Sitting of 21 May 1969

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

    Clyde Shipbuilding Industry
    Mr. Gordon Campbellasked the Minister of Technology if he will make a statement on the shipbuilding industry on the Clyde.
    Mr. Edward M. Taylorasked the Minister of Technology whether he has now concluded his discussions with the Shipbuilding Industry Board on the position of the Clyde shipyards.
    Mr. Rankinasked the Minister of Technology if he will make a statement on the future of the shipbuilding industry on the Upper Clydeside.
    Mr. William Hamiltonasked the Minister of Technology if he will now make a statement on the future of the Upper Clyde shipyards.
    Mr. Shinwellasked the Minister of Technology what progress has been made in solving the problems that face the shipbuilding industry on the upper Clyde; and if he will make a statement.
    The Minister of Technology (Mr. Anthony Wedgwood Benn): The Shipbuilding Industry Board is awaiting proposals from Upper Clyde Shipbuilders Limited which are expected within the next few days.
    Mr. Campbell: When will the Minister be able to make a statement? Will it be before the recess? In view of the Government's involvement in this consortium, is the right hon. Gentleman treating as urgent and important the need for
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    a healthy and viable industry on the Clyde, and does he recognise that this is of great concern in Scotland?
    Mr. Benn: As far as the latter part of the question is concerned, certainly. This is what the operation is all about. As regards the date of a further statement, I am to some extent in the hands of the U.C.S. and the S.I.B. which will want to look at it, but I shall keep the House as fully informed as I can.
    Mr. Taylor: Is the Minister aware that workers on Clydeside are ready and willing to work themselves out of this crisis so long as they know the size and extent of the problem? Will he therefore ensure that when the plan comes forward the men are told the precise targets which have to be met if the yards are to be saved, so that they can meet them?
    Mr. Benn: I am aware of the interest and concern of the people working in Upper Clyde Shipbuilders. It is a matter not just of telling the workers but of involving all those concerned in the problem of tackling this very serious situation.
    Mr. Rankin: Will my right hon. Friend keep before him the fact that on Clydeside today there are plenty of men to build ships, and ships are waiting there to be built? Will he see to it that he does everything he can to assist in keeping those two together?
    Mr. Benn: I am well aware of that point, but my hon. Friend will recognise that the operation of U.C.S., like every other company, is to build ships in such a way as to provide a return. When I look at the money which has been made available by loans, and also money in grants, coupled with the £.19½ million in loans which was made available to Cunard for building the QE2, and £1 million a year on R.E.P. made available to U.C.S., I have no doubt that the Government have indicated their interest in this matter in a substantial way.
    Mr. Hamilton: Can my right hon. Friend give an assurance that satisfactory guarantees have been given, or are likely to be given by U.C.S. as to productivity, a reduction of unofficial strikes, a reduction of absenteeism, and improvement in management before public money is involved?
    Mr. Benn: My most recent visits have been very much concerned with that, particularly in view of the current losses confronting the group. This, I think, is now understood, and the responsibility rests upon management and the trade unions on the Clyde to tackle it in that spirit.
    Mr. Shinwell: Is there not a danger that unless the S.I.B. makes recommendations of a substantial character very soon, some elements in the consortium may decide to hive off and associate themselves with other sections of the industry, and thus create a great deal of unemployment in the remaining shipyards of the consortium?
    Mr. Benn: My right hon. Friend is not quite right about a consortium. It is a group, and we are dealing with the group as a group. My right hon. Friend is perfectly right in saying that time is of the essence here, and that is why the S.I.B. is anxious to receive the plans from U.C.S.
    Mr. Galbraith: While fully agreeing with the Minister that eventually this organisation must make a profit, may I ask whether he thinks that as he was responsible for the shotgun marriage which created the U.C.S. he has some responsibility to see that there is a sufficient dowry to make the marriage workable?
    Mr. Benn: I was responsible under the Shipbuilding Industry Act for approving the recommendation of the S.I.B. in this respect, but it is manifestly clear to anyone who looks at it that without the Board or the Shipbuilding Industry Act or the Industrial Expansion Act which provided money for the 0E2 there would have been a major tragedy on the Clyde much earlier than now, and it should be seen in that way. We have made substantial help available, but we have to look at this in terms of future prospects for the group.
    Mr. Small: I thank my right hon. Friend for his reply and I know that he monitors the Upper Clyde group. Does he recognise that it is an integral part of the British shipbuilding industry and that some of the historical factors should be taken into account in any allocation or recommendation of the S.I.B.?
    Mr. Benn: The House recognises, and did so when the Act was passed, that the inheritance, not just on the Upper Clyde but in the whole shipbuilding industry, was one of the problems which had to be overcome. It required a new type of management, a new approach by management and a new sense of responsibility by the workers involved. It would be a great mistake, because of the problems of this group, to forget the successes of other shipbuilding groups, all of which of course, have received, or are eligible to receive, substantial Government help.
    Mr. William Hamiltonasked the Minister of Technology how much public money has been invested in the Clyde shipyards since October 1964; and how much was so invested in the comparable period prior to that date.
    The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Gerald Fowler): The Government own 875,000 £1 shares in Upper Clyde Shipbuilders Ltd., and £940,000 of 7 per cent. loan stock in its Fairfield subsidiary. The Shipbuilding Industry Board has made grants of over £3 million and loans of over £4½ million to the same company. All these investments have been made since October, 1964. These sums do not take account of any payments to Clyde shipyards under the Local Employment or Industrial Development Acts.
    Mr. Hamilton: How much of this was due to the Industrial Expansion Act, 1968, which the Opposition are pledged to repeal? Can my hon. Friend say what these figures represent in terms of total grants and loans given to all shipyards in the United Kingdom?
    Mr. Fowler: In answer to the last part of my hon. Friend's supplementary question, I must ask him to await the annual report of the Shipbuilding Industry Board. It is now familiar to the House that we cannot easily reveal the details of loans and grants made by the board in advance of its report.
    The answer to the first part, about the Industrial Expansion Act, is that we should have been unable to give as much help to the industry as we are giving if we had not secured that Act, with the consent of Parliament.
    Mrs. Ewing: What is the rate of interest on the loan and what terms of repayment have been arranged? How do

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    these figures compare with loans made prior to 1964?
    Mr. Fowler: I cannot, without notice, reveal the rate of interest on the loan. In any event, the details are very much a confidential matter in the transaction between the Shipbuilding Industry Board and the company concerned. I hope that hon. Members will not press me to give details in this matter—[HON. MEMBERS: "Why not?"]—because if they did they would only make a difficult matter even more difficult.
    Mr. David Price: Would not the hon. Gentleman agree that it has been the practice of the S.I.B., as we saw in its first annual report, to give just the details for which the hon. Lady the Member for Hamilton (Mrs. Ewing) has asked? Are we not entitled to assume that in its next annual report the S.I.B. will continue with what most of us regard as the admirable practice begun in its first report, of giving the very details for which the hon. Member for Fife, West (Mr. William Hamilton) has asked?
    Mr. Fowler: I appreciate that, but the hon. Gentleman must accept that there is a crucial difference between awaiting the annual report of the S.I.B., in which it accounts for its actions over the past year, and revealing in public the details of commercial transactions as they take place. To do that would make the position of a particular company in the commercial sense very difficult indeed, and that is why I cannot reveal the details.
    Mr. Ridleyasked the Minister of Technology if he will seek to make arrangements whereby the shipyards constituting Upper Clyde Shipbuilders Limited can withdraw from that consortium.
    Mr. Benn: Upper Clyde Shipbuilders Limited is not a consortium but itself owns all but one of the shipbuilding yards in the area. The question of these yards withdrawing from the company does not arise. In the case of the other yard, Upper Clyde Shipbuilders has a majority holding in the company owning it and the relationship between the companies is a matter for them.
    Mr. Ridley: Does the right hon. Gentleman now rue the day when he
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    pushed all these companies together? Has he yet realised that it is sometimes better to leave things to the free play of the market?
    Mr. Benn: Had we left the shipbuilding industry to the free play of the market we should not now have a British shipbuilding industry with more orders on its books than there have been at any time. The hon. Gentleman is, therefore, totally wrong. If he is talking about help to the shipbuilding industry, I hope that he will also look at the other groups which have received help or are eligible for it and which, as a result, have been able to create for themselves a viable position which will benefit our balance of payments, create employment and provide a new lease of life for the shipbuilding industry.
    Mr. Rankin: Is my right hon. Friend aware that if it had not been for the direct intervention of the Labour Government in 1964 there would, other than at Yarrows, have been no shipbuilding at all on Upper Clydeside?
    Mr. Benn: I am very well aware of the problems facing the Upper Clyde. To give another example, if the Government had not taken action in respect of Furness in the North-East of England there would have been major unemployment, and a wonderfully equipped yard would have gone out of the industry at a time when its facilities were needed.

    Atomic Weapons Research Establishment (Orfordness, Suffolk)
    Sir H. Harrisonasked the Minister of Technology whether he will make a statement about the future of the Atomic Weapons Research Establishment at Orfordness, Suffolk.
    The Minister of State, Ministry of Technology (Mr. J. P. W. Mallalieu): In the foreseeable future there is not likely to be an adequate work load to justify keeping the Orfordness station open. The Atomic Energy Authority is therefore studying the implications of closing the establishment and transferring to Aldermaston those test facilities which will continue to be required.
    Sir H. Harrison: Why have we had to wait for this Question before we had a statement about this? There have

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    been rumours in the Press. Surely this is a bad way of doing it. What steps is the hon. Gentleman taking to see that those employed here are given further occupation? Is his decision influenced by the building of the radar research station at Orfordness?
    Mr. Mallalieu: On the latter question, the answer is, "No" An announcement has been made to the staff concerned that this prospect is before us. There are about 170, most of whom could be re-employed at Aldermaston, if they want it, or, otherwise, in establishments in the area itself.

    Clyde Shipyards (Orders)
    Mr. Edward M. Taylorasked the Minister of Technology if he will make a statement on the present order book of Clyde shipyards.
    Mr. Fowler: At the end of last month the various shipbuilding companies on the Upper and Lower Clyde had ships to the value of over £80 million under construction and ships to the value of nearly £70 million on order but not yet started.
    Mr. Taylor: Would the hon. Gentleman agree that this is a substantial order book? Does he intend that the completion of this work will be an integral part of any plan for the future of U.C.S.?
    Mr. Fowler: It is indeed a substantial order book. As for the completion of work which is already on hand in the yards of U.C.S., I trust that the hon. Gentleman will not take so depressed a view of the future of U.C.S. as to assume that it would be necessary to make any special arrangements for this.
    Mr. ManuelIs my hon. Friend aware that, despite this substantial order book, it is of supreme importance that any discussions to give success to these orders should include talks with trade union representatives on an equal footing with employers' organisations?
    Mr. Fowler: I agree entirely. My right hon. Friend and I have said repeatedly to all concerned that any solution to the problems facing the Upper Clyde must be found through joint effort by management and workpeople and their organisations.
    Mr. David Price: Could the hon. Gentleman break down the figures which he has given between the Upper Clyde and the Lower Clyde?
    Mr. Fowler: I apologise to the hon. Gentleman but I cannot do that. The figures are supplied in confidence and it would be improper to reveal the order books of individual companies.

    Blue Streak
    Mr. Martenasked the Minister of Technology if he will make a statement about the future of Blue Streak.
    Mr. J. P. W. Mallalieu: The European Launcher Development Organisation is considering its future launcher development and production programmes, including the number and type of vehicles required. Until a decision is reached, within the next few months, requirements for Blue Streak beyond the present programme will not be known. The Government have already informed Member States that they undertake to supply Blue Streak launchers at least up to 1976 on a commercial basis, provided that the orders are placed in time.
    Mr. Marten: Is it true that E.L.D.O. will probably want about two a year? If so, will development work continue on Blue Streak?
    Mr. Mallalieu: I cannot say how many E.L.D.O. will want beyond the remaining four, until it makes up its mind, which will be in September. In the meantime, development work is proceeding.

    Black Arrow Programme
    Mr. Martenasked the Minister of Technology if he will make a statement about the Black Arrow programme.
    Mr. J. P. W. Mallalieu: The Black Arrow programme is essentially a programme of research and development on satellite technology. The first test firing of the launcher is planned for June of this year, and the first utilisation satellite is planned for launch in 1971.
    Mr. Marten: What is now the Government's end purpose for this programme?
    Mr. Mallalieu: The end purpose is to take part in space activities and work on satellites which are likely to be profitable.

    Sea Water (Desalination)
    Sir D. Rentonasked the Minister of Technology what progress has been made with regard to desalination of sea water; which pilot schemes are in operation or have been planned; and whether he will make a statement.
    Mr. J. P. W. Mallalieu: Considerable progress has been made by the Atomic Energy Authority and several industrial partners. Development of the multi-stage flash distillation process for export markets has consistently reduced costs, and other processes are under investigation.
    Pilot plants exist or are planned to test these alternative processes, but there are no proposals at present for desalination schemes in the United Kingdom.
    Sir D. Renton: In view of the suggestions in the House in recent years that there should be pilot schemes in connection with atomic energy power stations, why are no pilot schemes actually operating? What will the hon. Gentleman do about that?
    Mr. Mallalieu: Pilot schemes are operated. I am talking about schemes for desalination plants to supply the United Kingdom. A considerable investigation has been done into that, and the Minister of Housing is at present considering it.
    Miss Quennell: Is the hon. Gentleman aware that there is a predictable and foreseeable water shortage in this country, which, by the year 2,000, will be critical? Surely the Government should be doing a little more than this about it.
    Mr. Mallalieu: This is a matter for the Minister of Housing, but he has been having a report prepared on it and it is now being considered.

    Concorde Aircraft
    Mr. Biffenasked the Minister of Technology what additional data have emerged following the recent test flights of Concorde to determine whether or not there will be sufficient commercial demand to enable a repayment of a substantial element of publicly financed development costs by means of a levy on individual aircraft sales.
    Mr. J. P. W. Mallalieu: The early test flights which have been at subsonic
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    speeds have been encouraging. The demand for Concorde will, however, depend on the performance of the aircraft at its sustained supersonic cruising speed, which is not expected to be reached until the first half of 1970.
    Mr. Biffen: Does it remain the Government's expectation that a substantial—I emphasise the word "substantial"—amount of the development costs will be recouped by the taxpayer, as these have been publicly financed?
    Mr. Mallalieu: We shall not be able to tell that until we know what orders will come on, but the House has already been told that we should hope to recoup about a third of the development costs.
    Mr. Onslowasked the Minister of Technology what estimate he has made of the effect on Concorde sales prospects of the United States Government's decision not to back the manufacture of a United States supersonic civil transport aircraft.
    Mr. J. P. W. Mallalieu: No such decision has been taken. The United States Administration is still considering whether or not to proceed with the development of a supersonic transport.
    Mr. Onslow: Would the hon. Gentleman agree that the indications are that a decision to proceed is unlikely in the near future and that, meanwhile, since we enjoy a considerable lead over the possible competition, it would be a false economy—all other things being equal—to allow the pace of our own endeavours to slacken?
    Mr. Mallalieu: There are no indications yet available about the American attitude, but I agree that our present lead is very useful.
    Mr. Fortescueasked the Minister of Technology whether he will make a further statement about Concorde.
    Mr. Michael McNair-Wilsonasked the Minister of Technology what recent discussions he has had with the French authorities about progress with the Concorde project; and if he will make a statement.
    Mr. Rankinasked the Minister of Technology if he will make a statement on the progress of Concorde.
    Mr. Brooksasked the Minister of Technology what financial limit Her Majesty's Government have laid down beyond which they will not be prepared to support the research and development programme of the Concorde.
    Mr. Benn: I apologise for the length of this Answer.
    The results of the early flights have been encouraging.
    The official estimates, published in 1966, of the costs to the two Governments of the joint extra-mural development programme comprised a basic estimate of £450 million plus an overall contingency of £50 million.
    The latest basic estimate, calculated on the same price level, is £600 million. After allowing for the effects of devaluation and of pay and price increases in both countries, this becomes £730 million. This increase is obviously a matter of serious concern and is one of the points we and the French Government will be considering when examining the future of the project.
    There are still many uncertainties to be resolved. The basic estimate of £730 million does not include a contingency allowance for major unforeseeable difficulties; measures to overcome such difficulties, if approved, would involve higher expenditure. If further changes involving anything more than a 15 per cent. increase in the estimates were proposed, we should probably be facing a demand for a fundamental redesign of the aircraft. I shall circulate further particulars in the OFFICIAL REPORT.
    My talks with the French Minister responsible, which will include all financial questions, have had to be postponed until after the French Presidential Elections.
    Mr. Fortescue: I thank the Minister for his frank statement of the present position. Will he once again reassure the House that up to now all the flight testing has been highly successful—perhaps even more than we hoped—and that if all goes along these lines the full details of these test performances will be with the airlines by the middle of next year, and that we may expect orders for several hundred aircraft to be placed by the end of next year, with an in-service date for the first of, perhaps, 1973?
    Mr. Benn: In view of the experience that we have had with advanced aircraft it would be foolish of me to confirm in detail a timetable of the kind put forward by the hon. Member but, as I have made clear on a number of occasions, this period of flight testing is a period of decision for Concorde and ultimately Concorde's future will be decided by airline orders. I cannot go beyond what has been said about the encouraging nature of the flight tests because the evaluation of data naturally takes some time.
    Mr. Michael McNair-Wilson: Can the right hon. Gentleman say whether there is any truth in the statement that the French are intending to spread some of the Concorde finance to cover the A300B airbus?
    Mr. Benn: That is a matter for the French Minister. It is not for me to comment upon the deployment of French resources.
    Mr. Rankin: In view of the fact that the figures which have just been given us by the Minister have been fairly widely expected, and in view of the fact that we have advanced so far in the creation of this aircraft, would it not be a very unwise action to think about turning back or abandoning it, or even proposing to proceed with it on less magnificent lines?
    Mr. Benn: I think that the answer to my hon. Friend is that this aircraft has always involved great technological and economic uncertainty. As the Minister responsible in this country for advising the Government on the deployment of these gigantic sums of public money, I am bound to look at it in terms of the return. The House knows me well enough now to know that I try to apply this in the case of the A300, E.L.D.O. or any other project for which I am responsible. That is the only way we can do it.
    Mr. Brooks: Is my right hon. Friend aware that he has not answered my Question No. 42? It would be interesting to know whether there is any limit whatsoever to Her Majesty's Government's commitments. Will he indicate whether, if the 15 per cent.—plus extra expenditure is incurred, and we go into a redesign phase, it will still mean that neither this country nor France will have an opportunity to withdraw?
    Mr. Benn: I think that I did answer that question, because I said that measures to overcome such difficulties—that is, above the basic commitment—if approved, would involve much higher expenditure. I also made clear in my answer that, as in all other matters, the subject of my hon. Friend's question is discussed with the French Government.
    Mr. Corfield: Will the right hon. Gentleman refer again to the question asked by my hon. Friend the Member for Walthamstow, East (Mr. Michael McNair-Wilson)? It is clear that the suggestion that the French will go slow could have a considerable effect on the continuity of employment in the various factories in this country which are concerned with Concorde. Can the right hon. Gentleman give us some idea of the way in which this extra money will be spread, on an annual basis? It will obviously not be required in a lump sum. Can he give us some idea of the spread per annum?
    Mr. Benn: On the hon. Member's first point, in my other capacity, as a Member for a Bristol constituency, I am concerned with the employment consequences of the development programme. At the same time, the management, in phasing the programme, is also taking account of the fact that there has been a slippage, and this is one of many important factors taken into account. As far as the latter part of the question is concerned, escalation does not mean spending more each week but that some of the problems are more formidable and require longer to solve, which, in turn, means that the total sums spent during the programme are greater. That is what the hon. Gentleman was saying.
    Mr. Sheldon: Does my right hon. Friend realise that his statement will cause astonishment and dismay at the progress of this folly that we have undertaken, or that was undertaken by the previous Government without the necessary safeguards? Will he now use the opportunity afforded by the change of Government in France to take up with them the whole question of dropping this elaborate scheme and making sure that we concern ourselves only with those prospects which have a chance of becoming commercially viable?
    Mr. Benn: I think that my hon. Friend has overdone his comments. This aircraft, if successful—and I should add that a great deal of effort is being put in on both sides of the Channel and in both Governments and industries to make it a success—will be substantially ahead of possible rivals, and if it meets the requirements of the airlines it will bring in substantial earnings to this country. Having said that, however, I am bound to look at it with that criterion in mind and not the criterion of simply saying that because it is advanced and sophisticated therefore we must necessarily abandon the normal criteria for the support of such projects.
    Sir A. V. Harvey: I recognise the progress made with Concorde both in France and in Britain, but has the right hon. Gentleman taken into account—bearing in mind the lead that Britain has over the Americans—the possibility of our American friends going out of their way to baulk this aircraft flying over the United States on some pretext—noise, or some other technical factor—which could have a damning effect on the whole project, even if it works well?
    Mr. Benn: As the hon. Gentleman knows, the design aim in terms of noise is about the same level as that of a subsonic aircraft. As for the supersonic bang, this is a matter which is bound to be considered internationally, and by countries individually. I am sure that the hon. Gentleman will not read into some very difficult community pollution problems—which is what we are talking about—any particular ill will on the part of the American Government in respect of this Anglo-French aircraft. The problems are difficult enough without attributing to others motives in this matter.
    Mr. Palmer: Does my right hon. Friend agree that in any new scientific and technical field of this kind too much immediate cost-consciousness can be financial folly in the long run for the future of this country?
    Mr. Benn: I can assure my hon. Friend that the problem is not a matter of immediate cost-consciousness. If I may put it starkly to the House, the question is: do the customers want this aircraft? We must consider the possibility that because of payload, range, noise, or other reasons

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    this or any other aircraft may not be acceptable to the market, and in that case it would not be the penny pinching attitude of the Government that would be preventing success but the fact that we have not produced something that people wish to use. These are considerations that have to be in our minds.
    Following is the information:
    1. The latest basic estimate of £730m. is divided as follows, as between actual past expenditure and estimated future expenditure.

