannan, William

  Miller, Dr. M. S.

  Watkins, David (Consett)

  Harper, Joseph

  Milne, Edward (Blyth)

  Watkins, Tudor (Brecon & Radnor)

  Harrison, Walter (Wakefield)

  Molloy, William

  Weitzman, David

  Hart, Rt. Hn. Judith

  Morgan, Elystan (Cardiganshire)

  Wellbeloved, James

  Haseldine, Norman

  Morris, Alfred (Wythenshawe)

  Wells, William (Walsall, N.)

  Hattersley, Roy

  Morris, Charles R. (Openshaw)

  Whitaker, Ben

  Hazell, Bert

  Morris, John (Aberavon)

  White, Mrs. Eirene

  Healey, Rt. Hn. Denis

  Moyle, Roland

  Whitlock, William

  Herbison, Rt. Hn. Margaret

  Murray, Albert

  Wilkins, W. A.

  Hilton, W. S.

  Neal, Harold

  Willey, Rt. Hn. Frederick

  Hooley, Frank

  Newens, Stan

  Williams, Alan Lee (Hornchurch)

  Hooson, Emlyn

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Williams, Clifford (Abertillery)

  Horner, John

  Norwood, Christopher

  Williams, Mrs. Shirley (Hitchin)

  Houghton, Rt. Hn. Douglas

  Oakes, Gordon

  Williams, W. T. (Warrington)

  Howie, W.

  Ogden, Eric

  Willis, Rt. Hn. George

  Hoy, James

  O'Malley, Brian

  Wilson, Rt. Hn. Harold (Huyton)

  Huckfield, Leslie

  Oram, Albert E.

  Wilson, William (Coventry, S.)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Orbach, Maurice

  Winnick, David

  Hughes, Hector (Aberdeen, N.)

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

  Woodburn, Rt. Hn. A.

  Hughes, Roy (Newport)

  Owen, Will (Morpeth)

  Woof, Robert

  Hunter, Adam

  Padley, Walter

  Wyatt, Woodrow

  Hynd, John

  Page, Derek (King's Lynn)

  Irvine, Sir Arthur (Edge Hill)

  Paget, R. T.

  TELLERS FOR THE AYES:

  Janner, Sir Barnett

  Palmer, Arthur

  Mr. Ioan L. Evans and

  Jay, Rt. Hn. Douglas

  Pannell, Rt. Hn. Charles

  Mr. Ernest G. Perry.

  NOES

  Alison, Michael (Barkston Ash)

  Amery, Rt. Hn. Julian

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

  Allason, James (Hemel Hempstead)

  Astor, John

  Awdry, Daniel

  796

  797

  Baker, Kenneth (Acton)

  Harris, Reader (Heston)

  Page, John (Harrow, W.)

  Baker, W. H. K. (Banff)

  Harrison, Col. Sir Harwood (Eye)

  Pearson, Sir Frank (Clitheroe)

  Balniel, Lord

  Harvey, Sir Arthur Vere

  Peel, John

  Barber, Rt. Hn. Anthony

  Harvie Anderson, Miss

  Percival, Ian

  Batsford, Brian

  Hastings, Stephen

  Peyton, John

  Beamish, Col. Sir Tufton

  Hawkins, Paul

  Pike, Miss Mervyn

  Bell, Ronald

  Hay, John

  Pink, R. Bonner

  Bennett, Dr. Reginald (Gos. & Fhm)

  Heald, Rt. Hn. Sir Lionel

  Pounder, Rafton

  Berry, Hn. Anthony

  Heseltine, Michael

  Powell, Rt. Hn. J. Enoch

  Biggs-Davison, John

  Higgins, Terence L.

  Price, David (Eastleigh)

  Birch, Rt. Hn. Nigel

  Hiley, Joseph

  Prior, J. M. L.

  Black, Sir Cyril

  Hill, J. E. B.

  Pym, Francis

  Blaker, Peter

  Hirst, Geoffrey

  Quennell, Miss J. M.

  Body, Richard

  Hogg, Rt. Hn. Quintin

  Ramsden, Rt. Hn. James

  Boyd-Carpenter, Rt. Hn. John

  Holland, Philip

  Rawlinson, Rt. Hn. Sir Peter

  Boyle, Rt. Hn. Sir Edward

  Hornby, Richard

  Rees-Davies, W. R.

  Braine, Bernard

  Hunt, John

  Renton, Rt. Hn. Sir David

  Brewis, John

  Iremonger, T. L.

  Rhys Williams, Sir Brandon

  Brinton, Sir Tatton

  Irvine, Bryant Godman (Rye)

  Ridley, Hn. Nicholas

  Bromley-Davenport, Lt.-Col. Sir Walter

  Jenkin, Patrick (Woodford)

  Ridsdale, Julian

  Bruce-Gardyne, J.

  Jennings, J. C. (Burton)

  Rippon, Rt. Hn. Geoffrey

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

  Johnston Smith, G. (E. Grinstead)

  Robson Brown, Sir William

  Buck, Antony (Colchester)

  Jones, Arthur (Northants, S.)

  Rodgers, Sir John (Sevenoaks)

  Bullus, Sir Eric

  Jopling, Michael

  Rossi, Hugh (Hornsey)

  Burden, F. A.

  Joseph, Rt. Hn. Sir Keith

  Royle, Anthony

  Campbell, B. (Oldham, W.)

  Kaberry, Sir Donald

  Russell, Sir Ronald

  Campbell, Gordon (Moray & Nairn)

  Kershaw, Anthony

  St. John-Stevas, Norman

  Carlisle, Mark

  Kimball, Marcus

  Sandys, Rt. Hn. D.

  Channon, H. P. G.

  King, Evelyn (Dorset, S.)

  Scott, Nicholas

  Chichester-Clark, R.

  Kirk, Peter

  Scott-Hopkins, James

  Clark, Henry

  Kitson, Timothy

  Sharples, Richard

  Clegg, Walter

  Knight, Mrs. Jill

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

  Cooke, Robert

  Lambton, Viscount

  Silvester, Frederick

  Cooper-Key, Sir Neill

  Lancaster, Col. C. G.

  Sinclair, Sir George

  Cordle, John

  Lane, David

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

  Costain, A. P.

  Langford-Holt, Sir John

  Smith, John (London & W'minster)

  Craddock, Sir Beresford (Spelthorne)

  Legge-Bourke, Sir Harry

  Speed, Keith

  Crouch, David

  Lewis, Kenneth (Rutland)

  Stainton, Keith

  Crowder, F. P.

  Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)

  Stodart, Anthony

  Cunningham, Sir Knox

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

  Stoddart-Scott, Col. Sir M.

  Currie, G. B. H.

  Longden, Gilbert

  Dalkeith, Earl of

  MacArthur, Ian

  Summers, Sir Spencer

  Dance, James

  Maclean, Sir Fitzroy

  Tapsell, Peter

  d'Avigdor-Goldsmid, Sir Henry

  Macleod, Rt. Hn. Iain

  Taylor, Sir Charles (Eastbourne)

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

  McMaster, Stanley

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

  Digby, Simon Wingfield

  Macmillan, Maurice (Farnham)

  Taylor, Frank (Moss Side)

  Dodds-Parker, Douglas

  McNair-Wilson, Michael

  Temple, John M.

  Doughty, Charles

  McNair-Wilson, Patrick (New Forest)

  Thatcher, Mrs. Margaret

  Douglas-Home, Rt. Hn. Sir Alec

  Maddan, Martin

  Tilney, John

  Drayson, G. B.

  Maginnis, John E.

  Turton, Rt. Hn. R. H.

  du Cann, Rt. Hn. Edward

  Marples, Rt. Hn. Ernest

  Vaughan-Morgan, Rt. Hn. Sir John

  Eden, Sir John

  Marten, Neil

  Vickers, Dame Joan

  Elliot, Capt. Walter (Carshalton)

  Maude, Angus

  Waddington, David

  Emery, Peter

  Maudling, Rt. Hn. Reginald

  Walker, Peter (Worcester)

  Errington, Sir Eric

  Mawby, Ray

  Walker-Smith, Rt. Hn. Sir Derek

  Eyre, Reginald

  Maxwell-Hyslop, R. J.

  Wall, Patrick

  Farr, John

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

  Walters, Dennis

  Fisher, Nigel

  Mills, Peter (Torrington)

  Ward, Dame Irene

  Foster, Sir John

  Mills, Stratton (Belfast, N.)

  Weatherill, Bernard

  Galbraith, Hn. T. G.

  Miscampbell, Norman

  Wells, John (Maidstone)

  Gilmour, Ian (Norfolk, C.)

  Mitchell, David (Basingstoke)

  Whitelaw, Rt. Hn. William

  Gilmour, Sir John (Fife, E.)

  Monro, Hector

  Wiggin, A. W.

  Glover, Sir Douglas

  Morgan, Geraint (Denbigh)

  Williams, Donald (Dudley)

  Glyn, Sir Richard

  Morgan-Giles, Rear-Adm.

  Wilson, Geoffrey (Truro)

  Godber, Rt. Hn. J. B.

  Morrison, Charles (Devizes)

  Wolrige-Gordon, Patrick

  Goodhart, Philip

  Mott-Radclyffe, Sir Charles

  Wood, Rt. Hn. Richard

  Goodhew, Victor

  Munro-Lucas-Tooth, Sir Hugh

  Woodnutt, Mark

  Gresham Cooke, R.

  Murton, Oscar

  Worsley, Marcus

  Grieve, Percy

  Neave, Airey

  Wright, Esmond

  Griffiths, Eldon (Bury St. Edmunds)

  Nicholls, Sir Harmar

  Wylie, N. R.

  Gurden, Harold

  Noble, Rt. Hn. Michael

  Younger, Hn. George

  Hall, John (Wycombe)

  Onslow, Granley

  Hall-Davis, A. G. F.

  Orr, Capt. L. P. S.

  TELLERS FOR THE NOES:

  Hamilton, Lord (Fermanagh)

  Orr-Ewing, Sir Ian

  Mr. R. W. Elliott and

  Hamilton, Michael (Salisbury)

  Osborn, John (Hallam)

  Mr. Jasper More.

  Harris, Frederic (Croydon, N. W.)

  Page, Graham (Crosby)

  Bill accordingly read a Second Time.

  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  IRON AND STEEL [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to make new provision in relation to the finances of the British Steel Corporation and certain of their subsidiaries, it is expedient to authorise—
  (1) the substitution for the commencing capital debt of the British Steel Corporation to the Minister of Power of £833,988,359 4s. 1d. of a commencing capital debt of £133,988,359 4s. 1d.;
  (2) the payment out of moneys provided by Parliament of—
  (a) sums required by the Minister of Power for the making of payments by him to the British Steel Corporation, being sums the aggregate of which, taken together with—

  (i) the amount outstanding in respect of the principal of any money borrowed under section 19 of the Iron and Steel Act 1967 by the British Steel Corporation (other than money borrowed for the payment off of any part of the debt assumed by them under section 18 of the Iron and Steel Act 1967); and

  (ii) the amount outstanding in respect of the principal of any money borrowed under section 19 of that Act by the publicly-owned companies (within the meaning of that Act) otherwise than from the British Steel Corporation;

  does not exceed £500,000,000 or such greater sum, not exceeding £650,000,000, as the Minister of Power may from time to time by order (made by statutory instrument) specify; and
  (b) any sum required by the Board of Trade for making to the British Steel Corporation, in respect of an asset vested in them by virtue of the said Act of the present Session or in pursuance of arrangements approved by the Minister of Power, being an asset of a company in public ownership within the meaning of the Iron and Steel Act 1967 in respect of which a grant might have been made under section 1, 2 or 6 of the Industrial Development Act 1966 had the asset not vested in the British Steel Corporation and, in a case in which capital expenditure is incurred with reference to the asset by the British Steel Corporation, had it been incurred by the company, a grant of the like amount as the Board might have made to the company in those circumstances;
  (3) any increase attributable to the provisions of the said Act of the present Session in the sums which, under provisions of the Iron and Steel Act 1967, fall to be paid out of the National Loans Fund or the Consolidated Fund; and
  (4) the payment into the Consolidated Fund of any sum received by the Minister of Power
  800
  under the said Act of the present Session.—[Mr. Freeson.]
  10.15 p.m.
  Mr. Michael Shaw: I am sorry to delay the House, but I have one question to ask the Minister. Does the Money Resolution empower the Steel Corporation to spend the additional sums which it will have at its disposal for buying the additional fringe companies relating to its other activities? We should like to know the answer to this since it affects the debate which will take place eventually on the Committee stage of the Bill.
  The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): The answer is quite simple. The passage of the Money Resolution does not alter the position which has obtained up to now with regard to the B.S.C. purchasing or negotiating for the purchase of what the hon. Gentleman has called a fringe company. Any such move is subject to the Minister's authority and he has to be satisfied that it is an appropriate way to conduct the B.S.C.'s activities, in the same way as has occurred in the past when there has been a movement out of the public sector into the private sector.
  Sir Keith Joseph: The Parliamentary Secretary has not answered my hon. Friend. Will we be able, under the Money Resolution, to debate the question on the Committee stage? We are asking whether the Money Resolution is drawn widely enough to permit debate on capital acquisitions on borrowed money. The second question is whether in Committee the Money Resolution permits us to discuss the point which the Government have not answered, which is set out at the bottom of page 43 of the Annual Accounts—[Interruption.]—namely—
  Mr. Speaker: Order. The right hon. Gentleman is addressing the House and it must be most difficult against the amount of conversation which is now taking place. Sir Keith Joseph.
  Sir K. Joseph: —namely, the matter of the £130 million of accumulated losses which are referred to on that page.
  This, so far as I can see, is outside the terms of the Money Resolution, but we shall want to probe the treatment of

  801
  that sum of money. I should like an assurance from the Parliamentary Secretary that the treatment of the loans connected with the four new steel plants which are referred to on that page will be within the Money Resolution.
  Mr. Freeson: Strictly procedural matters are not for me to deal with categorically this evening. If there are any doubts about the points which might appropriately be raised in debate in Committee, I should have thought it was a matter for the Chairman of the Committee to give a ruling at the appropriate time.
  Sir Harmar Nicholls: The Parliamentary Secretary might not be in a position to answer the procedural question, but the House ought to have an answer. The Treasury Bench is full and the Minister himself is responsible. [Interruption.]
  Mr. Speaker: Order. I am listening with acute interest to the hon. Member for Peterborough (Sir Harmar Nicholls), but I want to hear him.
  Sir Harmar Nicholls: The Minister in charge of the Bill is in his place and is flanked by many colleagues from other Departments. The figure about which we are talking is not a niggling amount, and I hope that I am giving the right hon. Gentleman time to get an answer. We know how these things are done. There are ways and means of getting advice. He ought to be using the time which I am now giving him to get the answer. In the interests of Parliamentary responsibility for this huge amount of money, the procedural question ought to be answered before we grant it.
  Several Hon. Members rose—
  Mr. Speaker: Order. There is a host of hon. Members seeking to catch my eye. I must choose very carefully. Mr. John Peyton.
  Mr. John Peyton: I very much hope that the Parliamentary Secretary will be able to supply the answer to this question. It is no good his saying that this is a procedural matter which can be disposed of in the Standing Committee. Although it is unusual for a Bill of this kind to go to a Standing Committee at all—
  Mr. Speaker: Whether the Bill goes to a Standing Committee or not, the moment for deciding that momentous question has passed.
  Mr. Peyton: Mr. Speaker, surely even a Member of Parliament is entitled to an obiter dictum. I know that we are not entitled to very much. We do not even get the papers—[HON. MEMBERS: "Hear, hear."]—
  Mr. Speaker: Order. I hesitate to make a terrible pun and say that it might be an obituary if the hon. Gentleman does not come to his point.
  Mr. Peyton: I am not at the moment seeking to write my own obituary or anyone else's. The writing of obituaries is a matter for which the Treasury Bench is well qualified at the moment.
  We are giving the Parliamentary Secretary all the time that we can. I hope that the Parliamentary Secretary will answer the question, or call up some powerful allies from the Treasury, who are accustomed to conducting these debates, so that it can be explained on behalf of the Administration to what extent those of my right hon. and hon. Friends who will have the inestimable privilege of serving on the Standing Committee will be able to discuss the matter to which my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has referred. Until the Parliamentary Secretary or some other Government spokesman—
  Mr. Speaker: Order. It will be for the Chairman of the Committee to which the Bill is sent to decide which Amendments are in order and which are not. The hon. Gentleman may ask general questions about the scope of the Money Resolution.
  Mr. Peyton: That is the point, Mr. Speaker. The Parliamentary Secretary has the responsibility of defining what the Money Resolution does and the extent to which it confines those of my right hon. and hon. Friends who will serve on the Standing Committee. At the moment, the look of perplexity on the face of the Parliamentary Secretary gives one the impression that perhaps he is in deep water and that the torrent of advice to which he is presently being subjected will not necessarily facilitate his easy response to the question posed by my right hon. Friend.

  803
  All that I wish to do is put him at his ease and make him feel that he is well able to answer the penetrating question put to him by my right hon. Friend. I acknowledge the smile on the face of the hon. Gentleman—
  Mr. Speaker: Order. We are not discussing the Parliamentary Secretary. We are discussing the Money Resolution.
  Mr. Peyton: Unfortunately, there is a very close association between the two. At any rate, we will be glad to receive from the hon. Gentleman a much better idea than we have at present about the extent of the discussion which it is possible for the Chairman of the Standing Committee to allow, bearing in mind the fence being erected by the Money Resolution.
  Mr. Peter Blaker: As I understand it, the Government are asking the House to pass this Money Resolution. My right hon. and hon. Friends are asking whether it is the right Money Resolution and whether it is framed in a satisfactory way. That is the purpose of the questions that they have asked.
  Before deciding whether to vote on the Money Resolution or whether it should go through unopposed, surely this is a relevant question for the Government to answer. It cannot be satisfactory for the Parliamentary Secretary simply to say that it is a matter for the Chairman of the Standing Committee to rule upon when the Bill gets to the Committee. We are not in Committee yet, and the question which is before the House is about the form of Resolution that the House should pass, which in turn will be binding on the Committee and will be guidance to which its Chairman will have to refer.
  Unless the Parliamentary Secretary is able to answer the questions put to him by my right hon. and hon. Friends, I fear that the horrible suspicion that the Parliamentary Secretary does not have a clue about what is going on will be confirmed. Will he kindly answer the question?
  Mr. Freeson: We will have our fun. Mr. Speaker.
  I have nothing to add to the specific points that were put earlier in the debate.
  804
  The fringe activities, the sale or purchase of plants and factories, etc. outside or inside the public sector is not changed by the drafting of the Money Resolution.
  The £130 million, to which reference has been made, is covered by the capital debt in the accounts.
  The detailed manner in which any such points shall be raised in Committee is not for me to include or exclude. It is for the Chairman to decide whether hon. Members are in order when they raise certain matters in Committee.
  Mr. Michael Shaw rose—
  Mr. Speaker: Order. The hon. Member has exhausted his right to speak.
  Mr. Peter Emery: I do not think that the answer given by the Parliamentary Secretary makes any sense in relation to the question that was asked. We know, from the same Ministry, the problems we have had with Money Resolutions in the past. For instance, when a question was put on certain aspects of the Mines and Quarries (Tips) Bill—
  Mr. Speaker: Order. One Money Resolution is enough.
  Mr. Emery: I realise that, Mr. Speaker. But the Ministry of Power has previously been unable to answer properly whether certain matters would be allowed to be debated by the drawing of a Money Resolution. At that time the Minister said that it would depend on interpretation by the Chair. Therefore, I ask the Minister: does he believe—I am not asking what he believes anybody else believes, but does he believe—that the drawing of the Money Resolution will preclude the Committee discussing peripheral purchase by the Corporation of other activities? If so, I shall want to vote against the Money Resolution. If this can be discussed in Committee, we may allow the Money Resolution to go through. But will the Minister give his view on what the Money Resolution will allow on that subject?
  Sir John Eden: I am sorry that the Minister has not been able to answer the question: what will be the scope for debate as defined by the terms of the Money Resolution? He has answered a number of other questions which were not put to him. In the circumstances, we cannot possibly allow

  805
  this Money Resolution to go by. Therefore, I must ask my right hon. and hon. Friends to vote against it.
  Question put:—
  The House divided: Ayes 241; Noes 98.

  Division No. 204.]

  AYES

  [10.28 p.m.

  Albu, Austen

  Fraser, John (Norwood)

  Millan, Bruce

  Allaun, Frank (Salford, E.)

  Freeson, Reginald

  Miller, Dr. M. S.

  Alldritt, Walter

  Gardner, Tony

  Milne, Edward (Blyth)

  Anderson, Donald

  Garrett, W. E.

  Molloy, William

  Ashton, Joe (Bassetlaw)

  Gordon Walker, Rt. Hn. P. C.

  Morgan, Elystan, (Cardiganshire)

  Atkins, Ronald (Preston, N.)

  Gray, Dr. Hugh (Yarmouth)

  Morris, Alfred (Wythenshawe)

  Atkinson, Norman (Tottenham)

  Gregory, Arnold

  Morris, Charles R. (Openshaw)

  Bacon, Rt. Hn. Alice

  Grey, Charles (Durham)

  Morris, John (Aberavon)

  Bagier, Gordon A. T.

  Griffiths, Eddie (Brightside)

  Moyle, Roland

  Barnett, Joel

  Griffiths, Will (Exchange)

  Murray, Albert

  Beaney, Alan

  Hamilton, James (Bothwell)

  Newens, Stan

  Benn, Rt. Hn. Anthony Wedgwood

  Hamilton, William (Fife, W.)

  Norwood, Christopher

  Bennett, James (G'gow, Bridgeton)

  Hamling, William

  Oakes, Gordon

  Bessell, Peter

  Harrison, Walter (Wakefield)

  Ogden, Eric

  Bidwell, Sydney

  Hart, Rt. Hn. Judith

  O'Malley, Brian

  Binns, John

  Haseldine, Norman

  Oram, Albert E.

  Bishop, E. S.

  Hattersley, Roy

  Orbach, Maurice

  Blackburn, F.

  Healey, Rt. Hn. Denis

  Owen, Will (Morpeth)

  Blenkinsop, Arthur

  Hooley, Frank

  Page, Derek (King's Lynn)

  Boardman, H. (Leigh)

  Hooson, Emlyn

  Paget, R. T.

  Booth, Albert

  Horner, John

  Palmer, Arthur

  Boston, Terence

  Houghton, Rt. Hn. Douglas

  Parkin, Ben (Paddington, N.)

  Bottomley, Rt. Hn. Arthur

  Howie, W.

  Parkyn, Brian (Bedford)

  Boyden, James

  Hoy, James

  Pavitt, Laurence

  Bradley, Tom

  Huckfield, Leslie

  Pearson, Arthur (Pontypridd)

  Bray, Dr. Jeremy

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Peart, Rt. Hn. Fred

  Brooks, Edwin

  Hughes, Hector (Aberdeen, N.)

  Pentland, Norman

  Brown, Rt. Hn. George (Belper)

  Hughes, Roy (Newport)

  Perry, Ernest G. (Battersea, S.)

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

  Hunter, Adam

  Perry, George H. (Nottingham, S.)

  Brown, R. W. (Shoreditch & F'bury)

  Hynd, John

  Prentice, Rt. Hn. R. E.

  Buchan, Norman

  Irvine, Sir Arthur (Edge Hill)

  Pursey, Cmdr. Harry

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

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

  Rankin, John

  Butler, Mrs. Joyce (Wood Green)

  Jenkins, Rt. Hn. Roy (Stechford)

  Rees, Merlyn

  Callaghan, Rt. Hn. James

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

  Rhodes, Geoffrey

  Carmichael, Neil

  Jones, Dan (Burnley)

  Richard, Ivor

  Carter-Jones, Lewis

  Jones, T. Alec (Rhondda, West)

  Roberts, Rt. Hn. Goronwy

  Chapman, Donald

  Kenyon, Clifford

  Robertson, John (Paisley)

  Coleman, Donald

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

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

  Conlan, Bernard

  Kerr, Russell (Feltham)

  Rodgers, William (Stockton)

  Corbet, Mrs. Freda

  Lawson, George

  Roebuck, Roy

  Crawshaw, Richard

  Lee, Rt. Hn. Frederick (Newton)

  Rose, Paul

  Crossman, Rt. Hn. Richard

  Lee, John (Reading)

  Ross, Rt. Hn. William

  Darling, Rt. Hn. George

  Lestor, Miss Joan

  Rowlands, E.

  Davidson, Arthur (Accrington)

  Lewis, Arthur (W. Ham, N.)

  Ryan, John

  Davies, Ednyfed Hudson (Conway)

  Lewis, Ron (Carlisle)

  Shaw, Arnold (Ilford, S.)

  Davies, G. Elfed (Rhondda, E.)

  Lipton, Marcus

  Sheldon, Robert

  Davies, Dr. Ernest (Stretford)

  Lomas, Kenneth

  Shore, Rt. Hn. Peter (Stepney)

  Davies, Ifor (Gower)

  Loughlin, Charles

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

  Delargy, Hugh

  Luard, Evan

  Silkin, Rt. Hn. John (Deptford)

  Dell, Edmund

  Lubbock, Eric

  Silverman, Julius

  Dempsey, James

  Lyons, Edward (Bradford, E.)

  Skeffington, Arthur

  Dewar, Donald

  Mabon, Dr. J. Dickson

  Slater, Joseph

  Diamond, Rt. Hn. John

  McBride, Neil

  Small, William

  Doig, Peter

  McCann, John

  Steele, Thomas (Dunbartonshire, W.)

  Dunn, James A.

  Macdonald, A. H.

  Stewart, Rt. Hn. Michael

  Dunnett, Jack

  McGuire, Michael

  Stonehouse, Rt. Hn. John

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

  McKay, Mrs. Margaret

  Strauss, Rt. Hn. G. R.

  Eadie, Alex

  Mackenzie, Gregor (Rutherglen)

  Summerskill, Hn Dr. Shirley

  Edelman, Maurice

  Mackie, John

  Taverne, Dick

  Edwards, William (Merioneth)

  Mackintosh, John P.

  Thomas, Rt. Hn. George

  Ellis, John

  Maclennan, Robert

  Thomson, Rt. Hn. George

  English, Michael

  McMillan, Tom (Glasgow, C.)

  Thornton, Ernest

  Ennals, David

  MacPherson, Malcolm

  Thorpe, Rt. Hn. Jeremy

  Ensor, David

  Mahon, Peter (Preston, S.)

  Tinn, James

  Evans, Fred (Caerphilly)

  Mahon, Simon (Bootle)

  Urwin, T. W.

  Faulds, Andrew

  Mallalieu E. L. (Brigg)

  Varley, Eric G.

  Fernyhough, E.