    British Government

    French Government

    Both Governments

    £m.

    £m.

    £m.

    Actual costs from 29th November, 1962 (the date of the Anglo-French Agreement) to 31st March, 1969, at the prices and exchange rates prevailing when the costs were incurred

    170

    160

    330

    Estimated costs from 1st April, 1969 to completion of the programme, at January, 1969 prices and an exchange rate of £1/11·85 F

    170

    230

    400

    Totals

    340

    390

    730

    2. The difference between the latest estimate of £730m. and the former estimate of £450m. is made up as follows:—

    £m.

    Latest estimate

    730

    Less—

    additions due to devaluation of the £ in November, 1967

    40

    additions due to pay and price increases since January 1966 in both Britain and France

    90

    Latest estimate, reduced to 1966 prices

    600

    Increase over former estimate, at 1966 prices

    150

    Former estimate, at 1966 prices

    450

    3. Of the increase of £150m., £20m. is attributable to increases in overheads at the contractors. Of the remaining £130m., about two-thirds is attributable to design changes:—

    —to meet specific new requirements proposed by the airlines and airworthiness authorities;

    —to maintain the aircraft's prospects of achieving its target payload/range performance (including major modifications to the wings, fuselage, and engines);

    —to improve the runway loading characteristics of the undercarriage;

    —to improve the performance and reliability of various items of equipment, and

    —resulting from three major exercises to reduce weight-growth.

    The remainder is due to underestimation of the time and effort required to complete the programme as originally planned.
    Mr. Onslowasked the Minister of Technology what plans he has for a further series of sonic boom tests; and if he will make a statement.
    Mr. J. P. W. Mallalieu: We have no plans at present for separate tests of sonic booms. Concorde's boom will be measured during the aircraft's flight test programme. The test routes on which Concorde will fly supersonically have not yet been decided.
    Mr. Onslow: When such a decision is taken, will the hon. Gentleman make a statement so that people can understand precisely what is happening? Will he draw some profit from the last mismanaged series of tests, so that the new series of tests, when they come, are properly organised?
    Mr. Mallalieu: We will certainly make a statement before they take place.
    Mr. Younger: When studying the question of sonic booms from the Concorde point of view, will the hon. Gentleman bear in mind the outstanding qualities of Prestwick Airport for test flying, where, because it is near the sea, 'planes may be flown in and out without booms occurring over land?
    Mr. Mallalieu: I am not sure about the latter part of that supplementary question, but, on the former part, I entirely agree that it is a magnificent airport.
    Mr. Rankin: Would my hon. Friend at least say whether the Concorde tests will be held under terrestial or oceanic conditions?
    Mr. Mallalieu: It is possible that, for safety reasons, there will be some overflying of land, but the bulk of tests will take place over the sea.

    Airbus
    Mr. Fortescueasked the Minister of Technology whether he will make a statement on the progress made by the French and German Governments on the A300B airbus project and reported to him in accordance with the terms of the agreement.
    Mr. Benn: There is nothing of substance to report. My Department has, of course, maintained contact with the French and German authorities.
    Mr. Fortescue: Can the right hon. Gentleman confirm that Dutch and Italian interests now stand ready to participate in the A300B project? Can he tell the House the latest position about the possibility of a British designed and manufactured airbus?
    Mr. Benn: I cannot answer authoritatively about Dutch and Italian interests because, not having participated following the conference in London, I am not privy to all the discussions going on between the French, and Germans and potential partners. As to the question of the possibilities of a British airbus—the BAC311—as in other projects, we are prepared to consider proposals by other aircraft manufacturers and we shall look at them very critically to be sure that if we were to go ahead with the support of such a project it would be commercially successful.

    Short SC1 VTOL Aircraft
    Mr. McMasterasked the Minister of Technology what research and development work is being undertaken with the Short SC1 vertical take-off and landing aircraft.
    Mr. J. P. W. Mallalieu: The prototype S.C.1. has now completed an extensive programme of research at the Royal Aircraft Establishment into basic aerodynamics, handling and performance.
    The second aircraft has been fitted with an advanced control system and R.A.E. is assessing its benefits in V/STOL operations from restricted sites in all weathers.
    Mr. McMaster: Will the Minister ensure that the benefits of this successful pioneering work on multi-jet vertical take-off will be maintained and exploited by the British aircraft industry and not given away to our foreign competitors to the detriment of our overseas trade?
    Mr. Mallalieu: I will do my level best on that point.

    Technocentres
    Mr. Bostonasked the Minister of Technology if he will make a statement about his proposals for technocentres.
    Mr. Fowler: I am discussing with the Council of Engineering Institutions and
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    local interests various suggestions for centres combining exhibition facilities and supporting activities designed to increase public awareness of the engineer's contribution to society and to attract more of our abler young people into the profession.
    Mr. Boston: Does the hon. Gentleman accept that this is an imaginative concept? Where and when does he propose to start setting these up and with which local authorities and other bodies, apart from the one to which he referred, is he now having discussions?
    Mr. Fowler: There have been discussions in a few places with local interests—local authorities, industry, education and so on—the purpose being to explore the possibility of incorporating a technocentre as part of some other local development, such as a town centre redevelopment or a conference centre. In the only cases in which discussions have proceeded beyond the first exchange of views, there has at present been no commitment from the central Government about finance. I cannot easily reveal where these discussions have taken place.

    Computer Aided Design Committee
    Mr. Macdonaldasked the Minister of Technology what steps he takes to ensure that recommendations from the Computer Aided Design Committee are adequately considered by a representative body or range of firms from the industries involved.
    The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Jeremy Bray): There is feed-back of information to industry through the membership of the Committee and its sub-committees. Also the reports of the Committee, including its recommendations, have been published and receive wide circulation. Where the application of computer aided design to particular industries has been studied the industries concerned are consulted through seminars.
    Mr. Macdonald: As this Committee is largely composed of industrialists and was set up with the express purpose of ensuring that Mintech computer research is of practical interest to industry, how does it come about that on the first report of the Committee, which was unanimous, Mintech states that five out of eight

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    recommendations are of no interest to industry? Either the wrong people are making the recommendations or the wrong people are listening to them.
    Dr. Bray: If my hon. Friend reads the reports of the Computer Aided Design Committee he will see that while valuable recommendations were made on the design of pipework, they were somewhat general and needed to be worked out in detail in discussions with particular firms. That is under way, some useful conclusions are emerging and some contracts have been placed.

    Defence Equipment (Vietnam)
    Mr. Frank Allaunasked the Minister of Technology if he will prohibit the issue of licences to enable military aircraft of British design to be manufactured in the United States of America for sale to the American or South Vietnam Governments.
    Mr. Fowler: No, Sir. Our policy on the supply of defence equipment which might be used in Vietnam was stated by my right hon. Friend the Prime Minister on 12th July, 1966.—[Vol. 731, c. 191.] Similar considerations would be involved in our approval of any licensing proposals.
    Mr. Allaun: Is not this in breach of British policy—the policy that we do not supply arms for the Vietnam war—and is not this one application of British research that we do not want to see?
    Mr. Fowler: I cannot for the life of me see how anything could have happened which is in breach of British policy, since there are no proposals currently under consideration by Her Majesty's Government for the future manufacture under licence in the United States of any British military aircraft.

    Shipyards (Public Investment)
    Mr. Ridleyasked the Minister of Technology how much public money has now been given, lent and promised to British shipyards in total.
    Mr. Fowler: The Shipbuilding Industry Board has made or promised grants totalling over £9,300,000 to United Kingdom shipbuilders as well as loans of over £14 million. It has also promised grants in relief of interest on these loans. In
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    addition, the Government have certain shares and loan stock of which I gave details in reply to the hon. Member for Fife, West (Mr. William Hamilton) a moment or two ago.
    Mr. Ridley: So the Government have now invested some £25 million more in industry. Before further money is invested, will the Government undertake to lay before the House a prospectus showing to what purpose the money is put and the rate of return that it is expected to earn upon it, so that the House may approve the investments made in its name before they are made?
    Mr. Fowler: No, Sir. The House has approved the Shipbuilding Industry Act, 1967, the Industrial Expansion Act and the Shipbuilding Industry Act of this year. There was no dispute between the two sides of the House about the Shipbuilding Industry Acts. I cannot undertake to do what was not prescribed in those Acts. This is an industry of which every product is either an export or is import-saving, and I will not see it sold down the river, as some hon. Members would wish.
    Mr. Shinwell: Is my hon. Friend aware that the Conservative Government provided credits for the shipbuilding industry in the North-East and elsewhere, and that the money that has been granted and lent by this Government is far better spent than was the money, amounting to hundreds of millions of pounds, spent by previous Conservative Governments on the research and development and production of aircraft which never flew?
    Mr. Fowler: I am well aware of the provisions made by the previous Government to help the shipbuilding industry. In the first place, they were inadequate, and, in the second place, there was no precondition of any reorganisation in the industry in order to enable it to compete in the future in world markets. We are determined that that reorganisation will take place, and that we shall have a competitive shipbuilding industry.

    Light Engineering (Machines)
    Mr. Dempseyasked the Minister of Technology what progress is being made in the designing of machines for light engineering; and if he will make a statement.
    Dr. Bray: It is primarily the responsibility of industry to ensure satisfactory progress in machine design. The Ministry encourages good design practice as one element of sponsorship activities of the engineering industries, and assists the design of new machines both by development and pre-production contracts.
    Mr. Dempsey: Is the Minister aware that in my constituency machines are being employed in the printing and knitwear industries which have had to be imported from Germany, not because of any lack of skill or material on our part but because of lack of industrial designers? Will my hon. Friend, therefore, launch some initiative to recruit designers so that we can assemble the machines in Britain, thus saving imports and helping employment?
    Dr. Bray: When visiting light engineering firms, I have seen some very interesting developments in both printing and knitting machinery which will substantially help our balance of payments, but I believe that we would be quite wrong to suppose that we can be self-sufficient in all fields of machine design.

    U.S.S.R. (Minister's Visit)
    Mr. Bostonasked the Minister of Technology if he will make a statement on his official visit to the Union of Soviet Socialist Republics.
    Mr. J. H. Osbornasked the Minister of Technology what was the purpose of his visit to the Union of Soviet Socialist Republics.
    Mr. Palmerasked the Minister of Technology if he will make a statement on his official visit to the Union of Soviet Socialist Republics.
    Mr. Benn: I visited the Soviet Union from 13th-20th May for a review of the Anglo-Soviet Technological Agreement in accordance with the provisions of that Agreement. I was also able to have a useful discussion with Mr. Kosygin. I will place a copy of my programme and the Agreed Minute in the Library of the House.
    Mr. Boston: Will my right hon. Friend accept that this resumption of Ministerial contacts with the Soviet Union is very
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    welcome; and that, although this does not affect our view of events in Czechoslovakia last August, it is precisely in developing contacts of this kind that the best hope lies for improving East-West relations? Can he confirm, on the follow-up action and co-operation between industry and Government, that industry is very enthusiastic about the prospects here?
    Mr. Benn: I can confirm what my hon. Friend said. Of course, the real work that goes on under the agreement is conducted by a very large number of industrialists, led by the C.B.I., who have engaged in very active exchanges over a period now of 18 months to two years. We are here talking about the development of our British trade in the long term in a very rapidly expanding market.
    Mr. Osborn: I welcome increasing prospects of trade, but can the right hon. Gentleman give an assurance that scientific and technological teams going from this country to the Soviet Union will have the same access to factories and information as we give to our guests when they come to this country? Has the Minister been able to iron out past difficulties in this respect?
    Mr. Benn: One of the reasons for an agreement of this kind is to provide Ministerial contact at the top where problems of the kind mentioned by the hon. Member can be discussed. I took the opportunity when I was there, when I visited the very successful British pavilion at the Automation Exhibition, of discussing with British business men the degree of access they can get to their customers in the Soviet Union. This is one of the matters, among many others, which I hope, under the agreement, to be able to bring to the attention of the Soviet authorities at the highest level.
    Mr. Palmer: Did my right hon. Friend, in his very proper and free exchange of scientific opinion and information on technological developments as between civilised countries, discuss with the Soviet leaders the case of Mr. Gerald Brooke, who has been barbarously treated by the Russians for freely and openly expressing the same political opinions as my right hon. Friend and I accept?
    Mr. Benn: As I explained when I arrived there, before I left, and on my return, the subject of Gerald Brooke was

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    not on the agenda of my talks because, as the House knows, this is a matter for my right hon. Friend the Foreign Secretary.
    Sir H. Legge-Bourke: Will the Minister say whether there has been any attempt to resolve the somewhat different opinions held between the British Government and the Department of Defence in the United States over this type of technological co-operation?
    Mr. Benn: I am not aware of any difficulties which have arisen in this case. The arrangements that we have with the Soviet authorities, which are principally industrial in character, are wholly compatible with our international obligations, and are conducted in such a way as to open up areas of trade, in which, I might add, American businessmen in the Soviet Union are also very active indeed.
    Mr. Grimond: As the Minister apparently expressed regret for the history of British imperialism in Russia, did he draw the attention of the Russians to their own imperialism and suggest that they should do something about it?
    Mr. Benn: I was lecturing at the State Committee on the problems of the modernisation of the British economy. There is no doubt whatsoever, if we look back over the last hundred years, that the diversion of effort that occurred in this country in the maintenance of a large overseas empire is one of the reasons why, in the area of management and of industrial restructuring and in a lot of other ways, this country acquired some of its current economic problems.

    Underwater Engineering
    Mr. Hector Hughesasked the Minister of Technology if he will state the progress made in the study commissioned by his Department with the Underwater Engineering Group of the Construction Industry Research and Information Association into the industrial research and development needs of the world's seas; and when the report will be published in whole or in part.
    Mr. Fowler: A team of three marine technology experts, set up by the Construction Industry Research and Information Association, has begun work on a study of the research requirements of United Kingdom industry in the fields
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    of diving technology and underwater engineering, and an interim report is expected by the end of July, 1969, with, it is hoped, a final report by the end of 1969 or early in 1970.
    Mr. Hector Hughes: Does the Minister realise that from Britain's point of view the most important part of this research relates to the seas surrounding Britain, and, from Aberdeen's point of view, the North Sea? Will he make an early report on those aspects?
    Mr. Fowler: We are well aware that the most important part of the ocean from the British point of view is the sea surrounding Britain. I am sure that the importance of the area east of Aberdeen has not escaped the notice of Her Majesty's Government.

    Technological Industry (Midlothian)
    Mr. Eadieasked the Minister of Technology at what stage his Department became involved in the siting of new technological industry in the county of Midlothian.
    Dr. Bray: The Department encourages the establishment of technologically advanced industry in the development areas, including Scotland, at any stage when it can help in the furtherance of the Government's development area policy.
    Mr. Eadie: Do I understand from that reply that the rôle which my hon. Friend's Department has played in studying new technological industry in Midlothian has been one of continuous assistance rather than of hindrance?
    Dr. Bray: The Government, and the Ministry of Technology in particular, have very good reason to be proud of their record in Scotland, in that the number of new jobs created in electronics since 1964 has been some 14,000. Midlothian is particularly well situated and can, I think, look forward with confidence to the future.
    Mrs. Ewing: Can the Minister say whether this departmental involvement in the study of industry in Midlothian of any other county comes before or after the Board of Trade, the Department of Economic Affairs, the Scottish Economic Planning Board, the Scottish Planning Council and the local authorities? Is he at the end or at the beginning of the queue?
    Dr. Bray: The concerns of different Departments come into play at different stages. Because of our close knowledge of the future plans of firms we are sometimes in at the beginning; in other cases we are concerned only at a very much later stage.

    Motor Vehicle and Passenger Cars (Production)
    Mr. J. H. Osbornasked the Minister of Technology what is now the current rate of production per month of motor vehicles and passenger cars, respectively; and how this figure compares with the average to date this year, and the average monthly production last year.
    Mr. Fowler: No information about the current rates of production is available. The average rate of car production in the 13 weeks ended 29th March this year was 34,735 a week, compared with 35,966 in the corresponding period of 1968 and 34,922 a week in 1968 as a whole. The corresponding commercial vehicle weekly average rates were 9,265, 8,021 and 7,869.
    Mr. Osborn: Has there not been a drastic drop in production, as was suggested by Question No. 19? What now are the prospects for the motor industry? What is the percentage increase in exports necessary due to restrictions resulting from the credit squeeze, fuel tax and purchase tax? What are the trends for the industry in future?
    Mr. Fowler: The hon. Member has got it quite wrong; there has not been a dramatic fall in production. [HON. MEMBERS: "Oh."] There has not been a dramatic fall in production; I emphasise this for the benefit of those on the benches opposite who are more interested in prejudice than the facts. The percentage drop in the production of motorcars in March, 1969, over the previous March was almost entirely accounted for by the effect of industrial disputes. As my Answer makes clear, commercial and industrial vehicle production was substantially up over last year.
    Sir G. Nabarro: Is it not true that Question No. 19 is in the name of an hon. Member representing a motor manufacturing constituency, the City of Oxford? It says that there was a 25 per cent. drop in production of motorcars.
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    If that figure is inaccurate, will the Parliamentry Secretary tell the House what his figure is, because I believe the figure in Question No. 19 is accurate.
    Mr. Fowler: I am delighted to know that the hon. Member for Worcestershire, South (Sir G. Nabarro) is aware that Oxford is a centre of motor manufacturing. [HON. MEMBERS: "Answer the question."] That is the answer to the first part of his question. As to the second part, I have already answered that the drop was almost entirely due to industrial disputes.

    Short Brothers and Harland and Rohr Corporation
    Mr. McMasterasked the Minister of Technology if he will make a statement on the result of the negotiations with the Rohr Corporation to take an equity interest in Short Brothers and Harland Limited.
    Mr. J. P. W. Mallalieu: I have nothing to add to the reply I gave on 16th April.—[Vol. 781, c. 1144.]
    Mr. McMaster: If these negotiations do not reach a satisfactory conclusion, will the hon. Gentleman take all reasonable steps to see that sufficient work is placed with this company to obtain employment in research and development both in aircraft and missiles in view of the excellent record of the company?
    Mr. Mallalieu: I am delighted to see that the company is taking those steps and I congratulate it on the Lockheed order which it has recently obtained.

    Nuclear Power Stations (Breakdowns)
    Mr. Eadieasked the Minister of Technology if he will list the nuclear power stations in Great Britain operated by the Atomic Energy Authority which have been subject to breakdown during the last five years; and what were the additional costs and the loss of revenue involved.
    Mr. J. P. W. Mallalieu: I have already given the hon. Member the information for which he asked in respect of the one reactor at Chapelcross which has been out of commission since May, 1967. The three other reactors at Chapelcross and the four reactors at Calder Hall, which is the only other power station operated

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    by the Authority, have all operated successfully over the last five years.—[Vol. 776, c. 1320–1.]
    Mr. Eadie: Is my hon. Friend aware that, although the whole country can be proud of the technological achievement in this field, it can be argued that the same results could have been achieved less expensively and that miners' jobs would not have been sacrificed by bogus differential estimates?
    Mr. Mallalieu: I know that that point can be argued because I have heard my hon. Friend argue it, but I do not accept it.
    Mr. Lubbock: While congratulating the Atomic Energy Authority on the remarkable reactors it has been operating since its inception, may I ask what are the additional costs and the loss of revenue involved as a result of the welding defects on the prototype fast reactor now under construction?
    Mr. Mallalieu: I believe I have given that information to the House, but I have not got it in my head. I shall certainly take steps to give it to the House if I have not already done so.
    Mr. David Price: Does the hon. Gentleman agree that the reactors operated by the Atomic Energy Authority are in the main prototype reactors and a fair comparison with coal-fired stations is in looking at the costs with the Central Electricity Generating Board and the South of Scotland Electricity Board? Will he confirm that the utilisation of British reactors by the two generating boards is higher than any reactors operating anywhere else in the world?
    Mr. Mallalieu: Yes, I confirm that with pleasure.

    Dounreay Reactor
    Mr. Hector Hughesasked the Minister of Technology why the Dounreay materials testing reactor was closed down after 11 years; where and when its unfinished work will be resumed; what employment will be offered to the workers there; and what effect this will have on the employment conditions in the City of Aberdeen.
    Mr. J. P. W. Mallalieu: The reactor was closed down because the Atomic Energy Authority decided, after careful
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    consideration, that its needs for materials testing irradiation facilities could best be met by concentrating remaining work at Harwell. Staff will be transferred to other work at Dounreay, and employment conditions in Aberdeen should not be affected in any way.
    Mr. Hector Hughes: Does my hon. Friend realise that this closing down is very serious from the point of view of not only interference with the valuable work carried on there but interference with workers who live there who will have to transplant their homes to another area? Will he therefore give the evidence on which his deep consideration was based?
    Mr. Mallalieu: I understand that there will be no uprooting whatever. The staff will be transferred to other work at Dounreay itself.

    Jump-Jet Airliner
    Mr. Albert Robertsasked the Minister of Technology what consideration has been given to assisting the development of a jump-jet airliner.
    Mr. J. P. W. Mallalieu: As I told the House on 16th April, studies have been commissioned of various aircraft concepts, and also of the traffic and environmental problems which are connected with intercity VTOL services. Decisions on further assistance must await the outcome of these studies.—[Vol. 781, c. 1132–3.]
    Mr. Roberts: Does my hon. Friend realise that if the jump-jet airliner can be developed successfully it will make a tremendous saving in money and the construction of runways? Will he bear in mind that if there are any possibilities for this they should receive immediate attention?
    Mr. Mallalieu: Yes, most certainly. We expect to have the preliminary studies by the autumn. We shall evaluate them very carefully, and hope to begin design studies about June next year. This subject is of immense importance.
    Mr. Maxwell-Hyslop: Will the hon. Gentleman bear in mind that what killed previous progress, as for instance the rotodyne, was the high noise level? Does he agree that the multiple lift system is inherently better than the vectored-thrust system for civil aircraft applications?
    Mr. Mallalieu: I will take note of what the hon. Member says in his second point. Of course, noise could vitiate the whole project, and a great deal of money and effort are being expended to keep down the noise.

    Aerospace Industry
    Mr. Brooksasked the Minister of Technology whether he will publish a Green Paper showing the Government's proposals for the future of the British aerospace industry; and if he will make a statement.
    Mr. J. P. W. Mallalieu: The future of the British aerospace industry depends on its ability to develop and produce equipment for a highly competitive international market. The Government, through their defence procurement and in other ways, will continue to support the industry in its efforts. I do not consider that it would be appropriate or helpful to publish a Green Paper.
    Mr. Brooks: In view of the continuing uncertainties about the rôle of the British avionics and aero-engine industries in such European projects as the multi-combat aircraft, is it not vital that this House, the country and informed opinion should have an opportunity to discuss just where we are going in these European ventures?
    Mr. Mallalieu: The policy of the Government towards the aircraft industry is well known to the House and to the aircraft industry. Should my hon. Friend wish to have a debate in the House we would welcome it, but it would be a matter for him to put to the Leader of the House.
    Sir Ian Orr-Ewing: Will the hon. Gentleman take into account some of the recommendations of the recent Report of the Select Committee on Science and Technology, which could have considerable healthy repercussions on the wellbeing of the aerospace industry?
    Mr. Mallalieu: Yes certainly, and not only those, but the Report produced by Mr. Elstub and his Committee as well as the S.B.A.C.

  SCOTLAND

    Selective Employment Tax
    Mr. Gordon Campbellasked the Secretary of State for Scotland what representations he has received about the effects in Scotland of the proposed increase in selective employment tax; and what reply he has sent.
    The Minister of State, Scottish Office (Dr. J. Dickson Mahon): Two such representations have been received. The replies drew attention to the wide range of inducements available under the Government's regional policies and emphasised the desirability of supporting the development of the Scottish economy in this way rather than by shielding it from general taxation.
    Mr. Campbell: Does not the sparsity of representations show that the many people in Scotland whose interests are seriously damaged by this obnoxious tax have lost any confidence that the Secretary of State can any longer do anything about it? Does the Secretary of State for Scotland consider that this tax is good for the Highlands and Islands?
    Dr. Mabon: No, Sir; it does not show that. The representations, which were confined to the Perth branch of the Communist Party and the Dundee Chamber of Commerce, show what bad company the hon. Gentleman is keeping.
    Mr. William Hamilton: What is the net gain to Scotland, taking into account the S.E.T. and the regional employment premium?
    Dr. Mabon: The net yield of the tax itself—that is, at the rates to be applied from 7th July—will be about £57 million a year, as against the £10 million in S.E.T. additional payments to manufacturers and regional employment premium payments of £39 million, which place Scotland in a more favourable position than Great Britain as a whole.
    Mr. Maudling: My hon. Friend the Member for Moray and Nairn (Mr. Gordon Campbell) asked the Minister about the position qua the Highlands and Islands. The Minister did not answer that. Will he now answer it?
    Dr. Mabon: If the hon. Gentleman will be kind enough to table a Question, I will certainly give him the up-to-date figures.

BRITISH STEEL CORPORATION (PRICES)
The following Question stood upon the Order Paper:
MR. EDDIE GRIFFITHS: TO ask the Minister of Power, in view of increased cost of production and the need for increased capital investment over the next six years, whether, following the recently published National Board for Prices and Incomes Report on Steel Prices, he will now authorise the full price increases applied for by the British Steel Corporation; and whether he will make a statement.
The Minister of Power (Mr. Roy Mason): With permission, Mr. Speaker, I will now answer Question No. 73.
The Government have considered the report of the N.B.P.I. on Steel Prices Report No. 111) which is being published this afternoon.
The Board's main recommendation is that the B.S.C. should make price increases to bring in additional revenue of £40 million per annum as against the £50 to £55 million which the Board estimated as the effect of the Corporation's proposals.
The Government accept this recommendation and are still considering the other recommendations in the Report.
Mr. Speaker: Mr. Eddie Griffiths.
Several Hon. Members rose—
Hon. Members: He is not here.
Sir K. Joseph: On a point of order. How did the Minister come to answer a Question that had not been asked, Mr. Speaker?
Mr. Speaker: The Minister should have informed the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths)—I hope he did—that his Question was to be answered. This is most irregular.
Sir K. Joseph: May I protest against the business of Ministers answering Questions, if they have been asked, and no doubt giving to the Press—I have not evidence of this—the Answer, but giving no information to the Opposition or to the House? We have not seen the Report of the National Board for Prices and Incomes, which I have no doubt is
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a long one, nor have we had time, obviously, to study the Report or the Minister's response.
If I may try to formulate some questions that I have obviously thought about in preparation for this matter, may I ask the Minister whether he will agree that this is, once again, a case of a nationalised industry, vital for our export trades, being far quicker to raise prices than to cut costs?
Secondly, how does the Minister reconcile this apparent subsidy—that is, the cut in the rise in prices that the B.S.C. thought was commercially necessary—with our international obligations, on the one hand, and with all the brave talk of commercial discipline, on the other?
Thirdly, is it not monstrously unfair to the private steel industry to have to compete with a nationalised and subsidised competitor?
Finally, are not the Government embroiled in all these dilemmas only because they chose to nationalise steel instead of removing the Steel Board and leaving individual companies to compete and make their own prices?
Mr. Mason: The right hon. Gentleman did not do bad for someone who has not had a glance at the Report. There has been no general increase in steel prices for the past three years. Meanwhile, the industry's materials and services have increased in cost by £60 million. Further, between 1961 and 1968 steel prices rose on average by 10 per cent. whilst private manufacturing prices, on which they have thrived, went up by 21 per cent.
As to our international obligations, the proposal for an additional revenue of £40 million, when the B.S.C. went forward for an increase initially of £58 million and reduced it to £55 million during the course of the examination, is not in contradiction with any of our international obligations.
When the right hon. Gentleman reads the Report, he will see that the private sector is given licence on almost all of its products to quote prices below, on a par with, or above those of the nationalised steel sector.
Mr. Michael Foot: Will my right hon. Friend accept that many of us who come from steel constituencies will be very

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concerned about the Report of the National Board for Prices and Incomes, which appears to impose limitations on a publicly-owned industry which would not be imposed on a privately-owned industry?
Is it also the case that the further parts of the Report, to which my right hon. Friend referred, contained detailed proposals for interfering in the arrangements between the Steel Corporation and its customers, interferences which would be contradictory to the Statutes passed by the House, in defiance of the legislation which is now before the House, and in contradiction of the recommendations of the Select Committee on Nationalised Industries?
Will my right hon. Friend therefore undertake that neither he nor the Government will accept from the National Board for Prices and Incomes recommendations which substitute the whims of the Board for the will of Parliament?
Mr. Speaker: Order. Long questions mean fewer questions by other hon. Members.
Mr. Mason: I am not aware that we shall be torn between the two stools to which my hon. Friend referred in the latter part of his question; so I would not worry unduly about that.
My hon. Friend should be aware, as no doubt the House is aware, that the N.B.P.I. is the chosen instrument when there is a major price increase confronting a nationalised industry. The Board has looked at it all and has recommended generally an increase up to £40 million. The Iron and Steel Consumers' Council also proposed a scaling down of the initial proposal. Therefore, we must take note of both those bodies.
Sir G. Nabarro: As the N.B.P.I. recommended increases which will bring in £40 million against the British Steel Corporation's request for £50 to £55 million, will the Minister tell the House how an increase in steel prices of £40 million will, first, help our export trade and, secondly, help the policy of import substitution, because it places British steel in an uncompetitive position now with equivalent imported steels?
Mr. Mason: If the hon. Gentleman follows these questions very closely, he will have noticed that Europe and Japan, during the past six months, have already taken advantage of this trend in steel and have increased their prices. Therefore, this proposed increase will not have the effect on imports that the hon. Gentleman refers to.
Mr. Tinn: Has my right hon. Friend noted that the British Steel Corporation achieved a reduction in costs of £15 million in one year? Will he bear in mind that the White Paper—" Nationalised Industries: A Review of Economic and Financial Objectives"—required that prices should be related to long-run marginal costs and that the proposed price increases asked for by the Corporation would still have been below those marginal costs?
Mr. Mason: When my hon. Friend reads the Report, he will notice that reference is made to long-run marginal cost and to the financial objectives set out Command 3437. My hon. Friend is also right that the return on capital last year from the B.S.C. was most unsatisfactory, and that is why we must establish this £40 million increase.
Mr. Lubbock: Is the Minister aware that it is very inconvenient for hon. Members to have to deal with this statement when they have not had a chance of reading the Report? Why could not he have asked the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) to table an Oral Question which could have been answered tomorrow, which would have given us at least 24 hours in which to study the findings?
May I ask the Minister, in detail, how he justifies the difference of £10 to £15 million between the recommendations of the Prices and Incomes Board and the actual price increase he has allowed? Further to the question asked by the hon. Member for Worcestershire, South (Sir G. Nabarro), what assessment has his Ministry made of the effect on our balance of payments of this price increase on the major steel-using industries, such as the automobile industry?
Mr. Mason: It is not easy to make a calculation of that kind in relation to the balance of payments, because the prices

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will vary from product to product. The British Steel Corporation has carried out a major review of pricing, the first major review affecting British steel for 30 years. There are 50 schedules, and there are hundreds of prices in each schedule affecting different types of product. On average, steel will go up by 5 per cent., but to a big steel user whose product contains 20 per cent. of steel the increase in price will be 1 per cent.
Mr. Shinwell: Is my right hon. Friend aware that hon. Members on both sides who are concerned about the competitive position of the shipbuilding industry are disturbed about an increase in steel prices? Was this taken into account by the Board and by my right hon. Friend before a decision was reached?
Mr. Mason: I cannot go into the shipbuilding industry, the car industry or separate industries, because, as I said in my original Answer, we are giving consideration to how the £40 million should be spread. The N.B.P.I. suggests that we should take note of 12 special products, but the Government have not yet decided that this is the best course.
Second, as to why it is essential to make the statement today on the date of publication, the Corporation has been losing £1 million a week during the examination and could lose up to £4 million a month while we are making up our mind. Therefore, we had to state quite clearly that the £40 million is accepted, and the method is still to be urgently considered.
Mr. J. H. Osborn: Will the right hon. Gentleman say which are the other recommendations he has accepted, in addition to the recommendation in paragraph 84 of the Report, and what is the reaction of the private sector to the recommendation in paragraph 87?
Mr. Mason: I have already pointed out that if the private sector thought that there were unfair practices, then, under Section 30 of the 1967 Act, it would be obliged to appeal to me. Therefore, I could not prejudge any decision on that.
Second, once the method of abatement has been agreed, the private sector will, according to the Report, be able to quote prices below, on par, or above the British Steel Corporation's prices.
Mr. Hooley: Will my right hon. Friend agree that a 5 per cent. increase over
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a period of five years compares very reasonably with other major industries in this country; second, that a limitation on the price increase is of major importance for major steel using industries in Britain, including shipbuilding, and is of great importance for our export competitiveness?
Mr. Mason: I am much obliged to my hon. Friend; he is absolutely right. Although the Corporation has not got what it initially proposed, if prices had not moved at all it would over the next five years have lost £100 million on revenue which it was anticipating.
Mr. Biffen: Will the right hon. Gentleman confirm that he would regard it as thoroughly undesirable if the steel industry or any other nationalised industry were required to subsidise its customers? Can he confirm that one of the consequences of Mr. Aubrey Jones having overturned the commercial judgment of the Steel Corporation is that the chairman of any other nationalised concern will put in an extra amount in his application in the expectation that it will be specifically scaled down by the Prices and Incomes Board?
Mr. Mason: I cannot anticipate what another nationalised industry may do in the future. That will be up to the industry in the light of this Report.
Mr. John Mendelson: Will my right hon. Friend accept that there will be appreciation in all the steel-producing areas for his having taken the earliest opportunity to make his statement to the House, regardless of any technicalities about which other hon. Members not representing steel constituencies might be concerned?
Second, will he tell us whether, having varied the application, he is now satisfied that the steel industry will be fully provided with the necessary capital and all the other requirements for its expansion over the next five years?
Mr. Mason: Even with the abatement and without any additional cost savings—it is obliged to look at that, and the Report makes a strong point about it—the Corporation's gross profit in 1970–71 before depreciation is forecast at £180 million, which is a rate of return not out

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of line with what has been earned by major steel undertakings elsewhere.
Mr. Edward M. Taylor: Will the right hon. Gentleman confirm that the new price schedules are United Kingdom schedules and that there is no question of introducing regional differentials for this nationalised industry?
Mr. Mason: That has not come before me so far, and there is no mention of it in the Report.
Mr. Dempsey: Is my right hon. Friend aware that Continental steel prices are already climbing over the tariff wall and conquering certain markets in this country? What assessment has he, therefore, placed on the effect which the increase will have on the competitive ability of British steel and employment in other industries?
Mr. Mason: I referred to this earlier in reply to the hon. Member for Worcestershire, South (Sir G. Nabarro). The European steel industries have taken advantage of the recent cyclical trend and have increased their prices. Therefore, we do not have to take so much note of the import seriousness of the point which my hon. Friend refers.
Mr. Geoffrey Lloyd: Does the Minister's supplementary answer a few moments ago mean that the motor industry, as a big user, will not have to pay more than 1 per cent. more for its steel?
Mr. Mason: It depends entirely on the percentage of steel going into the final product. If it is 20 per cent. in the final product, the increase will be 1 per cent. in the final price.
Mr. Ashton: Does my right hon. Friend agree that the steel industry has for many years required a massive injection of new capital and capital equipment, and will he try to ensure that the revenue from this increase is used on new capital equipment in order to put the industry in a better position to compete with European manufacturers?
Mr. Mason: This will be in the forefront of the Corporation's mind.
Mr. McMaster: Will the right hon. Gentleman note that the shipbuilding industry, because it has been such a large
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user of steel, has always been quoted special prices, and will he note, also, the many anxious questions put to him today relating to the Upper Clyde and the large order books of the shipbuilding industry, orders which will have to be taken at a loss unless a specially favourable price is quoted to shipbuilding?
Mr. Mason: Is the hon. Gentleman suggesting that I or the B.S.C. should subsidise British shipbuilding? He ought to put the matter in proper perspective in relation to the figures. The British shipbuilding industry, the whole of it, takes 450,000 tons of plate per year. The British steel industry produces 27 million tons of steel a year. It is a very small user.
Sir G. Nabarro: It is very important to shipbuilding.
Mr. Mason: It may be; but the rate of return on capital throughout the whole of the shipbuilding industry last year, including some just struggling yards, was 2·8 per cent., but the Steel Corporation's rate was down to nil.
Sir J. Eden: Was not the Corporation's assessment of its forward capital requirements based on its receiving the full £55 million, and did not the Minister give this recommendation for a price increase his full and personal backing? Does not the outcome now mean that the Corporation will have to come back sooner than it otherwise would have done to ask for a further tranche of capital?
Mr. Mason: What is means is that, as regards borrowing powers and the Bill now before the House, borrowing is not affected at all. The figures in the White Paper and the Bill still stand. But it might mean that there will be a smaller dividend from the p.d.c. than we planned hitherto.
Mr. McMaster: In view of the unsatisfactory nature of the Minister's replies, I beg to give notice that I shall raise the matter again.
Sir T. Beamish: On a point of order. Mr. Speaker. May I raise with you two matters arising out of the statement just made? First, this is the first time I have ever known a Minister make a statement to the House in reply to a Question when

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the hon. Member who put the Question down was not here. I should like to know, Sir, whether that was in order.
Second, even if it be in order, is it not a great discourtesy to the House and an attempt to steal a march on the House by making a statement on this important matter when no one has had opportunity to read the material in question, which was not in the Vote Office until exactly 3.30?
Mr. Speaker: I shall deal with the points of order seriatim. First, this is not the first time that a Minister—[HON. MEMBERS: "Hear, hear."] Order. I need no encouragement from one side. This is not the first time that a Minister has answered a Question on the Order Paper when the hon. Member who had the Question down was not there to ask it.
I said at the outset that it was quite irregular. I should have thought that, if the Minister proposed to answer a Question on the Paper out of turn, as has been done today, he would let the hon. Member know—I would imagine that he did—
Mr. Mason indicated assent.
Mr. Speaker:—and the hon. Member should have been here to put his Question. But it has happened before.
On the broader issue, it is in order for a Minister to answer any Question on the Order Paper whether it is reached or not and, a fortiori, the Minister could have made a statement to the House. What apparently the right hon. Gentleman did was tell the hon. Member for Sheffield, Brightside (Mr. Eddie Griffiths) that he would make his answer in reply to the hon. Gentleman's Question. That is as far as the Chair can go.
Mr. Peyton: Further to that point of order, Mr. Speaker. Had the Minister made a statement—and we accept that he had the alternative of doing so—he would have been under some obligation to make a copy available to my right hon. Friends. This is a very serious statement, delivered against a background of considerable discourtesy.
Mr. Speaker: There is something in what the hon. Gentleman has said, but
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it is a fact that a Minister can answer a Question on the Order Paper at the end of Question Time if he chooses to do so. I can do nothing about it.
Several Hon. Members rose—
Mr. Speaker: Order. I hope that we can get on. We have a lot of business before us.
Mr. Tinn: Further to that point of order, Mr. Speaker. It may assist the House if I say that my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) had been informed by the Minister and intended to be present. I can only assume that he has been prevented from being here by circumstances beyond his control. I am sure that he intended no discourtesy.
Several Hon. Members rose—
Mr. Speaker: Order. I am willing to listen to points of order, but I have to consider the business of the House. We have a lot to do.
Mr. Lubbock: Further to that point of order, Mr. Speaker. Since a Minister has the option of answering a Question which he has stimulated an hon. Member to put down on the Order Paper the night before or of making a statement, a copy of which would be available through the usual channels, and since on this occasion the right hon. Gentleman has chosen, to the great inconvenience of the House, to adopt the former course, will you refer this matter to the Select Committee on Procedure so that, on all future occasions when important matters of this kind are to be the subject of an announcement by a Minister, it is done in the proper form by means of a statement?
Mr. Speaker: I can deal only with points of order. I cannot deal with the hon. Gentleman's charge that the right hon. Gentleman stimulated an hon. Member to put down a Question That is a matter of esoterics and philosophy and not of order for Mr. Speaker. If the hon. Member for Orpington (Mr. Lubbock) wishes to raise the question whether a Minister can answer a later himself take it up with the Select Com-Question than is arrived at on the Order Paper during Question Time, he can mittee on Procedure.