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

  Wainwright, Edwin (Dearne Valley)

  Finch, Harold

  Mapp, Charles

  Wainwright, Richard (Colne Valley)

  Fitch, Alan (Wigan)

  Marks, Kenneth

  Walden, Brian (All Saints)

  Fletcher, Raymond (Ilkeston)

  Marquand, David

  Walker, Harold (Doncaster)

  Fletcher, Ted (Darlington)

  Marsh, Rt. Hn. Richard

  Wallace, George

  Foley, Maurice

  Mason, Rt. Hn. Roy

  Watkins, David (Consett)

  Foot, Michael (Ebbw Vale)

  Maxwell, Robert

  Watkins, Tudor (Brecon & Radnor)

  Ford, Ben

  Mellish, Rt. Hn. Robert

  Wellbeloved, James

  Forrester, John

  Mendelson, John

  Wells, William (Walsall, N.)

  Fowler, Gerry

  Mikardo, Ian

  Whitaker, Ben

  White, Mrs. Eirene

  Williams, Mrs. Shirley (Hitchin)

  Woof, Robert

  Whitlock, William

  Williams, W. T. (Warrington)

  Wilkins, W. A.

  Willis, Rt. Hn. George

  TELLERS FOR THE AYES:

  Williams, Alan (Swansea, W.)

  Wilson, Rt. Hn. Harold (Huyton)

  Mr. Ioan L. Evans and

  Williams, Alan Lee (Hornchurch)

  Wilson, William (Coventry, S.)

  Mr. Joseph Harper.

  Williams, Clifford (Abertillery)

  Winnick, David

  NOES

  Alison, Michael (Barkston Ash)

  Hastings, Stephen

  Peel, John

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

  Hawkins, Paul

  Peyton, John

  Balniel, Lord

  Hay, John

  Pink, R. Bonner

  Batsford, Brian

  Heald, Rt. Hn. Sir Lionel

  Powell, Rt. Hn. J. Enoch

  Bennett, Dr. Reginald (Gos. & Fhm)

  Higgins, Terence L.

  Price, David (Eastleigh)

  Biggs-Davison, John

  Hiley, Joseph

  Pym, Francis

  Black, Sir Cyril

  Hill, J. E. B.

  Rhys Williams, Sir Brandon

  Blaker, Peter

  Hirst, Geoffrey

  Rodgers, Sir John (Sevenoaks)

  Body, Richard

  Hornby, Richard

  Russell, Sir Ronald

  Boyd-Carpenter, Rt. Hn. John

  Hunt, John

  St. John-Stevas, Norman

  Boyle, Rt. Hn. Sir Edward

  Jenkin, Patrick (Woodford)

  Sandys, Rt. Hn. D.

  Braine, Bernard

  Jones, Arthur (Northants, S.)

  Scott-Hopkins, James

  Buck, Antony (Colchester)

  Joseph, Rt. Hn. Sir Keith

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

  Bullus, Sir Eric

  Kaberry, Sir Donald

  Silvester, Frederick

  Burden, F. A.

  Kershaw, Anthony

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

  Campbell, Gordon (Moray & Nairn)

  Kirk, Peter

  Stodart, Anthony

  Carlisle, Mark

  Knight, Mrs. Jill

  Stoddart-Scott, Col. Sir M.

  Clegg, Walter

  Lane, David

  Taylor, Sir Charles (Eastbourne)

  Cooke, Robert

  Lewis, Kenneth (Rutland)

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

  Costain, A. P.

  Longden, Gilbert

  Temple, John M.

  Crowder, F. P.

  Maclean, Sir Fitzroy

  Turton, Rt. Hn. R. H.

  Currie, G. B. H.

  McNair-Wilson, Michael

  Waddington, David

  Dalkeith, Earl of

  McNair-Wilson, Patrick (New Forest)

  Wells, John (Maidstone)

  Dance, James

  Marples, Rt. Hn. Ernest

  Whitelaw, Rt. Hn. William

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

  Mawby, Ray

  Williams, Donald (Dudley)

  Digby, Simon Wingfield

  Maxwell-Hyslop, R. J.

  Wilson, Geoffrey (Truro)

  Eden, Sir John

  Monro, Hector

  Wolrige-Gordon, Patrick

  Wood, Rt. Hn. Richard

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Morrison, Charles (Devizes)

  Wright, Esmond

  Emery, Peter

  Mott-Radclyffe, Sir Charles

  Wylie, N. R.

  Eyre, Reginald

  Neave, Airey

  Farr, John

  Nicholls, Sir Harmar

  TELLERS FOR THE NOES:

  Foster, Sir John

  Noble, Rt. Hn. Michael

  Mr. Jasper More and

  Glover, Sir Douglas

  Osborn, John (Hallam)

  Mr. Bernard Weatherill.

  Griffiths, Eldon (Bury St. Edmunds)

  Page, John (Harrow, W.)

  IMMUNITIES AND PRIVILEGES
  10.37 p.m.
  The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. William Whitlock): I beg to move,
  That the International Sugar Organisation (Immunities and Privileges) Order 1969, a draft of which was laid before this House on 14th April, be approved.
  With your permission, Mr. Deputy Speaker, and that of the House, I think that it may be convenient to discuss at the same time the other Motion,
  That the International Coffee Organisation (Immunities and Privileges) Order 1969, a draft of which was laid before this House on 14th April, be approved.
  Mr. Deputy Speaker (Mr. Harry Gourlay): Is it the wish of the House that the two Orders be taken together?
  Hon. Members: Agreed.
  Mr. Whitlock: These two Orders, which are the subject of the Motions, which you are allowing us to take together, Mr. Deputy Speaker, and which I am glad to commend to the House, have been approved in another place. They are very similar in both background and terms to the International Wheat Council (Immunities and Privileges) Order which was approved by the House last November. They are also made under the powers of Section 1 of the International Organisations Act, 1968, a measure which was welcomed by Parliament as bringing our legislation up to date, to meet the growing importance of international organisations in world affairs.
  The International Coffee Organisation and the International Sugar Organisation are two more of the four commodity organisations based in London to which we are acting as hosts. In order to regulate our relations with these Organisations, we have drawn up, as is customary, Agreements about their status in the United Kingdom. These draft Headquarters Agreements were laid before Parliament in February, Cmnd. 3915 and Cmnd. 3926. The Orders will make it possible for Her Majesty's Government to sign and give effect to these two Agreements. This country is a member of both Organisations, whose work is of the greatest importance for the economies of developing countries which produce
  810
  coffee and sugar. The conferences which recently drew up world-wide agreements about production and trade in coffee and sugar agreed, as a result of a United Kingdom proposal, that the privileges and immunities set out in the Agreements and in these Orders were suited to the needs of the host State as well as those of the Organisations.
  The precedent on which the two Orders now before the House are based—the European Space Research Organisation (Immunities and Privileges) Order—was originally approved by Parliament in 1965, and was followed last year in the case of the International Wheat Council Order which I have already mentioned. A feature which accords with views from time to time expressed by hon. Members is the limitation on the immunity from suit which has the effect that the two Organisations, and all the members of their staffs except the head of each, will have no immunity from the civil or criminal jurisdiction of our courts in matters arising from motoring offences and accidents. Another limitation makes it possible to sue the Organisations to enforce an arbitral award made under compulsory provisions in the Agreements. Personal privileges given to staff and representatives are limited, and do not extend to families in any case. Tax exemption is conditional on payment of a tax to the Organisations themselves.
  Mr. Eldon Griffiths: May I ask a question—
  Mr. Whitlock: Perhaps the hon. Gentleman will make his speech during the debate, and I can reply at the end.
  As the two Orders—
  Mr. Griffiths rose—
  Mr. Deputy Speaker: Order. If the Minister does not give way, the hon. Member must resume his seat.
  Mr. Griffiths: On a point of order. Mr. Deputy Speaker. I appreciate your Ruling, and I shall abide by it at once, but the House is surely not in a desperate rush, and it is unusual for the Minister to be so discourteous.
  Mr. Deputy Speaker: That is not a point of order. If the Minister does not give way, the hon. Member must resume his seat.
  Mr. Whitlock: As the two Orders follow so closely the precedent of the Wheat Order, there is probably no need for me to take up any more time in explaining their purpose and effect. They are designed to improve the treatment in this country of the International Coffee Organisation and the International Sugar Organisation within the accepted principles of United Kingdom policy on immunities and privileges, and I believe that the House will have no difficulty in approving them.
  10.38 p.m.
  Mr. Bernard Braine: I thank the Minister for the brief explanation that he has given of the two Orders before the House, but for reasons which I hope to show I fear that the hon. Gentleman cannot expect us to give our approval without first probing a little deeper.
  These are the first two Orders of their kind that I have had to scrutinise in my present capacity, but I have been in the House for long enough to know that Parliament does not care very much about granting an ever-widening circle of foreign representatives immunities and privileges denied to our own people.
  It may be that in this day and age one must accept the principle of granting such immunities and privileges to the staffs of highly reputable international organisations. The arrangement is, after all, reciprocal with other countries, and our nationals gain some benefit from it. That is why general approval was given to the International Organisations Act, 1968, under which these Orders are made. In fact, the principle was generally accepted even before the passing of that Act which merely brought up to date the previous legislation which was technically defective and of a somewhat haphazard character.
  It is obviously desirable that we should welcome international organisations here. It is sensible that we should encourage them to establish their headquarters in Britain rather than elsewhere. In any event sugar and coffee go together particularly well; they certainly suit my taste. Not only has Britain played a notable rôle in promoting sound international commodity agreements—this is
  812
  one thing which both sides of the House strongly support—but we are the centre of the Commonwealth. Many Commonwealth countries with which we are linked are important producers of sugar and coffee. All that I readily acknowledge.
  There are, however, certain details in the Orders which require clarification. How many people are involved? I should have thought that that would have been an obvious figure for the Under-Secretary to have given the House. He must know that Parliament has long been jealous about extending these privileges and is entitled to know how many persons enjoy them. When the Orders were under scrutiny is another place my noble Friend, Lord Bessborough, put his finger on an inconsistency in their provisions which was never satisfactorily explained. One would have thought that under all the Orders made under the 1968 Act, which was supposed to bring everything into ship-shape order, identical immunities and privileges would be granted. This is not so. My noble Friend discovered that these two latest Orders differ from, for example, the International Wheat Council Order in one important respect, namely, that they accord exemption from social security obligations to all foreign staff. Why should this be? It has long been the policy of successive Governments to afford comprehensive social security and National Health cover to all our citizens in return for contributions. It has long been the proud aim of successive Governments eventually to encourage other countries to do the same so that there would be complete reciprocity. A Yugoslav visiting Britain and falling ill can enjoy free treatment on the National Health Service here because a Briton visiting Yugoslavia can enjoy free treatment there.
  The reply given to my noble Friend on this point, however, was that the Wheat Council Order affected fewer foreign staff and they were perfectly happy with the arrangement. On the other hand, the Government spokesman claimed that the staff of the Coffee and Sugar Organisations are largely foreigners who are unhappy about coming under our social security arrangements. Why should there be this difference in treatment? How do the Government know that the staff of the Sugar and Coffee Organisations want different arrangements? Was every member of the staff

  813
  canvassed? What question was asked? Who asked the question? What right had the Government, anyway, to ask it?
  Further, even if this inquiry was conducted and the replies received were 100 per cent. satisfactory in each case, how do the Government know that future members of the staff of these Organisations would want the same rights? The Government's reply in another place was extraordinary. It revealed a slipshod and haphazard approach which is becoming all too characteristic of the Government in almost every field.
  Parts IV and V of each of the Orders—I am agreeable to taking them together because they are virtually identical—[HON. MEMBERS: "No."]—no doubt my hon. Friends will seek to comment upon the differences between the Orders. I am talking now about features which are common to the two Orders. Parts IV and V would appear to provide different rules for high officers and experts than for the rest.
  What do these phrases mean? I suppose that one could identify a high officer as being somebody higher than somebody else lower down. But "experts," whoever they may be, are simply defined as persons
  "… other than officers of the Organisation.…"
  What is an expert? Somebody suggested to me the other day that an expert is a person who is not more right than anybody else but is able to give more sophisticated reasons for being wrong. Or perhaps we could define an expert as one who knows more and more about less and less. Considering recent exhibitions from the Government Front Bench, certain right hon. Gentlemen opposite might qualify accordingly.
  Exactly what is meant by "experts" in this connection? Who are these people to whom we are extending these privileges and immunities? Are they, as distinct from officers of the Organisation, people who hop in and hop out of the United Kingdom at the Organisation's will? If so, how often does this occur? How many of them are there? And what are the implications?
  I protest against sloppy draftsmanship of this kind. As I have said on many occasions, the Government must understand that Parliament will not put up
  814
  with badly drafted legislation. [Interruption.]
  Mr. William Molloy: On a point of order. Are you aware of the difficulty that we are experiencing in trying to listen to the interesting argument being adduced by the hon. Gentleman because he appears to be coming under attack from his hon. Friend the Member for Bristol, West (Mr. Robert Cooke)? Would you kindly tell that hon. Gentleman to shut up?
  Mr. Robert Cooke: Further to that point of order. My hon. Friend pointed out that Parliament would not tolerate sloppy draftsmanship and I commented that, in present circumstances, we were lucky to have anything printed.
  Mr. Deputy Speaker: Neither comment is a point of order.
  Mr. Braine: I did not think for a moment that my hon. Friend was attacking me. He made a perfectly valid comment and I hope that he will have an opportunity to develop his argument in more detail later.
  May I draw the attention of the House to paragraph 16(c)(ii) of each Order which refers to the exemption of these officers and experts from Customs duties and taxes on the importation of
  "… articles which were in his ownership or possession or that of such a member of his family, or which he or such a member of his family was under contract to purchase, immediately before he so entered the United Kingdom."
  I question the word "immediately". What does it mean in this context? Does it mean a day or a week before he entered the United Kingdom? Would a contract entered into by an officer or a member of his family a month before he entered the country be permissible? The meaning is obscure, although it appears to have the intention of encouraging purchase just before, immediately before, entry; and that surely could defeat the real intention of the provision.
  Sir Harmar Nicholls: Has my hon. Friend ever seen a document as intricate as this with such a weak Explanatory Note, the paucity of which is surely a matter for comment?
  Mr. Braine: My hon. Friend is right. A better drafted Explanatory Note might

  815
  have saved the House a good deal of time and trouble. This one might just as well not have been published. The Under-Secretary said that these privileges and immunities do not apply to members of the families of these officers. Has he studied the paragraph which I just read out? He must tell those in certain quarters to get the facts right. Does the Order apply to officers and their relatives? I serve warning here and now—
  Mr. Albert Murray: Fear strikes our hearts.
  Mr. Braine: We have a long time for this debate. If the hon. Gentleman wishes, I, or my hon. Friends, who are raring to go, will go over the Order line by line and word by word pointing out the sloppy draftsmanship and the paucity of information laid before us. But I want to be fair—
  Mr. John Peyton: I share my hon. Friend's views about the paucity of information, but I hope that he will be fair, as he always wishes to be, and acknowledge that these documents—although the Explanatory Note is worthless—are drafted with a degree of clarity to which we are not accustomed in Bills. They may not be very good, but they are better than most.
  Mr. Braine: These matters are relative, of course. The Order may be a slight improvement on the Bills we have been getting and at least we have these documents, which has not been the case in some instances lately. But choosing my words carefully, I serve notice now that we will go over these Orders and any others that follow with a toothcomb to stop slipshod drafting like this. The very least that we expect from the Under-Secretary is that he will assure us tonight that there will be no repetition of this practice, which is treating the House with something like contempt.
  10.58 p.m.
  Mr. Eldon Griffiths: I tried to intervene earlier in the Under-Secretary's speech to ask him a civil and courteous question to elicit some information which the House should have. For some extraordinary reason, he did not show the normal courtesies which an hon. Member might expect when the House is not particularly
  816
  pressed. I must, therefore, start by asking him the question which I could not ask him then—
  Mr. John Biggs-Davison: My hon. Friend, for whom I have great regard and respect, is being a little unfair. No one would say that the Under-Secretary is discourteous. The trouble is that he has strict instructions not to give way lest he finds difficulty in answering questions.
  Mr. Griffiths: No doubt my hon. Friend puts a more charitable interpretation on the circumstances than I do. However, the question I wanted to ask the Minister arose out of his own statement. I understood him to say that dependants of those who will come here and enjoy diplomatic immunities under this Order will not themselves receive these immunities.
  I should like him to confirm to me now whether that statement is correct. If he will consult the International Organisations Act, 1968, the parent of this Order, he will see that it says in Schedule 1, Section 23(3)
  "Persons who are members of the family and form part of the household of such a member of the official staff … shall be entitled to the privileges and immunities set out in Part II of this Schedule".
  I have served on a number of Committees concerned with diplomatic immunities, as the Minister may or may not know, and we have debated with a number of his colleagues this question as to how far diplomatic immunity should or should not extend to families and to dependants. This is something I think we need to know, and in my judgment the statement which I thought I heard the Minister utter was incorrect. I will be very glad to give way now if he will tell me whether or not I understood his words correctly. Does it extend to families or dependants, or does it not?
  It seems perfectly obvious that the Minister either does not know or that he prefers not to get on to his feet because he is frightened of falling over them. The House of Commons is being asked tonight to admit to our country a number of officials who will serve the International Coffee Organisation—and I am one of those who welcome them to this country—but before Parliament gives the Government the right to extend to

  817
  these officials diplomatic immunities which involve relief from taxes of many kinds, we are entitled to know whether or not these immunities extend to their dependants.
  I find it beyond belief that the Minister is not prepared to give me an answer. Does he not know? I appeal to you, Mr. Deputy Speaker. Is not this a perfectly reasonable question which I am putting? It is obvious that the Minister is not willing to reply, and I shall therefore begin my speech under protest.
  I begin with this agreement, and I echo some of the words of my hon. Friend the Member for Essex, South-East (Mr. Braine) when he says that this is a poorly drafted Statutory Instrument. Let me say that I welcome both these Instruments. I am sure that the headquarters agreement signed in New York which has made it possible for the Sugar Organisation to be set up here was a good one, and that we ought to welcome it. The same is true of the agreement that permits the Coffee Organisation similarly to be established here in London.
  I am sure that the House welcomes this for several good reasons: firstly, because both these international organisations are concerned with the orderly management of international trade, and as a trading country ourselves we have—perhaps almost more than any other country—a great interest in seeing orderly management of world trade.
  Secondly, I am glad to see both these Organisations coming to London because I believe it helps our national capital, and has what I might call a number of spin-off advantages. The fact that the Coffee Organisation and the Sugar Organisation are headquartered in London is bound to bring a great number of delegations of experts to Britain, and this too I think should be welcomed.
  Having made these two general points, I should now like to look into some of the details of the Orders before us. I turn first to the whole wide question of privileges and immunities, which are not unfamiliar. They have been extended over the years to a whole array of international organisations and foreign embassies and consulates in this country. But Parts II and III of the Orders contain the extension to a fairly substantial number of people, perhaps, of exemptions
  818
  from British taxation. My hon. Friend the Member for Essex, South-East asked how many people we are now extending these privileges to. That is a relevant question. It was asked in respect of the Consular Relations Act and the Diplomatic Immunities Act, and we have the answers in those cases. We are entitled as a Parliament to know how many will similarly be advantaged under the Orders. We should know the answers at least approximately before we agree to them tonight.
  The taxes from which the servants of the two Organisations will be exempted are set out fairly carefully in the various headquarters agreements and, I believe, in the International Organisations Act, which is the parent of the Orders. The taxes referred to are income tax, customs duties, petrol, wine and spirits duties, the capital gains tax, estate duty and purchase tax, as well as exchange control. I believe I have covered most of them, but we have so many these days that it would be a very long list if I gave them all.
  I ask the Minister, in the dwindling hope of getting some sort of answer, precisely what is to be regarded as the necessary amount of wine and spirits freely imported for representatives of the International Coffee and Sugar Organisations for the purpose of their duties? The Minister may remember—though I do not know whether he remembers anything—that in the course of the passage of the Consular Relations Act we discovered the extraordinary fact that the Foreign Office had in practice given relief from duty on hydrocarbons and wines and spirits without any Parliamentary authority, and it had been giving this relief for some time. That is why we need to know what quantity of wine and spirits is regarded as being necessary for the performance of the duties of the gentleman who will come here under the Orders.
  Are they to have a quart of whisky a day, a week or a month? We are entitled to some idea of the view of the Foreign Office on the amount of wine and spirits a coffee expert requires to drink in a week for the performance of his duties. A definition is required, and I hope that the Minister will be able to give it to us when he replies. Some of us might imagine that they would prefer coffee anyway.
  Mr. John Farr: Is my hon. Friend aware that there is an international beverage known as Irish coffee, which requires not only a coffee content but an alcoholic base?
  Mr. Griffiths: I have heard tell of this brew, but I have not had the pleasure of sampling it.
  "Hydrocarbons" is an expert expression for petrol. How much petrol per expert or official will be brought into this country without payment of duty for the benefit of the International Coffee and Sugar Organisation? Is it to be supposed, for example, that a man here on behalf of the International Coffee Organisation will motor 100 miles a week, and if so how much free petrol will he have for that purpose? Or is it to be supposed that he will drive very much more than that? Once again, we should have some idea and hon. Members who do a great deal of driving know that the total relief from petrol tax is a considerable concession. Indeed, when we were debating the Consular Relations Act and the Diplomatic Immunities Act, we appreciated that we were giving these foreign guests an advantage of about 3s. 6d. or 4s. a gallon. I suspect that it is now about 4s. 6d. or 5s. per gallon. What is the approximate estimate that the Foreign Office is making of this concession now?
  I turn to the other range of taxes from which these gentlemen will be exempted. We must accept the exemption for income tax because it is reciprocal. British nationals serving abroad benefit from relief in the countries in which they are serving, although the relief we grant is much greater because, generally speaking, our income tax is much higher than in other countries. We are thus giving these guests in our midst a rather larger privilege because of the greater levels of our income tax.
  Sir Harmar Nicholls: I hope that my hon. Friend will not pursue that argument too far because, if what he says is taken literally by other countries, they may put up their income tax so that they can say how kind they are to our nationals.
  Mr. Griffiths: That is a possibility but I would not wish it on any of them. I am rather more concerned about the freeing
  820
  of those who come here to serve in these two organisations from exchange control, capital gains tax and purchase tax. No doubt some of these gentlemen to be exempted from income tax will have a fairly substantial income. If they are prudent, I am sure that they will wish to invest some of their income in the British stock market. This is one of the spin-offs to which I have referred. It should assist our stock market if we have these well-to-do, international gentlemen buying equities in this country. It is my hope, as one who approves of the international capital market, that they will do well and profit from their investments. But I understand that, uniquely, they are to be free of capital gains tax.
  It is surely not a necessary part of their duties in Britain that they should be exempted from capital gains tax. I see the case for exempting them from income tax because it affects their day-to-day work and that it is probably appropriate to let them off the hydrocarbon and spirit taxes because they need these things. In a previous debate, a Minister described whisky as one of the tools of their trade and to some extent he was right. But I do not think that playing the market is in any way a necessary part of their duties as diplomats in this country and do not see why their profits from doing so should be exempted from capital gains tax. Let us, by all means, exempt them from income tax and hydrocarbon oils tax, but surely not from capital gains tax.
  Then there is exchange control. I appreciate that it would be wrong to place guests and foreign diplomats in our midst under the onerous restrictions that we have to face. In a country with the foreign exchange problems that we have at present, with so much pressure upon our balance of payments, it is inequitable and moreover unnecessary, to provide large numbers of international civil servants with complete freedom from exchange control. Where they need to be free of exchange control for the purpose of going about their business abroad that must be right. This House would never wish to deny it to them.
  On the other hand, if they are going off on their holidays, if they are just buzzing down to Majorca for the week-end or pushing off to the Bahamas or somewhere of that sort, I should have

  821
  thought there was no reason, when they are going on personal holidays, for them to be exempted from the exchange controls and the allowances imposed upon British citizens.
  I turn to another exemption contained in the Orders, namely exemptions of the headquarters buildings set up by these two Organisations from any payment of local rates. The local authority, presumably the Greater London Council, or the London boroughs, will not be able to collect any rates from the offices of these two Organisations. There is a point of principle here. It is that missions, diplomatic and consular, and international, are supposed to pay for a proportion of the services which they receive from the local authorities. I believe that they are charged their water rate, because it can be metered. This is the practice in all foreign missions here.
  What is to happen, for example, in respect of the police services? We all know that the police services have to be provided for foreign missions. The Soviet Mission certainly requires them, the Chinese require them on occasions, although often the Chinese attack the police. There is the problem that, if additional police are to be provided for the protection of these large numbers of international missions in our midst, some arrangement ought to be made whereby the local authority, providing 50 per cent. of the money for the police, is able to be compensated in some fashion. This is not provided for in the Orders. It is quite wrong that if they are to be given complete freedom, as the Orders require, the Government should not come forward and show in what way they will make up to the local authority the proportion of money that is spent on the police protection of these buildings.
  I come now to the numbers and categories of persons in these missions who will benefit. We have asked for the numbers and we have not been vouchsafed a reply. I have studied with some care all the documents that go before these Statutory Instruments, the original International Sugar Agreement, the original Headquarters Treaty, and all the Schedules thereto. I find that persons who are members of the family and of the households of the officials attending
  822
  these Organisations are given immunities under the Orders. The Minister told us differently, but I am bound to say that in this case I have done my homework rather better than he has.
  Sir Harmar Nicholls: Article 15(2) in Part IV states:
  "Part IV of Schedule 1 to the Act shall not operate so as to confer any immunity or privilege on the families of officers to whom this Article applies."
  Perhaps that paragraph applies only to that Article.
  Mr. Griffiths: That is precisely the point, and this confirms my hon. Friend's comment about sloppy drafting. As I read that paragraph it refers to Part IV under the heading "Officers". I see no such provision under the headings "All Officers" which is a different category. Equally, in this extraordinary category of "experts" the Act does not confer immunity upon the families of experts. The representatives, the high officers and the experts have to pay for their families, but there is nothing in the Order covering the families of other officers. If the Minister had answered my question in the first place we should not be in this difficulty.
  It is not simply a question of how many will benefit. The question is how far the category of experts extends. There is no definition and nothing to show where the category of expert begins and ends. Presumably a chauffeur is an expert, and a chauffeur is covered in the Consular Relations Act and the Diplomatic Immunities Act. Is he covered here? We are entitled to know. Is the gardener employed by the head of mission regarded as having immunity? Is the nursemaid who looks after the family of the head of the International Coffee Organisation to be regarded as an expert—I have no doubt that she is an expert in her duty. Does the term "expert" include all these members of the family of the head of the mission?
  I come now to the Headquarters Agreement from which the Orders stem and which is both cognate and referred to in the Statutory Instruments. Article 26(2) specifies that the Government shall issue to all staff members on notification of their appointment a card bearing the photograph of the holder and identifying him as a staff member. This card is to

  823
  be accepted by the appropriate authorities as evidence of identity and appointment. Who will issue the identity cards? Who will have the photographs taken, and who will give them to the experts when they arrive here? Will that duty be laid upon the over-burdened police force, or will it be done by the Foreign Office staff? Is it the wish of the House that those who come to our country as guests should have to carry identity cards? I have lived for many years in foreign countries and, even if I have been required to have an identity card with a photograph, I have never been required to carry it with me. Will the Government, under Article 26, require diplomats to carry identity cards?
  There are other problems which I should like to ventilate, but I know that a number of my hon. Friends are anxious to join in the debate, and there are crevices which require exploration.
  I conclude with these two points. I welcome these two Orders. It is right that we should have them. It is utterly wrong that they should be so badly drafted, so full of holes and that there should be such a lack of definition as to those to whom they apply. Whereas I do not anticipate that we shall oppose them, I expect the Minister to do a little better and show us a little more courtesy than he has managed to do so far.
  11.26 p.m.
  Mr. John Biggs-Davison: Mr. Deputy Speaker, I have no—
  Mr. Roy Roebuck: On a point of order, Mr. Deputy Speaker. It used to be the custom in the 19th century to adjourn the House on the receipt of great news. I have to acquaint the House with the fact that Labour has regained control in Sheffield, and I ask that the House should be adjourned for that reason.
  Mr. Deputy Speaker: The point may be of interest, but it is hardly a point of order.
  Mr. Biggs-Davison: I do not know whether that qualifies as great or good news, but if it gives cheer to the downcast spirits of hon. Gentlemen opposite, so be it.
  824
  I have no wish to speak at great length. I know that hon. Gentlemen opposite wish to disperse to their constituencies, where they will be so gladly received. However, we should scrutinise these important Orders with the care that they deserve.
  Criticism has been made already of their drafting. I do not wish to join in it, although I defer to the view of my hon. Friends that these Orders might have been better drafted. At least we can be thankful that they exist in writing and that we have been able to obtain copies from the Vote Office.
  Those hon. Gentlemen opposite who obviously wished this debate to be brief might have been better served by their hon. Friend the Under-Secretary of State. The debate would have been a good deal shorter if he had given us more explanation of the Orders. He read a statement to us at almost breathless speed, and it was difficult to follow what he said. When he was asked for elucidation by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), he failed to give it. The debate has been protracted because we have been trying to probe the Orders and obtain replies to our questions.
  My hon. Friend the Member for Essex, South-East (Mr. Braine) referred to the debate in another place on the International Sugar Organisation Order, though not the International Coffee Organisation Order. In that debate, my noble Friend the Earl of Bessborough said—
  Mr. Roebuck: The hon. Gentleman must not quote what was said in another place.
  Mr. Biggs-Davison: I do not propose to quote verbatim what he then said, but my noble Friend pointed out that before the war he had been an international civil servant with the League of Nations Secretariat concerned with refugees. We are here concerned with Orders relating to the headquarters of international organisations, and the headquarters of the body my noble Friend served were also based in London. He said that in those days we did not have any of these immunities and privileges—they were not then felt to be necessary.