RHODESIA
Sir Alec Douglas-Home(by Private Notice) asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the situation concerning Rhodesia following Mr. Ian Smith's broadcast last night.
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Michael Stewart): Mr. Smith announced at a political meeting in Rhodesia on 7th May that the constitutional proposals which he advocated would sound the death-knell of majority rule. Last night's broadcast has not, therefore, surprised us, though it provided saddening confirmation of the régime's attitude.
I have not yet seen the official text of the constitutional proposals which Mr. Smith was publishing in Salisbury this morning. But it seems clear that they are broadly in line with those which my right hon. Friend the Prime Minister described on 18th February as
"… a complete and flat denial of at least five of the six principles".—[OFFICIAL REPORT. 18th February, 1969; Vol. 778, c. 204.]
If the door is now being slammed it is not by us, but by the régime. We have made repeated attempts to reach an honourable settlement. Mr. Smith said last night a number of things with which I could not agree; but there is one point he made which I accept and which is central to our inability to reach agreement. Mr. Smith said:
"Throughout the entire series of discussions the British have been obsessed with the question of majority rule".
I accept that. It is the first of the principles which we inherited from our predecessors and it is basic to our dispute with the illegal régime.
I think that it was generally recognised, both in the country and in this House, that, in the "Fearless" proposals we made a very fair offer. Some people thought it went too far. My right hon. Friend the Prime Minister resisted pressure at the Commonwealth Conference to withdraw these proposals, but Mr. Smith and his colleagues have turned them down.
We now await the results of the referendum of the minority electorate,
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which has been arranged for 20th June. Let us hope that those who are able to vote on that day will choose a wiser course for the whole future of their country than the disastrous counsel urged on them by Mr. Smith.
Sir Alec Douglas-Home: If the early reports of the proposed constitution are right, then, of course, this country could not be a partner in that kind of constitution.
The Foreign Secretary has referred to the referendum and until it is held all hope is not dead. Can he give, in a suitable form, as he did before, the substance of the exchanges between Her Majesty's Government and Mr. Smith during the last few months? This would help us in making up our minds as to whether there is any prospect for the future.
It might also be right to have a short debate after the Whitsun Recess after seeing that information, if only to show before the referendum that there could be an honourable and dignified alternative as a basis for independence for Rhodesia.
Mr. Stewart: On the first point, my answer is, "Yes, Sir". Our exchanges with the régime have taken place under an agreement with them that, subject to notice from either side, they would remain confidential. Now, in the light of Mr. Smith's broadcast, we propose to give this notice and to arrange as soon as possible thereafter for publication of a White Paper giving the text of our exchanges with the régime since the Salisbury talks last November.
As the right hon. Gentleman knows, the question of a debate is not for me, but I am sure that my right hon. Friend the Leader of the House will be aware of the House's feeling on the matter. I think that the right hon. Gentleman said that there was an honourable alternative available. I take him to mean an honourable alternative to what Mr. Smith is proposing. That is certainly so and we have made it clear very often.
Mr. Sandys: While I realise that the prospects are not promising, may I appeal to the Government even at this eleventh hour to make a further last attempt to settle this lamentable dispute by negotiation?
Mr. Stewart: The right hon. Gentleman refers to "negotiations". Brushing aside all the elaborate details, and so on, our position can be described as follows: we have been prepared, and are prepared, to be flexible on details, on form, and even, within reason, on timing. But there is one matter that is not susceptible to compromise. Any settlement, to be acceptable, I would have thought, to anyone in this House, must be a settlement which would mean unimpeded progress within a reasonable time towards majority rule. I think that every right hon. and hon. Member would feel it to be the least one could require. I am afraid that it is inescapable from Mr. Smith's pronouncements that he does not accept that. If at any time any régime in Rhodesia is prepared to accept it, then we shall have a different situation.
Mr. George Brown: The situation in Rhodesia is not, as we all know, concerned only with that. I ask my right hon. Friend, since the so-called Prime Minister of the illegal régime has thought himself safe enough to make his announcement, whether my right hon. Friend has had any discussions with the South Africans recently about the situation.
Mr. Stewart: I think that my hon. Friend knows that, over a long period, we have had discussions with the South African Government and with other Governments about this whole problem.
Mr. Alexander W. Lyon: Would my right hon. Friend agree that this latest announcement of Mr. Smith is no more important than his announcement of U.D.I.? What is important, now as then, is what the Government's response will be to the announcement? Will he not agree that, in coming to their conclusion on the referendum, the electors in Rhodesia might find it helpful to know that, if they decide in favour of Mr. Smith, the proposals made in "Fearless" will no longer lie on the table?
Mr. Stewart: To pursue the metaphor of the table, if Mr. Smith's proposals were accepted by the referendum that would mean that they had, in effect, pushed those proposals off the table. Whether any subsequent or wiser choice could put them back again, we do not yet know. It is quite clear that Her Majesty's Government
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and, indeed, all the Governments of the world—because this is mankind's problem—must resolve to pursue steadily the present course of denying recognition and maintaining sanctions against an illegal régime which denies human rights.
The importance of Mr. Smith's broadcast, I think, is that it now presents to those people in Rhodesia who have a vote a choice which they can still make—a choice between a course which means disaster for their country and one which could reconcile not only the different races in Rhodesia to one another but Rhodesia itself to mankind.
Mr. Thorpe: If the terms of Mr. Smith's broadcast are confirmed as accurate, is the right hon. Gentleman aware that it will come as no surprise that those who started this rebellion should be the first to break off negotiations? While the ultimate application of the six principles will thereby become more difficult to implement, none the less, the adherence to them of the majority of this House, and the Government, in particular, is, if anything, strengthened in the face of this new development.
Mr. Stewart: I would agree with both the things that the right hon. Gentleman says. It has been clear all along that Her Majesty's Government have been extremely anxious to reach an honourable settlement. We have faced one example of intransigence after another and there is certainly no doubt—I trust that there is none in any part of the House—that we are all committed to the six principles.
Mr. Paget: Is my right hon. Friend aware that I do not regret what has happened any the less because I foresaw that this would be the result of a sanctions policy? Is he aware that, in effect, this means that Rhodesia becomes a protectorate of the Union of South Africa? Is there much point at this stage in our injuring ourselves by maintaining sanctions against a portion of the territory of South Africa?
Mr. Stewart: Obviously, I cannot accept the proposition that this is a result of the policy of sanctions. It is inescapable, when one considers the history of this matter, that this is the result of the determination of a certain number of people in Rhodesia to maintain a policy

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which permanently denies equal justice to a large number of their fellow subjects. The premise, therefore, of my hon. and learned Friend's question falls down.
Mr. Hastings: Since the Government have said that the purpose of sanctions is to bring the Rhodesians to the conference table, and since, regrettably, the referendum may lead to a situation in which further negotiations are impossible, would the right hon. Gentleman make it clear to the House what, specifically, will be the purpose of sanctions then?
Mr. Stewart: The purpose of sanctions is to bring home to those who are responsible for policy in Rhodesia the unrelenting hostility of the whole of mankind to the racialist principles on which their policies are based. I am certain that no one in the House who has any responsible knowledge of this subject would expect that, because of this statement or because of a possible result of the referendum, we should either condone what is happening in Rhodesia or relax the measures now being taken against it.
This may take a long time, but the issue is so great that I do not believe that we or any other nation can neglect our responsibilities.
Mr. Philip Noel-Baker: Will my right hon. Friend tell the electorate of Rhodesia in plain terms that Mr. Smith, like my hon. and learned Friend the Member for Northampton (Mr. Paget), is living in a dream world, and that his policy of permanent serfdom for the Africans can only prepare the way for the eviction of all Europeans from Rhodesia?
Mr. Stewart: I believe that, in the long term, this is true. What gives this matter its really serious and tragic connotation is that, while it may be possible in Rhodesia, as in some other parts of the world, to maintain for a time régimes which exalt tyranny and deny justice, those who try to do that lay up fearful retribution, either for themselves or for their successors.
Mr. Evelyn King: Were we not told initially that the purpose of a policy of sanctions was to impel Mr. Smith to an agreement? Is it not a fact that that is now shown to be a proven failure—
Mr. Shinwell: So what?
Mr. King: —and that, therefore, the cost of it has fallen overmuch upon Great Britain, while other nations have breached it? Will the right hon. Gentleman undertake not to reinforce sanctions?
Mr. Stewart: No, Sir. The object of sanctions must be to bring about a situation in which, in the end, whoever is able to do so in Rhodesia comes to terms not only with us but with mankind and with justice. If the hon. Member is saying positively that we should, at this stage, abandon sanctions and recognise the illegal r—gime, he should say so without equivocation. If his question does not imply that, it has no significance.
As to the comparative burden of sanctions on us and on other countries, it was with that in mind that Her Majesty's Government proceeded to the step which made sanctions mandatory, so that they would apply to other countries as well as to ourselves. I was sorry that we did not have the hon. Member's support on that occasion.
Mr. Crawshaw: Would my right hon. Friend agree that those hon. Members who have supported Mr. Smith since U.D.I. could best serve the interests of Rhodesia between now and the referendum by making it clear that even they are not prepared to accept the terms which Mr. Smith has put forward?
Mr. Stewart: It is my belief that no one in this House would say that he could accept the terms which Mr. Smith has put forward. I hope that that is so. If I replied—as I did to the hon. Member for Dorset, South (Mr. Evelyn King)—possibly polemically to some questions, as I was obliged to do to his, I hope that that will not cause any of us to overlook the fact that there should be one thing on which the whole House is united—that we must reject the establishment in Rhodesia of a régime based on the kind of principles which Mr. Smith outlined. I hope that that is common ground with all of us.
Sir Knox Cunningham: Could the right hon. Gentleman say what the realistic future will be, if—as I would regret deeply—Rhodesia becomes a republic and is then recognised by other countries? Does he mean that we will go on imposing sanctions in the 1980s and the 1990s? Where is the end of it?
Mr. Stewart: There is no sign whatever of any other country desiring to recognise this régime and I trust that nothing will be said in the House which would encourage any other country to do so.
Mr. Winnick: Does not my right hon. Friend agree that the latest news shows the complete futility of any British Government trying to reach an honourable settlement with the Rhodesian Front leaders? As all that is now being proposed in Rhodesia is totally meaningless and illegal, is it the intention of the British Government to press at the United Nations for stiffer sanctions against the illegal régime?
Mr. Stewart: I must leave the second question until we know the results of the referendum.
As for the futility of trying to seek an honourable settlement, I think that we were right to try to seek such a settlement. While there was any chance whatever of its being sought, I was most anxious that nobody should be able to say that the chance of an honourable settlement was thrown away by any unnecessary inflexibility on our part. I believe that that must now be clear to anyone who has studied the matter.
Sir C. Osborne: As a settlement with Mr. Smith now seems to be impossible, have the Government considered trying to contact business, financial and farmer leaders in Rhodesia to see whether there is another point of view which may be held by the responsible people in that country? Before the right hon. Gentleman agrees to the stiffer sanctions that may be demanded, will he tell the House roughly what they would cost?
Mr. Stewart: At this stage the latter question is entirely hypothetical. We are aware that there are other points of view in Rhodesia and, as I have explained to the House in answers to earlier questions, it happens quite frequently that people from Rhodesia come here and we have discussed with them and heard their views, and this will continue.

GOVERNMENT PUBLICATIONS (SUPPLY)
The Chief Secretary to the Treasury (Mr. John Diamond): With your permis-
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sion, Mr. Speaker, and that of the House, I wish to make a statement about the supply of Government publications to Parliament and members of the public.
There was a delay this morning in the supply of papers to the House. This delay arose from a ban on overtime by engineers working in St. Stephen's Press. A pay claim by employees working in the Press is at present the subject of negotiations and I am sure that the House will understand that I am not, at present, in a position to say more.
At the same time, considerable inconvenience is being caused to hon. Members and to the public by the continuing strike at the publications warehouse of Her Majesty's Stationery Office. Recently, Ministers saw representatives from the chapel and the London central branch of the union concerned, S.O.G.A.T., to discuss the dispute which is about a control formula in a pay and productivity agreement.
An offer was made to the union representatives that the disputed clause should be the subject of arbitration, but I regret that this offer was rejected.
As there has been no further progress, we have decided to set up an inquiry forthwith to look into this dispute.
Mr. Maudling: I do not want to comment on the merits of the dispute, but may we be clear on one thing—that the Government must not invite the House to take business for which adequate documentation is not available? The Leader of the House is present. May we have a complete and clear assurance that those responsible will not put Government business before the House without adequate papers for that purpose?
Mr. Diamond: I can give a clear "Yes" to that question.
Mr. Turton: Although this situation is unprecedented, should not the Chief Secretary have a plan for emergency preparations of papers so that hon. Members are enabled to do their duty, as they were not able to do this morning?
Mr. Diamond: I entirely accept what the right hon. Gentleman has said.
Mr. Temple: Is the Chief Secretary aware that I endeavoured to put a Private Notice Question to the Leader of the House on this subject today and—
Mr. Speaker: The hon. Gentleman must not speak about the subject of a Private Notice Question which has been refused.
Mr. Temple: I was extremely exercised that I and other hon. Members were not receiving our papers as regularly as we should.
Is the right hon. Gentleman aware that even such documents as the Report of the Northumberland Committee, which was published some weeks ago, are still not available to hon. Members? Are not these disputes a disgrace and are they not causing disruption of Parliamentary business in the same way that industrial disputes are paralysing industry?
Mr. Diamond: I have already said that I am very conscious of the inconvenience caused to hon. Members and, with respect to hon. Members, the greater inconvenience caused to the public. I take a serious view of it and we are doing everything we can to put an end to that inconvenience.
Dr. David Kerr: Will my right hon. Friend note that to some of us this latest inconvenience is merely a manifestation of the growing dissatisfaction at all levels of the staff who attempt to serve us so well in the House for such inadequate reward? Will not my right hon. Friend extend the inquiry which he proposes to set up to take in the whole problem of salaries and conditions of work involving all employees working within the curtilage of the Palace of Westminster?
Mr. Diamond: In point of fact, that is not the case. The problem with the Press to which I referred is a national and not a local problem, concerned with the relativity of pay between two different classes of worker.
Mr. Lubbock: What machinery exists for resolving disputes of this kind? When interpretation of a clause in an agreement is a matter of argument between the employers and S.O.G.A.T., is there provision for automatic arbitration? Will the right hon. Gentleman place a copy of the agreement in the Library, so that we may study it?
Mr. Diamond: There is no provision for automatic arbitration. As I have said, arbitration was suggested but refused. I have, therefore, done the only
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thing left to me, which is to set up an immediate inquiry.
Mr. Higgins: The Chief Secretary gave a clear "Yes" to the question of my right hon. Friend the Member for Barnet (Mr. Maudling). Will the Purchase Tax Act, 1963, crucial to today's discussion of Amendments to the Finance Bill, be available in the Vote Office?
Mr. Diamond: I am sorry, but I am not able to answer that question.
Mr. Maudling: On a point of order. We had a clear assurance from the right hon. Gentleman that the Government would ensure that documentation was available. Now the Chief Secretary cannot answer my hon. Friend. Where do we stand on this?
Mr. Diamond: If I am not aware of the precise facts about precise documents, I am sorry, but I just cannot give the answer.
The hon. Member for Worthing (Mr. Higgins) referred to a 1963 publication. I naturally took the right hon. Gentleman's question to refer to new publications, to new matters coming before the House. The hon. Member was referring to a six-year-old publication. I am not saying that it is not relevant to today's business, but I am saying, as honestly and as openly as I can, that I am not aware whether it is available in the Vote Office. I will cause immediate inquiries to be made. I recognise that the House must not be unduly inconvenienced.
Mr. Maudling: The right hon. Gentleman has just assured us that the Government will not proceed with business unless the House has the necessary documents. He is now clearly departing from that assurance.
Mr. Diamond: I am causing immediate inquiries to be made. I have been asked a question of fact and the shortest way to answer it is to find out.
Mr. Shinwell: May we assume that if this dispute continues—and, personally, I deplore it and its effect—will the Government be unable to introduce the Industrial Relations Bill? If so, what would be the effect of that?
Mr. Diamond: As I have already said, my right hon. Friend may rest content that arrangements have been made

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for new publications and the House will not be unduly inconvenienced.
I took the question of the right hon. Member for Barnet (Mr. Maudling) to refer precisely to new publications, because we are discussing a strike in a warehouse and difficulties related to the Press, two separate disputes, which relate mainly to new publications.
Later—
Sir T. Beamish: On a point of order. Are you able to tell the House, Mr. Speaker, what consideration has been given to the view that anything which seriously impedes the work of Parliament, over which you preside, may amount to a breach of privilege? It seems to me—
Mr. Speaker: Order. The hon. and gallant Gentleman will recall that that was raised as a matter of privilege some days ago. I ruled that it was not a prima facie breach of privilege. I hope that the hon. and gallant Gentleman will not formally raise it again.

DIVISION No. 215 (ERROR)
Sir G. Nabarro: On a point of order. I gave notice to your office earlier this afternoon, Mr. Speaker, that I wished to put this point of order to you immediately following the Treasury statement.
Last Wednesday, I was unavoidably absent from the House, honourably paired with the hon. Member for Bedwellty (Mr. Finch). However, my name appears in a Division list, No. 215, as having voted with the Government on the land betterment levy, thereby causing all my constituents and myself great distress.
As I was in Newcastle-upon-Tyne at 9.20 p.m. televising, and could not then have been in the House, would it be possible for you, Sir, in retrospection, to give orders for the matter to be remedied and my name taken off the Government voting list?
Mr. Speaker: I realise the gravity of the point which the hon. Gentleman raises; it is almost a Star Chamber matter. His remarks will be noted in HANSARD. He will be relieved of the responsibility of having voted in a way in which nobody in the House would imagine he would have voted.

CONCORDE AIRCRAFT
Mr. Brooks: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the increase in the extramural development cost estimates of the Concorde and the need for more adequate parliamentary control over such expenditure."
I shall be very brief, Sir. The facts speak for themselves. It is obvious that Concorde has become a licence to spend money—taxpayers' money—on a most speculative and uncertain venture. Nothing could be more specific than the facts: an escalation over three years in gross terms of £280 million, on top of an escalation of £220 million between 1964 and 1966, and on top of an escalation of £100 million between 1962 and 1964—[Interruption.]
Mr. Speaker: Order. The hon. Gentleman is submitting to Mr. Speaker what he believes to be a serious point. I must hear him before I can rule.
Mr. Brooks: The figures which have been given to us this afternoon leave out of account altogether the very substantial costs, running into tens of millions of pounds, which themselves have substantially escalated, in intramural expenditure. We used to have a saying, "The sky is the limit." It would appear that Concorde long ago passed through the stratosphere.
Mr. Speaker: Order. The hon. Gentleman must not debate his submission or the points which he would wish to make if I were to grant his submission.
Mr. Brooks: The basic point which I would put to you, Sir, is that this involves a problem of parliamentary scrutiny, parliamentary surveillance and public accountability.
When we consider that, taking account of the charges imposed by devaluation and increased costs, there has been a net increase in the last three years of about £1 million per week or £140,000 per day, we can only wonder why we get so excited about teeth and spectacles.
It seems to me that this is a matter of great urgency. It may well be a unique

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matter in view of the terms of the Concorde treaty. But we should know where we are going, and whether there is a ceiling on this expenditure and, if so, on what conditions.
Mr. Speaker: The hon. Gentleman was courteous enough to inform me this morning that, after listening to the replies of the Minister of Technology, he might seek to move the Adjournment of the House under Standing Order No. 9.
The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the increase in the extramural development cost estimates of the Concorde and the need for more adequate parliamentary control over such expenditure."
I listened carefully to the exchange at Question Time and to the hon. Gentleman's submission, and I have given careful consideration to all the points. But I must rule that his submission does not fall within the provisions of the revised Standing Order. Therefore, I cannot submit his application to the House.

COMPANIES
Sir Brandon Rhys Williams: I beg to move,
That leave be given to bring in a Bill to amend the law relating to companies so as to require that the agenda of annual general meetings shall include consideration of the appointment of shareholders' committees.
In view of the lateness of the hour, I shall try to make my remarks as brief as possible. The Bill I propose may fairly be described as a very small Bill. It involves no expense to the Government. It puts no added obligations on shareholders. It gives a further, but only limited, measure of protection to minority interests in public companies. Nevertheless, I believe that it is potentially important in bringing shareholders and managements into contact and, in due course, promoting efficiency in the working of joint stock companies.
If we are thinking of playing a game of cricket, we organise ourselves into teams of 11. If our object is to get together for the creation of wealth or the conduct of business, the normal practice is to organise ourselves into joint stock companies. The joint stock company is a device which has evolved over a great many years. Lord Goodman is perfectly right in saying that it constitutes one of the glories of the common law. But, unfortunately, the joint stock company can today be a very sick organism, and it is often found to be not in the best of health. The problem is that there is no automatic corrective within the joint stock company when things begin to go slightly wrong. I think that this is due to the virtual abdication of the shareholders.
There are a number of reasons wily shareholders find it difficult to keep in touch with the management of public companies. One is the increase in the absolute number of shareholders and of public companies. Another is the growing complexity and technical content of modern business problems. There is also the managerial revolution; and the almost universal adoption of limited liability. All these things are irreversible, but it is necessary to take special measures to correct their side-effects, which amount, really and truly, to the loss of shareholder supervision of management.

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There are a number of forces working for discipline in public companies which are of value. One is the Press. But, with the best will in the world, the Press cannot supervise everything that happens in 10,000 public companies. There are the great institutions. But, quite rightly, they are normally afraid to become too closely entangled in disputes with management. There are also the take-over bidders; but their activity is generally more that of executioner than company doctor. I feel that it is necessary to bring in the shareholders in the very early stages of decay of the joint stock company.
But, obviously, we cannot have the entire body of shareholders tramping into the board room. This is why it is necessary to encourage the growth of shareholders' committees. I believe that a Bill which requires the consideration of the appointment of a shareholders' committee once a year is a reasonable beginning on the road. However, I would like to make one further provision, to deal with the situation that would arise if the committee appointed by the shareholders and the board should come to loggerheads—as might well happen, Provided that the committee has the support of not fewer than 200 members of the company, or 10 per cent. of the voting rights, and provided that it carries the majority of those voting at the meeting, it should have power to bring in a third party to conduct what is increasingly widely described as a "management audit". I would like, however, to propose still further safeguards to protect boards from irresponsible and tearaway elements among shareholders.
In connection with my following remarks, I think it only right that I should pay tribute to the Board of Trade, which has been exceptionally helpful in the advice that it has given me, and also to a number of experts in company law and practice who have guided me to the conclusions which I would like to incorporate in the Bill.
I think that the terms of reference of the management auditor should be settled by the shareholders' committee in the light of the particular circumstances of the company. It may be that the shareholders would want the management audit to be conducted into the whole
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management of the business or, possibly, into certain aspects only—for example, marketing, works management, research or personnel practice. The person or firm retained to carry out the management audit and the fees payable should, however, be agreed by the board. In the event of disagreement between the committee and the board in these matters, the problems should be solved by reference to arbitration or, if necessary, to the Board of Trade.
The auditor should have power to examine papers and to interrogate staff, but not in any circumstances to disclose information beyond what is called for under existing company law—except, of course, to state to the shareholders whether, in his opinion, the board is conducting the business with prudence and competence and making the best use of the assets in the circumstances.
I believe that there is no shortage of men with the maturity and knowledge in the various fields in which they might be required to carry out the type of audit that I envisage. There are also, undoubtedly, already in existence firms of accountants and of consultants which have grown up and are able to provide a professional service of the sort which I foresee being called for. In this respect, it would be proper for me to declare a personal interest. I have been employed for a number of years by Management Selection Ltd., which is among the relatively quite large number of firms of consultants which would be able to provide the sort of service which a shareholders' committee might require.
I do not envisage that in any circumstances all the 10,000 public companies with a share capital which would be affected by the Bill would immediately start to set up shareholders' committees; nor do I think that a management audit would ever be instituted except as a rare event. Nevertheless, the fact that consideration of the appointment of a shareholders' committee would be on the agenda of every public company once a year would remind the board of the existence of the shareholders and would also make every annual general meeting an event of potential significance.
Mr. Hector Hughes rose—
Mr. Speaker: Order. Does the hon. and learned Member wish to oppose the Bill?
Mr. Hughes: May I say a word on the Bill. Mr. Speaker?
Mr. Speaker: Order. I have asked the hon. and learned Member a question. He may not say a word unless he wishes to oppose the Bill.
Mr. Hughes: No. I do not wish to oppose it, Mr. Speaker. I think that it is a step in the right direction.
Mr. Speaker: If the hon. and learned Member thinks that it is a step in the right direction, he must sit down and be quiet.
Question put and agreed to.
Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. Alison, Mr. Bruce-Gardyne, Mr. Crouch, Mr. du Cann, Mr. Grant. Mr. Lane, Mr. Maurice Macmillan, and Mr. John Smith.

COMPANIES
  COMPANIES BILL
  Bill to amend the law relating to companies so as to require that the agenda of annual general meetings shall include consideration of the appointment of shareholders' committees, presented accordingly, and read the First time; to be read a Second time on Friday, 13th June, and to be printed [Bill 166].
ORDERS OF THE DAY

  FINANCE BILL
  (Clauses 7, 8, 36, 38, 43 and 44, and Schedule 6)
  Considered in Committee [Progress, 20th May].
  [Mr. SYDNEY IRVING in the Chair]

  FINANCE BILL
    Clause 44

      SELECTIVE EMPLOYMENT PAYMENTS
      4.35 p.m.
      Mr. Terence L. Higgins: I beg to move Amendment No. 92, in page 64, line 9, at end insert:
      (12) Where an employer has paid selective employment tax for any contribution week beginning on or after 7th July 1969 in respect of a full-time worker employed solely in the gaining of exports and it is shown to the satisfaction of the Secretary of State for Social Security that throughout that week that person was so employed the Secretary of State shall make to that employer in respect of that person and that week a refund equal to the tax paid.
      The Chairman: With this Amendment, we may discuss also the following Amendments:
      Amendment No. 91, in line 9, at end insert:
      (12) Where an employer has paid selective employment tax for any contribution week beginning on or after 7th July 1969 in respect of a full-time worker employed on the staff of a consulting engineer exclusively engaged on overseas projects the Secretary of State for Social Security shall make to that employer in respect of that person and that week a payment of an amount equal to the tax paid.
      Amendment No. 93, in line 9, at end insert:
      (12) Where an employer has paid selective employment tax for any contribution week beginning on or after 7th July 1969 in respect of an employee who is wholly or partly occupied in the provision of services in connection with the export of goods by such employer on his own behalf or on behalf of another or in the obtaining of earnings from overseas the appropriate Minister shall make to that employer in respect of that employee and that week a payment of

      (i) in the case of an employee wholly occupied in such activity an amount equal to the tax paid; and

      (ii) in the case of an employee partly occupied in such activity such amount of the tax paid as is proportionate to the time so occupied:

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      Provided that when the activities in which a group of employees are engaged are only partly in the provision of such export services or in the obtaining of overseas earnings the appropriate Minister may fix the amount of the repayment in respect of such employees by reference to the relation of the total exports or overseas earnings to the total turnover or earnings of the employer.
      Amendment No. 110, in line 9, at end insert:
      (12) Where any consulting engineer has paid selective employment tax in respect of any employee engaged on drawing office work concerning overseas projects during any week after this clause comes into operation that employer shall be entitled to a refund of that tax for that person for that week.
      Although the requirements of procedure have dropped off Amendment No. 82—in page 64, line 9, at end insert:
      (12) Where an employer has paid selective employment tax for any contribution week beginning on or after 7th July, 1969 in respect of a person employed in the business of consulting engineering and working exclusively on overseas projects, the Secretary of State for Social Services shall make to that employer in respect of that person and that week a payment of an amount equal to the tax paid.
      —because we have reached Amendment No. 90, I still propose to allow Amendment No. 82 to be included in this selection of Amendments.
      Mr. Higgins: Thank you, Mr. Irving.
      Amendment No. 92 is concerned with giving relief effectively against selective employment tax to full-time workers employed solely in the gaining of exports. We are grateful to you for linking with it the other Amendments, particularly No. 91, which is concerned with giving relief from S.E.T. to those who are employed on the staff of consulting engineers exclusively engaged on overseas projects.
      An Amendment similar to this one was moved in Committee on the Finance Bill upstairs last year, when my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) brought this matter forward a few moments before the Guillotine which was to restrict the debate fell. None the less, we had a useful debate, albeit short, in which my right hon. Friend stressed that the imposition of S.E.T. on those who were engaged in encouraging exports was clearly contrary to the avowed policy of the Chancellor of the Exchequer of that time. I would think that it is even more clearly against the policy of the Chancellor as put for-
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      ward in his latest Budget speech. Therefore, we take the view that the Amendment is one which the Government should welcome.
      I appreciate that the wording of the Amendment may not necessarily be perfect, but it is the overall principle which we wish to bring forward. We dispute the arguments which the Government employed in rejecting our similar Amendment last year. If we are to be successful in selling our exports, it is surely crucial that the marketing process should be efficient. Unless that is so, we cannot hope to promote our exports overseas. I certainly dispute the view, expressed by the Chancellor, that the effects of devaluation in encouraging exports still amount to 7 per cent. on a price or profit differential.
      I enumerated in my speech on the Budget—I will not weary the Committee with the matter again—the action which the Government have taken which has, I believe, eroded away almost entirely any value which exporters may have obtained from devaluation. Since that time we have had further increases in costs and in inflation and we are now debating further increases in the selective employment tax. It has become clearer than it was at that time that the imposition of further payments for pensions contributions will impose a further burden on those who are exporting. Therefore, it is surely extremely important that as far as possible, we should do everything we can to encourage exports. It is absurd that we should tax those who are engaged in trying to promote exports.
      I should like to take three brief examples to demonstrate how this works. The first is the question of those who employ people engaged wholly in promoting exports within a larger concern. Hon. Members may have noticed in The Times of, I think, 19th April, a letter from the managing director of Dexion Limited, who pointed out that the public as a whole did not appreciate that firms, such as the one of which he was managing director, actually have to pay selective employment tax on those members of their staff—for example, export salesmen and the shipping department—who are engaged in promoting their sales overseas. He points out that the company with which he was concerned, which last year earned £3,400,000 in foreign currency

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      from exports and overseas trading, paid over £40,000 in taxation on those who were engaged in promoting those exports. This surely is a ludicrous situation.
      To take the reciprocal of that argument, many firms and individuals are engaged in this country as buying houses or buying agents for companies overseas; for example, large department stores in the United States or in Australia. Selective employment tax must be paid on this staff although they are entirely engaged on behalf of companies overseas in encouraging United Kingdom firms to export to them. It is ludicrous that a tax should be imposed on such people who are doing work which benefits specfically and explicitly our balance of payments.
      Various other groups are affected in this way, even although they do not come in the service category which I have just mentioned. One group of people who fall within the wording of the Amendment in that they are employed purely on the gaining of exports, are those employed in television companies, either commercial companies or the B.B.C., who are concerned with producing exports of television programmes.
      The odd thing about this situation is that in one sense they are manufacturing a physical article, and one would, therefore, expect that they would be exempt from S.E.T. The television programmes are recorded on video tape, which is then exported to overseas markets, with the result that substantial sums of foreign exchange accrue to this country.
      One would have expected this process to be automatically exempt as a manufacturing process, but, because of the absurd operation of the Standard Industrial Classification, either in its old form or in its new form which the Clause now proposes to employ, and because it was not designed for the purposes of S.E.T., the television industry pays S.E.T. on the people who are engaged in producing a physical product, which embodies many services necessary to produce the television programme, in addition to the many other burdens imposed upon it.
      The tax is imposed after the overall profit position has been determined in negotiation with the Government. We hope, therefore, that the Government will exempt those who are engaged in producing
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      television programmes which are subsequently exported and which go to improve our balance of payments position.
      The other absurdity is that the Government have recognised the strength of this case in the production of ordinary films in ordinary film studios. The result is that if films are produced in a film studio and subsequently exported, S.E.T. is not paid, but if films are produced for a television programme on video tape instead of on ordinary film, S.E.T. must be paid on those engaged in the operation.
      This is clearly an area where the Government have made a mistake. They can perhaps put it right, and I hope that the Chief Secretary will give an assurance that a suitable Amendment will be put down on Report. He will appreciate that it is difficult for us to draft an Amendment in specific terms to cover the entire area of commercial and B.B.C television.
      4.45 p.m.
      I know that many of my hon. Friends are more expert in this area than I am, so I will do no more than mention Amendment No. 91, which is one of several Amendments concerned with consulting engineers. The point here is that S.E.T. has to be paid on consulting engineers who are operating exclusively on work in the overseas market. It might be argued that S.E.T. should not be paid even if they are only partially engaged in the overseas market, but the Amendment is moderate and straightforward in that respect.
      I hope that the Government will give an assurance and perhaps even deal with this point more widely than the Amendment does. Selective employment tax is putting consulting engineers in British firms at about a 5 per cent. disadvantage at present rates. This is a sufficient margin to result in their losing out in the overseas market because the margin on which such firms operate is necessarily very competitive and not large.
      This is a growth market overseas, and the extent to which British consulting engineers overseas have raised the capital value of overseas works since 1964 has been substantial; an increase from £950 million in 1964 to £1,638 million last year. This is a substantial increase in an expanding market which one would

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      have thought the Chancellor of the Exchequer would wish to encourage if he seeks to put our balance of payments position into equilibrium, or to get the surplus which he maintains he will still achieve, even though it will be somewhat later than he orginally hoped.
      The direct contribution of consulting engineers working on overseas projects is approximately £18 million per annum; yet they are being penalised by S.E.T. to the extent of about £640,000 per annum. This is not merely losing us invisible earnings, but is deterring many people overseas from buying British goods. People employing British consulting engineers would also buy physical assets which were British and physical capital goods which were British.
      The case is overwhelming. We are not satisfied with the explanation given last year by the Financial Secretary that this is an area where we run into problems with G.A.T.T. and E.F.T.A. agreements. No one is more anxious than I not to set off a protectionist war in world trade, but in many areas reasonable arrangements could be made about the payment of S.E.T. which were not contrary to international agreements. Whereas value-added tax can be rebated, S.E.T. cannot, and that is a basic flaw in S.E.T., but, even so, the imposition of the tax on this area seems to be determined not by our international agreements, but by the idiosyncratic way in which the Standard Industrial Classification places people on one side of the line or the other. If films can be on the right side of the line, there should be no difficulty in video tape being on the right side of the line.
      I hope that the Committee will accept the Amendments, because, although there may be arguments in individual G.A.T.T. or E.F.T.A. agreements, these do not run to our invisible exports which make such an important contribution to our balance of payments.
      Mr. W. Howie: I propose to take up some of the points made by the hon. Member for Worthing (Mr. Higgins) because I, too, have tabled an Amendment dealing with consulting engineers. It is in somewhat different terms from the hon. Gentleman's Amendment. I drafted it myself, and on looking through the Amendments on S.E.T. I see that my Amendment is unique.
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      I do not claim, therefore, that it is better; I merely claim that it is different.
      For the encouragement of my right hon. Friends on the Front Bench, I preface my remarks by saying that I entirely approve of S.E.T., or almost entirely. I think that it is an excellent tax, for three reasons.
      Mr. Patrick Jenkin: It is not only his Amendment but the hon. Gentleman himself who is unique.
      Mr. Howie: I have only just started and my uniqueness will become the more apparent as I go on. I am encouraged by the hon. Gentleman's praiseworthy intervention, but it shows most unusual impatience on his part. He usually waits until the argument has been started before he gets excited.
      My first reason for liking S.E.T. is one which should appeal to hon. Gentlemen opposite. It is that this tax raises a large sum of money for a very small outlay. It is, therefore, a very profitable tax, and on profit-making grounds alone I find it extremely desirable. It is also, in theory at any rate, an infinitely flexible tax. I am not sure that it has as yet been used sufficiently flexibly by my right hon. Friends, but it is that very flexibility which I hope to prompt them into exercising in respect of the consulting engineering profession.
      I do not support the hon. Member for Worthing in his general demand for exemption in connection with exports. As a consulting engineer, I am not strongly inclined to link my profession with that of the manufacturers of television films. They are no doubt excellent people in their own way, but the kind of service which they provide for society is of a totally different order from the kind of service which consulting engineering provides for society. When I talk about service, I am talking about service in the general humanitarian sense of the word, not in terms of a service industry as it is thought of in terms of S.E.T. I do not regard the consulting engineering profession as a service industry in the terms of this Bill at all.
      I shall not attempt to rehearse all the arguments. They were laid out strongly enough yesterday by my hon. Friend the