  825
  Times have changed. We wish to give full hospitality and reciprocity to international organisations, but there is no doubt that there has been the most remarkable proliferation of these organisations. We can usually debate them only one at a time, but this evening we are debating two together. But, since the war, so many organisations have come into existence, and to their representatives, whether they be high officers or low officers—
  Mr. Deputy Speaker: Order. The hon. Gentleman must relate his remarks to the Orders which are before the House. We are not discussing immunities in general, but merely their application to those people who are referred to in the Orders now before the House.
  Mr. Biggs-Davison: I am most grateful to you, Mr. Deputy Speaker, for bringing me back within the compass of the rules of order. I was trying to say that our view of these Orders relating to international organisations must be governed by the number of international organisations which exist. There comes a point when things get beyond the limit. We are entitled to question whether there may be too many international organisations now represented in this country whose officers, whether they be high officers or low officers, enjoy immunities. Our constituents are also entitled to ask us to scrutinise the matter in order to establish whether or not these Orders will put the number of proliferating international organisations beyond their reasonable limit—
  Mr. Braine: Would not my hon. Friend agree that we have these international organisations—they are here—and it is not, perhaps, so much their number that matters. What should be the concern of the House of Commons is the complete inability of the Government in laying Orders like these to tell us precisely what these immunities and privileges are, to whom they are to be extended and how many more people are to be added to those who already enjoy these immunities and privileges.
  Mr. Biggs-Davison: That is quite right. I hope that we shall be given a full reply. I have here a list of some, at least, of the international organisations which have been the subject of
  826
  legislation according immunities to their servants. It would be quite wrong for me to read the full list, but will the Under-Secretary tell us how many there are? First of all, how many organisations are there to whose representatives these immunities apply? We are now being asked to give immunities to the representatives of two new organisations—
  Mr. Deputy Speaker: Order. I must not allow the hon. Gentleman to go wide on the Orders. We are discussing the application of the Orders only to the groups concerned: we are not concerned now with any other groups.
  Mr. Biggs-Davison: Indeed. I was saying that we are now being asked to approve two Orders regarding two international organisations, namely, the International Sugar Organisation and the International Coffee Organisation, and that they be added to a formidable list of international organisations. If the Under-Secretary can help by assuring us that this is not completely out of control, that the numbers are not—
  Mr. Deputy Speaker: Order. The Minister would be out of order if he attempted to answer that question.
  Mr. Biggs-Davison: It is a matter of regret that the rules of order prevent the House being given this information.
  Perhaps the Minister will be able to tell us how many persons belonging to these two international organisations will be affected by these immunities and, of those numbers, how many are British subjects or commonwealth citizens.
  My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) recounted the immunity from taxation which would be accorded to officials of these two Organisations. It is a mouthwatering list of exemptions from taxation. It would be interesting to hear from the Minister what will be the loss to Her Majesty's Treasury and to the taxpayer from the immunities which will be accorded.
  Sir Harmar Nicholls: I do not think that our concern is what it is likely to cost. We want to know how far the privilege extends and to whom. We do not want to give the impression to anybody involved that we are niggling at

  827
  cost. But we should know to whom it applies.
  Mr. Biggs-Davison: I am sorry if I gave the impression of niggling. I accord my welcome to the Orders in general, badly drafted though they are and ill-explained though they were by the Under-Secretary. I do not wish to take any niggling attitude. But it is a matter of concern to this House to know how many persons are involved and to what extent there will be immunity from income tax, surtax, capital gains tax, selective employment tax, and, of course, from the municipal rates, to which my hon. Friend referred in his admirable speech.
  As other hon. Members wish to speak, I come briefly to the immunities from legal proceedings. The Minister said—although he spoke so fast that it was difficult to catch his words—that there were certain legal proceedings from which there would be no immunity and that we would welcome that. But there is a vast number of legal proceedings which it will not be possible to apply to officials of these two Organisations. We should take note of that. If the Minister wishes to say anything further upon that I should be grateful.
  Lastly, I wonder whether there is a security aspect to all this. I do not wish to say anything about a case which may be sub judice at this moment, but there have been cases in the past when members of international organisations, stationed in the capitals of other countries, have been engaged in espionage and activities dangerous to the state which has given them hospitality. We should like to be quite certain that no immunity that is accorded by this House would in any way preclude the necessary security measures against activities of that kind.
  11.39 p.m.
  Mr. John Farr: It is indicative of the state to which the Labour Party has sunk that the knowledge that it has gained control of a city council is greeted as great news by hon. Gentlemen opposite and raises a large cheer.
  Turning to the Orders, several points have been clearly made by my hon. Friends, which I do not intend to repeat. Instead, I should like to raise a couple of other points. I do so, because, as has
  828
  been said, the Under-Secretary spoke rapidly and briefly. What he told us was useful, but it was not sufficient. I have additional questions to put to him.
  I should like to know how on earth any Government Department could have permitted such a weak interpretation paragraph as paragraph 2. Its three subparagraphs contain a collection of words which are capable of almost any interpretation in the English language. For instance, what is the exact difference between "Representatives", the heading for paragraph 14, "High Officers"; the heading for paragraph 15, "All Officers", the heading for paragraph 16, and "Experts" the heading for paragraph 17? Why is not the difference explained in the interpretation paragraph?
  I know the Under-Secretary well and I know that he is not a man who would deliberately treat the House with discourtesy, but after the arguments of my hon. Friends he must admit that the House is short of the information it needs. My hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) asked into which categories the different servants of the Organisation would fall. What would be the categories of chauffeurs, gardeners, cooks? Is a secretary classed as an expert, or simply as an officer? Into which category would clerks fall? Four different categories are itemised and each has a slightly different treatment and it would help the House if hon. Members were told what type of employee fell into each category.
  The International Sugar Organisation is to replace the International Sugar Council. Are the privileges which we are asked to confer on the Organisation at least equalled by privileges granted to members of the Commonwealth Sugar Agreement? The Commonwealth Sugar Agreement is an important structure upon which we depend for most of our sugar supplies. Do the officials of that important organisation receive like privileges?
  Sir Harmar Nicholls: On a point of order, Mr. Deputy Speaker. Has there, by some method not known to us, been formed a National Government? I see my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) acting as a P.P.S. to a Government spokesman. Has something happened of which the House should be aware?
  Mr. Deputy Speaker: The hon. Gentleman knows that that is not a point of order.
  Mr. Farr: I was asking the Under-Secretary an important question of concern to hon. Members on both sides of the House. Are officials of the Commonwealth Sugar Agreement to have the same kind of privileges that we are proposing to confer on officials of the International Sugar Organisation?
  Mr. Deputy Speaker: The hon. Member is going a little wide of the Orders. It would not be in order for the Minister to reply to those questions.
  Mr. Farr: My difficulty, and I am sure that it is shared by a number of my colleagues, is that we know too little about the scope of the Orders.
  Hon. Members: Hear, hear.
  Mr. Farr: I am glad to have the support of the Treasury Bench in that respect.
  Mr. Eldon Griffiths: With respect, Mr. Deputy Speaker, is not my hon. Friend in order in asking these questions? There is contained in the International Sugar Agreement an article which specifically deals with the experts of Commonwealth countries and other countries with which the International Sugar Organisation will have to deal when it comes to London.
  Mr. Deputy Speaker: We are not discussing that Agreement tonight. We are discussing the two Orders which are before the House.
  Mr. Farr: I respect your Ruling, Mr. Deputy Speaker, but I think you will appreciate that, dependent as we are in this country on the valued supplies of Commonwealth sugar, in making my speech tonight it is difficult not to refer to the Commonwealth Sugar Agreement en passant. I want an assurance that the Commonwealth Sugar Agreement officials receive at least like privileged treatment as these international officials do.
  As I said a moment ago, much of our difficulty would have been resolved and we would not have put these questions if only the Minister had told us the total number of persons who are to receive this privileged treatment. The Minister
  830
  did not tell us the total number. He did not take the opportunity which was afforded him by my hon. Friend the Member for Bury St. Edmunds of giving the House the benefit of that information. Naturally, hon. Members on both sides of the House are chary of granting an unknown number of officials these vast privileges which have been spelt out so ably in other speeches.
  My hon. Friend the Member for Bury St. Edmunds said that he believed that these officials and, we understand, their families who play the markets in this country would be exempt from capital gains tax. I would add that they would also be exempt from stockbrokers' stamp duty on these transactions.
  We are also in some difficulty in understanding how much importance we should place upon these exemptions contained in these Articles. We do not know how many people they refer to. The Minister must have some idea. Is it in hundreds or in thousands?
  Mr. Braine: It is an official secret.
  Mr. Farr: The fact that we do not have any idea from the Minister makes us reluctant to allow the Order to pass without further explanation.
  I wanted to refer to a couple of other points, particularly on Article 10 relating to the import of capital equipment. Why is it necessary for the Organisation to import large quantities of foreign capital equipment into this country, duty and tax free? I know from my own experience—and other hon. Members on both sides of the House know it—that in this country we have a very sophisticated range of office equipment, including the latest type of computer, which can surely satisfy the needs of the International Sugar Organisation, without bringing in a large quantity of capital equipment from abroad, duty and tax free. What are the types of equipment and goods which are referred to in Article 11?
  I understand from what has been said earlier in the debate that Article 12 means that these privileged people will receive a full refund of all petrol duty and that they will be able to drive around with duty-free petrol in their tanks. Article 13 apparently gives them the very important privilege of being able to purchase in any of our shops purchase tax-free goods.

  831
  We may be making a mountain out of a molehill, and we may not. We ask the Minister to give us some idea of the total number of people who will be in that very privileged position if the House confirms these Orders.
  11.50 p.m.
  Mr. Whitlock: I am sorry that some hon. Gentlemen opposite, by their sometimes pompous, and sometimes nitpicking, approach to this matter have delayed the House from giving a speedy welcome and approval to these Orders which are recognised by the hon. Member for Essex, South-East (Mr. Braine) as enabling us to act as a more generous host to the people of these organisations—a suitably generous host, but not an over-generous host.
  Where I am able to answer some of the questions which have been put to me I shall do so, but, as the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) said, he is an expert on this matter but he still does not know the answers to them. In some cases so pernickety and detailed are some of the questions, that offhand I am not able to answer them either. But where the questions are worth all the trouble I shall write to hon. Gentlemen opposite if I do not cover them in the course of my reply.
  I have been asked about the total number of staffs of these Organisations. The total number of staff of all grades of the International Coffee Organisation is at present 65, that of the International Sugar Organisation is 18.
  Mr. Farr: Do those figures include families?
  Mr. Whitlock: I said quite specifically "the staffs of these Organisations". I have no idea what their progeny is, and I shall not make inquiries about that.
  I have been asked why the provisions conferring on staffs exemption from social security obligations are in both these Orders and not in the Order relating to the International Wheat Council. During the negotiations with the Wheat Council we offered to exempt its staff from social security obligations, but the Council declined the offer because the majority of its staff are British and would not in any case have been
  832
  exempted, while the few foreign staff preferred to remain covered by United Kingdom arrangements. In the case of the Coffee and Sugar Organisations, the majority of the staff are foreign and prefer to be covered by arrangements made in their own countries or by the Organisations. The provision for exemption was therefore included in the Headquarters Agreement with these Organisations.
  I have been asked about the position of families under Article 16(c)(ii). Customs privileges are not given directly to families, but obviously an officer may use his privilege to import articles for members of his family. I point out to the hon. Member for Bury St. Edmunds that while the 1968 Act gave power to extend privileges and immunities of high officers to families, these Orders do not take that power, and therefore the Orders do not apply to families. I said that earlier, and I say it again.
  The hon. Member for Essex, South-East also asked about the application of Article 16(i)(ii) to an officer who had entered into a contract before arrival here. If he had entered into such a contract to purchase a month before he came here, he would still be under contract immediately before coming here, or else he would be in ownership or possession of the article. I therefore do not follow the hon. Gentleman's question.
  Mr. Braine: The hon. Gentleman has missed the point. I was questioning the relevance of the word "immediately". If that word was not in the Article, the meaning would be clear. The word "immediately" begs the question which I asked. I was questioning the use of the word "immediately". I was questioning the draftsmanship of the Order.
  Mr. Whitlock: If he had entered into a contract a month before coming here he would still be under contract immediately before coming here.
  Mr. Braine: Exactly. Therefore, "immediately" is redundant.
  Mr. Whitlock: The hon. Gentleman may question the draftsman on the insertion of this one word. I prefer to believe that the legal draftsmen have been exact and correct.

  833
  The hon. Member for Bury St. Edmunds asked how much wines and spirits can be imported by these Organisations for their official use. The Customs and Excise authorities have limits for the amount of spirits, and so on, which may be brought in, and they treat these as a ceiling. The authorities do not state that amounts which they treat as ceiling, because it would only encourage everyone to go up to ceiling. The ceiling was, I believe laid down in the days of the last Administration. One would therefore think that in those days hon. Members opposite would have been querying the figures.
  Full diplomatic taxation exemption is given only to high officers. That means to only one man—the high officer under the Coffee Order—because there is not one at present entitled under the Sugar Order. Other staff get only income tax relief emoluments conditional on their paying the internal tax to the Organisation and Customs privileges only on personal goods imported on arrival. They do not get duty-free petrol.
  I was asked about exchange control. The Exchange Control Act, 1947, is the authority for the provision in the Agreements. Therefore, exchange control exemption is not provided for in the Orders. Capital gains tax exemption is given only to one high officer in the Coffee Organisation. The exemption does not apply to capital gains arising in Britain.
  Relief from rates, which is accorded to a diplomatic mission under the Diplomatic Privileges Act, 1964, is relief from the so-called non-beneficial portion of the rates, which relates to services from which the mission or organisation is deemed not to derive direct benefit. The largest element in this part relates to education. The beneficial part of the rates includes drainage, fire services, refuse removal, street maintenance, parks and open spaces. The method of according the relief is that the Treasury pays the total sum involved to the local authority in the first place and recovers the beneficial portion from the Organisation. The mission or organisation does not pay the police element, because we have a duty under international law to protect its premises. Other points I should be very happy to write and enlighten hon. Gentlemen.
  834
  I hope it will be agreed by the House as a whole that the United Kingdom derives political and financial benefit from the presence of these Organisations. Their presence reinforces London's position as the centre of world commodity trade and valuably influences our balance of payments by the expenditure of these Organisations and of the many overseas visitors who come to them on business.
  The importance of the work done by these Organisations in regulating international commodity trade and assuring stable markets was emphasised at the United Nations Conference on Trade and Development and until now these bodies have not received privileges and immunities commensurate with their functions and importance. With the passage of these Orders that defect in our arrangements for international organisations will be taken care of, and I therefore hope that the House will approve them.
  12.1 a.m.
  Sir Harmar Nicholls: Am I right in supposing that if one of the people with these privileges and immunities invests and makes a gain on his securities, he will nevertheless have to pay capital gains tax?
  Mr. Whitlock: He would have to pay.
  Sir Harmar Nicholls: I have considerable sympathy for the Minister in this matter because I recall being in a similar position, when I played a part in getting a sugar Measure through all its stages. These are intricate matters and one would not expect a junior Minister to carry all the answers to complex questions in his head. For this reason, when we were in office, we made sure that a Law Officer was on hand to answer difficult questions. Hon. Members are entitled to such answers, and it is to be regretted that a Law Officer is not present tonight.
  My hon. Friends and I are not criticising the hon. Gentleman. I blame whoever organises Government business for not giving him the necessary support, particularly on legal and complex matters, to conduct the debate properly. It is the job of junior Ministers to listen patiently, to answer our questions as best they can and to get the Government's business through in the best possible way.

  835
  The hon. Gentleman must show patience and generosity to hon. Members who seem to be probing matters deeply. It is not helpful for him to talk about my hon. Friends being pompous and nitpicking in their attitude. We are merely doing our duty. He described the conditions which we are considering, when questioned by us, as being generous but not over-generous, and—
  Mr. James A. Dunn: On a point of order. Would you agree, Mr. Deputy Speaker, that you are stretching the over-generous side of your nature in allowing the hon. Gentleman to speak on matters which have nothing to do with the Order?
  Mr. Deputy Speaker: I was about to intervene, but I thought that the hon. Gentleman had almost concluded.
  Sir Harmar Nicholls: I would have argued the point if you had, Mr. Deputy Speaker—[HON. MEMBERS: "Oh."]—and I resent the presumption of the hon. Gentleman in raising that point of order. My comments are completely relevant.
  The Minister said that families were not covered by this immunity. Had a Law Officer been present, I would have asked him how that assurance squared with what appears to be the clear statement in Article 16(c)(i):
  ". . imported for his personal use or that of members of his family forming part of his household…"
  Perhaps, in legal jargon, those words do not mean what they seem to say. The Minister, who comes from a civilised part of the country, should know the answer. The hon. Gentleman said that my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) should not have asked a question to which neither of them knew the answer. But it is the job of the Opposition to ask questions to which they do not know the answers: if they do know, they are taking advantage of the House.
  Mr. Braine: Can my hon. Friend throw any light on the heading to Part V? Who are these "experts", and how many are there? We are complaining about this extraordinary loose language.
  Sir Harmar Nicholls: My hon. Friend has made one of my points. I do not blame the Under-Secretary. He should have had the support of those who can give an authoritative answer on legal and technical jargon. If it does not sound too pompous, the hon. Gentleman should not pass off these questions by saying that he will write to hon. Members. That is courteous, but the Opposition are not asking for their own personal satisfaction. We have a responsibility to Parliament to get these things clearly on the record, and in a private letter they would not be on the record.
  Mr. Biggs-Davison: It is worse than that. Time and again, Ministers say that they will write to hon. Members, but I have never received a letter answering my questions.
  Sir Harmar Nicholls rose—
  Mr. Frank Allaun: On a point of order. I understand that this debate can go on for only an hour and a half, and it started exactly 92 minutes ago—
  Mr. Deputy Speaker: Order. I am seized of the point of order, which the hon. Member can leave to the Chair.
  Sir Harmar Nicholls: If there is an answer, it should not be confined to a private letter. It should be on the record. This is a difficult and technical matter. The Government know that we will not vote against the Orders. We do not want to be ungenerous to the people who come here as our guests. The Government have a duty—
  It being one and a half hours after the commencement of proceedings on the Motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 2 (Exempted business).
  Question agreed to.
  Resolved,
  That the International Sugar Organisation (Immunities and Privileges) Order, 1969, a draft of which was laid before this House on 14th April, be approved.
  International Coffee Organisation (Immunities and Privileges) Order, 1969, draft laid before the House, 14th April, approved.—[Mr. Whitlock.]

  HOUSING (SCOTLAND) BILL
  Order for Second Reading read.
  Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to a Scottish Standing Committee.—[Mr. McBride.]
  Question agreed to.
  Bill (deemed to have been read a Second time) committed to a Scottish Standing Committee.

  HOUSING (SCOTLAND) [MONEY]
  Queen's recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to prescribe a tolerable standard for houses and to make provision for the treatment of houses and areas, and for payments in respect of houses purchased or vacated, which do not meet that standard; to make new provision with respect to the repair of houses; to make further provision for grants by local authorities and contributions out of moneys provided by Parliament towards the cost of providing dwellings by conversion, or of improving dwellings; and for other purposes, it is expedient to authorise:—

  (1) any increase attributable to the Act of the present Session in the sums payable out of money provided by Parliament under sections 13, 16 and 17 and for the purposes of Part II of the Housing (Financial Provisions) (Scotland) Act 1968;

  (2) the payment out of moneys provided by Parliament of contributions to local authorities towards so much of any expenses incurred by them, or treated under the Act as incurred by them, for the purpose of the improvement of the amenities of certain areas as may be approved by the Secretary of State;

  (3) the payment out of moneys provided by Parliament of any administrative expenses incurred by the Secretary of State under the said Act of the present Session;

  (4) Any increase in the sums payable out of moneys provided by Parliament in respect of rate support grants which may arise from the inclusion, in the expenditure relevant to the fixing of the aggregate amount of those grants, of expenditure under the Act.—[Mr. George Thomson.]

  Dr. David Kerr discharged from the Select Committee on House of Commons (Services) and Mr. Garrett added.—[Mr. McBride.]

  FACTORY, PELAW-ON-TYNE (ATMOSPHERIC POLLUTION)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]
  12.9 a.m.
  Mr. Bernard Conlan: I want to raise a matter which is causing many of my constituents great concern. The problems to which I wish to draw the attention of the House this evening are problems that I have raised many times before in correspondence with departmental Ministers, by personal representations, by Questions in this House, and in a previous Adjournment debate on 28th June, 1967, almost two years ago, and yet the problem remains.
  For the sake of the record, I should explain that in May, 1966, a planning application was made by the firm of Wailes Dove (Bitumastic) Limited, the purpose of which was for the erection of a building to be used for the application of a protective covering to steel pipes and fittings. This building was to be within the curtilage of a site used for many years by a firm called Robert Bowran Limited, which manufactures paints and varnishes.
  Planning permission was given and subsequently granted in August, 1966, by the Felling Urban District Council, acting on behalf of the planning authority, the Durham County Council. At that time the offensive nature of the operations proposed by the applicants was not apparent. When the factory became operational in September, 1966, immediate complaints were made by local people about emissions from the plant, and these complaints have persisted ever since.
  The factory is situated in the centre of a good-class residential area, and in some cases is a mere 20 or 30 yards away from the nearest houses. From time to time, the whole area is pervaded by acrid smoke and smells, and there is irrefutable evidence of interior and exterior paintwork suffering considerable deterioration and damage because of the heavily polluted atmosphere. Garments hanging out to dry after being washed are being spattered with a tar-like substance that has fallen from the surrounding atmosphere.

  839
  It is little wonder that my constituents are gravely concerned and worried at the possible damaging effects on their health.
  I said in my speech on 28th June, 1967, that these processes, being registrable under the Alkali Works, Etc., Regulations, 1906, should never have been carried out in close proximity to residential property. But once the factory was built and operational it was very difficult to deal with, and at this stage, Mr. Deputy Speaker, I would like to pay tribute to the officials of the Felling Urban District Council, especially the Public Health Inspector, and also to the Ministry's own Alkali Inspector, because they have been grappling constantly with a problem which is insoluble.
  The firm too has been trying very hard to remove the causes of the complaints. It has made extensive alterations to the plant itself, and has installed some fresh equipment, but without success.
  It is abundantly clear, I think, that no matter how much surveillance may be applied, and irrespective of any amount of new plant and equipment, the one and only solution is to transfer the factory to another site away from houses. Offensive smoke and fumes are inherent in this type of process. There is no escaping that fact.
  I am not at all sure that the arrangements for dealing with planning applications involving registrable processes are satisfactory. My hon. Friend the Joint Parliamentary Secretary, the hon. Member for Hayes and Harlington (Mr. Skeffington), told me in reply to a Parliamentary Question on 17th December, 1968:
  "Registrable processes are placed in a separate industrial group in the Use Classes Order, because of their special characteristics, to give local planning authorities effective control over their siting."—[OFFICIAL REPORT, 17th December, 1968; Vol. 775, c. 317–8.]
  If that is so, just how effective is that control? I find it very difficult to believe that if the planning application had shown clearly that the intended process might cause offence, as all registrable processes will, it would have been approved. I very much doubt that it made clear what the factory was to be used for.
  840
  Why not put the responsibility on the applicants to state specifically whether the premises are or are not to be used for registrable processes? I would like my hon. Friend to look at the regulations covering these circumstances, for it seems to me that there is a great need for a tightening up. I realise that that aspect of the matter does not affect the case I have in mind. But action of the kind I suggest could prevent a great deal of trouble and heart-ache for many people in the years to come.
  When my hon. Friend the Joint Parliamentary Secretary, the hon. Member for Widnes (Mr. MacColl), replied to the previous debate that I opened on this subject on 28th June, 1967, he said that it was for the local planning authority to take the initiative and make a discontinuance order under the town and country planning laws to stop the firm from carrying out the offensive operations. Although I acquainted the local planning authority with my hon. Friend's views, I regret to say that almost two years later the discontinuance order has not been made. In the meantime, my constituents continue to suffer.
  I readily appreciate the difficulties of the local planning authority. I am aware of the reasons why it does not press ahead vigorously with the order, although I do not agree with them. But I cannot and will not remain silent and let things drag on like this.
  All the representations I have made to my hon. Friend have been received with sympathy and understanding. I recognise that it has all along been his wish that the firm and the county council should enter into a voluntary agreement for the resiting of the factory at a more suitable location. But these discussions have been going on for a long time, and no agreement has been reached. The time has now come for my hon. Friend to lay down a fairly short time limit to enable the county council to make one final effort to reach agreement. If it is not reached at the end of the period, he must invoke his reserve powers and seek the revocation of the planning approval. There is no alternative way out. In the circumstances, I believe that the proposition I have made is both fair and reasonable and I look to my hon. Friend for action.
  12.20 a.m.
  The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Arthur Skeffington): My hon. Friend the Member for Gateshead, East (Mr. Conlan) has pursued this matter on behalf of his constituents with very great and praiseworthy persistence. Although he has many other claims to fame in Gateshead and in this House, I tend to associate him with the undoubted hardship which a number of his constituents have suffered ever since this process in the factory was established in 1966. No one could have done more locally with the local authority or with my Department than he has to try to get a just solution.
  My hon. Friend made the point that had the planning authority fully understood when the application came before it what was involved in the process at this factory it would not have granted permission. I think that that undoubtedly is the case. It assumed from what was contained on the application form, which was for
  ". . application of protective covering to steel pipes and fittings 0…"
  that this was an extended use of a similar sort of procedure which had been carried on in the old paint factory and therefore came within Class VIII of the Use Classes Order. I have told my hon. Friend previously that where there is a process which creates a nuisance by virtue of the escape of noxious or offensive gases the application falls to be dealt with under Class V, and I am certain, therefore, that, had the local planning authority known what was really to take place and what the process really was to be, it would not have given permission.
  That is the unhappy position we have arrived at. Planning permission was given, the process started and the kind of conditions began to occur which my hon. Friend has described so graphically—droplets of bituminous deposits, smell, and sometimes noise as well, as he mentioned on a previous occasion. In these circumstances, what was the best remedy that could be afforded?
  As a result of public protests and representations by my hon. Friend, the local planning authority decided to take formal proceedings against the company
  842
  in the form of an enforcement notice served in October 1967 on the ground that what the company was doing was outside the terms of its planning permission. Subsequently this enforcement action was dropped, and I assume that it was dropped on the legal advice that planning permission had been given with-in the terms of the application. Although the application was not precise, it contained the words about a process
  "… of protective covering for steel pipes and fittings …"
  It is uncertain whether the enforcement notice would have been successful.
  But even if it were necessary to go ahead now with a discontinuance order, either made by the local authority or by the Minister, it would still be a lengthy process. I have the calculations before me of the time which might well elapse. Even if action were, say, taken next week and the order were unopposed, it might well take six to nine months. If the order were opposed, the quickest period would be 11 months and it might take as long as 14 months.
  If there is an alternative solution, it is preferable to try it, (a) because it is doubtful whether the firm would be held to have breached the conditions, and (b), even if one did persist in that way, there is the difficulty of a further fairly lengthy period during which my hon. Friend's constituents would have to put up with, perhaps not all the inconvenience they have had, because as a result of what the firm has done and because of what the Alkali Inspectorate has done the nuisance has been reduced.
  Nevertheless there is no doubt that this process is too close to normal homes. There is one other way in which the matter might have been dealt with, and that is by a discontinuance order under Section 28 of the 1962 Act. If such an order is served and is held that a valid planning permission has been given, then the authority would be faced with quite heavy compensation. That means that the ratepayers of my hon. Friend's constituency and other ratepayers in the county might be involved in the payment of a sum of probably not less than £100,000—it might be more. Again the process before there could be completion of this procedure might be a long one.

  843
  This is a matter which had to be taken account of by the authorities, and even my right hon. Friend if he made the order, which he can do, although he very rarely uses the power—it is much better used by the local authorities—compensation would still have to be paid by the local people. Consequently this is a factor which cannot be lightly turned aside, although it must not dominate the issue.
  I am glad that my hon. Friend paid tribute to those who have been seeking a solution, the officers of the Felling local authority and the county and also the Alkali Inspectorate. Once the Inspectorate knew what was happening—it was not registered until 1967 but operations started in 1966—it has been most thorough in keeping a constant watch and obtaining as far as possible some mitigation of the nuisance by the installation of specialised machinery. Looking at the records, I find that in 1966, after establishment but before registration, it paid six visits, no less than 30 in 1967, 90 in 1968, and this year up to the beginning of May it made 22 visits. It has done all it can within its powers to affect what improvement is possible. It is in no doubt that this type of work ought not to be allowed so close to a residential area.
  Mr. Jasper More: Does this not suggest that the law is in a very unsatisfactory state? I have a case in my constituency—
  Mr. Deputy Speaker (Mr. Harry Gourlay): Order. I hope that the hon. Gentleman is not suggesting any amendment of the law, which is not in order on an Adjournment debate.
  Mr. More: I only wanted to mention that I had a similar case in my constituency, of which either the Minister or his predecessor is aware. It seems very unsatisfactory that the planning committee should have given permission which produces the results that have put this burden on the Alkali Inspectorate.
  Mr. Skeffington: I agree with the hon. Gentleman. Certainly in the past these matters have been even more unsatisfactory. We have made a number of changes in the 1968 Act which will be helpful. There are two points which should help my hon. Friend.
  844
  My hon. Friend asked me whether the regulations were satisfactory in the sense that the planning authority obviously had not been aware of the full details of the procedure. The Durham County Council have instituted a new procedure designed to ensure that what happened here will not happen in future anywhere else in the county. This is encouraging, although it does not get my hon. Friend out of his difficulty or remove the grievance of his constituents.
  The question of a discontinuance order is difficult because of compensation, and an enforcement notice is also difficult. We have taken the view, although it has taken a long time to get to this point, that the easiest way would be for the local authority to come to an agreement, with financial assistance, to get a voluntary solution. I am sorry that this matter has dragged on, but I can now give my hon. Friend some encouraging news.
  The county council officers were instructed to pursue the possibility of a voluntary solution with a promise of some financial assistance towards the company's costs. They have recently agreed with the company on an alternative site free of these difficulties, and have established with the company the kind of financial help sought. These negotiations have now gone some way; we are not just hoping; something is happening.
  Subsequently sub-committees of the county council and the Felling Urban District Council have considered the case. Its conclusions and recommendations are now subject to ratification by the two councils, and I do not think that any difficulties will arise. A formal report will be made at the meeting of the county planning committee of the county council on 15th May, and I hope that there will be conclusive results. A recommendation will be made that this plan should come into effect and that the clerk should be authorised to open formal negotiations. The preliminary work has all been done. The recent petition of the Felling residents will also be reported at that meeting. As a result of the activities of my hon. Friend and of local residents we are now within sight of a solution. An acceptable site has been found, and if this solution comes about it will be in no small part due to

  845
  the activities of my hon. Friend inside and outside the House.
  I hope, as a result of this case and the case mentioned by the hon. Gentleman, that planning authorities under the procedures of the new Act will in future be given more information in the applications that they receive, so that adequate provision may be made or permission
  846
  refused if noxious processes are involved. This has been an unhappy case, and I hope that the news I have given will go a little way to lighten the feelings of my hon. Friend and of his constituents.
  Question put and agreed to.
  Adjourned accordingly at twenty-six minutes to One o'clock.

ECONOMIC AFFAIRS
  Merseyside Development Area
  Merseyside Development Area
  Stoke-on-Trent (Industrial Diversification)
  Stoke-on-Trent (Industrial Diversification)
  Small Business Centres
  Small Business Centres
  Erewash Valley
  Erewash Valley
TELEPHONE SERVICE
  Cheltenham
  Cheltenham
  Exchanges (Names and Code Numbers)
  Exchanges (Names and Code Numbers)
  London-Scotland Service
  London-Scotland Service
  Rhum, Eigg, Muck and Canna
  Rhum, Eigg, Muck and Canna
POST OFFICE
  Telex (Airports and Motorway Service Areas)
  Telex (Airports and Motorway Service Areas)
  Letter Deliveries (London Area)
  Letter Deliveries (London Area)
  International Telex Exchange (London Switchboard)
  International Telex Exchange (London Switchboard)
EMPLOYMENT AND PRODUCTIVITY
  Industrial Disputes (Lost Working Days)
  Industrial Disputes (Lost Working Days)
  Industrial Relations Commission
  Industrial Relations Commission
  Trawler Crews (Pay)
  Trawler Crews (Pay)
  Employment of Women (Oldham)
  Employment of Women (Oldham)
EDUCATION AND SCIENCE
  European Institute of Science and Technology
  European Institute of Science and Technology
  New School, Honiton
  New School, Honiton
HOME DEPARTMENT
  Immigrants
  Immigrants
  Capital Punishment
  Capital Punishment
  Prince of Wales (Investiture)
  Prince of Wales (Investiture)
  Dr. A. E. Laurence
  Dr. A. E. Laurence
NATIONAL FINANCE
  Company Dividends (Tax)
  Company Dividends (Tax)
  Public Sector Expenditure
  Public Sector Expenditure
  Foreign Travel Allowance
  Foreign Travel Allowance
  Sterling Balances (Gold Guarantee)
  Sterling Balances (Gold Guarantee)
  Savings Schemes
  Savings Schemes
  Chancellor of the Exchequer (Visit to Washington)
  Chancellor of the Exchequer (Visit to Washington)
  Average Incomes
  Average Incomes
  Local Authorities (Overseas Loans)
  Local Authorities (Overseas Loans)
  Balance of Payments
  Balance of Payments
  H.M.S.O. Publications Warehouse (Industrial Dispute)
  H.M.S.O. Publications Warehouse (Industrial Dispute)
BOARD OF TRADE
  Overspill Towns (Employment)
  Overspill Towns (Employment)
  Export Figures
  Export Figures
  Dairy Products (Imports from China)
  Dairy Products (Imports from China)
TECHNOLOGY
  Ball Bearing Industry
  Ball Bearing Industry
SCOTLAND
  Teachers (Registration)
  Teachers (Registration)
  Road Accidents
  Road Accidents
LOCAL GOVERNMENT
  Woking (Redevelopment)
  Woking (Redevelopment)
  Rugby Portland Cement (Fall-out)
  Rugby Portland Cement (Fall-out)
  NIGERIA (PRIME MINSTER'S VISIT)
  NIGERIA (PRIME MINSTER'S VISIT)
  FISHERIES (MINISTERIAL RESPONSIBILITIES)
  FISHERIES (MINISTERIAL RESPONSIBILITIES)
  VETERINARY SERVICES (WALES)
  VETERINARY SERVICES (WALES)
  MENTALLY HANDICAPPED CHILDREN
  MENTALLY HANDICAPPED CHILDREN
FOREIGN AND COMMONWEALTH AFFAIRS
  Anguilla
  Anguilla

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwark.

B.O.A.C. AIRCRAFT PURCHASES
THE EARL OF KINNOULL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether B.O.A.C. are considering plans now for increasing their existing fleet of VC 10 aircraft or whether they are likely to favour a further order of American Boeing 707 aircraft.]
LORD BESWICK: My Lords, I understand that B.O.A.C. are hoping to purchase two convertible Boeing 707s, needed for non-scheduled operations starting next year.
THE EARL OF KINNOULL: My Lords, while thanking the noble Lord for that disappointing reply, may I ask him whether he can advise us what load factor the VC 10 has so far accomplished on average over the last three years, in comparison with the Boeing 707?
LORD BESWICK: My Lords, I am sorry that I cannot give that figure off the cuff, but it really is not relevant to the noble Lord's Question. Unfortunately, as I understand it, there are no VC 10s available for this type of operation.
THE EARL OF KINNOULL: My Lords, can the noble Lord say whether the present VC 10 production line is still operating or whether it has officially closed down?
LORD BESWICK: My Lords, I was hoping that the noble Earl would not press me about this. I myself wish very much that the Corporation had ordered more VC 10s some while ago. Nevertheless it is in any case a convertible aircraft which the Corporation need. It is not, however, now convenient for the B.A.C. to accept orders for two special aircraft.

YOUNG SOLDIERS AND ARMY CHURCH PARADES
3.7 p.m.
LORD SORENSEN: 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 how regularly boy or youth recruits for the Army are compelled to attend church parades, and whether they have the option of choosing not to attend or of attending a church service of their own choice.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR DEFENCE, R.A.F. (LORD WINTER-BOTTOM): My Lords, recruits in Junior Soldier Units, such as Army Apprentice Colleges or Junior Leaders' Regiments, are required to declare their religion and to attend religious services of the denomination to which they have declared they belong. Normally they attend religious services once a week, or less frequently at the discretion of their commanding officers.
LORD SORENSEN: My Lords, may I take it from the noble Lord's Answer that in fact a number of these boys can be compelled to attend religious services, even if they do not desire to?
LORD WINTERBOTTOM: My Lords, the boys are in a position to say that they have ceased to belong to a religious denomination, and after one month they can then be classified as atheists or agnostics and cease to attend services.
LORD SORENSEN: My Lords, does my noble friend appreciate that a number of boys are not necessarily agnostic or atheist but do not desire to attend service; and seeing that we have abolished compulsory attendance at church services for adults should this not also apply to the young ones?
LORD WINTERBOTTOM: My Lords, this is a fine theological question. Within an armed force a young man may choose to be an agnostic or Church of England, but if he decides to belong to the Church of England he must attend church service.
LORD BLYTON: My Lords, is my noble friend aware that when I was in

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the Services I used to prefer to go to church to get relaxation rather than do the dirty jobs in the barracks that were given to us if we did not go to church?
LORDWINTERBOTTOM: My Lords, as always, my noble friend has a firm grasp of reality.
LORD SORENSEN: My Lords, may I further ask my noble friend whether he means that those who do not attend church are then subject to other routine duties, such as cleaning out latrines?
LORD WINTERBOTTOM: My Lords, that is another question, but cleaning out latrines is a very old-fashioned duty.
BARONESS SUMMERSKILL: My Lords, may I ask my noble friend, looking at this matter quite objectively, whether, if a boy is registered as an agnostic or an atheist at the age of 14 or 15, when he has not had time seriously to think about these matters, his future is prejudiced, perhaps, in some field of labour?
LORD WINTERBOTTOM: My Lords, nobody registers him as such; he registers himself. The parents, of course, have a view and are consulted, but it is up to the young man himself to decide to which religious group he belongs.
BARONESS SUMMERSKILL: My Lords, may I ask my noble friend whether he, at the age of 14 or 15, knew all the answers to life?
LORD WINTERBOTTOM: My Lords, even at my present age—no.
LORD INGLEWOOD: My Lords, would the noble Lord agree that he is largely the man he is because of compulsory chapel attendance at Charter-house?
LORD WINTERBOTTOM: My Lords, as the noble Lord knows, Charterhouse is somewhat more permissive. I do not believe that one has to attend twice a day nowadays.
LORD MAELOR: My Lords, may I give my experience? I am a Scotch Baptist—and, incidentally, Scotch Baptists are not to be found in Scotland: they are in Wales.
SEVERAL NOBLE LORDS: Order!
THE LORD PRIVY SEAL (LORD SHACKLETON): My Lords, would the noble Lord give way? I am sure the noble Lord is giving the House a lot of valuable information, but if he; could phrase it in an interrogatory fashion he will find an easier passage.
LORD MAELOR: My Lords, is my noble friend aware that there are no Scotch Baptists in Scotland; they are in Wales? But when I declared myself as a Scotch Baptist I was told "No religion—C. of E."

STANSTED AIRPORT AND RADAR EQUIPMENT
3.11 p.m.
LORD TREFGARNE: 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 radar equipment is at present installed and available for use at Stansted Aerodrome.]
LORD BESWICK: My Lords, at present there is no radar equipment installed or available for use at Stansted Aerodrome. Hitherto the volume of air transport movements has not warranted the required expenditure.
LORD TREFGARNE: My Lords, I am obliged, as always, to the noble Lord for that Answer. Would he not agree, however, that this deficiency ought to be rectified at an early date, particularly now that the American supplemental carriers are being encouraged to use that airport? Can he give an undertaking that this matter will be looked into, and that proper equipment will be installed if it is found necessary?
LORD BESWICK: My Lords, if it is found necessary, something will be done, but I do not agree that there has been any lack of consideration before. There has been some slight problem with a U.S.A. fighter squadron at Wethersfield. Some changes in procedure there will help in the future, and there is the possibility of some temporary radar equipment being installed, which will give us some experience of what goes on in that area. Talks to this end are now being held.

AIR NAVIGATION SERVICE CHARGES
LORD TREFGARNE: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government why they omitted to follow the normal consultative procedure before laying Statutory Instrument No. 510 (1969) before Parliament on April 9 last.]
LORD BESWICK: My Lords, I do not accept that Her Majesty's Government failed to consult the interested parties before laying Statutory Instrument No. 510.
LORD TREFGARNE: My Lords, once again I am obliged to the noble Lord for that reply. Is he aware that his view seems to be confined to him alone; and is he further aware that the people who are alleged to have been consulted flatly deny it? Will he therefore undertake that before any similar arrangement is made better consultation will take place?
LORD BESWICK: My Lords, if the noble Lord is going to make an assertion of that kind in this House he should bring forward some evidence. He is challenging the good faith of Ministers and civil servants, and he should not do it like that.

THE WHITSUN RECESS
3.10 p.m.
LORD BESWICK: My Lords, at a convenient moment after half-past three my noble friend the Leader of the House will be making a Statement on the industrial dispute at Her Majesty's Stationery Office.
It may be convenient for the House if I inform your Lordships that, subject to the progress of business, it is intended that we should rise for the Whitsun Recess on Thursday, May 22 and return on Monday, June 9.
EARL ST. ALDWYN: My Lords, I am grateful to the noble Lord for giving the House that statement. May I ask why we should come back on Monday the
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9th? This House usually reassembles after a Recess on a Tuesday.
LORD BESWICK: My Lords, probably the noble Earl did not hear me say that I was proposing that the House should rise on Thursday, May 22 until Monday, June 9. That seems a very reasonable Recess. I phrased it in that way because I thought, after consultation, that it was better it should be done in that way. One of the Bills we hoped to take on Thursday the 22nd is unlikely to be with us, and most noble Lords will find it more convenient if they are told that we are coming back on the 9th, and learn later, if the Bill does not arrive early enough, that we shall come back on the 10th, rather than the other way round.
LORD CARRINGTON: My Lords, can the noble Lord give us an undertaking that there will be enough business to keep the House occupied for the rest of the summer? I understand that now that the Parliament (No. 2) Bill is dropped and the fate of the Industrial Relations Bill is uncertain we may find that there is not enough to do. So why come back on a Monday?
LORD BESWICK: My Lords, if the noble Lord's venture into—I will not say the unknown, but the future, proves to be justified, we may even come back on the Tuesday.
LORD BYERS: My Lords, do I understand that we are coming back one day earlier to take the Divorce Law Reform Bill? Is the noble Lord sure that he is going to get it?
LORD BESWICK: My Lords, there happens to be other business: the Bill I had in mind was the Post Office Bill.

BUSINESS OF THE HOUSE
LORD SHACKLETON: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That leave be given to the Chairman of Committees to advance the Third Readings of the Barclays Bank Bill and the Lever Park Bill from Thursday the 22nd of May to Wednesday next.—(Lord Shackleton.)
On Question, Motion agreed to.

PROCEDURE OF THE HOUSE
3.14 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, I beg to move that the First Report from the Committee on Procedure of the House be now considered.
Moved accordingly, and on Question, Motion agreed to.
The Committee's Report was as follows:
1. SELECT COMMITTEES ON PUBLIC BILLS
The Committee have considered the experiment of last summer in referring the Gaming Bill to a Select Committee instead of committing it to a Committee of the whole House. The Committee are of opinion that the experiment was successful and recommended that suitable Public Bills should in future be referred to similar Select Committees.
2. PUBLIC PETITIONS
The Committee have considered the proceeding in the House on Public Petitions. They recommend that such Petitions should be presented only by a member of the House and that in doing so the Peer presenting a Petition should confine himself to reading out the Prayer and stating the number of Petitioners who have signed the Petition. They further recommend that such a Petition should not be printed unless a member of the House puts down a motion to debate it for a particular day; in which case the Petition will be ordered to be printed for the convenience of the House.
3. UNSTARRED QUESTIONS
The Committee have had their attention drawn to the increase in the number of Unstarred Questions, and particularly those coming on at a late hour. They have considered whether to recommend any limitation, either of time, or of the number of Unstarred Questions allowed on any one day.
While at this stage the Committee would be reluctant to recommend restrictions of this kind by Standing Order, which might unduly interfere with the flexibility of the House's procedure, they are of opinion that it is undesirable, as a general rule, for a second Unstarred Question to be taken after 8 o'clock unless there are special circumstances. They, therefore, recommend that Peers should only put down a second Unstarred Question on a day when the business appeared to be light; and if subsequently the pressure of business increased so that it appeared after all that such a Question would come on late, the Peer concerned should be prepared to postpone his Unstarred Question to a more convenient date, subject only to the convenience of the House and of other Peers who might wish to speak upon the particular Question.
The Committee recommend that an appropriate entry should be made in the Companion to the Standing Orders.
THE EARL OF LISTOWEL: My Lords, I beg to move that this Report be agreed
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to. In asking your Lordships to agree to the Report, I should like to make a few brief comments on two of its paragraphs. First of all, I would say a few words to expand and correct paragraph 1. In this paragraph, which deals with Select Committees on Public Bills, the Report is misleading when it says:
"… the experiment of last summer in referring the Gaming Bill to a Select Committee instead of committing it to a Committee of the Whole House."
The House will recall that the Bill was referred to a Select Committee whose procedure was as similar as possible to that of a Committee of the Whole House and was then recommitted to a Committee of the Whole House. That was in fact what occurred.
I should also like to draw the attention of the House to the proposal regarding Unstarred Questions set out in paragraph 3. The effect of this proposal, while it points out that it is usually undesirable to take Unstarred Questions after eight o'clock in the evening, is to continue to rely on the good judgment of Members of the House to decide whether to ask a second Unstarred Question after eight o'clock on a particular day. I beg to move.
Moved, That the Report be agreed to.—(The Earl of Listowel.)
LORD SHACKLETON: My Lords, perhaps I could support the noble Earl, the Lord Chairman of Committees. This question of applying some limitation to Unstarred Questions could raise very delicate issues, and we considered—in-deed, we twice considered—whether or not to introduce something a little more rigid. We were all agreed that it was most undesirable to introduce rigidity into our arrangements if we could avoid it. It is one of the enormous advantages of our procedure in this House that we are much freer to take business at convenient moments and in ways that are generally acceptable to the House, and therefore we thought it undesirable to introduce specific limits in this matter. On the other hand this puts a particular responsibility on the good sense of Members of your Lordships' House, and I have no doubt that the Report of the Committee will be taken to heart by all noble Lords.
On Question, Motion agreed to.

NUCLEAR INSTALLATIONS BILL
House in Committee: Clauses agreed to.
House resumed: Bill reported without amendment; Report received.

PARLIAMENT (No. 6) BILL [H.L.]
LORD ALPORT: My Lords, with the permission of the House, I should like to withdraw this Bill. Accordingly I beg leave to withdraw the Bill.
Bill, by leave, withdrawn.