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      Member for Liverpool, Walton (Mr. Heffer) when he talked about the building industry, and what he said then applies to the consulting engineering industry today, which includes builders and engineers.
      In my Amendment the people in whom I am principally interested are the drawing office staffs, the technologists of the consulting engineering world. I am not so much concerned with the peripheral people employed by consulting engineers to look after the filing, to do the typing, and so on. I am concentrating on the technologists, the engineers, and the draughtsmen. It is their work which should be excluded in so far as it relates to exports.
      Drawing office staffs are an integral part of the chain of production, and to call them anything else is quite wrong. This error arose originally from the crudity of the classifications upon which S.E.T. is based. We know that certain exemptions have been made. As I recollect it, if a drawing office is attached to a manufacturing establishment it is exempt, whereas if it is along Victoria Street it is not, and yet the draughtsmen may be doing the same kind of work and using the same kind of drawing boards and pencils. This is an anomaly which is too great to be borne reasonably.
      I am asking for exemption in respect of people engaged on overseas work. I am being very modest in my demands. I know that the Government are beset with problems on both sides, and I do not wish to add to annoy them. I am not asking that all technologists should be excluded, only those who are engaged on export work. I am inclined to quibble a little with the Opposition Amendment, but the fault may be mine. I know that the hon. Member for Worthing is meticulous in these matters, and he is at least as likely as I am to be right in understanding his own Amendment, possibly more so.
      I rather got the notion that the hon. Gentleman was under the impression that odd bodies of consulting engineers were devoting themselves exclusively to export work. This is not quite the case. It is much more complicated than that. There is a substantial body of consulting engineers whose work is partly for the home market and partly for exports. In addition,
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      individual employees may find that their time is devoted partly to overseas work and partly to work for the home market. I realise that I am quibbling with the hon. Gentleman at this point. I am merely suggesting that his Amendment is perhaps rather more blunt than he really means it to be, though I support the general tenor and the thought behind his Amendment.
      I am asking for exemption for these very important exporters because of the importance of our export problem. We debate this problem day after day and week after week in this House. No one would say that our export performance, even since devaluation, is as good as we would desire. No doubt our exports have greatly improved compared with what they were, but we can all agree that improvements can still be made and that we should be doing everything we can through legislation to promote those exports. This is a small way in which we can help.
      The hon. Member for Worthing gave us some figures. He showed that the total capital value of work done overseas by British consulting engineers amounted to £1,600 million, an increase of nearly 100 per cent. since 1964. It produces a substantial sum in the form of invisible exports, amounting to about £18 million a year, and this is by no means a sum which we can laugh off.
      In addition, this work puts Britain and British engineering into a large and expanding market in the world. When British consulting engineers are working overseas, two things seem to follow. First, British engineering goods are bought because the engineer concerned naturally hopes that the capital goods which he is designing will be exported from Britain, and very often they are.
      But there is another factor in this. A British consulting engineer working abroad establishes a very useful connection with foreign engineers, not merely established engineers but young ones, of whom substantial numbers are coming forward from the expanding parts of the world, the Middle East and so on. If British consulting engineers work hard overseas, we draw into what one might call the British technological sphere of influence a large body of foreign engineers who become orientated towards

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      British engineering and British-manufactured engineering goods. That is not something which we can show in the balance of payments accounts or argue about when dealing with these matters. It is an intangible which in my opinion shows a great promise for the future for British engineering.
      5 p.m.
      I have said that the Government are very anxious that we should encourage exports. I believe that the hon. Member for Worthing said that a British consulting engineer finds that S.E.T. places him at a price disadvantage of about 5 per cent. as compared with foreign competitors, when he is seeking work abroad. Five per cent. can be a very crucial margin in seeking that work. In trying to encourage exports the Government have gone as far as setting up a special bureau to encourage consulting engineers to work overseas and to draw into that work many British consulting engineers who have never done it before. Yet S.E.T. remains as a burden and an impediment to them.
      I do not think that there would be any administrative difficulty in allowing this exemption. A slight complication might arise from the fact that engineers would be dividing their work between the home market and overseas markets, but that difficulty would not be impossible to overcome. The cost to the Exchequer would not be significant. If this exemption were allowed the loss to the Exchequer would be about £640,000 out of a total yield of £600 million from this tax.
      Mr. Laurence Pavitt: It is £630 million.
      Mr. Howie: It would be £640,000 out of a total of £630 million. The loss to the Exchequer would be insignificant—certainly compared to the gain that would be derived.
      I have asked the Chancellor to be flexible in the use of this tax. He has shown some flexibility in the past, notably in respect of the hotel industry. I am asking him to show flexibility in this respect and to consider, at a later stage, allowing an exemption for consulting engineers to the extent that their staff are engaged in overseas work and are producing invisible exports.
      Mr. Tom Boardman: I am not sure from his remarks whether the hon. Member for Luton (Mr. Howie) was in favour of S.E.T. in general and opposed to it in principle—the principle being any interest of which he had some knowledge. His remarks on that point would apply to almost any aspect of the service industries of which each of us has some knowledge. There is common ground between hon. Members on both sides on one point: we both wish to increase exports. But the Government do not begin to know what is necessary to create exports. It is not just a question of the manufacturing process. That is vital, but in many ways it is the easiest part of the process. First, it needs, market research. It needs people in overseas countries discovering what is required. We need the selling people. There is a great task for export salesmen, and there are the questions of transportation, documentation, credit arrangements, after-sales services, P.R.O.s and all the other factors that go to make up the export sales that appear in our balance of payments.
      Some large vertical firms can do all this by themselves. If they are clever enough to position their people in the right places so that they have the right percentage in the right sites where the factories exist, all these services can be provided by one firm, which then receives a refund from S.E.T. The majority of firms, however, need the help of other firms of export agents, merchant bankers, shippers and insurers. It is these smaller firms to which my Amendment refers—those which are wholly or partly engaged in overseas earnings.
      I draw the Chief Secretary's attention to some figures with which he is probably familiar. The British Export Houses Association is collectively responsible for about £1,000 million worth of exports a year. All its members are paying S.E.T. The Overseas Marketing Corporation rightly pays S.E.T. in respect of its staff. I say "rightly" because it would be wrong to put it in a different category from the British Export Houses Association and many similar export firms. But it exposes the farce that corporations of that kind, established to promote exports, have this additional penalty put round their necks. The people doing these jobs

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      are no less important than those engaged in factories, yet they all pay S.E.T.
      On many occasions the Prime Minister has referred to candyfloss. He seems to have an irrational dislike of it. He may have an irrational dislike of many things, but the development of that argument, namely, that the candyfloss manufacturer shall have immunity whereas people engaged in the promotion of exports shall pay the tax, is candy-floss logic of the worst kind. It is so much nonsense when the bulk of our manufacturing, in respect of which a refund is paid, goes to home consumption. The Amendments that we are discussing all cover people who are engaged in exports. It is a nonsense that they should have to pay the tax while manufacturers for home consumption do not.
      My Amendment goes rather further than that of my right hon. Friend the Member for Enfield, West (Mr. Macleod). My Amendment seeks to cover those who are not only wholly engaged but partly engaged in exports. We have also covered those who are engaged in obtaining overseas earnings. The drafting of the Amendment is amateurish, and I do not doubt that the Chief Secretary would be able to find a number of holes in it. Nevertheless, I hope that we shall have his support for its principle.
      It has been suggested in similar debates in other years that such an Amendment would be an infringement of G.A.T.T. or the E.F.T.A. Convention. I find it difficult to accept that, but if it is so it merely emphasises the folly of imposing this tax on people who are engaged in export industries. The Government now have an opportunity to show that they wish to help the exporters. We have had a lot of lip service to the idea; the acid test is whether the Government are prepared to do something about it, and about those who are engaged in invisible exports. The figures show that £3 out of £8 of our exports come from invisibles—from merchant banks, insurers, and so on. Tributes have often been paid to the City, and these normally provoke sneers from hon. Members opposite. But I hope that hon. Members will bear those figures in mind—£3 out of every £8 comes from institutions referred to collectively as "the City". These are the people who are being penalised, and our Amendment would
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      provide a formula for them to have a refund.
      Of course there are administrative problems, but to anyone who has devised the present system of S.E.T.—the division between those who pay, those who are refunded and those who used to be paid—the problem of separating those engaged in exports from those who are not will be child's play—
      The Chief Secretary to the Treasury (Mr. John Diamond)indicated dissent.
      Mr. Boardman: The right hon. Gentleman shakes his head, but if he gave thought to the problems in the present tax and then to the comparatively simple way in which this rebate could be given, he would find that it is child's play.
      We have inserted a proviso to try to achieve a global effect by setting the amount to be refunded in proportion to the overseas activity of the firm concerned. This may need careful redrafting to avoid the G.A.T.T. and E.F.T.A. Conventions, but it is the principle which is at stake, Some such proviso would provide some rough justice, but it would at least be justice instead of the smooth talking injustice of the present system.
      The Amendment provides for those partially as well as wholly employed on overseas work. This also may present some administrative difficulties, but the present situation is a complete farce. If 51 per cent. of employees are engaged in manufacturing, the whole lot are exempt, but if only 49 per cent. are so engaged, none of them does. Also, one must be careful to site one's office on the right side of the road and to see that offices fit into the pattern which allows firms to reduce their S.E.T. liability by the maximum amount. The ridiculous state of the present application would, as I said, make the devising of a system of rebate along these lines appear child's play.
      The Government have an opportunity here to make a small gesture to our exporters. After all the letters of intent, let us at least have a message of intent in this direction. Let the Government with their dying gasp, show that if they cannot initiate anything sensible at least they can still listen to reason.
      Mr. A. P. Costain: I support this Amendment and

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      associate myself with the two Amendments which are being discussed with it. The hon. Member for Luton (Mr. Howie) referred to consulting engineers, who have a strong case. I must declare an interest. I am in the contracting profession, and we have interests in consulting and in the work of architects. I was surprised that the hon. Member referred only to consulting engineers, since nothing in his argument could not apply also to architects. I assume that, should the Government accept his Amendment—
      Mr. Howie: I referred only to consulting engineers because that is what my Amendment is about, and I am like that.
      Mr. Costain: I appreciate that the hon. Gentleman is like that. I should not like to suggest that he referred only to consulting engineers because he was a consulting engineer and not an architect.
      What we are talking about are the invisible exports. Few people realise that, over 175 years, in only five or seven years have we had a balance of payments surplus on our ordinary exports, so our invisibles are some of the most important factors in our balance of payments.
      5.15 p.m.
      I would draw attention particularly to the work of those who produce know-how—the consulting engineers, architects, structural and constructing engineers. It shows the absurdity of this tax that anyone who manufactures a plant or design is considered to be in a service industry, whereas anyone who produces candy-floss is manufacturing. There is a strong case for supporting the consultants and those with know-how.
      The hon. Member for Luton weakened his case—we will put that right in a moment—by saying that there was some difficulty over deciding which staff in the offices were working on overseas work alone. Another hon. Member suggested that all consulting engineers worked at home and overseas. I dissented at the time because I can quote one or two who work exclusively overseas, specialising in such work as pipelines.
      If the Chief Secretary intends to quote the absurd argument—it is the only possible one that I can see—of the difficulty
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      of checking, he should remember that even the Treasury has faith in audited certificates; even the Treasury agrees to employ management consultants and to pay them on the basis of time worked. The Treasury has agreed that, for repayment of investment grants, it will take an audited certificate as proof of what has been paid or the work that has been done. Therefore, unless they think that every consulting engineer, architect and professional man is an out-and-out crook, and clever enough to swindle the Treasury, there will be no difficulty in separating these activities. There is a strong case for exempting from S.E.T. all the know-how of these people, but that would be outside the Amendment.
      I want to draw particular attention to the advantage of giving these people an incentive to get overseas work. I must declare another interest, in that I sit on the Council of the Export Group for the Constructional Industries. This week, we are about to publish an interesting document showing what consulting engineers and architects have done for exports. We have been honoured by a letter on Board of Trade stationery from no less an individual than the President of the Board of Trade himself. I am sorry that he is not here to convince the Treasury of the weight of our argument, but, in this letter, he says:
      "By any standards the great diversity of projects undertaken and the international scale on which it operates put the British constructional industry amongst the foremost in the world. The industry has played a conspicuous part in meeting the demands of the developing countries for infrastructure projects and at the same time supplying overseas countries generally with projects ranging from public buildings of all kinds to the most sophisticated and technologically advanced industrial plants.
      I greatly welcome this illustrated publication by the Export Group for the Constructional Industries which will provide potential overseas buyers, whether in the public or private sector, with valuable information about the British constructional industry. The relations between Government and that industry are very close and will become even closer following establishment in the Board of Trade of a focal point to co-ordinate the diverse Governmental activities bearing on the industry's approach to projects overseas."
      I hope that there will be co-ordination and that, if the Government really wish to increase exports, they will get some sense into S.E.T.

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      I fear that the effect of not accepting the Amendment will be that consulting engineers engaged on overseas work will decide to do the detailed designing of that work abroad. After all, they will not only not have to pay S.E.T., but will avoid the other taxes which the Government have imposed. I know from experience of at least one firm of architects which was doing a large amount of work in the Middle East who got so fed up with the imposition of taxes in Britain that it opened an office in Cyprus and is now operating from there. We see that the Government are not only losing S.E.T., but are losing considerable amounts in income tax and surtax. This illustrates the small-mindedness and short-sightedness of the Government.
      We must not overlook the fact that when consulting engineers design work in this country for overseas clients they normally, though not to the extent that this is done by some foreign consulting engineers, specify the use of British products. I am thinking not only of structural steel and heavy machinery, but even things like sheets for hotels.
      My hon. Friend the Member for Worthing (Mr. Higgins) quoted some interesting figures. Mine may be a little more up to date because I obtained them this morning from the British Consultants' Bureau. I am assured that there are 1,500 projects under way, 1,000 of them by consulting engineers and 500 by architects and management consultants. The work is worth about £1,800 million. We should not forget that the fees are worth about £20 million. While the President of the Board of Trade explains the importance of this work in a prefix to a new book, the Government take the view that because these people are successful they must be heavily taxed.
      Because a number of my hon. Friends wish to speak I will be brief. Basically, we must agree that someone who manufactures a plan or design is manufacturing an article. I will resist the temptation to show how absurd it is that S.E.T. should be paid by the building industry, since the hon. Member for Liverpool, Walton (Mr. Hefter) dealt admirably with this point yesterday. It is indefensible that a person who manufactures a plan should be considered to be manufacturing something else. It is indefensible that those who are
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      helping our exports and are, at the same time, increasing the exports of other industries as a by-product of their efforts, should be treated in this way. If the Treasury has any interest in improving our balance of payments it has a chance to do so by accepting the Amendment.
      Mr. Cyril Bence: I support the proposals of my hon. Friend the Member for Luton (Mr. Howie), although while he likes the idea of S.E.T., I am not at all partial to it. As an engineer, I find it difficult, in a complex industry such as that in which I served for many years, to separate service from manufacturing activities. Indeed, in my profession it is virtually impossible to divide the industry up into the two concepts because in, for example, the servicing of machines, everybody engaged in that work is performing a service.
      I support my hon. Friend because in Britain today we are engaged in a process which may last for a decade or more. We are transforming many of our out-of-date industries into modern, viable ones. In many instances we can achieve a higher conversion value in terms of final output between raw materials and products.
      When a vast investment programme in a big engineering plant is undertaken, outside consulting engineers are frequently called in. They are often able, after considering the layout and techniques required to speed production, to bring an analysis to the problem which those who are engaged in the plant may not be able to produce. This often occurs simply because those who have spent many years in a plant are not able to take as objective a view as an outside consulting engineer. The engineering industry is aware that the outside consultant can often represent the most economic way of redeveloping a plant. For this reason, my hon. Friend the Member for Luton has a good case in calling for the exemption of consulting engineers from S.E.T.
      During the war the consulting engineer showed what a valuable contribution he could make to industry. His services were readily called on at that time, as they were in the post-war period when industry had to transfer to peacetime production to compete in the markets of the world.
      With my experience of engineering, I assure my right hon. Friend the Chief

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      Secretary that it is virtually impossible to split engineering activities into export and non-export divisions. The majority of engineers work on both types of project and one cannot say what percentage of their time is spent on producing goods for the home market as against producing goods for abroad. For example, if I were tooling up to produce a large commercial lorry to convey goods from Birmingham to the London docks where they were to be shipped to the United States, I would not be sure if I were producing something for export or for home consumption.
      For this reason, I prefer the concept of a payroll tax right across the board.
      [Dr. A. D. D. BROUGHTON in the Chair]
      Mr. John M. Temple: Even the Government are appreciating the extraordinarily valuable contribution which invisible earnings make to our exports. Whereas I should like to support the Amendment which was so ably moved by my hon. Friend the Member for Worthing (Mr. Higgins), I am inclined to give greater support for the more flexible proposal made by my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) because the Amendment standing in his name recognises the difficulty involved in saying that a worker is employed only on exports and that some of his time is not devoted to work concerned with home consumption.
      I have had the good fortune to travel abroad a considerable amount in recent years. Last year I was in Lima, Peru, on a Parliamentary conference. I had lunch with one of our leading insurance men who, to my surprise, told me that the Peruvian fishing industry was the largest in the world and that its vessels were insured in the London markets. Those who know about insurance matters appreciate that in the London market it is impossible, when dealing with the servicing of insurance business from overseas, to separate what is being done for overseas clients from the work being done for clients in this country. I maintain that it would be comparatively easy for an accountant to certify approximately the proportions of work being done for customers overseas and for business within this country.
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      5.30 p.m.
      The Chief Secretary, in a former existence, was a professional man, and will recognise that tax inspectors today have to settle big claims with accountants. It is often a matter of what to do at the end of the day. The tax inspector says that the amount should be so much, the accountant says that his estimate puts the figure slightly lower, and in the end they split the difference. My point is that today the Revenue and accountants are used to "horse trading" in these matters, and they could quite easily fix the proportions in which a certain firm was dealing with the home and the export markets.
      I can quote another example from the insurance world. Only the other day I came across a foreign international airline, 95 per cent. of whose reinsurance was placed in the London market, yet the employers of those workers in the London market have to pay the full contribution to selective employment tax.
      My hon. Friend the Member for Folkestone and Hythe (Mr. Costain), and one or two hon. Members opposite, have spoken particularly about consulting engineers. In my constituency we have a number of very important architects who do a great deal of work for customers overseas, advising on the building of hospitals, universities and schools. The Amendment in the name of my hon. Friend the Member for Leicester, South-West would cover just such a situation. It is not only the architectural work which is so important, but the fact that once a plan drawn in this country has been accepted, much of the capital equipment for the project, which will be supplied by manufacturing firms not subject to selective employment tax will follow the initial plans drawn up and approved in architects' offices here.
      I pass on to a slightly different but in a way a related topic—the agricultural industry. In a few weeks' time, one of my privileges will be to assist with the international pavilion at the Royal Agricultural Show at Stoneleigh. The whole object of that pavilion is to welcome visitors from overseas in the hope that they may become purchasers of our livestock and equipment. The pavilion will be staffed entirely by people for whom the society will have to pay selective employment tax. Whilst it would be impossible