HOUSE OF LORDS REFORM
3.20 p.m.
LORD ALPORT LORD ALPORT rose to move that this House takes note of the present situation with regard to the reform of the House of Lords and its wider implications for the functioning of Parliament. The noble Lord said: My Lords, the Bill which you have been good enough to allow me to withdraw was not my Bill; it was a Bill no doubt coloured by the political requirements of the situation as seen by the Government, but it was in principle a product of prolonged conversations between the Labour, Conservative and Liberal Leaders, who had reached a remarkable measure of agreement. I should like to say to my noble friends, Lord Carrington and Lord Jellicoe, that during nearly forty years' of active association with the Conservative Party's fortunes, in good days and in bad, I can think of no more remarkable achievement in the field of constitutional reform than theirs in assisting a Labour Government towards a decision to publish, first, a White Paper and, secondly, a Bill, the effect of which was both to strengthen your Lordships' House and to maintain a remarkable degree of continuity with regard to its composition.
As to the first, let me recall to your Lordships the views expressed by Mr. Heath a few days ago. Mr. Heath is reported in The Times of April 24 as follows:
"Of the Lords reform Bill, Mr. Heath said the White Paper embodied the best proposals for reform yet devised and they would have
1272
produced a more effective House of Lords. He suggested that if Mr. Wilson had not called off the inter-Party talks, in a fit of pique, over the Lords' action on the Rhodesia Order last summer, the Opposition would have gone on fighting for the Bill."
So far as continuity is concerned, and assuming a reasonable span of life, there would still be at least one Peer entitled to sit in your Lordships' House by hereditary right in the year 2020.
I think, frankly, that this was a brilliant achievement on the part of the two noble Lords who led the Conservative Party in this House. Their success was endorsed by an overwhelming vote which your Lordships gave in favour of the White Paper. It may be that the Bill, the No. 2 Bill, when presented to the House of Commons, fell short in some respects of the promise of the White Paper. Nevertheless, as a Conservative I recognise that it took great political courage and breadth of vision on the part of Ministers to produce a Bill at all on the lines of the No. 2 Bill. Here the credit, so far as your Lordships' House is concerned, goes, I believe, to the noble Lord, Lord Shackleton, and to the noble and learned Lord the Lord Chancellor. In promoting the White Paper and the Bill, clearly they were inspired by the wish, in the interests of the Labour Party, to put an end to the centuries-long domination of this House which the Tory Party has enjoyed, but at the same time to preserve the valuable role which your Lordships' House has in relation to our Parliamentary system, and to maintain in our typically English way an element of continuity in the evolution of a great historic institution.
I guess that I should be right in saying that the same breadth of vision animated Lord Byers and his Liberal colleagues, whose political inspiration must be drawn from memories of the last Liberal Government and the bitter episode of the Parliament Act 1911. If I had been a Labour or a Liberal Peer, understandably embittered by the manifest unfairness of the political situation created by the existing composition of your Lordships' House, I should have had difficulty in resisting the urge to use the opportunity provided by a large majority in the House of Commons to replace the long decades of Conservative domination of this House by a system which gave my Party at any rate

1273
an equal chance of enjoying a long period of similar advantage. But that is not what the Parliament (No. 2) Bill sought to do. Its aim was to give a Labour or a Liberal Government something less than every Conservative Government had enjoyed since the 'seventies of the last century: that is, a docile majority in the House of Lords which could be relied on to prevent any obstruction of, or embarrassment to, a Conservative Administration or its supporters in the House of Commons.
It may be that Party zealots will consider that there are defects in a solution which does not seek to extract the last ounce of Party advantage from a situation with which it deals; but I have a profound faith in the fair-mindedness and common sense of British opinion. I believe that, if fully understood, the generosity of the reforms agreed to by the Government and published in the No. 2 Bill would have been of as great advantage to the Labour Party as the existing composition of the unreformed House of Lords is a political liability to the Conservatives.
The position was admirably described in his Life of Lord Lansdowne by the grandfather of my noble friend Lord Newton. Your Lordships will recollect that the second Lord Newton was a Conservative Peer and an aide to Lord Lansdowne during the controversial Sessions of 1910 and 1911. Lord Newton, in this book, says:
"The failure of the Unionist Party to recognise the necessity of reforming the House of Lords when they had the opportunity during their ten years' period of office from 1895 to 1905 is one of the most curious oversights in Party tactics imaginable. The House of Lords positively invited attack. Overgrown, unrepresentative and unwieldy, when the Unionists were in office it was expected merely to act as a kind of registry office, and to pass without amendment, and occasionally without discussion, any measure sent up to it at the last moment. When, however, a Liberal Government was in power, it was expected to come to the rescue of a discomfited Opposition. Although the House of Lords has occasionally shown itself to be a more correct interpreter of public feeling than the House of Commons, its gigantic and permanent majority deprived it of any appearance of impartiality, and, unfortunately, it had not shown any sign of independence by throwing out any Conservative measure."
Lord Newton goes on to say, writing in 1929,I think:
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"The danger of the situation had become fully apparent to the more clear-sighted and energetic members of the Conservative Party."
He subsequently proposed some reform, and he notes that his proposal
"found little favour in the eyes of the official Opposition"—
that is, the Conservative Party—
"and various efforts were made privately to induce me to withdraw the Bill, chiefly on the familiar ground that it was 'inopportune'. It was certainly inopportune in the sense that it had been for too long delayed, but it was evidently less inopportune in 1907 than in 1910."
He goes on, finally, to say
"The task of pointing out its imperfections to any Assembly is an ungrateful one, and there were probably many who resented my action"—
that is, Lord Newton's action—
"as an impertinence; but whatever the defects the House of Lords may possess, it is always polite".
From my own personal experience since I entered your Lordships' House there is a familiar ring about Lord Newton's description of his experiences some forty or fifty years ago.
My Lords, the No. 2 Bill would have ended the state of affairs described by Lord Newton, and which in fact still exists in this House to-day, a stale of affairs which has been morally and politically indefensible for nearly a hundred years; which has weakened your Lord-ships' House in the eyes of a fair-minded public; which has given us a unicameral Parliament in fact if not in theory, and, because of this, has undermined the balance and credibility of our Parliamentary system at a time when our democratic institutions need all their strength as Britain enters an era of great economic instability and trouble. It is because I agree with Mr. Heath that the Government's proposals embodied the best proposals for reform yet devised, and with my noble friend Lord Carrington that the dropping of the Bill represented a wasted opportunity of a reform which would have given to the Upper Chamber powers appropriate to its place within the Constitution that I, at any rate, have been appalled by what happened to the No. 2 Bill in the House of Commons.
It would not, I think, be in accordance with our custom in this House to comment in detail upon proceedings in another place, but no one who has the

1275
slightest knowledge and understanding of the workings of our Party political system can fail to be astonished—quite apart from the cause of reform of this House—that the leaders of the Government and of the Opposition have allowed themselves to be deflected from effecting a major piece of constitutional reform, on the desirability of which there is general agreement, by a combination of forces which represent the extreme Left and the extreme Right in the contemporary political spectrum. It is quite unimportant that the reasons for the opposition of these groups to the No. 2 Bill are quite different: the Labour Left presumably because it strengthens the powers of the Second Chamber, and the Tory Right presumably because it weakens Conservative domination over it. Nor is it right to believe that the Government's defeat—and this is what it came to—on the No. 2 Bill was due to a purely opportunist combination of forces led by two rather elderly enfants terribles in the shape of Mr. Powell and Mr. Foot. I dare prophesy that the consequence of what happened to the No. 2 Bill will affect the remainder of the Labour Government's term of office and have serious consequences to Mr. Heath's ability to control his Party and govern when he comes to power.
LORD CONESFORD: My Lords, may I appeal to the noble Lord the Leader of the House to guide us? My noble friend is now in this speech criticising individual Members of another place for their actions in the current Session. Were a similar thing to be done in another place immediate objection would be taken thereto by Mr. Speaker. It would be out of order. I think we desire to treat another place with the respect with which the two Chambers invariably treat each other. As it is not within the power of any presiding officer in this House, as it is in the power of Mr. Speaker, to stop my noble friend, I would seek the guidance of the noble Lord the Leader of the House on whether it is not contrary to the practice of this House to criticise individual Members of another place for their votes and speeches in the current Session?
VISCOUNT DILHORNE: My Lords, before the noble Lord replies, would it not be in accordance with custom to
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ask my noble friend to withdraw the observations he made about individual Members of another place?
LORD ALPORT: My Lords, perhaps it would help the House and the noble Lord the Leader of the House if I say that of course if I have caused any offence to the right honourable and honourable Gentlemen in another place by the reference to them, I immediately withdraw it.
LORD SHACKLETON: My Lords, since I have been asked by the noble Lord to comment, this is a very delicate area and we have been conscious of remarks made in another place which have caused very considerable resentment and resentment among all Members of this House. I think it would be as well if I drew attention to what the Companion to the Standing Orders actually says on this. As is so often the case, the Companion gives general guidance without being quite as explicit as one might wish, but of course in another place there is the Speaker to interpret. This appears on pages 61 and 62 of the Companion, and the two main points are
"It is out of order to quote from a speech of a Member of the House of Commons, unless it be the speech of a Minister …"
although
"The content of a speech … may be summarised".
It then goes on to say:
"This practice has been established for the purpose of avoiding anything which might bring the two Houses into conflict, and for preventing a debate in the House of Lords becoming a continuation of a debate in the House of Commons."
Again this is slightly obscure, but there is a general rule, I think, that we try to avoid referring to Members of another place. I think the noble Lord was just about all right, but if I may advise him. I think he had better not go further. I think I should be expressing the feelings of your Lordships' House—however much we may resent things that have been said in another place—if I said that we should perhaps be careful that we ourselves behave in a way consistent with our normal standards.
LORD ALPORT: My Lords, I am very grateful to the noble Lord the Leader of the House for his guidance to me personally in this matter as well as to your

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Lordships' House. I have, as your Lord-ships have already heard, withdrawn any reference if indeed it causes offence. The last thing I should like to do would be to enter into direct controversy with another place, even though this matter may be of interest.
LORD SHACKLETON: My Lords, if I might interrupt the noble Lord, perhaps I should have added—and I am sorry I forgot—that it is also laid down in the Companion that
"… no Private Member of the House of Commons may be mentioned by name by way of criticism."
LORD ALPORT: My Lords, I was saying that the effect that seemed to me likely was that this episode of the No. 2 Bill would represent a great problem not only for the present Government but for a Conservative Government when it came into power, and it was because I felt that it was important that we in this House should have an opportunity of discussing the situation that I decided to introduce the No. 2 Parliamentary Bill as the No. 6 Parliamentary Bill, and informed my noble friend Lord Carrington, the noble Lord the Leader of the House, and the noble Lord, Lord Byers, of my purpose. I thought it right that in the first place we should have a debate here to enable those of us who supported reform to try to correct some of the impressions and misunderstandings which seemed to me to have arisen from a general discussion of the Government's proposals. It has, for instance, been argued that the No. 2 Bill gives to the Prime Minister in particular a source of patronage which will corrupt politicians and degrade our public life in some sinister way. I do not believe that this argument holds water for a moment.
In 1911 the Liberal Government were prepared to create 300 hereditary Peers in order to gain control of the House of Lords, and I think no one at that time doubted that it was the Prime Minister's right to insist on such a bulk creation in the interests of his Government's policy. To-day a Prime Minister of, let us say, the Labour Party could, by creating 300 Labour Life Peers take effective control of the unreformed House of Lords—an ascendancy which a subsequent Conservative Government would have great difficulty in frustrating. Indeed, so far from
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extending the Prime Minister's patronage, the No. 2 Bill would have limited and regularised it. I conclude that the reason for this discussion, this form of criticism, was one which was not really based upon fact.
Critics of the No. 2 Bill further allege that a House dominated by nominated Peers would be more subservient to the Executive than one which contained a numerous hereditary membership. There may be some Members of the House of Commons who genuinely believe this point of view. But we in this House—I think most of us, at any rate—believe that, however great may be the distinction and sense of service which an mates our colleagues who sit by right of succession, it is the continuance of the fact that voting power in this House is vested in its hereditary membership which has destroyed Its credibility in the 20th century Parliamentary system.
A nominated House—if, as I believe, an elected Second Chamber must await the reform of Parliament as a whole—is the only alternative in terms of practical politics to leaving this House, in the expressive phrase of one of my Conservative Leaders, simply to rot. The idea that a nominated House is likely to be subservient to the Executive to a greater extent than a hereditary Chamber, must be fallacious. After all, men and women of substance and distinction, free of the need to safeguard an inheritance for their successors, secure in their tenure of an influential role in public life, untroubled by the need to compete for power and advancement in their careers, which an assured and privileged position in the community renders largely irrelevant, would have provided probably the most independent-minded Chamber in history. It is perhaps not altogether surprising that the existing unreformed House of Commons shrank from allowing a Second Chamber of this sort to come into existence.
An essential element in the proposals for reform in the No. 2 Bill was the presence in your Lordships' House of a strong group of Cross-Bench Peers and Peeresses. The position of our colleagues on the Cross-Benches is not an easy one, but under the No. 2 Bill it would have been of very great significance. Daring the debate in another place they were subjected to a good deal of wholly unjustifiable abuse. I am quite sure that

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they do not require any justification at my hands, for they are very capable of doing it themselves. But I must say this, however much it may run counter to the existing canons of political faith: an understanding of politics, the science of government and the best interests of the country is not necessarily a monopoly of those who choose to identify themselves with a Party or accept allegiance to some particular individual politician. It may well be, in view of the disfavour into which the established Parties have fallen, that in fact the centre of gravity of British politics will move to those who in this House and, more, in the great body of the electorate outside, approach government from a Cross-Bench point of view.
My Lords, as I have explained, my purpose in tabling the Parliament (No. 2) Bill as the No. 6 Bill in your Lordships' House was primarily to provide an occasion for a debate in which we might have an opportunity of trying to correct some of the popular misunderstandings of the problem of reform of the House of Lords, which must result from the debacle of the No. 2 Bill in the House of Commons. I felt, rightly or wrongly, that only a private Member, acting independently, could do this. To be quite frank, it did not seem to me in accordance with the dignity or the interests of this House that a project for constitutional reform to which we in this House were committed by a massive vote, following long inter-Party consultations and a distinguished debate, should be allowed to disappear unmarked amid a welter of mismanagement, misrepresentation and ridicule.
My noble friends who sit with me on these Benches perhaps do not agree with me. I make no complaint. They are as much entitled to their judgment of what is right as I am: we are, after all, Independent Unionist Peers, although perhaps some of us are a trifle more independent than others. If they think that the reform of this House along the lines to which this House is committed should be killed stone dead, that is their business. I thought that the No. 2 Bill should if possible be rescued; should be given, so to speak, the kiss of life. And that was the second object which encouraged me to table the No. 6 Bill.
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If the No. 6 Bill had been passed by your Lordships' House on Second Reading, it was my hope that I should have been allowed to resign the management of the Bill through all its subsequent stages to the Leader of the House of Lords, as Leader of the House of Lords. I hoped that, with certain agreed Amendments, the Bill might have had the active support of the Leaders of the Conservative and Liberal Parties here, and of a majority of Peers, of all Parties and of none. It could then have gone as a House of Lords Bill, before the end of July, to the House of Commons. I think that with the resolute support of a Government confident of their future, and a Conservative Front Bench capable of distinguishing between the tu quoques of Party politics and the real interests of our Parliamentary Constitution, it could have been passed into law before the end of next October.
I invite your Lordships to consider the beneficial effect which such a procedure would have had upon the reputation of your Lordships' House; the beneficial effect of the significance of the precedent thus established with regard to constitutional reform and of the profound impression this would have created in the minds of thinking men and women, who are no longer very patient with the tactics and the small change of the Party system. Frankly, I do not think that the House of Commons could have rejected a Bill remitted to it in such circumstances.
It may be that I am wrong in believing that these considerations have any relevance to the realities of contemporary politics. The No. 6 Bill has been withdrawn. The No. 2 Bill has been dropped As my noble friend Lord Carrington said, as reported in the Financial Times:
"It is very, very sad. We'll never see this again … It's just a wasted opportunity."
Well, my Lords, we may not be able to do anything about this, "sad, sad wasted opportunity". But I thought, and I still think, that we can with advantage take note of what has happened; for, after all, the chance must come again. My Lords, I beg to move.
Moved, That this House takes note of the present situation with regard to the reform of the House of Lords and its wider implications for the functioning of Parliament.—(Lord Alport.)
3.48 p.m.
LORD BYERS: My Lords, I should say straight away that I welcome this opportunity to debate this subject, although when it was first mooted, and certainly in the form in which it was first mooted, I had grave doubts as to whether this was the right course of action. Therefore I want to say how very relieved I am that the noble Lord, Lord Alport, has decided to withdraw the Parliament (No. 6) Bill in favour of a general debate on the Motion. Apart from anything else, I think it would be quite wrong for this House to proceed unilaterally in this matter. I think it would be seen as an unnecessary challenge to the other place.
I have already expressed my own deep disappointment at the Government's decision not to proceed with the Parliament (No. 2) Bill in the Commons. Having devoted so much of the time of another place to that Bill, and having got through the bulk of the controversial clauses, it seems to me inconceivable that the Government should have lost their nerve so completely. But since they have done so, I do not think it is for us in this House now to take unilateral action. However, there are a number of points which I should like to make, as briefly as possible, to your Lordships, if only for the sake of the Record.
First, all parties to the Conference made a sincere and genuine attempt to obtain an agreed scheme. We all thought it right to get an agreed scheme, because this was to be a major constitutional reform. To attempt agreement naturally meant some form of compromise, some give-and-take, although, speaking personally as a member of the Conference, I must say that I found the differences between the Parties were nothing like so great as I had expected when we entered the Conference itself. But because we wanted to get an agreed scheme it was clear that we had to work outside the glare of publicity, and had to avoid the parties to the Conference striking attitudes in public from which it might be difficult, if not impossible, to withdraw or to retreat. But because we met privately we have been accused of being parties to a conspiracy—a conspiracy of the Front Benches against Parliament as a whole. I can only say that this is totally untrue, in both fact and intention
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Next, we have been told that the schemes have not been thought out with sufficient care. All I can say is that a very great deal of hard thought and research in depth was undertaken, first by the three-man committee, assisted by the excellent civil servants in charge of the studies and assisted, too, by the various Departments which were consulted and other interests with whom the matter was discussed, including, of course, the main conference itself. I can only say that if the background papers are published, as I understand they will be in thirty years' time, the charge will be seen to be as futile as I personally, as a member of the three-man committee, know it to be.
My Lords, the scheme we produced could not hope to satisfy everybody—no scheme of reform will do that—but it did provide a workmanlike arrangement which faced up to and mitigated some of the problems of patronage which are inevitable in a nominated system. I could confuse the House with plenty of statistics on this subject, but I will leave it to somebody like the noble and learned Lord the Lord Chancellor to say a few words on how much, in fact, we reduced the possibilities, particularly of Prime Ministerial patronage, by the various arrangements which we put forward. I hope that the noble and learned Lord on the Woolsack will expand this subject, because I have no doubts; and if the background papers were produced I think they would be quite conclusive. But as the noble Lord, Lord Alport, was speaking, I could not help feeling that perhaps in 1911 we in the Liberal Party missed a glorious opportunity in not going ahead and creating those 300 hereditary Peers. We might not then have had this trouble at the present time.
The scheme also provided for the transition from an hereditary system to a House of relatively full-time voting Members, while still preserving a place for those people whose contributions are very important but who cannot assume responsibility for full attendance. This was not an easy solution to discover; and a great deal of hard research and thinking went into the proposal. Also, we provided the machinery for studying the way in which the scheme itself, as it developed, could be changed if the Houses so wished. I must say, my Lords, that I was absolutely staggered

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that it failed to commend itself sufficiently to another place to defeat the well-organised filibuster of that militant minority in the Commons. And why the action of forty or fifty Members of another place in frustrating the desires of the rest of the House of Commons should be hailed as a victory for Parliamentary democracy, escapes me completely.
My Lords, I have asked myself continuously since that time: what went wrong? I think it is very difficult to find a real, satisfactory answer, but the first thing that went wrong, I believe, was that very few people, in both Houses and outside the House, bothered to read the White Paper or to understand the Bill. But this did not stop them pontificating on it. I was defeated in the Liberal Council, and when I asked the mover and the seconder of the resolution if they had read the White Paper—at that time the Bill was not out—they confessed that they had not. They had seen a few reports of it in the Manchester Guardian and one or two other papers. This, I am afraid, is what happened in the Commons. too, and other places.
LORD CONESFORD: My Lords, may I interrupt the noble Lord? If it was as he says, can he explain why so good a Liberal as Mr. Grimond voted against the Second Reading?
LORD BYERS: Yes, my Lords, I can. I can explain that quite simply. So far as I know, he has very advanced views on the reform of the House of Lords—views which I do not share. I do not think I am in any way misleading the House when I say that I think his views are that he wants a completely elected Chamber, and I do not accept that.
LORD CONESFORD: My Lords—
LORD BYERS: Perhaps I may just develop this point, because it does come up.
LORD CONESFORD: My Lords, I am much obliged to the noble Lord for giving way, but I do not think it is irrelevant, for this reason. The noble Lord sought to describe the opposition in another place as a filibuster. I say it was opposition on its merits, and so say a great many people in this House. All I am suggesting—
SEVERAL NOBLE LORDS: Order. Order!
LORD SHACKLETON: My Lords, I wonder whether the noble Lord will allow me to intervene. I think he is generating a little heat. Indeed, I think he is to some extent falling into the error of which he accused his noble friend. I think it might be better if the noble Lord, Lord Byers, who seems to be making a very good-tempered speech, were allowed to continue to do so.
LORD BYERS: I am sorry the noble Lord the Leader of the House is trying to get the temperature down: I was beginning to enjoy it. But if I may just reply to the noble Lord, Lord Conesford, the fact is that there is a very big difference—because I watched and listened to a number of these debates—between the filibuster which took place and the views, the sincere views, of people in another place who hold views different from those I happen to hold; and if only the noble Lord, Lord Conesford, could have contained himself for one moment—actually, he has allowed me to refresh my memory from my notes—I was just coming on to that point. I think that one of the basic problems is the fact that the views held on the reform of the House of Lords vary very widely indeed, and genuinely and sincerely. There is the view of some of the Left Wing that one House is quite sufficient and that the second one is superfluous. There is the view that the second House in a democracy must be an elected one. That is certainly very popular in my own Party; and it is tenable if one is prepared to see power shared with the other House and possibly find the second Chamber becoming more powerful than the first—and as a Parliamentarian who has been in both Houses I do not accept that as being a proper role for the House of Lords.
In addition, there was the strategic mistake of trying to carry a reform designed as an inter-Party or consensus measure unilaterally, as the Prime Minister did when he broke off the talks after the Vote on the Southern Rhodesia Order in this House. But, my Lords, that is not the responsibility solely of the Prime Minister or of the Labour Party, because, if I may mention it, in the debate on that Order I predicted—and it was not difficult to predict—what might happen if the Conservative Party took

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that Order to a Division and negatived it. In Volume 293, column 561, of Hansard I said:
"If there is an adverse Vote to-night, it is likely to distort completely the natural progress towards the reform of this House which we could be so near to achieving."
Then I said:
"… if the whole weight of the Conservative Party, animated by its Right Wing, is mobilised in the Division Lobby to defeat the will of the elected representatives of the people, not only will this reform be jeopardised but certain other things must inevitably follow.
"First of all, there will be a strong demand from important sections of the Labour Party and the Liberal Party that a sine qua non in any reform shall he the elimination of hereditary Peers from taking part in any of the proceedings of this House".
I then went on to regret that, because I believe they have a very important part to play in the new House which was devised for them in the reform scheme. I then said:
"Secondly, I would say that in the past ten to fifteen years the proponents of a one-Chamber system have been losing ground very fast indeed. I am afraid that it there is an adverse Vote to-night, their arguments will be fortified. I can tell the House one other reaction which is predictable—that is, that in the Liberal and Labour Parties the already strong movement in favour of an elected Second Chamber will gain further ground. To many of us this would not be the proper course to take, because we do not see this House as a rival to the House of Commons. But what the Conservative Party is in danger of doing to-night—and I hope it will not do this—is to revive all the old phobias about the House of Lords and to poison the climate of co-operation which has been established in the past year".
My Lords, I felt that strongly at the time. I felt I had to say it; and I am very sorry indeed that it turned out to be true.
If one adds to these reasons the seeming lack of enthusiasm for the measure by the Government and their handling of the matter in another place, one can see how the dice came to be loaded. I am only afraid that the way in which a limited number of Members of another place—and they were very few, but very vocal—ridiculed this House and some of its Members has done a great deal of damage to the relationship between the two Houses. I do not think it is out of order to say that, because I think it is a most important factor for the future. I think that the denigration by one House of another so blatantly and so con-
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tinuously damages the fabric of Parliament itself and strains the relationship which should exist if Parliament is to function as a whole.
VISCOUNT DILHORNE: My Lords, could the noble Lord answer a question? I am trying to follow his remarks about denigration with the greatest interest. Does he not regard it as denigration of Members of the other House by alleging that they indulged in a filibuster?
LORD BYERS: My Lords, I am not alleging it; I am stating it. In many cases I was in the Gallery watching; and it was done very professionally.
I am particularly disappointed myself at the out-turn of events. I had seen the reform of this House as a prelude to the reform of the Commons and to a new era of collaboration between the two Houses in the interests of greater efficiency and better democracy. What needs reform is not merely the Lords, but the whole of Parliament and the close relationship between the two Houses and the relationship between Parliament and the Executive. These are the things that I was hoping that we were going to start. No one Party will ever be able to do this by itself or carry it through. I still hope that we may be able to make some progress along that road.
I believe that we ought to create to an all-Party vehicle to study the problems in depth and to put forward various alternatives for public debate before attempting to put them into practice. It will take a long time; but we ought soon to make a start. The prospect of sitting in an unreformed House of Lords, uncertain of one's powers, under threat when Labour are in power, ignored by the Conservatives when they are in government, is a prospect which holds out no pleasure for me. I must say that at the very least the problem should be put to the constitutional commission: but I am not hopeful that we shall get anything like as good an arrangement as one worked out by people with first-hand experience, very largely of both Houses. It occurs to me from reading to-day's papers that the Bill on trade union reform may either be dropped or reduced to something much less controversial. I seem to remember that the reason for not proceeding with the Parliament (No. 2) Bill was the pressure on Parliamentary

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time of important legislation which had to be brought before the House. If either of these things should happen—either that the Bill be dropped or that it should become less controversial—I wonder whether we might not be able to proceed with the Bill in the Commons at the stage that it has reached.
If that happens I would plead with all Parties to make sure that their followers really understand what the proposals are and will give a strong lead to them. Failure to achieve this reform is to me, and to those of my generation who agreed with me, an unmitigated tragedy. There is so much that our generation, apart from others, could contribute to make such a reform work effectively; there is so much knowledge of Parliament in this House which could be harnessed towards really first-class reform that I hope we have not seen the end of this in my lifetime.

INDUSTRIAL DISPUTE AT HER MAJESTY'S STATIONERY OFFICE
4.4 p.m.
LORD SHACKLETON: My Lords, I apologise for interrupting the debate, but with your permission I should like to repeat a Statement that is being made in another place by my right honourable friend the First Secretary to the Treasury about the industrial dispute at the Cornwall House Publications warehouse of Her Majesty's Stationery Office. The Statement is as follows:
"After a pay claim by H.M. Stationery Office employees at the warehouse who are members of the Society of Graphical and Allied Trades, discussions have been proceeding for some time about a proposed pay and productivity agreement. The S.O.G.A.T. chapel at the warehouse came out on strike last week. They have refused to return to work until a final agreement is concluded. The details of an agreement have been extensively discussed in negotiations which are temporarily adjourned while various points are considered. The House will understand that it is difficult for me to say more at this stage without possibly prejudicing the negotiations."
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My Lords, I should also like to say a few words about the effect of this dispute, so far as your Lordships' House is concerned. In the first place, I am assured that an adequate supply of all Parliamentary Papers (which includes new prints of Bills and Amendments, the daily Hansard and Minutes of Proceedings) will continue to be available in the Printed Paper Office. Your Lordships may remember that I indicated last week that the problem is not so much the availability of printed copies of Parliamentary Papers as their postal distribution. The House authorities are making every effort to ensure that postal distribution of at any rate the Minutes of Proceedings and Notices and Orders of the Day, will continue. I hope that this may also extend to other Papers, but I trust that noble Lords will appreciate that it is essential we should all make every effort we can to collect any Papers from the Printed Paper Office ourselves—and particularly prints of Bills, Amendments and so on. Perhaps I may add that we should, if possible, retain copies we have taken or even perhaps, if we have no further use for them, return them to the Printed Paper Office. I confess that there have been times when I have felt rather guilty about getting the fourth copy of a Bill in a few days. I am sure that noble Lords will make every effort to assist the Officers of the House who are doing all they can to assist us.
LORD CARRINGTON: My Lords, the House will be grateful to the noble Lord for repeating that Statement. I do not of course want to say anything that would prejudice negotiations; but would the noble Lord perhaps agree that this strike illustrates the lack at the present time of appropriate mechanism to enable strikes of this kind to be dealt with quickly—and particularly strikes which directly affect the national interest? Would the noble Lord the Leader of the House also agree that it is the duty of the Government so to arrange things that Parliament can conduct its business properly?
LORD BYERS: My Lords, I do not want to comment on the substance of the Statement but I think that the whole House will appreciate what the Printed Paper Office are doing to overcome the difficulties that they are facing.
LORD SHACKLETON: My Lords, I appreciate the noble Lord's remarks. I do not think I will comment on the wider issues which we have recently debated on the White Paper. I note what the noble Lord has said: he emphasised the responsibility of the Government. The Government will do their utmost to cope with any difficult situation as it develops.
THE EARL OF SWINTON: My Lords, we appreciate what the Printed Paper Office are doing and will co-operate in every way. May I ask the noble Lord this question? Will copies of the Finance Bill be available for collection from the Printed Paper Office?
LORD SHACKLETON: My Lords, I do not know whether copies of the Finance Bill are actually available in this House, officially, at the moment. But if they are, they are limited in number. I know that this is a sensitive issue down at the other end, and I hope that we shall exercise economy in the matter. I am told that there are some copies available—though I hope there will not be an ugly rush to get them.

HOUSE OF LORDS REFORM
4.8 p.m.
Debate resumed.
THE LORD CHANCELLOR (LORD GARDINER): My Lords, the last occasion on which I spoke in your Lordships' House on this subject was in November when the Motion approving the White Paper was carried by the massive vote of 251 to 56. I must admit that I little dreamt at that time of the course of events that has since followed. I do not think we should disguise from ourselves the fact that the Statement by my right honourable friend the Prime Minister in another place on April 17 means that the Parliament (No. 2) Bill has, in effect, gone into a siding from which it is unlikely to emerge in this Session. Your Lordships will have noticed that my right honourable friend, at the conclusion of his Statement, promised another place that the House would be kept informed about the Government's further intentions in relation to the Bill. The noble Lord the Leader of the House repeated that pledge in this House. But it is not my wish to speak this afternoon about the future of the Bill. The House is well
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aware of the tradition of silence in relation to legislation for a coming Session. And yet the Parliament (No. 2) Bill is a good Bill. It was, of course, as the House knows, based on a consensus, by which I mean that both in the White Paper and in the Bill we adhered strictly to the proposals which had been hammered out in the Inter-Party Conference.
My Lords, given the fact that the White Paper stemmed from the inter-Party talks and that the proposals were the result, as the noble Lord, Lord Byers, has said, of a great deal of work an I also of give and take between those who took part at the Conference, I must confess that I am deeply sorry that the result did not appeal to many of our opposite numbers in another place. It is also a matter of regret to me that the Opposition Front Bench in another place did not do more to support the proposals of which they were themselves in part the author. In saying this I do not wish to imply that there had been any formal agreement between the two sides in the matter—there had not. The situation was this. At the tine of your Lordships' vote on the Southern Rhodesia Order last June, the draft Report of the Inter-Party Conference had been prepared for consideration by the Conference. Following the breaking off of the talks in the circumstances to which the noble Lord, Lord Byers, has spoken, the proposals which it contained were adopted by the Government and the resultant White Paper was shown in confidence to the Opposition and Liberal Leaders so that they could make sure that we had not altered the proposals in any material way. Given these facts, I must put on record my sense of disappointment at the attitude adopted by right honourable gentlemen opposite in another place in the consideration of the Bill there.
My Lords in the recent months in the Press and in Hansard we have seen much concerning the progress of the Parliament Bill and criticism of the proposals, of the Government's handling of the Bill, of the intentions of the Government in bringing forward the proposals and indeed of the role of the Opposition Front Bench as joint authors of these proposals.
I should like to try to explain to the House the reasons for my regret at this lost opportunity. Many of your Lordships may have felt a certain relief that things should go on as they were; old

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ways are pleasant and few of us can remain for long unmoved by the particular atmosphere of your Lordships' House and of the civilised and tolerant way in which we conduct our business. This was indeed charmingly expressed by the right honourable gentleman the Member for Kinross in his notable speech on the Second Reading of the Bill in another place. He, of course, has had the experience of having been a leading Member of both Houses. Of course we can all sympathise with this liking for the present House and its ways, a liking which we are now likely to savour for some time. But I do not think that when we really consider the matter, we can accept that the present situation is satisfactory. I think that if we sit back with relief at the postponement of the Parliament Bill we commit the error of imagining that this problem can be satisfactorily shelved in this way. I do not think it can, for the reasons which I gave to the House in my speech on the White Paper.
I may remind your Lordships that notable speeches had been made from all sides of both Houses, not only by my colleagues in the Government but from the Front Benches opposite and speeches such as those from the noble Lord, Lord Harlech, the noble Lord, Lord Carrington, the noble Earl, Lord Jellicoe, the noble Lord, Lord Byers and, in another place, from Mr. Maudling, Mr. Macleod and Sir Alec Douglas-Home. They have all expressed the view that it is really impossible any longer to defend the hereditary Chamber. According to the White Paper, some 736 out of 1,062 Peers hold their Parliamentary rights by right of succession—that is three out of every four potential Members of this House. Of course in fact, as we all know, much of the day to day work is done by those who have been themselves created Peers. But when it comes to the exercise of the vote we must accept that it is the hereditary Peers who can decide the great issues which come before this House and this fact is known to the public and, I would submit to your Lordships, does not find favour with them.
In support of this proposition I would remind your Lordships of the public reaction to the vote in the Rhodesia debate. Almost nothing was said about the merits of the case in the Press at all; it was quickly blown up into a
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Constitutional crisis complete with concomitant caricatures of Peers, coroneted and ermine-robed, locked in combat with the representatives of the people. I would remind the House of what Bagehot called the importance of the "myth" always in the British Constitution; or, if I might use somewhat similar contemporary jargon, I should say the importance of the "image".
Can your Lordships really say that it is generally accepted by those you meet that it is right that a majority of this House should sit here and serve as legislators by right of descent alone? In the past, for social and economic reasons, it seemed quite appropriate that the Upper Chamber should represent the great landed interests which dominated our society; this has long ceased to be the case. Even a century ago it was accepted that in comparison with 100 or even 50 years before, to this dethronement of our erstwhile "natural leaders" the immense economic changes of the industrial revolution had served as the handmaid. Further, we have experienced, if I may quote Bagehot again,
"the tendency of our modern society to raise the average and to lower—comparatively and perhaps absolutely—the summit".
This fact was recognised in the remarkable speech by Sir Alec Douglas-Home to which I have already referred and which I would respectfully commend to your Lordships' House. I would further remind the House of the impossibility of justifying a Chamber which has such a large permanent majority for one Party. I say no more about this because I believe this to be so generally agreed.
But, my Lords, it is not only in the field of composition in which we have stood in need of reform—it is also in powers. I think the House would accept that it is no longer proper for us to be in a position to veto subordinate legislation in opposition to the will of the elected Chamber and without any machinery at all to give that Chamber the right to insist on its view or even to insist that we should think again. For these reasons—the totally unsatisfactory nature of the powers and composition of the House—I do not think that we shall be able for long to leave the matter as it stands. I think we shall be forced to reconsider it, perhaps to go through the same arguments that we have discussed at

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such length during this last Session. To take one example, I regret that we shall probably have to consider again the question of unicameralism, and I know that a good deal of the sincere opposition to the proposals in the Parliament Bill came from those who were dedicated unicameralists. To them I can only repeat that I simply do not believe that the legislative process can be adequately performed by one House. As evidence for this view I would instance the experience of every other Western democracy with a population comparable to our own. I think, too, that in the future we shall see a return to the arguments about a completely re-fashioned Second Chamber, whether with or without the noble and learned Lords of Appeal and the right reverend Prelates, possibly allied with some form of election, conceivably connected in some way with proposals for greater participation by the countries and regions of the United Kingdom in the democratic processes, conceivably with some kind of federal institution.
I must confess that I groan when I consider the arguments which are likely to plague our successors on this, because at the end of it all I find it difficult to imagine that the House of Commons would ever agree to such a reform. Despite the logical appeal of much that may be said in favour of a regionally or federally based institution, I continue to believe, as we stated in the White Paper, and as the noble Lord, Lord Byers, has just suggested, that an Upper House constituted on a regional basis would be open to the danger arising from the probability of rivalry between the Houses. One of the most painful reflections for those who have worked so hard for this reform has been the absence of any alternative proposal by those who have opposed us; or, rather, the absence of proposals which either they or anyone else believe to be viable.
We have heard in recent months many criticisms of our proposals and I should like very shortly to answer the principal ones. The first has been that of the argument of patronage; and in particular the appalling increase in patronage that the Prime Minister of the day would have. I believe this to be absolute rubbish. I agree with the noble Lord, Lord Alport, that in fact our scheme would have restricted and regularised it. I would invite those who have talked about patronage
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to consider three simple facts. The first is that the patronage would haw been approximately the same as it is today. Since my right honourable friend the Prime Minister assumed office, 151 Peerages have been created—that is, about 35 a year. Under our proposals the number of new Peers would have been roughly the same. Secondly, the proposed patronage was not to be for my right honourable friend the Prime Minister alone: it would be shared with the other Party Leaders in accordance with the proposed ratios set out in paragraph 48 of the White Paper. This power would have been shared, in other words, by men all of whom are responsible to their Parties in a thoroughly democratic way, and any misuse of the powers would have been visited with tribulation by the proposed patronage committee, which would have had the right to report publicly to Parliament.
Nor do I think that when we look at the way in which patronage has in fact been used in recent years, in particular since the passing of the Life Peerage Act 1958, we can say that the House of Lords has not been immeasurably enriched by the infusion of new blood, men and women following all kinds of careers, many of whom would not have been considered for hereditary Peerages in the old days. Thirdly, there was the great safeguard provided by the fact that Peers were to be created for life. As I told your Lordships at the time, we had considered, only to reject, the proposal that Peers should be made for the length of a Parliament. Such a proposal would have immeasurably strengthened the power of the Whips. I put it to the House that it is not the case that those who have been nominated by a particular man to office for life are prone to feel under an obligation to back their patron's policies, and we have in the rich varieties of our House to-day many examples of noble Lords who have shown an extreme independence after coming here, sometimes abandoning the Parties whose Leader has nominated them to the Peerage. We would not wish it to be otherwise, nor would it have been otherwise in the reformed House.
Another strong point of criticism, particularly in another place, was of the paragraph in the White Paper on remuneration. This, as the House knows, led the Government to decide to postpone,

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at least until after the next General Election, any proposal for implementing this. Here my own view is quite simple. Peers should be paid a proper rate for a proper job, like other members of the community. I do not think it appropriate that those who do not have private means should be prevented from playing a full part, and I remain convinced that it would have been proper for the working members of the reformed House to have been paid in the long run, after an appropriate independent inquiry and after the House of Commons had been convinced that the reformed House was working in such a way that it warranted remuneration. I have heard it suggested that remuneration was not referred to in the Bill for some kind of improper reason. I can assure your Lordships that this is not so. It would never have been possible to include remuneration in the Bill. The remuneration of Members of another place and our own payment for expenses have never been the subject of legislation, but of Resolution by either House.
A further point of criticism in another place has been the role of the Cross-Benches. I was glad to hear what both noble Lords have already said about that. To those of us who know them and value the great part the distinguished Members of these Benches play in this House, such arguments seem difficult to understand. But, for myself, I stand by every word we wrote in paragraph 14 of the White Paper, dealing with Cross-Benchers, and I am proud of the fact that our scheme was going to give to the Members on the Cross-Benches the role explained in the scheme. It grieves me to reflect how greatly mistaken many comments have been on this feature of our proposals. Then I have heard it suggested that our proposals were too elaborate. There is nothing in the Bill which subsequent events have led me to think it would have been better to omit. For tactical reasons there might have been wisdom in having a shorter Bill, but I do not think that there would have been any actual improvement in the proposals if we had shortened them—for example, if we had left out Clauses 16 and 17, dealing with Parliamentary franchise and with qualification.
It will be obvious to your Lordships from what I have said that I have substantially agreed with the greater part
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of what has been said by the noble Lords, Lord Alport and Lord Byers. Nevertheless, I thought that as I was the Chairman of the All-Party Conference, I should express my own views. I cannot conclude without reminding the House of the opportunities which would have presented themselves for the reform of the functions and procedures of this House, and indeed of Parliament, if the main reform had been carried into law. I had looked forward with eagerness to the fundamental examination of the possible changes in these fields which it was proposed should be undertaken by the two Houses once the main reform was on the Statute Book. Like my right honourable friend the Secretary of State for Social Services, I saw this as one of the most positive reasons for the reform, by giving the chance of reorganising Parliament and thus reducing pressure on Back-Bench Members in another place and giving us the possibility of achieving adequate Parliamentary control of delegated legislation, the expansion of the proper consideration of non-Party controversial legislation, and, I should have thought, an increase of the control of Parliament over the Executive as a whole.
The possibilities were many and varied but, like my right honourable friend, I felt that we should put ourselves in a position to consider radically the procedures and functions of both Houses, and it is with deep regret that we must accept that such a wide-ranging inquiry cannot be undertaken in the present circumstances. The possibilities would have included the more equal spread of legislation between the two Houses and sharing in the consideration of legislation, more Joint Committee work, better control and possibly amendment of delegated legislation, further inquiry into the field of Private Bill legislation.
In ending on this melancholy note, I would say one word of comfort for those who are interested in these procedural and functional matters. I noted with great interest some of the suggestions made by the Select Committee on Procedure of another place in its Reports on the Session 1966–67. These Reports were made before the firm intention for the reform of this place had been announced, and I hope it may be possible to pursue on an inter-House basis some of the suggestions then made, despite the failure of the main reform.

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My Lords, I venture to predict that both the great Parties of the State will live to regret the demise of the Parliament Bill for differing but nevertheless compelling reasons. I also think that it would not be wise for the Members of this House to do other than to recognise here and now that the failure to proceed for the moment with our reform is an ill day, not only for your Lordships' House but also for Parliament.
4.30 p.m.
LORD CARRINGTON: My Lords, for some considerable time my noble friend Lord Alport has taken a great interest in the reform of your Lordships' House. We have had a number of debates on Motions which he has initiated and we have listened with great interest to what he has had to say this afternoon. May I at the outset say how glad I am that he has withdrawn the Parliament (No. 6) Bill. Whatever we may have felt about the merits or demerits of that Bill—and it is, of course, exactly the same as the Parliament (No. 2) Bill—I do not think it would have been very wise to have moved the Second Reading; and certainly if it had been carried it would have meant the House spending and wasting a large part of the summer discussing a measure which had no prospect of proceeding any further. For, whatever else may be uncertain about the reform of your Lordships' House, one thing is absolutely certain: that the Government do not intend to proceed with this Bill in the lifetime of this Parliament—and the noble and learned Lord on the Woolsack as good as said so in the first stages of his speech.
THE LORD CHANCELLOR: My Lords, I did say "this Session".
LORD CARRINGTON: If I were a betting man I would—
LORD BYERS: It might be the same thing.
LORD CARRINGTON: It might be the same thing, as the noble Lord, Lord Byers, has said. Facts are facts, and I do not intend to waste time flying in the face of reality. In the very few remarks that I shall make this afternoon I do not intend to discuss the disadvantages or the advantages of the scheme which was put forward as a White Paper and debated in this House in November of last year; and
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I earnestly hope that your Lordships will not either. I hope your Lordships will not follow the example of the three previous speakers, interesting as their recapitulation was, because in November we had three days' debate, and 103 noble Lords took part; and I do not suppose that any of us has changed his views, or that anything that may be said here this afternoon will change them. This, so far as I am concerned, is water under the bridge. My own views are well known, and I have not changed them. But I do not think it profitable to rake over the ashes.
I want to say only one thing. Whether or not we agree with the scheme, I do not think there is anybody in this House who will not sympathise with the noble Lord, Lord Shackleton. I suppose that he put more work into it than anyone else. The noble Lord, as well as being the Leader of the Labour Party in this House, is the custodian of the rights of this House, and nobody, in my experience, has stood up for them better both inside and outside this Chamber, than has the noble Lord. He has protected our interests against the predatory raids from another place, and he has called us to order with the greatest possible courtesy when, even in the permissive society of your Lordships, we go a little too far. We know that any proposal which comes from him about the reform of the House comes because he is genuinely attached to the principle of a Second Chamber and the traditions and behaviour of this House.
We are asked by my noble friend's Motion to take note of the position. Well, I take note of it. The position is that we are back where we started. Efforts at agreed reform have failed, and we have to think again. For my pact, I think it too soon for any of us to make up our minds what the next step should be. We are far too close to the breakdown of the previous efforts and the disagreements which those efforts inevitably brought, and I think a period for reflection and thought would be wise before any of us jumps to conclusions or makes further proposals.
There are, of course, a number of alternatives. For example, the whole matter might be referred to the Constitutional Commission—though some of us might feel that, even though the

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Chairman is a Member of your Lordships' House and a most respected and well-qualified man, the membership of that body would not be wholly appropriate to the task of remoulding this House. It would be possible to set up a separate body to deal with the whole of Parliament—not only your Lordships' House, but the powers, the composition and the relationship of both Houses. Or it might be possible to have another and rather more differently constituted committee consisting of Members of both Houses. My Lords, I do not know. Let us all think about it. But, as I ventured to say once before to the Government, I very much hope that they will do nothing about it for the moment, and that they do not intend to bring in any legislation to remove the powers of this House and not deal with the whole problem. They would, in my view, be very unwise to do so. Such a course might well have the opposite effect of that intended, and no doubt this has occurred to them.
But this leaves your Lordships in exactly the same position and difficulties as we have experienced in the last four years of Labour Government. We on this side will continue to judge the issues which come before us on their merits and by the same criteria as have guided us hitherto. We will take into account the circumstances in each case. And I hope that we shall not hear too much from Members of the Party opposite about the will of the people. I think it would be difficult to argue that Her Majesty's Government represent much more than themselves at the present time. They certainly do not represent the will of the people expressed in by-elections, in local elections or in opinion polls. But, as I say, we will continue to behave as responsibly as I believe we have in these last four years.
My Lords, so ends a chapter, but not I think a discreditable chapter, in the history of Parliamentary reform. Those who proposed the reform did so with honourable motives, and out of deep conviction that a Second Chamber, with power, and whose composition was acceptable to the broad mass of voters, was essential. Those who opposed it—certainly those in this House—did so for exactly the same motives: because they felt that our proposals were not the
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answer. Well, my Lords, we must all try again, and it may be that, however remote the possibility may seem at the present time, we may find it possible in the future, by general agreement, to preserve all that is best in this House, remove the anomalies and strengthen its very real virtues and its usefulness.
4.38 p.m.
THE LORD BISHOP OF CHESTER: My Lords, I am confident that I am expressing the views of those who sit on these Benches in regretting that still another attempt to reform your Lordships' House appears to have foundered. The noble Lord, Lord Carrington, has asked that there should be further thought on this matter, and many of us hope that the failure to go forward with reform is only temporary. We feel that it would be a matter of great regret if the hard and constructive work of the Conference were to go by default, and if the most promising scheme yet devised, commanding agreement in the Conference and a widespread measure of support elsewhere, as was illustrated by the voting in your Lordships' House on November 19, should suffer the fate of so many of its predecessors. Appendix I of the White Paper, which recounts the previous attempts to reform this House, makes melancholy reading, and it is a sad thing that we have to add to it a further paragraph recording another story of failure.
I am sure the House will agree with what the noble and learned Lord who sits on the Woolsack has said about the value of a bicameral system of government; but it is essential that both Houses should command the respect of the people they serve. If either House should be seen not to measure up to the standards which any reasonable person would regard as desirable, then that House is wide open to criticism and attack, not only by anarchists and revolutionaries but also by men of moderate views and temper. And such is the situation which confronts your Lordships' House.
Those of us who sit in this House and take part in its work know that much of the criticism made of us is ill-informed and unjustified. Indeed, as a result of the reforms which have been made in the Constitution of this House in recent years—and let us not forget

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that they have been very considerable—the effectiveness and usefulness of the Upper House has been increased in a remarkable way. But so long as the hereditary principle continues to operate, and so long as one political Party has a built-in majority, this House will not command the respect which it ought to have, and it will continue to be wide open to the denigration of those who seek its abolition.
I confess that I shall watch with some nostalgic regret the gradual extinction of the hereditary system, for I think there can be few who do not admire and value the contribution which has been made to our national life by the service of the great political families. But against that sentiment must be set the illogicality of a situation in which a person possesses the right to a voice in Parliament solely by virtue of birth, and the fact that a great many hereditary Peers have no interest in politics and no desire to take part in Government. One can only hope that when there is reform the process that is suggested in paragraph 38 of the White Paper will be implemented, that those hereditary Peers who have shown a readiness and ability will be given an opportunity to serve in this House, and that the great names will not disappear from its membership.
My Lords, I am conscious that the proposals for the abolition of the hereditary principle do indirectly call into question the presence in this House of the Lords Spiritual, for though we are not present by virtue of birth we are here by virtue of our Sees, which have a kind of hereditary right to a Writ of Summons when the time comes. The Lords Spiritual established their base in the Upper House of Parliament by virtue of their literacy and their power to control the sources of finance and manpower. They no longer have a monopoly of people able to read and write, and certainly they cannot provide money and men in the manner of their medieval predecessors. It might therefore be argued that their presence here is as anachronistic as is the presence of hereditary Peers.
Yet, as I suggested to your Lordships in the debate on November 19, the status of the Bishops in your Lordships' House, and their contribution to its work, has down the centuries shown a remark-
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able capacity for adaptation. I hope that I do not appear to be over-ambitious for the good name of the Lords Spiritual to-day if I claim that in days when so much legislation has an obvious ethical and moral content, and when regional representation is so highly valued, those who sit on these Benches have been able to make a useful contribution to your Lordships' debates. We are certainly grateful for the consideration that was given to our position in Parliament both by the Conference and in the White Paper.
As many of your Lordships will be aware, the Church of England is at present occupied on a programme of administrative reform in which, through the Affirmative Resolutions given to a succession of Church Assembly Measures, your Lordships have had some part. We have reformed the Church Courts. Yesterday the Convocations promulged the new Code of Canons, giving the Church at long last a viable system of domestic law. We have a large measure of freedom to recast our forms of worship. The new Pastoral Measure gives wider powers to restructure the framework in which our pastoral work is to be set. Soon there will come before your Lordships the Synodical Government Measure giving wider powers to the laity to take an effective part in the government of the Church.
As part of this surge of administrative reform, as your Lordships will know (for it is mentioned in the White Paper), a Commission set up by the Archbishops is at present sitting to consider the relationships between Church and State. I am a member of that Commission and therefore cannot comment upon the likely outcome of its deliberations. But your Lordships will be aware, I am sure, that one of the vital issues which must be faced is the manner in which the Bishops of the Church of England are appointed, for there is among many Church people a restlessness with the present procedure. Should there be, when the Report of the Commission has been considered by the Church, a demand for a modification in the way the diocesan Bishops are appointed, then clearly their right to a Writ of Summons would similarly need to be re-examined.
For my part, valuing as I do the principles underlying the existence of an

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established Church, I earnestly hope that a place may be found for the Lords Spiritual in a reformed House of Lords, under conditions of reformed relationship between Church and State. I would add that such a place certainly should not be interpreted by the Church of England as a claim to possess a monopoly of the right to speak for the religious consciousness of the nation or, in these days of growing ecumenical understanding, to indicate a claim to spiritual superiority. So long as there is an Established Church the presence of the Bishops in the House of Lords as a separate Estate is, I hope your Lordships will agree, both a symbol and an effective expression of a truth which is deeply embedded in our history and which to-day has not, I venture to think, lost its significance.
My Lords, I hope that for the good name of its House, and its effectiveness, reform will not long be delayed. However responsibly we conduct our duties, however well the present system works in practice, the illogicalities which exist must always be a present, even though often unspoken, embarrassment. And this must of necessity lend an air of unreality in the eyes of the public to much of our work. We shall be listened to more attentively, and we shall command greater respect, if the reforms in the White Paper, modest and generous as I believe them to be, can be implemented with as little delay as possible.
4.48 p.m.
THE EARL OF PERTH: My Lords, I want to speak on only one point; that is, the need in any reform to ensure that the Scottish Peers are in adequate number to deal with Scottish business. In the marathon debate in November, I stressed that Scotland was literally a law unto itself, and that it must have special treatment. I gave some grounds for this, one being the Act of Union, with the entrenched clause which laid down that Scotland must be adequately represented. Whatever the legal right may be with regard to the Act of Union, I have no doubt that the moral right remains one of overwhelming importance.
The second ground—and more important ground—was a practical one. Scottish law is often different from English
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law. This means, as your Lordships know, that we often have Scottish Bills with their own special features and their own character. It is essential in any reformed House that there should be an adequate number of Peers in touch with Scottish opinion who have knowledge of, and can criticise constructively, these Scottish Bills. To be in touch with Scottish opinion means very often that these Peers must be Scottish-based; and there then arises, of course, a problem as to how, if they are Scottish-based, they can attend the two-thirds of the meetings required if they are to enjoy the right to vote.
I and others felt that such Scottish-based Peers must have the right to vote, at any rate in the Committee stage. In that long debate I said that I myself—and I knew this applied to other Scottish Peers—should certainly vote in favour of the White Paper if we could have some assurance from the Government on this point. When the noble Lord the Leader of the House was winding up to an impatient House who wanted to get to the vote, he in fact did not cover this point in his admirable speech. I recall that with great trepidation I rose at the very end and had to ask what the position was. I obtained a reassurance, which I think I should quote. It was as follows:
"… I appreciate that Scotland is in a special constitutional and legal position."—[OFFICIAL REPORT, 21/11/68; col. 1090.]
Furthermore, he said:
"… we should be anxious to discuss any arrangements which provided properly for the discharge of Scottish business."—[col. 1091.]
The sequel to that was that we formed an all-Party working group to discuss the problem with the Leader of the House and the noble Lord, Lord Hughes. I should like to take this opportunity to thank all those, including the various officials, who took part in this work. A substantial measure of agreement was reached on what was the objective, although I must confess that the method to achieve it remained one of some complexity.
In another place in the Committee stage valiant efforts were made to achieve our aim. They were not successful, although again the Government expressed their sympathy. I think we of the working party felt quietly confident that we