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      to prove that one or two home buyers had not gone into the pavilion during that week, the society would be able to prove that a very high proportion of the staff employed there were devoting their efforts entirely to generating export business. Yet it is for those employees that the tax will have to be paid.
      Our livestock export business is growing fairly fast. Here I must declare a personal interest. In about a week's time, animals from my farm will go to Libya. In the last few years, animals from my farm have gone to the Middle East and to Spain. I know that the farming industry is in the neutral zone, but what about the livestock export companies and the breed societies? The breed societies have large parts of their organisations devoted entirely to getting statistics of the performance of the animals to be sold so that overseas buyers can have confidence in those animals. The work of the livestock export companies is entirely devoted to the shipping and general sales arrangements in respect of these animals for overseas countries. This is an aspect of the incidence of the selective employment tax which has been very much overlooked by the Government, yet these services industries are vital to the sales of our capital goods overseas.
      I therefore hope that the Chief Secretary, recognising the country's desperate export position, will have a change of heart this evening and say, knowing that it could do so much good in encouraging exports, that those who are partially or wholly connected with the acquiring of these orders should receive the selective employment tax rebate.
      Mr. F. A. Burden: I want to appeal for the people who are engaged wholly in exports. I take the point in Amendment No. 92 that the person for whom a refund is made shall be
      "… a full-time worker employed solely in the gaining of exports …"
      One category of firms so engaged can be very clearly defined. They are those firms, mostly in London, which act as buying agents entirely and absolutely for companies overseas. In most instances, they are engaged solely in selling consumer goods or in sending consumer goods against orders to their principals
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      overseas. I can give very definite examples, and the companies can be easily recognised.
      One of these firms buys in the London market for no fewer than 26 American stores. It has no other function. The merchandise is bought for and by the American firms in their name on the English market. The orders are placed on the London market with English firms. The firm goes so far as to give guidance on design, selling and packing, and on everything that might be required by their people in America. It discusses the promotion of those goods in America, and it places the orders. It goes even further than that. It arranges the shipment of the goods, handles all the shipping documents and pays in England within seven days on behalf of its American clients.
      Those circumstances do not apply only to America. I give that case as an instance, because this is a very big firm dealing with very considerable quantities of British merchandise. It does not buy anything at all for sale on the British market. Its books would show quite clearly that every purchase it has made has been made for export.
      There is a firm in Bermuda, well known for its set-up. It has its own London buying office. Not only is the office interested in placing orders given by its principals overseas but it is constantly seeking out new products for the principals' markets. The same thing applies to the South African and other markets. These people and firms are exclusively engaged on exports, and it can be quite clearly shown that every member of their staffs is so engaged. The Treasury would have no difficulty at all in establishing their function. These people are very bitter because they, too, have to pay the selective employment tax.
      I ask the right hon. Gentleman to give particular consideration to this comparatively small number of firms. They are few in number, but they are of vital importance to us. In almost every case they are owned by their principals overseas. They are not even owned by anyone here. There are some free buying agencies which are owned by people in this country but, again, if they are engaged solely in dispatching British merchandise to overseas customers, they form a vital link

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      in the export chain. Very serious consideration should be given to the exclusion of these firms.
      Companies with principals in this country, engaged entirely and exclusively in the export trade, feel they are hard done by. My hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) has referred to candyfloss. No one would suggest that a candyfloss manufacturer would sent his produects overseas or that he is doing much for the economy, but the companies I have spoken of, both those run by British principals and those run for foreign principals, and entirely owned by overseas companies to whom they export, feel very bitter about this tax which is adding considerably to their costs.
      Mr. Keith Speed: This debate has followed the usual pattern of S.E.T. debates in that all hon. Members who have taken part in it are concerned about the tax. About a year ago I made my maiden speech and said that one of the troubles with British industry was that its output was production-orientated rather than marketing-orientated. For anyone to imagine that the sheer production of goods which will then qualify for S.E.T. refund in course of time is the end of the story, is to display a lamentable ignorance of what exporting is about.
      Exporting is, first finding a market, then doing design work. Production comes into this pattern and one has to have the sales and after-sales service, credit arrangements and the rest. The whole thing is a marketing operation. Any company which thinks it can solve its difficulties merely by production will soon be out of business. We have not done so well as we might, because in so many respects companies are not marketing-orientated. The present S.E.T. exacerbates this already bad situation. Is it seriously argued that too many people are employed in marketing, too many in providing credit for exports or too many in providing necessary insurance and documentation? Surely that is not so.
      My hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) spoke about firms with a good vertical structure whereby the whole operation can be carried out within the
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      firm. Many firms are doing well on that score. I have had personal experience of small firms which have been trying to export but they have not the staff to do the whole marketing concept.
      5.45 p.m.
      Mr. Burden: Does my hon. Friend agree that what he has been saying highlights the importance of the firms of which I spoke, which set up their market research in this country to help British firms to design for export?
      Mr. Speed: I am grateful to my hon. Friend. Where companies have not within their orbit all the exporting expertise and have not grown to this stage, they have to employ outside people to help them. As we have heard from almost every hon. Member who has spoken in this debate, those outside people are penalised by selective employment tax in their export efforts. My hon. Friend the Member for Leicester, South-West and I realise that we could not ask for everything in this respect. That is why in suggesting Amendment No. 93 we have suggested this differential for people who are employed in exports only to a certain extent. They may be in service partly for exports and partly for the home market. No doubt the drafting of our Amendment is far from ideal, but I hope that the Chief Secretary will accept its principle.
      The hon. Member for Luton (Mr. Howie) and my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) have spoken of consulting engineers. When I took part with other hon. Members in a tour of North Africa recently we met a number of such people in Algeria and other countries who were working on pipelines. They are doing a first-class job particularly in follow-up services and for the exports which may follow. If anyone should suggest that a 5 per cent. differential would not make much difference, they should speak to these people on the spot. This is a very competitive market in which we have to compete against Americans, Germans, Italians and Japanese. Some of the contracts run into six or seven figures. The potential in North Africa is considerable.
      The first essential must be balance of payments and increased exports. A former Prime Minister said, "Exporting is fun." It may be fun, but it is damned hard work. Those engaged in exporting

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      should be rewarded, not penalised. We want a fundamental reappraisal of the whole concept, which is a marketing rather than a production approach. That is why I hope our Amendment will be supported.
      Mr. Bruce Campbell: I support Amendment No. 93. If it were accepted it would certainly bring very welcome relief to certain industries in my constituency which are finding that crippling effect of selective employment tax so serious that some—principally the small ones—are being driven out of business.
      Oldham is an old cotton town. The cotton industry has been in decline for a number of years now, but a resilient and resourceful people have turned their talents to other industries and those industries contribute a great deal to exports. Yet many of them are crippled by the imposition of selective employment tax. In Oldham there is an industry called the textile waste reclamation industry. It brings great benefits to our country. It converts old textiles, worn-out clothing and other products, into new products. Some of these wastes can be turned into high quality paper which otherwise we should have to import. Other kinds of textile waste are turned into surgical dressings, felts and useful products of that kind, many of which are exported.
      If the industry did not utilise these waste products in this way, those surgical dressings, for example, would have to be made out of raw cotton, all of which would have to be imported, because we do not grow cotton here. However, for some reason which I and those engaged in this industry cannot understand, selective employment tax is imposed upon this industry. If this is not a manufacturing industry, I do not know what is. However, the tax is imposed.
      I have been very glad to learn that the Chancellor proposes to relieve from selective employment tax some of the other reclamation industries. I understand that the scrap metal reclamation industry and the waste paper reclamation industry are to be relieved of the burden of this iniquitous tax. All the arguments that apparently prevailed in regard to those industries applied with
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      equal force, if not more forcibly, to the textile waste reclamation industry. Yet apparently no similar relief it to be given to that industry.
      I understand the Chancellor's difficulties. I understand that he probably has to draw a line somewhere. What I cannot understand is what logical reason there can be for drawing a line in such a way that the scrap metal reclamation industry falls on one side of it and the textile waste reclamation industry falls on the other. I assure the Chief Secretary that this is an industry which is important for exports. One firm in my constituency tells me that it has a turnover of £4 million a year and that between 25 per cent. and 30 per cent. of its products are exported. I am therefore talking about an industry which not only saves us a great amount of imports, but also contributes a great deal towards our exports. There are those of us who cannot understand why a Government who constantly talk about their balance of payments problem can cripple industries such as these, which contribute so much to the solution of that very problem. I ask the Chief Secretary to think again, particularly about this industry.
      Mr. John Nott: I congratulate my hon. and learned Friend for Oldham, West (Mr. Bruce Campbell) on a short but very telling speech. I want too to congratulate my hon. Friend the Member for Meriden (Mr. Speed) on putting his finger on one of the most serious anomalies in the operation of this tax. I am sure that my hon. Friend is right that the major problem in Britain is that we are too product-orientated rather than market-orientated.
      A perfect example of this was the Chief Secretary's speech on Second Reading, when he went into a long academic dissertation, stretching some tattered economic theory to absurdity, to explain to us the difference between above and below the line costs in industry, until someone on these benches said, "And what about price?" The Chief Secretary had to be reminded that price was an important element in the selling of a product overseas.
      This demonstrates a general attitude of mind on the Government Front Bench, that the production and the manufacturing side are infinitely more important

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      than the marketing and servicing sides. This is an attitude which prevails throughout the country. Many British industries speak about their product with immense pride but seldom speak about their marketing. I agree with my hon. Friend that many firms rely on the services of export agents and that the successful exporting companies are those which go around the world knocking on the doors of agents and chasing their distributors day by day. It is the marketing side that we should be helping more.
      Mr. Geoffrey Rhodes: I have been following the last two or three speeches very closely. I agree wholeheartedly that there is a fundamental incorrectness of philosophy in arguing that servicing is less important than production. I am sure that we are wrong to consider the marketing operation as the country's soft under-belly, as one member of the Government described it when he was on the back benches. In the presence of the right hon. Member who has suggested the value-added tax, I should like to ask how that tax, which I understand is the Opposition's policy, could stop this problem.
      Mr. Nott: I was interested yesterday when the Chancellor devoted one-third of his speech to what he thought Tory policy would be. I can only assume that the Chancellor devoted so much time to the subject because he was rehearsing his first speech as Shadow Chancellor. There was no other reason why he should have devoted so much time to dealing with what he assumed our policy to be. In fact, a value-added tax such as in France and in Germany, where it is in a different form, can be rebated to people who are operating in the export services field.
      I want to be brief, so I will move on now to the comments I intended to make. One of the principle reasons which the Government have always given for taxing services is that it is a quid pro quo for purchase tax on goods and for excise duty. I do not want to argue the logic of this. I do not agree with the logic because services are a vital element in total costs. Services are taxed, because they are taxed when the ultimate product comes to market, in the form of purchase tax. Services are just as much an element in costs as wages are.
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      Leaving that aside, it cannot be denied that the Government's whole principle and that of practically every other trading nation is that indirect taxes fall away at the frontier. The major anomaly of S.E.T., as shown by the Amendment, clearly is that indirect taxes do not fall away at the frontier on services. Therefore, a way must be found of overcoming this obstacle.
      When the S.E.T. was introduced, the Government had a premium for manufacturing industries. I well remember that an argument was then advanced, which I have heard several times since, to the effect that our manufacturing sector is exporting a far greater percentage of its total production than the services are. In 1963—this is the latest year for which I have figures—28 per cent. of our total manufactured goods were exported, whereas the Committee on Invisible Earnings estimated that 19 per cent. of total services went directly or indirectly to exports.
      The interesting thing is that over the last few years the proportion of exports represented by services has risen, whereas the percentage of exports represented by manufactured goods has remained static. Our invisible exports have been increasing as a ratio faster than our visible exports.
      Recently, following on devaluation, this has become an infinitely more important subject, as the Chief Secretary well knows. Let us say that about £20 is the import content of £100 of exports. In the case of services about £9 of every £100 is the import content of an exported invisible item. Since devaluation the whole value of our invisibles has obviously been tremendously enhanced for Britain, and for this reason. I therefore suggest that the Chief Secretary needs to look at this whole matter again in this Finance Bill.
      The problem is that S.E.T.—this is one of its major deficiencies—is not levied by type and destination of service or of product. It is levied on the nature of the employment of the person. The difficulty about Amendment No. 92, and the even greater difficulty about Amendment No. 93, is that in many cases the export earnings cannot be identified. It would be difficult to identify, for instance, the invisible export content in tourism. For

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      that reason, I think that I prefer my right hon. Friend's Amendment No. 92, because there is no doubt about it there.
      My hon. Friend the Member for the City of Chester (Mr. Temple) referred to insurance. It would be simple to ascertain the premiums represented by overseas insurance business. Likewise, it would be simple to take the turnover of export houses directly related to overseas business. But, as I say, it would be difficult to identify the export and non-export content of the tourist trade.
      I hope that the Chief Secretary will give us some joy by accepting my right hon. Friend's Amendment, which is the one which I prefer.
      6.0 p.m.
      Mr. Diamond: I want there to be no misunderstanding about this, so I say at the outset that I am as anxious as any right hon. or hon. Member to pay my tribute to those who are engaged in the export of goods or services. I recognise the value of it and the need for it. I agree with what has been said about the need to concentrate more on or, as it was put, to orientate our minds to, the need to export on the services side as well, and I accept what is said about the need to be more up to date in one's view about packaging and so on. I pay my tribute to those who are engaged in the export of goods or services, since the improvement in our balance of payments is a first consideration, as the Chancellor has made clear time and again.
      But I go further than a tribute to those who are concerned in the export of goods or services. The balance of payments is a balance, the difference between certain things, and in the balance of trade it is the difference between exports and imports. Therefore, it would be churlish of me to restrict my tribute to those concerned in promoting exports, be they of goods or services. Although I recognise the importance and growing value of the export of services, I pay a sincere tribute also to those who are engaged in import substitution, equally valuable, often overlooked, but vital work. I refer to the encouragement of greater efficiency so that we are able by price, by service and in every other way to compete effectively with imports coming in from abroad. The only way open to this country to reduce imports in the long run is by
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      substituting a better, cheaper, more efficient, better made and better serviced British article.
      We all agree in paying our tribute to the exporters of goods and of services, but—I am sorry that it is I alone who have to say this; I have not heard it expressed by a single hon. Member opposite—I pay my tribute also to those who are engaged in the substitution of imports.
      Mr. Burden: On a point of order, Dr. Broughton. Would it not have been completely out of order if we had referred to that aspect?
      Mr. Diamond: It was an observation lasting only one sentence, Dr. Broughton—
      Mr. Burden: May I press that point of order, Dr. Broughton? May we have your Ruling?
      The Temporary Chairman (Dr. A. D. D. Broughton): It would not have been out of order to refer to it.
      Mr. Diamond: Hon. Members should not have a conscience about it already.
      Mr. Burden rose—
      Mr. Diamond: I shall be glad to give way later. We are in Committee, and perhaps the most expeditious way to proceed is to give way during one's speech rather than wait for a subsequent speech. But I hope that the hon. Gentleman will allow me to make one or two points, after which I shall give way.
      I wish to correct certain matters of fact so that we may proceed on agreed facts. The hon. Member for Worthing (Mr. Higgins) drew attention to what he thought were certain difficulties regarding videotape. In fact, the manufacture of videotape is a manufacturing industry under the Standard Industrial Classification, and separate establishments of T.V. companies engaged in it will have a refund of tax, whether exporting or not.
      Mr. Higgins: Will the right hon. Gentleman clarify what he has said? What is the position of those who are engaged in performances which are then embodied in a videotape which is exported? The relevant question relates not to the actual tape but to the programme which is being exported. Second, what is the position as regards those who

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      may for a given period be engaged on export items but are then subsequently engaged on domestic matters?
      Mr. Diamond: The hon. Gentleman drew attention to what he regarded as an anomaly between videotape and film. I wanted to make clear that he was mistaken as to the facts, and I thought that the first thing to do was to get our facts right.
      In as much as the manufacture of film is a manufacturing activity and the exhibition of a film in a cinema is a service, so the manufacture of videotape is a manufacturing activity and there may then be services carried out subsequently which may partake of entertainment services or information services, so one distinguishes between the two.
      Mr. Higgins: It is not a question of the making of film; it is the making of films or the making of videotape which embodies a performance. Is it the fact that a series of people engaged in making a film are not subject to tax now and a series of people engaged in taking part in a performance which is then placed on videotape are subject to tax?
      Mr. Diamond: Yes, because there is that distinction to be drawn which the hon. Gentleman has himself just drawn. I repeat that where there is a manufacturing activity as there is in the manufacture of videotape, it does not ultimately bear the tax. Where there is a service, it bears the tax. In that sense, it is exactly comparable with the manufacture of film and the exhibition of it. The manufacture of film now includes the manufacture of film and the production of the film because that is held to be a similar process. The hon. Gentleman introduced this only incidentally, and I did not want him to base his case on a misconception of facts.
      My hon. Friend the Member for Luton (Mr. Howie) drew attention to what he thought was an anomaly between a drawing office in London away from the manufacturing organisation and a drawing office situated within the factory. He has misunderstood the position. Drawing office staff who carry out design work for manufacturing are treated as engaged in a manufacturing activity, and that is so whether it be sited at the factory or entirely separate. If my hon. Friend had in mind a drawing office concerned with work on construction, then, since con-
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      struciton is treated as a service, the drawing office follows that way, too.
      The hon. Member for Folkestone and Hythe (Mr. Costain) referred to consultants. It was not a major part of his speech but he referred incidentally to the position of consultants or consulting engineers working entirely abroad. No doubt he had in mind work on civil engineering contracts abroad. If they are working full-time abroad, after a qualifying period they are not called upon to pay S.E.T.
      Mr. Costain: Obviously, I must have put the point badly. I was referring to those designing work in this country for contracting wholly abroad.
      Mr. Diamond: I did say that this was not a major part of the hon. Gentleman's speech. But he went on to refer to consultants working abroad full-time on the same process.
      Mr. Temple: They pay the tax.
      Mr. Diamond: The hon. Member for City of Chester (Mr. Temple) is wrong. They do not pay the tax. After a qualifying period, they are relieved of the tax if they are working full-time abroad.
      I come now to the main arguments advanced. There are a number of difficulties which I want to put to the House in connection with this group of Amendments. The first is the fatal difficulty—and I am sorry that the hon. Member for Worthing did not deal with this with sufficient care—concerning our international position. There is no question but that, so far as the export of goods is concerned, we cannot take exceptional measures. Government after Government have turned their thoughts to this proposition and have rejected it for the best of reasons—that the maintenance of these international rules is in the best interests of a trading nation such as ours. So far as the export of goods in concerned, both to E.F.T.A. countries and under the G.A.T.T., we could not adopt methods of the kind proposed, since they would be a form of subsidy.
      I come now to the question of the export of services. It is equally the case that, for exporting services in connection with goods, the E.F.T.A. rules are quite clear. The Amendment would be a breach of the rules. For us to try and expand this in other countries or to try and get

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      around it in some way with E.F.T.A. would be counter-productive. We already have considerable difficulties in maintaining the channels of trade open. We are the subject of continual complaints from other countries alleging that we are going a little too far or considerably too far in a variety of ways. We have to bear in mind that trade consists in having good relations between buyer and seller. Thus, in relation to the G.A.T.T. and E.F.T.A. positions, we could not in the one legally and in the other wisely adopt any of these proposals.
      Mr. Burden: As a result of the imposition of this tax our exports are being penalised above their true cost. This does not happen in the case of other members of E.F.T.A. and the G.A.T.T., whose products are not so impeded. Surely there is a good argument for pointing out to them that this is not equity and they would not suffer from our proposal because, in the international markets, our goods are the only ones penalised? Will the Government discuss it with them?
      Mr. Diamond: The hon. Gentleman might have waited until I got to that point, but perhaps it is convenient for me to deal with it now. The hon. Gentleman is wrong. So far as the addition to the cost of the goods is concerned, the hon. Gentleman would not maintain that S.E.T. is included in the cost of the goods because the manufacturer does not have to pay it. The hon. Gentleman is therefore saying that—
      Mr. Burden rose—
      Mr. Diamond: I hope that the hon. Gentleman will be patient. Communication is a process of listening both ways. What he is saying—and he is wrong—is that as compared with countries in the E.E.C our on-cost of labour as a result of our bearing this tax is greater than theirs. The fact is that, prior to the present increase in the tax, we were the lowest. Our on-cost on labour was lower than any of the E.E.C. countries. Our exporters therefore were advantaged and not disadvantaged in relation to the cost of labour for supplying services in relation to the export of goods. With the new rates we shall still be comparable or less, but not more, in every case. I may add that I am taking the E.E.C. figures as my guide.
      6.15 p.m.
      Mr. Speed rose—
      Mr. Diamond: It is not possible for me to make progress with my speech.
      Mr. Speed: This is on a point of clarification. What about insurance contributions? Will these not push these costs even higher when they are put on to on-cost?
      Mr. Diamond: That is another reason for not giving way to interventions. I am sure that the House will wish me to stop giving way so much. It is impossible to reply to such an important debate if, when one is trying to deal with points in succession, one is asked to deal with what was to be a later part of one's speech. I hope that hon. Members will be patient and let me get on.
      As I have said, we are in this considerable difficulty with E.F.T.A. and in the not quite so considerable difficulty with G.A.T.T. I do not want to exaggerate the position. The reason why there is not the same precision in the G.A.T.T. arrangements is that it has not been thought necessary to have the same regard to this matter since, of course, the cost involved is so insignificant. So far as the total of the exports handled by the export houses and the total of S.E.T. paid by them are concerned—I am talking about goods where S.E.T. is higher than in relation to services and where the price is less elastic—S.E.T. represents a cost of approximately one-tenth of 1 per cent.
      I have already said that the overhead cost of labour in relation to services for export goods has been less in this country than in any of the E.E.C. countries and is still competitive. In these circumstances, it is a gross exaggeration to say that this is a bar to exporting—quite apart from the fatal difficulty to which I have referred—and, of course, so far as services are concerned, I underline what the hon. Member for St. Ives (Mr. Nott) said. I am grateful and am most willing to acknowledge the good work of all those in the City and elsewhere who have contributed to exporting. I shall not use a post hoc procter hoc argument—the hon. Gentleman referred to the figures—but they have been forging ahead, including during the whole of the time that S.E.T. has applied. All I am saying is that there is no evidence that S.E.T. provides any