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should succeed in getting appropriate Amendments if and when the Bill came here. But of course that was not to be. I have gone back to what is now history because this is of importance when another Bill to reform your Lordships' House comes forward, as come it will. At that time, whatever Government may introduce such a Bill, I would ask them to look up the Record of our talks and of our proposals for the amendment of the Bill that was put forward; and ask that in any future Bill there be drafted from the start—I stress, from the start—a clause appropriate to take care of the Scottish problem and provide properly for the discharge of Scottish business. My Lords, I hope that I have sufficiently waved the red flag of danger on the Scottish problem; or, better perhaps, that I have planted firmly before your Lordships' House a Scottish banner against the time of any future reform.
4.54 p.m.
VISCOUNT DILHORNE: My Lords, whether that banner be firmly planted or not, there is no doubt at all that if any proposals for reform of this House come forward the Scottish point of view will be forcibly expressed by the noble Earl, Lord Perth. My Lords, this is to me an extremely curious debate. It was begun by my noble friend Lord Alport in a speech which could be described as a very powerful speech on the Second Reading of a Bill not before the House, and partly as justifying his introduction of a Bill which he has proceeded to withdraw this afternoon. It has indeed been an extraordinary debate, perhaps more like a memorial service than a discussion of a Motion. All the Motion asks us to do is to take note of the present position. That we can easily do: it is what it was.
There have been occasions on which I must confess that I have struck, I know, a discordant note in this House. I fear I shall do so again to-day, because the first discordant note that I propose to strike—and I think I am the first person to say it—is how much I welcome and support the Government's decision to abandon the Parliament (No. 2) Bill. I do not think there have been many occasions in the past when I have been able to give my support to the Government, but on this occasion I can, and I do so whole-heartedly. There are, I am
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Sure—although the impression me y not be created by the debate which has gone on so far—a very large number of your Lordships' House, and a very large number of people outside your Lordships' House who take an interest in these matters, who also welcome the Government's decision and think it was a wise one and a right one.
A great deal of this debate so far has been a resumé of some of the arguments in favour of the White Paper proposals. Indeed, it would be easy to convert this debate into another marathon debate, as indeed it would be if those who were critical of those proposals, and even more critical of the Bill itself, thought it would serve any useful purpose to express their views on this occasion. I personally do not think it would serve a useful purpose to deploy the arguments, the powerful arguments, that can be put forward in answer to the case made by my noble friend Lord Alport and others who have supported him.
Speaking for myself, I of course recognise that there are respects in which reform of this House is desirable. The noble and learned Lord the Lord Chancellor referred to one in particular: our power with regard to subordinate legislation. I agree with him that that requires to be changed. Then it is said that the hereditary principle is indefensible. I do not propose to debate that at all to-night. I dare say we can all agree that change of this House in various respects is desirable. But where we differ, and differ sincerely—it is really water off one's back for it to be said that the opponents of these reforms. engage in misrepresentation and misunderstanding—is in the view we take of the proposals contained in. the White Paper and the Bill.
I myself take the view, unlike my noble friend Lord Alport, that the proposals in that White Paper, if implemented, would not make this House stronger, but weaker; would not make this House more effective, but less effective. I think that the exercise of this House's powers at the present time is about right, and I do not believe that another place would willingly agree to an extension of our powers or to a greatly increased use of them if they were extended. I would say that, although one can attack the hereditary principle; although it may be said to be indefensible, it really is not a

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satisfactory reform to put in its place another system, arbitrarily devised, which appears to many of us equally indefensible. So, my Lords, while I am not opposed to reform, and many of my noble friends are not opposed to change, we are absolutely sincerely opposed to the proposals contained in the White Paper and in the Bill. May I just say this: in so far as the Bill is concerned, it did not implement to a satisfactory degree, as I thought, the proposals contained in the White Paper.
I have said something about the opposition point of view that could be expressed at great length by a number of my fellow Peers in this House if we were really going to have a debate on the White Paper again. A great deal has been said about its conduct in another place. My noble friend Lord Alport said he was appalled by the conduct of another place: the noble Lord, Lord Byers, described it as a "filibuster". I should have thought it undesirable—and I hope I shall have the noble Lord the Leader of the House with me in this—for any of us to engage in derogatory comments about the conduct of Members of another place. It can only lead to friction between the two Houses, and to say that Members of another place were engaging in a filibuster may be equally offensive to them as the suggestion that they talked mostly about other matters than the Bill.
Whether that be so or not I, for my part, should like to put on record my appreciation of, and admiration for, the fight put up in another place by those who were opposed to this measure—it may be on differing grounds, but I do not doubt in the utmost sincerity. Some of them put forward grounds which I personally could not support at all. But in those debates attention was called to a great many serious defects in the proposals, and I think we ought to express our gratitude to those Members who, out of a sense of duty to Parliament, spent so much of their time in dealing with this Bill.
The noble Lord, Lord Byers (who I am sorry to see is not in his place), posed the question—and I think it is a vital question—what went wrong? I welcome and praise the efforts of all those who took part in those negotiations, but they failed. And what went wrong? I think it is
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worth examining that for a moment. I believe that in the first place what went wrong was an attempt to reach a quick solution after the reference to this topic in the gracious Speech. This is a subject which needs investigation in depth and at length; and while anyone would have welcomed a completely formulated scheme agreed upon by representatives of all Parties, and subjected it to the closest consideration, none of us who did not take part in those discussions has seen the background papers to which the noble Lord, Lord Byers, referred. A scheme came out.
The noble and learned Lord the Lord Chancellor said we have had no alternative proposals, but I do not think that that was a body which would have been ready to receive any alternative proposals. It was not so constituted that it would have been able to receive proposals. But I ask the noble Lord, Lord Shackleton, and the Government, to consider whether the approach should not be that which we so often follow in other fields, namely, to appoint a body—not the present constitutional Commission, for the reasons my noble friend Lord Carrington has given, but a body with the task of considering the reform not only of this House but of another place as well. I think the job will not be well done if we look first at one House and then at the other. We must look at both.
I would make another point. I believe we make a mistake if we think that all the knowledge that can be brought to bear on the subject of reform of this House is held by Members and officials of this House and Members of another place. I do not think it is. I should like to see some sort of body set up to which people could put forward their proposals for reform and which would investigate, test and consider those proposals. That might take some time, but I believe that if at the end of it a system were proposed, carefully worked out in full detail—and the White Paper was not very precise; I hoped the matter would be given greater precision in the Bill, and it was not—if that body achieved its object and came out with a report supported by the majority (if it was not unanimous), that would carry great weight in the country, great weight with your Lordships and great weight with the Government of the day. So, my Lords, in answer to the question

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posed by the noble Lord, Lord Byers, while I add my praise to that already given to the efforts of those who took part in the negotiations, I think that what went wrong was an attempt to do too much too quickly and not having the process of deliberation such as one gets before a Royal Commission.
I do not propose to say any mor—perhaps I have said too much already. I welcome the Government's decision because, despite all that the noble Lord, Lord Shackleton, has said—and he has several times accused me of not understanding what was proposed, but I think I do—I myself opposed those proposals only because I could not see them operating so as to enable this House to function as effectively as it does now, far less to operate so as to enable this House to function more effectively. We have taken note of the present situation. I believe reform must come; but let it come slowly and gradually after a full and thorough investigation, and do not let us try to start and finish consideration of this subject in one Session.
5.7 p.m.
THE EARL OF LONGFORD: My Lords, the noble Viscount, Lord Dilhorne, and I have been friends for perhaps fifty years and I have noticed as time has passed that a kind of very acute, not unpleasing and rather macabre sense of humour becomes ever more prominent in his make-up. It may always have been there, but it was not so recognisable in past times. Now he comes down to the House to-day and asks us, in a way that is clearly ironical, to pay some sort of tribute to the House of Commons for thwarting the wishes of this House. There are jokes, bad jokes and absurdities, and that must rank as one end of that spectrum. He says that there will be many outside and in this House who will be grateful to the Government, as he is, for this wise decision. It cannot have escaped his notice that this House not so very long ago carried the proposals embodied in the Bill by 251 to 56. If the noble Viscount wishes to interrupt me I am sure he will stand up and say so.
VISCOUNT DILHORNE: My Lords, as I said previously, though I fear the noble Earl cannot have been listening—he must have been thinking about what he was going to say in reply to me—I said that one of my criticisms was that the pro-
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posals in the White Paper were not fully embodied in the Bill.
THE EARL OF LONGFORD: My Lords I am afraid none of us takes that reply very seriously. We are all aware that the noble Viscount was violently opposed to the White Paper and he has been against all these proposals, and in this last quibble I do not think lie will carry anybody along with him. No, the noble Viscount has been a strenuous opponent of the Bill and now he is delighted, of course, to see that it has been defeated by what can only be called a filibuster.
He says it is wrong to criticise the House of Commons. It does not prevent them from criticising us. I have been consulting the Companion, and of course I am under the guidance of the noble Lord who has handled all these matters so extremely well, as the noble Lord, Lord Carrington, remarked: I am referring, of course, to the noble Lord the Leader of the House. But the simple fact is that this Bill was talked out in another place; it was not argued out. No one who was in favour of reform was convinced that this was the wrong proposal by some clever dialectic or weight of argument. It was simply the load of endless and ineffably boring speeches which took up so much time. That is the fact. We are all perfectly well aware of it. The opposition set themselves to talk out the Bill. If "filibuster" is an insulting word I will qualify it by calling it a "fanatical filibuster"—a filibuster with sincerity, we do not question—but filibuster it was. They simply took up so much time that for the moment it has fallen by the wayside. So it is, to put it mildly, ironical, not to say facetious, for the noble Viscount, Lord Dilhorne, to come along and thank the Government for their wisdom, and so on. He knows that is all absolute bilge. It is a good joke, but we have had it for the moment.
Let us just see the situation that we face by this endless twaddle which took up so much time—I am not referring to to any individual, I am just making a collective remark. But this is the situation in which we are placed, and very unfortunate it is. I agree entirely with the noble and learned Lord the Lord Chancellor that this is an ill day, but we have

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to face reality. Incidentally, in the last debate the noble Lord, Lord Shackleton, was kind enough to associate me with the authorship of these proposals. It was an honour I had not claimed at that time, but now that they have become temporarily suspended perhaps I can thank him and say that I certainly stand on any share of mine in their initiation.
As I see it, looking at it quite cold-bloodedly in my retirement, I would lay down three propositions. First of all, a democracy such as ours is entitled to and requires a reasonable and defensible second Chamber. That is so general a statement that I hope it carries the noble and learned Viscount, Lord Dilhorne, and others who think like him. Secondly, I would say—and this is more a matter of argument, but I think that the vast majority of the House would agree—that such a Chamber could not permanently include an hereditary element. Thirdly, I would say that the particular proposals, whether in the White Paper or the Bill (and here we could get into a lot of detail), represent by far the best solution available. By that I mean that not only are they intrinsically the best, but they represent an agreement between the various Parties which one would have thought unthinkable until it was achieved. Here I follow the instructions of the noble Viscount and the noble Lord, Lord Carrington; I am not going to spend time on the details of those proposals in any way.
I would say one word on the hereditary principle. I should have thought that at this time, in 1969, the country is agreed that because someone's father sat in the Chamber there is no reason why he should sit there himself. That I should have thought was accepted as a principle. As the House knows, for years I have tried to suggest the way of easing the transition through what used to be called the two Writ plan and now the two-tier system. I will not dwell on that. I am simply saying that the idea that permanently you can have a hereditary Chamber or a Chamber with a large hereditary element in this country alone of all countries in the world is seen to be impossible.
Then we come to the question of what should be the basis of the new and re-
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formed Chamber. If we rule out as a permanency the hereditary principle, we are left in fact with two other wide ideas: either some sort of elective scheme or some sort of nominated scheme; or possibly, as in Ireland, for example, a combination of the two, which I will pass over now. I should have thought that, as the noble Lord the Lord Chancellor made plain, and has been made plain repeatedly, it seems almost incredible that in any future we can foresee this country will agree to an elected Second Chamber. It may be that in time, after most of us have passed on, some sort of indirectly elected Chamber will emerge, but I very much doubt it. Certainly in the foreseeable future I should think it is inconceivable. Therefore, if we are to have a reformed Chamber we are driven to what is called nominees. The Times, which has attacked these proposals from the beginning, has used this phrase as a term of abuse, as though it was describing a Chamber of nepotism. That is the way in which that phrase has been used.
If we are not to have elected Peers or Senators, and we are not to have hereditary Peers or Senators, we are forced back on some solution which takes the form of nominees. I quite agree that there are dangers, as there are bound to be in any scheme, and it could be that in some future scheme greater safeguards against abuse, if anyone can think of them, could be introduced. I do not think anybody would say that the last word has been said on that subject.
I must say frankly that if anybody, such as the noble and learned Viscount—perhaps I can arrest his attention, because I am going to say something very unpleasant which I know he will not want to evade—says that he stands for the reform of the House of Lords and is ready to agree that the hereditary principle has had its day, and is not proposing some kind of elected Chamber, which I do not imagine most people are, then they are forced back on the House of nominees or they are not genuine reformers at all. I must say that quite plainly. I must not refer to individuals in another place, so I will not do that. But in fact we have seen an alliance, some of us would say an unholy alliance, between the extreme Right and the extreme Left in another place. It cannot be thought that there was any identity

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of philosophy. They were both concerned for different reasons to wreck the whole idea of reform of the House of Lords. On the one hand, you had the ultra-traditionalists, who did not want to see the hereditary principle removed from this House. May I say, without any sort of Party reference, that they did not want to see the Conservative Party lose its domination here. On the Left there are people who do not want a Second Chamber, who want to abolish this House and have unilateral Government. That is a point of view, but not a point of view which I believe would ever be accepted in this country. We cannot, I am afraid, accept, as genuine reformers, either of those groups, and we cannot accept as genuine reformers anybody who is not ready to come forward and tell us in principle what he would put in the place of the proposed scheme.
May I say one word about the need for a Second Chamber. I am not going to argue that; I think this country accepts the need for a Second Chamber. I submit that if we are going to have a Second Chamber, if we believe in a Second Chamber, as most of us do, then we must surely want to see that Second Chamber a rational Second Chamber, a Second Chamber which makes a valuable contribution. And I would submit to the House that no Second Chamber will ever be allowed to make a really valuable worthwhile contribution worthy of its membership unless its composition is defensible before the public. The public are simply not going to let a Chamber composed as we are make the contribution of which we are capable. That is the case that many of us had in mind for quite a few years when we pressed for reform.
There is one point which I think in all candour one must face. I never got as far as the House of Commons—it was not for want of trying—but deep down in the consciousness of the House of Commons, I think, is the idea that if this House becomes more influential in some way we cut into the influence of the House of Commons. I think we must pause and ask ourselves whether it is true or not. I would say it is totally false; indeed the opposite is true. Once you leave out the question of powers, the question of our challenging the House of Commons, once you agree, as I am sure we all do, that in the last resort
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the House of Commons is supreme, there should be no conflict between a growth in our influence in the public mind and maintenance or increase in theirs. If we think in terms not so much of our influence but the contribution we can make, we can help them in so many different ways, not only in the education of the public mind but in co-operating in carrying out and giving effect to their own decisions. Bearing that in mind, I would say that we can complement their efforts, strengthen them and help them, and expand their influence. I hope that any Member of the House of Commons who bothers to look at these words will read what I am saying now. I hope people will realise that there is not this ineluctable clash between an enhancement of our influence and of the job we do, and their influence and their job. I hope they will see that these are complementary notions.
So I would hope that this matter is not left to languish for too long. Otherwise, I fear for the future of this House and of bicameral Government in this country. I see no danger whatever, speaking as a Socialist and also a former Leader of the House with responsibilities for everyone here, and, for that matter, as a democrat, of this House becoming too powerful, of hurting anybody, of sabotaging any proposals, from whatever quarter they may occur. The real danger is that this House will become futile. That danger has always hovered over us, and I am afraid it is hovering over us more clearly and visibly at the present time than ever before.
Anyone who loves this House—I am sure that that applies to the noble and learned Viscount, Lord Dilhorne, as to all other speakers—must, above all, want to avoid that consummation, though I believe it would be the ultimate outcome of any failure to reform this House. As time goes on, if nothing is done I believe that the public will be less and less ready to take us seriously as a factor in legislation. We shall remain a delightful club—the best in the world, as I ventured to say before—but we shall not be regarded as possessing any real meaning in the Constitution; we shall be regarded, in fact, as a rather whimsical facade.
If we really love this House, as I am sure is true of everyone here, then it seems to me clear that we must try to

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improve the constitution in some way that gives us the standing in the public mind that will enable us to do our job. I hope and believe that this evil day will in fact be forgotten when proposals, possibly different from these but not, I should think, much different, are brought forward in the near future.
5.22 p.m.
BARONESS SWANBOROUGH: My Lords, I fear that the point I want to bring forward may appear slight, but the reason I have the temerity to address your Lordships is that I have sat on these Cross-Benches for some ten years now and I have come to the conclusion that to-day the Cross-Benches do not convey to those who notice such things anything like a collection of Independent Peers, but much more an aggregation of a variety of people sitting on the Benches for a variety of reasons. Some of those sitting on the Cross-Benches to-day are temporarily out of sympathy with their own Party. Some sit on the Cross-Benches because of a special position that they hold, which again is of a temporary nature; and therefore, for one reason or another, the term "Cross-Benchers" to-day includes a number of persons who previously for considerable periods had a definite allegiance to one or other of the political Parties. I believe that if those who sit on the Cross-Benches at present were to be aligned, it would be found that there are many more sitting here for personal reasons than for individual outlook.
The fact that many Peers sit on the Cross-Benches for no reason other than disaffection with the Party to which they have always belonged, or because of a special appointment, or because they belong to a service which precludes their taking part in Party politics, does not rate them as Independents. I recognise, of course, that there must be a place where Peers who wish to discontinue support to a particular Party can sit and be able to make their contribution, and I realise how good that contribution can be. But I do think that they should not be confused with Independent Peers.
I have discovered, since I have sat on these Benches, the loneliness and yet the advantage of being an Independent Member of your Lordships' House. In saying this, I mean that I now understand to
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the full how difficult it is to operate without belonging to a Party which gives its members a definite understanding whether an item is important or not, and some help in the judgments that they may make. I have also learned that there are many difficulties inherent for those of us who must rely on our own judgment alone in coming to a decision when a vote in indicated. If at any time Independent Peers were to play a part of some importance in your Lordships' House, it is, I believe, abundantly clear that not only must the men and women concerned be truly, individually independent but also that they must be seen to be independent.
I hope that as and when discussions take place in regard to reform of your Lordships' House, this matter of the Cross-Benchers can be examined from the point of view of the Independent Peers. The value and the strength of such Peers should, and must, be that they cast their vote only after careful, considered, personal judgment. The problem of such Peers is that no Independent Peer can be a spokesman for another, inasmuch as each one is apart from and independent of his neighbour.
I believe I am right in saying that the term "Cross-Bencher" has been used in your Lordships' House only since the Second World War, and maybe the time has come when some new nomenclature should be considered. There is no question but that in the many discussions on Cross-Benchers the mistaken idea that "Cross-Bencher" denotes an Independent has led to much confusion. I wonder whether those who are very much more intelligent than I could ever hope to be could not find some means by which a Peer who sits on the Cross-Benches for a personal reason could be defined by a term which is different from that of a Peer who sits on the Cross-Benches because of his independent views. I recognise deeply that I speak with no authority beyond that of my own personal feelings, but I believe that this particular point of view has been largely ignored; and I beg that your Lordships will remember it when the right time comes.
5.28 p.m.
LORD AIREDALE: My Lords, I have only one point to make, and that is to draw attention to the one feature of

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the Parliament (No. 2) Bill which I most regretted. I do so in the hope that if any future reform is introduced this feature will not be reintroduced with it. I refer to the proposal that future Peers by succession are to be denied not only their right to vote but even their right to come and sit in this House. I object to that for two reasons. The first is that I believe that any measure of reform should do the minimum and not the maximum amount of damage to the people who are affected by it. I should have thought that to take away a Peer's vote was doing him quite enough damage, without at the same time denying him his right even to attend.
My second and perhaps better reason is that I believe that this proposal would have swept away the best means we have of bringing young Peers into this House. Consider the position of a young man who inherits a Peerage. He is progressing fast in his profession, and he is just the sort of young man who would be welcomed in this House. At present, he is able to come here whenever his professional duties allow him to attend. He can find out for himself, in his own good time, whether the work of this House is congenial to him. He can find out how much time he has available to come to this House. Supposing this Bill had gone through, that young man would have been denied the right to attend at all.
Nevertheless, he might well have been approached, I suppose, and asked: "Would you consider accepting a Life Peerage? This will require you, of course, to give a considerable amount of your time in attending at the House. You will have to attend a substantial proportion of the sittings of the House." I believe that that young man, faced with that offer, would be placed in a most cruel position. How would he know what demands his profession would be making on him in five years' time? How could be possibly say whether, in five years' time, he would have the time available to come to your Lordships' House and attend two-thirds, or whatever the proportion might be, of its sittings without doing damage to himself in his profession?
How infinitely preferable it would be that that young man should be allowed to avail himself of his hereditary Peerage
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to the extent of coming here (there is plenty of room on the Benches), and sitting, listening, and taking part in debates if he feels so inclined; and then, if he finds he will have the time to do it, allowing his name to be put forward as a person who would be prepared to accept a life Peerage if it was offered to him, and then becoming a voting Member of this House! My Lords, I believe it to be so important to allow young people to come into this House that I do not believe we should sweep away the best means we have of achieving this aim.
5.31 p.m.
LORD MOLSON: My Lords, I welcome the initiative of my noble friend Lord Alport in initiating this debate. I feel that when as recently as last November your Lordships accepted by the large majority of 251 to 56 the general principles of the proposals for reform, we should not pass without comment the dropping of the Bill which was intended to give effect to those proposals. It is surely desirable that we should have an end to the fifty years of uncertainty we have been suffering about the future of this House. During that time everybody has advocated reform, but nothing has been done because everybody differed upon what changes should be made. The Socialist Party resented, and naturally, the threat of obstruction from your Lordships' House; the Tory Party considered that your Lordships' House was ineffectual as a brake upon radical legislation, and I think the Liberal Party felt bound by the dictum of their great prophet of the past that the reform of your Lordships' House "brooks no delay". That was stated in 1911, and clearly they were under an obligation to try to promote reform. I think there is general agreement that the two defects from which this House suffers are the unchangeability of the Tory majority, and the fact that that majority is based upon an hereditary system.
There has been a hoodoo on the carrying through of any reform of your Lordships' House. The first proposals were made in 1918; the second proposals were made in 1948; and the third proposals were made in 1968. If I may reminisce for one brief moment, my first experience of this controversy was when I first went into the House of Commons

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in 1931, when I was one of the two honorary secretaries of a committee of Conservatives of both Houses who considered what proposals might then be made. We sat under the chairmanship of the then Lord Salisbury, and I can say that, despite the continuity of Cecilian thought, the Lord Salisbury of that time did not hold entirely the same views as my noble friend. We have heard talk about the hereditary principle, and I very much welcomed what my noble friend Lord Salisbury said last November. He said:
"I may be told that the fact that some such check may be needed does not of itself justify anything in the nature of a hereditary system. I should entirely agree with that view; …
there can be few people … who would still attempt to maintain the view that the fact that a man is the son of his father could of itself justify a claim to be a Member of this House."—[OFFICIAL REPORT, 19/11/68, col. 673.]
It is because the Conservative Party has moved so far forward in the last thirty years or so that I very much welcomed the attempt last year to arrive at an agreed settlement of this problem. I felt no hopefulness that the hoodoo that had hung over the problem for some fifty years would be banished, but I think it is the most remarkable thing that the Leaders of the two Parties should have agreed on the proposals in the way that they did.
LORD SHACKLETON: The three Parties.
LORD MOLSON: The three Parties: I apologise to the noble Lord, Lord Byers, and his friends. I felt, and I feel, that this was an opportunity that ought not to be missed.
"There is a tide in the affairs of men, Which, taken at the flood, leads on to fortune
And we must take the current when it serves, Or lose our ventures."
I very much fear that we have not taken the tide at the flood, and it will be extremely difficult to go back to where we were even a short time ago.
The merits of this scheme to me are these: they are in line with the general development of our Constitution; the ancient forms are preserved and the content is changed; under these proposals your Lordships' House would have gone on appearing to be very much what
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it was in the past, and yet would be based upon modern Statute and be in line with the thought of our times. That is why I entirely disagree with my noble and learned friend Lord Dilhorne that longer thought or deeper study would have resulted in anything more likely to be acceptable to public opinion in this country and to effect a transition smoothly and easily from what is not a satisfactory state—because your Lordships' House is undoubtedly anomalous—to something which could preserve the merits and virtues of this House while being based upon agreement between the Parties as to what is needed for the future.
The proposal that the Government of the day should normally enjoy a majority of 10 per cent. is also, I think, in accordance with the spirit of our Constitution. In the United States of America it is possible to have an Administration struggling against a hostile majority in Congress. That is not the way we work here. We work on the assumption that whatever is the Government must carry on the Queen's Administration and, in normal circumstances, is entitled to have a majority. And that is the only way in which our Constitution, as it is, can work. Therefore I think it right and proper that normally the Government of the day should have a small majority in this House. I welcome the idea that the balance of power should rest with perhaps the Liberal Party and the Cross Benchers. I believe that in the Cross Benchers at the present time, and to an equal extent in the future, we can have people of independent judgment and long experience who should be in a position to give a final decision upon many of these matters.
My Lords, I disagree with those noble Lords on this side who argue that because noble Lords are Cross-Benchers they have no political powers of reasoning and judgment. On the contrary, I do not accept the view, Party politician as I have been, that all political wisdom is confined to those who are attached to one or other of the political Parties. If it has been said that an independent Peer is one who is not to be depended upon, that the Government of the day when it introduces new and controversial legislation should not necessarily be able to depend upon a servile majority, either in this or in the other House, that seems to

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me to be a great advantage. I believe that the additional power which it was intended to confer upon the Cross-Benchers was one of the great features of these proposals.
My Lords, as has been said before, it is not only the benefits to this House which are being lost by the dropping of these reforms. I believe that proposals of this kind would have gone a long way to strengthen Parliamentary government in this country at a time when it is widely being criticised. As the noble and learned Lord the Lord Chancellor has said, I believe that it would have facilitated new and improved methods of co-operation between the two Houses. I hope that these opportunities are not forever lost owing to the events that have taken place. I have taken to heart the extracts from our Companion which have been quoted by the noble Lord the Leader of the House, and so I refrain from saying that there was elsewhere a filibuster of the lunatic fringes of two Parties. That, I think, in view of the printed word, would have been improper, and I will therefore say that it was protracted criticism conducted by those whose views, no doubt sincerely held, must be regarded as rather extreme, to whichever Party the speakers may belong.
I hope that when the Conservative Government comes to power it will remember that these proposals are virtually identical with those which were freely agreed upon between the representatives of our Party and of the present Government, and I think it would be appropriate and right that that Government should then introduce a Bill almost identically upon these lines. I hope that it will have a more docile majority in another place, and will be able to carry the reforms through in a way that has not proved possible in the case of the present Government. In the meantime I would urge that these proposals should be referred to the Constitutional Commission. In that way it may still be possible to ensure that these proposals, which have commended themselves to such a large majority of your Lordships' House, and I think to many moderate people in the country who have studied them, will be preserved from complete shipwreck and loss.
5.43 p.m.
LORD FRANCIS-WILLIAMS: My Lords, I should like to begin by saying
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how deeply I personally regret that the noble Lord, Lord Alport, for reasons which I can understand, decided to withdraw his Bill. I think it would have been excellent if this House had had the opportunity to reaffirm, as it clearly would if it had voted according to its political conscience, by the sort of majority by which it affirmed its support for the original White Paper, its belief in a Bill of this character. It seems to me that this would have been one of those occasions on which this House might very properly have shown itself independent of another place, and that in so doing it might very well, in the end, have been able to save another place from the worst consequences of its own folly.
It may well be that if the controversy is taken out of the Industrial Relations Bill, another place could find itself with time on its hands, and might even have been glad to have restored to it a Bill of this constitutional importance supported by substantial majorities of opinion in both Houses, and been prepared to go on. But as I have said, I appreciate why the noble Lord, Lord Alport, decided to withdraw his Bill, although I had put my name down expecting to speak in a Second Reading debate, and fully prepared to vote in that debate.
Although one would not, of course, in any way wish to insult or offend another place, which would be Parliamentarily improper to an extreme degree, one must, I think, say that this eminently sensible Bill was defeated by a combination of 20th century Luddites, who have done great damage to the constitutional prospect in this country. It seems to me that they eventually became almost driven hysterical by the temptations droned around their witches' brew, to such an extent that they were deafened to all reality. I think it is the experience of most people that if one sees one or two people, who on practically every issue of importance one knows are bitterly opposed, walking down the street laughing together, one knows that sensible and honest people had better protect their valuables, even if they are temporarily being cheered on from the other side of the road by an ex-Lord Chancellor.
I think that something very valuable indeed was destroyed by this curious

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combination of individuals, whom I must not mention by name—and I would not dream of doing so. While not going further on that, I should like to say that it seemed to me particularly intolerable that so much should have been said, and so many allegations made, regarding the probability of future Members of your Lordships' House, under the scheme proposed, becoming a sort of subservient slaves of patronage. I think there is nothing at all in the recent, or indeed, perhaps, in the comparatively long-term, political life of this country, and certainly nothing in the recent life of your Lordships' House, to give any credence whatever to the suggestion that, merely by allowing oneself to be nominated to the pleasure and honour of membership of your Lordships' House, one therefore puts oneself in the position of touching one's forelock to every Prime Minister or Minister who beckons a little finger in one's direction. That, if I may say so, seems to me a much more intolerable affront to the dignity and honour of this House than anything which may have slipped from people's lips in references to another place during this debate.
I think the whole experience of British public life indicates that, within our system and our climate of opinion, men of very divergent political views and attitudes can be asked to undertake public duties, paid or unpaid, who will then carry out those public duties with independence and integrity. I refuse to accept for one moment the suggestion that a nominated House of Lords (which, as has been said, is the only possible alternative to an elected House of Lords, which another place would not, I think for very good reasons, wish to have) would be in any way subservient to the Executive will. On the contrary, I believe that such a House of Lords would have done, or could have done, a great deal to redress the balance between the Executive and the Legislature; and could have provided a body of independent opinion, the members of which, while of course most of them would be speaking from a Party base held out of deep sincerity and a political background, would have spoken independently and with authority, and certainly not with any regard at all for those who had nominated them, in a strict, Party, narrow sense.
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It seems to me that the "talk-out" of this Bill in another place by a noisy minority (many of whom, of course, are wholly sincere) has made it impossible for this country to go forward with a constitutional change of great value; and, as has already been said, this seems to me to be a very black day in Britain's political democracy. I hope that we shall not simply regard this Bill as something to be forgotten; to be put away and never looked at again. I hope that another opportunity will arise for it to be considered. When it does, I believe that this Bill will provide an essential, sensible basis and foundation for House of Lords reform; and if I may say so, I hope that all those from the Lord Chancellor downwards who are concerned with constitutional matters will do what they can to see that if this Bill has to be pigeon-holed, at least it is put in a pigeon-hole from which it may be taken at reasonable intervals and looked at again.
5.54 p.m.
LORD SOMERS: My Lords, I must confess that I cannot pretend to be sorry at the rejection of this Bill, for to my mind it was a very bad one in every way. I am not against reform in the least—in fact, I think that reform is certainly needed in your Lordships' House—but I do not think that the methods suggested in the Bill are the way to carry it out. A great deal has been said about the fact that this Bill would have strengthened your Lordships' House. I was therefore very glad to have what had been my impression confirmed by my noble and learned friend Lord Dilhorne: that in fact the Bill would not have strengthened this House but would have weakened it. If your Lordships look at the clauses on legislative powers, Clauses 8 to 15, you will see that the other place is given power to disregard any opinion that we may express.
Another point which has been mentioned a great deal is the fact that there has been general agreement over this Bill between the two Parties. That, I think, was true to a degree over the White Paper; but the Bill and the White Paper are two very different things, and I do not think it is true to say that that is so of the Bill. The agreement, I believe, was only superficial at the best of times. A great many of us on the Back Benches

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felt very strongly against the Bill. The right reverend Prelate the Lord Bishop of Chester spoke of that well-known cliché, "the built-in majority". My Lords, on paper, of course, there is a built-in majority, but it is a purely hypothetical one, for I should say that about four-fifths of that majority never come near your Lordships' House at all. The majority is really only theoretical, and very rarely—in fact, I think I can say only once in my recollection has it actually appeared inside this Chamber. The right reverend Prelate also said that the presence in your Lordships' House of the Lords Spiritual might be questioned. I sincerely hope that it will not, because I feel that their presence here is of very great value in an age when we are more and more facing the tendency to disregard spiritual values, to ignore religious teaching in the schools, and so on. I think that the presence of the Lords Spiritual here is of very great value.
My Lords, we now come to the hereditary system. I have said what I feel about the hereditary system before in your Lordships' House and I am not going to repeat it again now, but I will add one thing to it. This system has one great merit over all the others, and that is that hereditary Members of your Lordships' House have no axe to grind whatsoever. They come here as independent Members of the House. Although they may ally themselves with one Party or another, there is no doubt that they do not feel, as would an elected Member, that they are in any way obliged to reflect the feelings of their Party. I think the noble Baroness, Lady Swanborough, put the case extremely well when she spoke of the independence of the Cross-Benchers. In a sense, all we who are hereditary Members of your Lordships' House are Cross-Benchers. We all feel perfectly free to vote which way we like. I have frequently, I must confess, voted against my own Party—not, perhaps, on very fundamental points; but we all feel free to do so.
I am not going to keep your Lordships any longer because I think that everything that could be said about this Bill has been said. I therefore end by saying only that I, for one, am extremely glad that the Bill, which I consider a very bad one, has been rejected.
6.0 p.m.
THE EARL OF CORK AND ORRERY THE EARL OF CORK AND ORRERY rose—
LORD SHACKLETON: My Lords—
THE EARL OF CORK AND ORRERY: My Lords, I beg the noble Lord's pardon. If I am out of order—
SEVERAL NOBLE LORDS: No!
LORD SHACKLETON: My Lords, the noble Lord is not out of order; but it is the usual courtesy of the House that if a noble Lord is going to get up before the next speaker whose name is shown on the list he warns that speaker. I do not say that in any sense of anger, merely of mild surprise.
THE EARL OF CORK AND ORRERY: My Lords, I entirely accept what the noble Lord has said. I apologise. The only excuse I can make is that I had not made up my mind to speak. I hope he will accept that. I hope that noble Lords as a whole will forgive my joining in this weird debate—weird because it has taken on the character of something between a Second Reading debate and a funeral oration, to neither of which two aspects would I have any wish to subscribe. But it might be worth while to wonder why the scheme for reform ever failed at all. I say that without any intention of speaking about what has actually happened in another place, or here this afternoon, or in the earlier debate upon the White Paper.
I believe that the inter-Party Conference went to work and probably started with certain assumptions which were either fallacious or untested. I wish to make it plain that I say that without any intention of criticising. That would be as impertinent as it would be ungenerous. If there is any wisdom in what I say, it is wisdom after the event; but, after all there is no excuse at all for not being wise after the event. I believe that the first fallacious assumption is simply the basic one: that something that has been centuries in growing into an organic whole can properly be attacked in one single act—in this case a Bill—with the object of destroying it and replacing it with something else. I think that my noble and learned friend Lord Dilhorne was right when he said that we have attempted to do too much too quickly.

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There are various other assumptions which I question; and the order in which I put them is more or less arbitrary. I will not argue them but will merely state them as quickly as possible. I believe that it is erroneous to suppose that you can transpose the ends that you mean to achieve and the means you use to achieve them. I think that that was done. The object of attempting to reform Parliament is to get a better Parliament. The means used to do it were in this House chiefly the elimination of the hereditary principle. That, according to the Government's Election Manifesto, was the approach they made at the beginning. But I think that in the course of the Session—as we can see by tracing the gracious Speeches from the Throne—the means and the end get turned back to front until we find that the primary object of the Bill was to get rid of the hereditary principle—for various perfectly good reasons which I accept. The reform of Parliament became the means for doing that. The end and the means got turned back to front. I have no objection to that, providing that both the ends and the means are equally reliable and respectable; that is to say, that the idea of getting rid of the hereditary principle is as widely accepted by everybody as the necessity for the reform of Parliament. But I question whether that is so.
That brings me to the third of my assumptions: the assumption that the hereditary principle is in fact anathema. I do nothing to defend the hereditary principle at this moment; but it has been attacked in rather curious ways. It is supposed by some that it is anathema to the whole country. It is anathema to the Labour Party but in so far as it is anathema to the Labour Party—or to anyone else—on the basis of prejudice rather than logic, this is not a very sound basis on which to base a project for the reform of Parliament.
LORD BYERS: My Lords, that principle was agreed in 1948 by all three Parties.
THE EARL OF CORK AND ORRERY: My Lords, I am aware of that. I am not defending the principle, as I think I said. I am only saying that the way in which it has been approached as
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being anathema is something that has made it difficult for this Bill to be accepted. But perhaps I can develop that argument briefly. I understand that the principle is accepted by all Parties, but I doubt whether it is true that it is anathema to the whole country. I do not think that anyone is in a position to say, as has been said by the noble Earl, Lord Longford, and the noble and learned Lord the Lord Chancellor, and indeed by my noble leader, Lord Carrington, that the country simply will not stand it. I doubt whether the country gives a hoot one way or the other whether we have a hereditary principle in the Lords or not. I do not know; but I do not think that anybody else knows. But I think it is a shaky foundation on which to build anything. I am not talking about hereditary legislators but about the principle itself.
Next, it is doubtful, I think—and my noble friend Lord Dilhorne suggested something of the same sort—whether in fact the Leaders of the Parties are the best persons to set about the task of drafting a Bill. I say this for two reasons: first, that a very wide area of knowledge is required for this purpose (which knowledge might be derived from constitutional lawyers and historians) and, second, that rightly or wrongly—I believe wrongly—it may be seen in the end product to have been produced by Governments—either the Government of the moment or a Government of the future. Front-Benchers emerge with a scheme and find that their Back Benchers are against them. That is illogical and fallacious in itself; but it happens; and I think we saw it happen in this case in the other place. People feel that what has happened is that a Bill has been produced for the benefit of the Government—and the object of the Bill was to make the process of government in general easier. But Parliaments do not exist for the benefit of Governments. To that extent the Bill itself was suspect, as I said, rightly or wrongly; though I take no sides.
It has been said—and I believe that this also is fallacious—that there was a great deal of agreement between the Parties and that an enormous opportunity was lost. I am not certain about this. My own view is that there was very little agreement between the Parties in the

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end, and I venture to think that the noble Lord. Lord Francis-Williams, was wrong to think that it would have been possible to repeat on the Bill the vote that we made on the White Paper. My opinion is that we should have found a different result. If we let the impression go from this Chamber that noble Lords as a whole, or noble Lords on these Benches, would have been in favour of the Bill if only they had been allowed to say so, I think we should be giving a false impression.
That is all I have to say, my Lords, have not observed the noble Lord the Leader of the House nodding in sage agreement whenever I made a point; but I think he will accept—and that the noble and learned Lord who sits on the Woolsack will accept—that I have done something to obey the injunction of my noble Leader Lord Carrington, who recommended a period of reflection and thought. The only difference is that he was proposing it for the future and I have already tried to carry it out. I have tried to do it without any personal bias of any kind because I believe that Lords Reform—although I would rather call it Parliamentary reform—must come. I think that it ought to come; I wish to see it. If there were mistakes made in the past which we can see now but did not see then, perhaps the realisation of those mistakes may help to achieve this reform in the future.
LORD MITCHISON: My Lords, I owe a deep apology for being so extremely late to-day, but I am going to atone for that by being very short. I had hoped that the noble Earl, Lord Longford, would be able to make my speech for me—
LORD CARRINGTON: My Lords, I do not wish to interrupt the noble Lord so soon in his speech, but I have sat in this House for 25 years and I have never known a noble Lord having heard none of the debate at all to come into the House and make a speech.
LORD MITCHISON: Then, my Lords, I will not make it.
6.10 p.m.
LORD SHACKLETON: My Lords, things have taken rather an odd turn. I thought that I was more generous to Lord Carrington's noble friend than he was to mine.
LORD MOLSON: My Lords, if I may interrupt the noble Lord, I would point out that my noble friend has been attending the debate whereas the noble Lord Mitchison, has only just walked into the Chamber.
LORD SHACKLETON: My Lords, I must say that I had already used strong words to my noble friend Lord Mitchison, and had, so to speak, purged my feelings on the matter. But I think my noble friend had a good reason why he was not able to be present, and he promised to be only two minutes. if the noble Earl, Lord Cork and Orrery, had not get up, my noble friend would riot have been in the Chamber in time anyway.
My Lords, I am not employing tactics—if I dare mention this—which are more familiar in another place. I should like to start by expressing to noble Lords, and especially to the noble Lord, Lord Carrington, my appreciation of their very generous remarks. I think that the noble Lord, Lord Carrington, and I have certain things in common—and I know that my noble friend Lord Longford would feel exactly the same. It is a great honour to act as Leader of your Lordships' House. One is very conscious of how kind are your Lordships to Leaders who sometimes find themselves in difficult circumstances when they have quickly to look up the procedure. I am not sure that the Clerks in this House are in quite such a good position to whisper advice to us as the Clerks in another place may be to whisper to Mr. Speaker. I only hope that it is not a contempt of another place to say that. I am grateful to noble Lords, and I think that the noble Lord, Lord Alport, may be well pleased with the debate.
I am slightly nervous that, as a result of the various references which have been made, there may be a lot of Motions on the Order Paper in another place tomorrow. I made some innocent remarks and there was a Motion and then a counter-Motion. We do not go in for that sort of thing in your Lordships' House, any more than we go in very much for questions of privilege. But I am bound to say, and to repeat, that a number of very offensive remarks were made in another place and although one of the most offensive was subsequently withdrawn, it was only after representations had been made by some of my noble friends on this side of the House.

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Of course, this is bound to give rise to the sort of things that Erskine May warns us against. I will not quote Erskine May, but one sees how one gets into this situation. It is arguable that in another place they were debating the reform of the House of Lords and we were not debating the reform of the House of Commons. The noble Lord, Lord Alport, referred to the wide implications of the functioning of Parliament as a whole; so to that extent we may feel a little freer, but I suggest that we continue the restraint that I hope we have successfully shown to-day so far.
I was slightly depressed by the last two speeches from the noble Lord, Lord Somers, and the noble Earl, Lord Cork and Orrery. I do not want to go over all the ground again, but there are still very fundamental misunderstandings of what the intention of the reform was. There are those who say that it was to strengthen the House of Lords; there are others who say that it was to weaken it. The basic ideas behind the reform were to strengthen Parliament as a whole. It is obviously open to argument that we have not succeeded and that the proposals were in fact counterproductive, but undoubtedly—and I am sure that noble Lords will accept it—that was the objective of those of us who took part in the discussions on this matter.
I would say to the noble and learned Viscount, Lord Dilhorne, that this was not something which was just "cooked up" as soon as there was an announcement in the Queen's Speech. Research had been going on for a couple of years before, and the origin of this research was the statement in the Labour Party's General Election policy. A number of noble Lords, and political scientists, particularly people like my noble friend Lord Longford—and we have heard the interesting quotation from the noble Lord, Lord Newton—have over many years been looking for the reform of this House and the improvement of Parliament in the process. My Lords, I was asked certain particular questions about the reform. I do not propose—
THE EARL OF CORK AND ORRERY: My Lords, before the noble Lord moves on, may I make one remark on my own behalf? I am sorry that the noble Lord was depressed by my speech. I think that I must have misled him. I hoped to
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make clear that in fact I was not intending any criticism of the content of the Bill. Does that make any sense to the noble Lord at all?
LORD SHACKLETON: My Lords, I must say that I find the speeches of the noble Lord and his reasoning somewhat—if I may so call it—involuted. I watch and listen with great interest, but—I say this with great affection—he has almost designed a new form of logic of his own. I study what he says with great interest because I appreciate that hidden in his remarks there are sometimes great truths. I look for them continuously, and I shall do so to-morrow. I appreciate the noble Lord's clarification.
My Lords, I will not go over the main issues which have been very fully put by my noble and learned friend on the Woolsack and in the excellent speeches of the noble Lord, Lord Byers, and the noble Lord, Lord Carrington, who was brief, terse and very much to the point, as always. I well understand the feelings of the noble Lord that perhaps we do not want to spend too much time over this now. None the less, something of a message has, I think, come from your Lordships' House. Certainly the majority of noble Lords who have spoken. and the majority of the weightier speeches, indicated that we should if possible try to proceed with the reform of the House of Lords as a contribution to the reform of Parliament. It is not for me to-day to say how or when this can take place, but I think that we should note it and for that reason I should like to answer certain of the points that were made so that they are on the Record.
My Lords, I entirely agree with the noble Earl, Lord Perth, when he says that he believes that it would have been possible to arrive at a satisfactory agreement with regard to the position of Scotland. I repeat that the position of Scotland is quite different from that of other areas in the United Kingdom. Apart from the obligations of the Act of Union, the existence of a separate body of Scottish law required that there should be special recognition of this and we had given it some consideration, first of all by a possible amendment to the Preamble. There were technical arguments against amending the Bill. It may well be that it was a mistake to have that recognition and that it would have been

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necessary to make some further amendments to the Bill, particularly in relation to Committee stages. We had not reached that stage in the discussions and therefore I cannot say that the Government and noble Lords would have agreed on it. But our talks were such that I think there was a very good prospect that we should do so. Incidentally, I should remind the noble Earl and the noble Lord, Lord Airedale (who I imagine have read the White Paper, but sometimes people forget), that it was one-third attendance and not two-thirds attendance.
My Lords, I do not think that the noble and learned Viscount, Lord Dilhorne, who was in moderate mood to-day, will want me to answer his arguments. It is a pity that we shall not be able to cross swords as I am sure we should have done if the Bill had come to this House. It may well be that there will be further opportunities on another occasion. My noble friend Lord Longford, in his characteristically—I hesitate to use the word "brilliant" about him, as I have used it so often—scintillating speech, dealt with some of the main arguments of the noble and learned Viscount.
There was an anxious comment by the noble Baroness, Lady Swanborough. We always listen with great seriousness to anything she has to say. I find it difficult to see why it is necessary to introduce a new category of Independents into your Lordships' House. It seems to me that Cross-Benchers, defined as Peers who sit on the Cross-Benches, is as accurate, neutral and all-embracing a term as it can be. We have always known that sitting on the Cross-Benches are Peers who cover the whole spectrum of Party politics. There are some who are so far to the Right that they are almost invisible and merely sit there because perhaps they are not sure where else to sit. There are others who, but for some technical consideration, would otherwise be regular Party Members. There are a number of Members of my own Party who sit on the Cross-Benches and who, as we notice, regularly vote against the Government. Yet we recognise the noble Baroness's position and I do not think that she need fear unduly that she might be misunderstood.
May I say one thing about how this agreement was arrived at? It is always assumed to be a bad thing if people
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belonging to opposing political Parties agree on anything. I believe strongly in the Party system and—I hope that the noble Lord, Lord Byers, will not take it amiss if I say this—on the whole I believe strongly in the two-Party system. The noble Lord occupies a special position, as does his small Liberal cohort, in your Lordships' House. But I believe that the Party system, for all its difficulties, is fundamental to the working of democracy in this country. Maybe in the years to come a new system may be evolved. I think it is essential that Party lines should not be blurred; that Parties ought to cover a fairly wide spectrum of views, as demonstrably is the position at the moment in the Labour Party and I suspect they do the same, perhaps more quietly, in the Conservative Party. But I do not believe that it follows as a natural truth that if the Leaders of opposing political Parties happen to agree on something which in their considered opinion is of value to the country or to Parliament, this should automatically be assumed to be wrong.
We gave the most thorough examination to this subject, and the view that the Government took deliberately was that this was something much better dealt with by consensus than on straight Party lines. It was certainly my view that it was to the interests of my own Party that it should be so conducted. We believe that we got essentially what we thought was necessary in the way of reform of your Lordships' House. I believe that this was equally so from the point of view of the Conservative Party, confronted as they have been with a very difficult situation, with their hands half tied behind their backs because of their large majority.
I am not saying this offensively, but I must say I find Lord Somers's definition of independence rather an odd one. It seems to suggest that the fact that a Peer has come to your Lordships' House only once in his lifetime indicates independence. I do not think it has often happened that major Conservative measures have been rejected in this House. That is embarrassing to the Conservative Party, as they find on a number of occasions when they have to choose between whether they ought to vote against the Government or whether the consequences will be out of proportion to the intention of the

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Government. That has been clearly recognised by the Leaders of the Conservative Party. In the same way there were serious disadvantages to the Labour Party. So we arrived at a reform which might not have been very beautiful, which might not have had the clarity of a written constitution but which was essentially an adaptation of a living institution. We believe it preserved the best qualities of your Lordships' House and would tend (if I may use the horrible word) to maximise its use, so that alongside the other place we might be able to make a bigger contribution to Parliament.
I reiterate that my greatest regret is that this loss of the Bill means a slowing up of Parliamentary reforms. I would remind your Lordships of what my right honourable friend Mr. Crossman said:
"The Bill will give us not only these negative reforms but a chance of reorganising Parliament, reducing pressure on Back Bench Members and giving a better chance of achieving adequate Parliamentary control of delegated legislation".
We all know that the system of control over delegated legislation is thoroughly unsatisfactory. We looked to these reforms, to Joint Committees and such like bodies, to establish a much more critical measure of control over the legislation which pours out from successive Governments.
I still hope that there are some changes it may be possible to carry through. There have been important proposals by the Select Committee on Procedure of another place. Perhaps it is early days for us to start thinking about Joint Committees. I believe that the atmosphere is a little too sour at the moment to talk about those; but I think that we ought to see whether we can develop some of these institutions. And when, in due course, once again someone makes an attempt to reform your Lordships' House, we shall then have a clearer view of how Parliament can be improved.
There is much that I could continue to say. Among the particular arguments that have been made was that of the noble Lord, Lord Airedale, who talked about the value of young hereditary Peers. I do not for one moment underrate the value of young hereditary Peers for your Lordships' House. The only thing is that there are so few of them. My noble and
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learned friend who sits on the Woolsack made some inquiries and found that of the hereditary Peers under 30 who turned up at least once in three times, there was only one. None the less, even one young hereditary Peer is very well worth while, and I have noted the noble Lord's point. In weighing the issues of the improvement of Parliament and of the achievement of respect for Parliament that I think the people of this country have tended recently rather to lose, I do not believe that the preserving of a few young hereditary Peers weighs the balance against the sort of reform we had in mind.
I hope that we shall have further opportunities to discuss the procedure of your Lordships' House. We shall certainly have our struggles during the remaining 18 months of this Parliament. I have noted what the noble Lord, Lord Carrington, said about hasty legislation being out of place and equally what he said about the Opposition in your Lordships' House playing its usual responsible role in relation to Government legislation. I hope that we shall in fact be able to continue in this way. Meanwhile, I would say to the noble Lord, Lord Alport, that it may be that a time will come when he will be able to introduce a Parliament (No. 1) Bill.
6.29 p.m.
LORD ALPORT: My Lords, it falls to me now, at the end of this debate, merely to wind up, very briefly, and to thank those noble Lords who have taken part in it. I do so with a great feeling of gratitude to them for turning this occasion into something which I hope your Lordships will regard as being a useful one in the interests of your Lordships' House. I realise that my noble friends on this side felt that I began this debate with a somewhat controversial speech. Had my noble friend Lord Conesford not leapt to the defence of the other place it would have been slightly more controversial than it was: more provocative perhaps, and more directly applied to certain of the issues of the last debates in the other place. But having listened to the noble Lords, Lord Byers, Lord Longford, Lord Francis-Williams and Lord Molson, I am rather consoled by the thought that anything I was prevented from saying has been said more than adequately on my behalf.

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I think your Lordships will have been touched, during the speech of my noble and learned friend Lord Dilhorne, at the vote of thanks which he passed to the distinguished literary critic of the Evening Standard. I can but think that had the events in the House of Commons gone differently for him, he might have been tempted to follow the rather more dangerous lines that I tried.
My Lords, many important points have been advanced during this debate, but primarily it leaves me with one conclusion. There may be many ways of reaching a solution to reform, but there is only one thing which to me seems to be important; and that is that those who are determined to bring about reform if they possibly can should continue with their efforts, despite discouragement and despite setbacks. The reform of a great institution such as this, with its origins and foundations running back into our national life and history, however important it may appear to some of us, is always slow in coming, and always requires great efforts by those who are convinced of its necessity. I am convinced of its necessity. I am as convinced as I have explained to your Lordships on more than one occasion; and, so far as I personally am concerned, I shall continue with my efforts to the best of my ability, as I hope will those noble Lords, to whichever Party they belong—or even those without Party—who feel it worth while joining to make certain that this particular reform, which should have been brought about many years ago, is accomplished without too long a period for further reflection and thought, or too long a period of waiting for investigations in depth when these, we know, are no longer relevant after the agreement in principle which has been reached between the Leaders of the various Parties and which forms the basis of the No. 2 Bill.
In those circumstances, my Lords, I would merely add that I am very grateful indeed for the consideration which your Lordships, as always, have shown to me
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as the initiator of this debate, and I now ask leave to withdraw the Motion.
Motion, by leave, withdrawn.

BEDFORD CORPORATION BILL [H.L.]
The CHAIRMAN OF COMMITTEES informed the House that the opposition to the Bill was withdrawn; the Order made on February 11 last discharged, and Bill committed to the Committee on Unopposed Bills.
NATIONAL WESTMINSTER BANK BILL LUTON CORPORATION BILL
Reported without amendment.
  CHELTENHAM RAILWAY STATION
  CHELTENHAM RAILWAY STATION