      493
      difficulty whatever or is a bar to increases in our exports of goods or services.
      I come now to the scope of the Amendments. They are intended to be restrictive in some cases but I do not think that anyone would suggest that the frontiers drawn by some of them could be sustained. Indeed, many hon. Members have argued against them. Some have urged the case for those engaged full time in exporting, others for those engaged part-time in exporting. Some have talked about consulting engineers only. Others, quite properly, have asked why we should distinguish between consulting engineers and architects, between architects and surveyors and many others, all of whom are providing excellent and essential services. It would be impossible to draw an agreed line and hold it. There would obviously be enormous pressures to extend it immediately. To accept these Amendments would be fatal to our international position, unhelpful to our exports, irrelevant to our export of services and would cause enormous difficulties in drawing the line between A and B and C.
      There is finally the suggestion that it is a simple matter for an accountant to provide a certificate of the relevant cost involved. I ought not to go into this at too great length, because I do not think that anybody really believes that there is a basis for doing this. However, I will say that of course any accountant can provide any information which he is asked to provide and he can certify it, as he always does, because he takes care to certify no more than he knows to be the truth and if he does not know the truth, he merely certifies that someone else has said that it is the truth. No sensible accountant will stick his neck out and every accountant's certificate is given on the basis that not only is he insured against negligence as a further protection, but there is not likely to be any responsibility which he has not wholly fulfilled.
      I say in particular to the hon. Member for the City of Chester that I am satisfied that the cost to the client, or the taxpayer, or the State—never mind who bears it—of providing records for a separate ascertainment of the salaries and wages involved in order to comply with these Amendments would be greater than the relief from the tax which might, if it were possible on these grounds, ensue.
      I hope that I have satisfied the Com-
      494
      mittee that I am fully appreciative of the work done by exporters and substituters of imports, that I regret that we are unable because of our international position, to accept any of these Amendments, and that even if it were not for the international position, it would be unwise, unnecessary and irrelevant to do so.
      Mr. Kenneth Baker: Would not the right hon. Gentleman agree that his main argument is that the fatal difficulty, to use his words, is that if we rebated S.E.T. on exports, G.A.T.T. and E.F.T.A. would object? Is it not the logical conclusion of that argument that when we abolish S.E.T., they will object even more, since they could then argue that we were giving all our economy and all our exports a tremendous boost?
      Mr. Diamond: The logic of that argument is that when the hon. Gentleman has his own way—and he is a young man and I hope that he lives long enough to have his own way, because he is a very able man and he will add knowledge and grace to these benches in the course of the next 50 years—
      Mr. Bence: Never.
      Mr. Diamond: One must be democratic and encouraging and it is right to encourage the hon. Member to look forward to the next 50 years. In 50 years' time, he will be able to put into effect what he and his hon. Friends are claiming to be the right thing to do about S.E.T., namely, to turn it into an employment tax. If it is a payroll tax, or an employment tax, it will again not fall away at the frontier, precisely as the hon. Gentleman objects that the present tax does not fall away at the frontier.
      Mr. Patrick Jenkin: If the Chief Secretary honestly believes that he has satisfied the Committee with that deplorable answer, he is indeed an optimist. Two things came out of his reply to the debate. First, all the objections he advanced to the Amendments would be irrelevant to a value-added tax. The answer is that if the Amendments cannot be accepted for selective employment tax, it is not the Amendments which are wrong; it is the tax which is wrong. All the cases that have been made—consulting engineers, architects, structural engineers, export salesmen, the insurance

      495
      industry, the production of video-tapes—for not taxing export content have been overwhelming.
      Secondly, the tax on these export activities is not deliberate. On the contrary, it is merely an unintended but unavoidable by-product of the system adopted in the standard industrial classification, and if this is a by-product of the tax system, that is another argument why the tax must go.
      I want to refer to videotapes. It is rare—and I say this as a tribute to the Chief Secretary—that he deliberately attempts to evade the argument, but I am bound to say that his reply on videotapes did just that. He sought to argue about the manufacture of the tape, whereas the argument is about selling the tape with the programme on it. The distinction which he sought to draw between the manufacture of films and the manufacture of videotapes was wholly unreal.
      The present position is that film studios and laboratories can now claim rebates of S.E.T. for those of their employees who are directly concerned with the production of films, but it is wholly anomalous—
      Mr. Bence: They get exemption for processing.
      Mr. Jenkin: For making a film, the finished product of the film with the movie on it. That is treated as production.
      Mr. Diamond: May I interrupt merely to state the fact? If I seemed to be evading the argument, I am sorry and obviously I did not take on board fully what the hon. Gentleman was saying. If he is now saying that the videotape with the recorded programme on it attracts S.E.T., he is inaccurate. It does not. If he looks at the new Standard Industrial Classification he will see that it is classified as a manufacturing activity.
      Mr. Jenkin: That is extremely difficult for those of us who are dealing with this matter, because the Standard Industrial Classification is not available in the Vote Office. I do not know how many hon. Members have been able to get one, but I have not been able to get a copy of the 1968 edition and I am having to
      496
      work from the 1958 edition. However, it is certainly the impression of the television studios and they will be most interested to hear this.
      Mr. Diamond: My hon. and learned Friend the Minister of State saw them only the day before yesterday and made all this quite clear.
      Mr. Roy Roebuck: Withdraw.
      Mr. Jenkin: On the contrary. The impression of those who operate television studios where they make the videotapes is that they are far from satisfied that they are getting equal treatment. However, no doubt we shall be able to return to this matter on Report in view of what the Chief Secretary has just said.
      He said that there was no evidence that S.E.T. was acting as a hindrance to the earning of exports. This is a ludicrous proposition. I refer him to the evidence which I know he has had from the British Export Houses Association setting out chapter and verse of the cost disadvantage which export houses face because their people wholly engaged in merchanting goods for exports have to pay S.E.T. I would quote—but I am anxious to be brief—the figures which have been put to the Chancellor of the Exchequer, and it is absolute nonsense for the Chief Secretary to say that there is no evidence. Industry after industry in the City has complained to the Chancellor of the cost disadvantage, of the effect on their liquidity, of the difficulties that it makes for them in finance.
      The balance of payments argument has always been stressed by the Government as a need to introduce this tax. One remembers the present Home Secretary's famous dictum, "You cannot export a haircut". He was quite right, but it has been asserted time and again that S.E.T. operates directly against the correction of our balance of payments deficit. The case was argued cogently in last August's issue of the Westminster Bank Review by an Oxford economist, Margaret Hall. The fact is that 44 per cent. of manufacturing output is exported, and 31 per cent. of services output is exported, yet the import content of the services output is vastly lower than the import content of the manufacturing output. This makes a complete nonsense

      497
      of the use of S.E.T. to discriminate against the service industries.
      Some service industries have a nil import content and a substantial export earning content, yet they are penalised by S.E.T. because the Government cannot bring themselves to admit that office work can be productive. This ancient prejudice goes right to the heart of the S.E.T. It is a fiscal brontosaurus, and the country will not be happy until it is as extinct as every other brontosaurus.
      In the meantime, the Amendments would go some way to relieving export industries of the penalties of the tax. I hope that my hon. and right hon. Friends will feel it right to divide in their favour in the Lobby.
      Question put, That the Amendment be made:—
      The Committee divided: Ayes 223, Noes 279.

      Division No. 226.]

      AYES

      [6.32 p.m.

      Alison, Michael (Barkston Ash)

      Ewing, Mrs. Winifred

      Maclean, Sir Fitzroy

      Allason, James (Hemel Hempstead)

      Eyre, Reginald

      Macleod, Rt. Hn. Iain

      Amery, Rt. Hn. Julian

      Farr, John

      McMaster, Stanley

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

      Fortescue, Tim

      Macmillan, Maurice (Farnham)

      Awdry, Daniel

      Foster, Sir John

      McNair-Wilson, Michael (W'stow, E.)

      Baker, Kenneth (Acton)

      Galbraith, Hn. T. G.

      McNair-Wilson, Patrick (New Forest)

      Baker, W. H. K. (Banff)

      Gilmour, Ian (Norfolk, C.)

      Maddan, Martin

      Balniel, Lord

      Glover, Sir Douglas

      Maginnis, John E.

      Barber, Rt. Hn. Anthony

      Godber, Rt. Hn. J. B.

      Marples, Rt. Hn. Ernest

      Batsford, Brian

      Goodhart, Philip

      Marten, Neil

      Beamish, Col. Sir Tufton

      Goodhew, Victor

      Maude, Angus

      Bell, Ronald

      Gower, Raymond

      Mawby, Ray

      Bennett, Dr. Reginald (Gos. & Fhm)

      Grant-Ferris, R.

      Maxwell-Hyslop, R. J.

      Berry, Hn. Anthony

      Gresham Cooke, R.

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

      Bessell, Peter

      Grieve, Percy

      Mills, Peter (Torrington)

      Biffen, John

      Grimond, Rt. Hn. J.

      Mills, Stratton (Belfast, N.)

      Biggs-Davison, John

      Gurden, Harold

      Miscampbell, Norman

      Birch, Rt. Hn. Nigel

      Hall, John (Wycombe)

      Mitchell, David (Basingstoke)

      Black, Sir Cyril

      Hall-Davis, A. G. F.

      More, Jasper

      Blaker, Peter

      Hamilton, Lord (Fermanagh)

      Morgan-Giles, Rear-Adm.

      Boardman, Tom (Leicester, S. W.)

      Hamilton, Michael (Salisbury)

      Morrison, Charles (Devizes)

      Body, Richard

      Harris, Frederic (Croydon, N. W.)

      Munro-Lucas-Tooth, Sir Hugh

      Boyle, Rt. Hn. Sir Edward

      Harris, Reader (Heston)

      Murton, Oscar

      Braine, Bernard

      Harrison, Brian (Maldon)

      Nabarro, Sir Gerald

      Brewis, John

      Harrison, Col. Sir Harwood (Eye)

      Neave, Airey

      Brinton, Sir Tatton

      Harvey, Sir Arthur Vere

      Noble, Rt. Hn. Michael

      Bromley-Davenport, Lt.-Col. Sir Walter

      Harvie Anderson, Miss

      Nott, John

      Brown, Sir Edward (Bath)

      Hastings, Stephen

      Onslow, Cranley

      Bruce-Gardyne, J.

      Hawkins, Paul

      Orr, Capt. L. P. S.

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

      Hay, John

      Orr-Ewing, Sir Ian

      Buck, Antony (Colchester)

      Heald, Rt. Hn. Sir Lionel

      Osborn, John (Hallam)

      Bullus, Sir Eric

      Heseltine, Michael

      Osborne, Sir Cyril (Louth)

      Burden, F. A.

      Higgins, Terence L

      Page, Graham (Crosby)

      Campbell, B. (Oldham, W.)

      Hiley, Joseph

      Pardoe, John

      Campbell, Gordon (Moray & Nairn)

      Hill, J. E. B.

      Peel, John

      Channon, H. P. G.

      Holland, Philip

      Percival, Ian

      Chichester-Clark, H.

      Hooson, Emlyn

      Peyton, John

      Clark, Henry

      Hordern, Peter

      Pike, Miss Mervyn

      Clegg, Walter

      Hunt, John

      Pink, R. Bonner

      Cooke, Robert

      Hutchison, Michael Clark

      Pounder, Rafton

      Cordle, John

      Iremonger, T. L.

      Price, David (Eastleigh)

      Corfield, F. V.

      Jenkin, Patrick (Woodford)

      Prior, J. M. L.

      Pym, Francis

      Costain, A. P.

      Johnson Smith, G. (E. Grinstead)

      Quennell, Miss J. M.

      Craddock, Sir Beresford (Spelthorne)

      Jones, Arthur (Northant, S.)

      Ramsden, Rt. Hn. James

      Crouch, David

      Jopling, Michael

      Rawlinson, Rt. Hn. Sir Peter

      Crowder, F. P.

      Joseph, Rt. Hn. Sir Keith

      Rees-Davies, W. R.

      Cunningham, Sir Knox

      Kaberry, Sir Donald

      Renton, Rt. Hn. Sir David

      Currie, G. B. H.

      Kerby, Capt. Henry

      Rhys Williams, Sir Brandon

      Dalkeith, Earl of

      Kershaw, Anthony

      Ridley, Hn. Nicholas

      Dance, James

      King, Evelyn (Dorset, S.)

      Ridsdale, Julian

      d'Avigdor-Goldsmid, Sir Henry

      Kirk, Peter

      Rodgers, Sir John (Sevenoaks)

      Dean, Paul

      Knight, Mrs. Jill

      Rossi, Hugh (Hornsey)

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

      Lambton, Viscount

      Royle, Anthony

      Digby, Simon Wingfield

      Lancaster, Col. C. G.

      Russell, Sir Ronald

      Dodds-Parker, Douglas

      Lane, David

      Sandys, Rt. Hn. D.

      Doughty, Charles

      Lewis, Kenneth (Rutland)

      Scott, Nicholas

      Drayson, G. B.

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

      Scott-Hopkins, James

      du Cann, Rt. Hn. Edward

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

      Sharples, Richard

      Eden, Sir John

      Lloyd, Rt. Hn. Selwyn (Wirral)

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

      Elliot, Capt. Walter (Carshalton)

      Longden, Gilbert

      Silvester, Frederick

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

      Lubbock, Eric

      Sinclair, Sir George

      Emery, Peter

      McAdden, Sir Stephen

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

      Errington, Sir Eric

      MacArthur, Ian

      Smith, John (London & W'minster)

      Speed, Keith

      Vaughan-Morgan, Rt. Hn. Sir John

      Williams, Donald (Dudley)

      Stainton, Keith

      Vickers, Dame Joan

      Wilson, Geoffrey (Truro)

      Stodart, Anthony

      Waddington, David

      Winstanley, Dr. M. P.

      Stoddart-Scott, Col. Sir M.

      Walker, Peter (Worcester)

      Wood, Rt. Hn. Richard

      Summers, Sir Spencer

      Walker-Smith, Rt. Hn. Sir Derek

      Woodnutt, Mark

      Tapsell, Peter

      Wall, Patrick

      Worsley, Marcus

      Taylor, Sir Charles (Eastbourne)

      Walters, Dennis

      Wright, Esmond

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

      Ward, Dame Irene

      Younger, Hn. George

      Taylor, Frank (Moss Side)

      Weatherill, Bernard

      Temple, John M.

      Wells, John (Maidstone)

      TELLERS FOR THE AYES:

      Thatcher, Mrs. Margaret

      Whitelaw, Rt. Hn. William

      Mr. Timothy Kitson and

      Thorpe, Rt. Hn. Jeremy

      Wiggin, A. W.

      Mr. Hector Munro.

      Turton, Rt. Hn. R. H.

      NOES

      Albu, Austen

      Edwards, Robert (Bilston)

      Johnson, Carol (Lewisham, S.)

      Allaun, Frank (Salford, E.)

      Edwards, William (Merioneth)

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

      Alldritt, Walter

      Ellis, John

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

      Anderson, Donald

      English, Michael

      Jones, J. Idwal (Wrexham)

      Archer, Peter

      Ensor, David

      Jones, T. Alec (Rhondda, West)

      Ashley, Jack

      Evans, Albert (Islington, S. W.)

      Kelley, Richard

      Ashton, Joe (Bassetlaw)

      Evans, Fred (Caerphilly)

      Lawson, George

      Atkins, Ronald (Preston, N.)

      Faulds, Andrew

      Leadbitter, Ted

      Atkinson, Norman (Tottenham)

      Fernyhough, E.

      Lee, Rt. Hn. Frederick (Newton)

      Bacon, Rt. Hn. Alice

      Finch, Harold

      Lee, John (Reading)

      Bagier, Gordon A. T.

      Fitch, Alan (Wigan)

      Lestor, Miss Joan

      Barnes, Michael

      Fitt, Gerard (Belfast, W.)

      Lever, Harold (Cheetham)

      Barnett, Joel

      Fletcher, Raymond (Ilkeston)

      Lever, L. M. (Ardwick)

      Beaney, Alan

      Fletcher, Ted (Darlington)

      Lewis, Arthur (W. Ham, N.)

      Bence, Cyril

      Foley, Maurice

      Lewis, Ron (Carlisle)

      Benn, Rt. Hn. Anthony Wedgwood

      Foot, Rt. Hn. Sir Dingle (Ipswich)

      Lipton, Marcus

      Bidwell, Sydney

      Foot, Michael (Ebbw Vale)

      Lomas, Kenneth

      Binns, John

      Ford, Ben

      Loughlin, Charles

      Bishop, E. S.

      Forrester, John

      Luard, Evan

      Blackburn, F.

      Fowler, Gerry

      Lyon, Alexander W. (York)

      Blenkinsop, Arthur

      Fraser, John (Norwood)

      Lyons, Edward (Bradford, E.)

      Booth, Albert

      Freeson, Reginald

      Mabon, Dr. J. Dickson

      Boston, Terence

      Galpern, Sir Myer

      McCann, John

      Bottomley, Rt. Hn. Arthur

      Gardner, Tony

      MacColl, James

      Boyden, James

      Garrett, W. E.

      Macdonald, A. H.

      Bradley, Tom

      Gordon Walker, Rt. Hn. P. C.

      McGuire, Michael

      Bray, Dr. Jeremy

      Gray, Dr. Hugh (Yarmouth)

      McKay, Mrs. Margaret

      Brooks, Edwin

      Greenwood, Rt. Hn. Anthony

      Mackenzie, Gregor (Rutherglen)

      Brown, Rt. Hn. George (Belper)

      Gregory, Arnold

      Mackie, John

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

      Grey, Charles (Durham)

      Mackintosh, John P.

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

      Griffiths, David (Rother Valley)

      Maclennan, Robert

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

      Griffiths, Eddie (Brightside)

      McMillan, Tom (Glasgow, C.)

      Buchan, Norman

      Griffiths, Rt. Hn. James (Llanelly)

      McNamara, J. Kevin

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

      Griffiths, Will (Exchange)

      MacPherson, Malcolm

      Butler, Herbert (Hackney, C.)

      Gunter, Rt. Hn. R. J

      Mallalieu, E. L. (Brigg)

      Butler, Mrs. Joyce (Wood Green)

      Hamilton, James (Bothwell)

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

      Callaghan, Rt. Hn. James

      Hamilton, William (Fife, W.)

      Manuel, Archie

      Cant, R. B.

      Hamling, William

      Mapp, Charles

      Carmichael, Neil

      Hannan, William

      Marks, Kenneth

      Castle, Rt. Hn. Barbara

      Harper, Joseph

      Marquand, David

      Chapman, Donald

      Harrison, Walter (Wakefield)

      Marsh, Rt. Hn. Richard

      Coe, Denis

      Hazell, Bert

      Mason, Rt. Hn. Roy

      Coleman, Donald

      Healey, Rt. Hn. Denis

      Mellish, Rt Hn. Robert

      Corbet, Mrs. Freda

      Heffer, Eric S.

      Mendelson, John

      Crawshaw, Richard

      Henig, Stanley

      Mikardo, Ian

      Crosland, Rt. Hn. Anthony

      Herbison, Rt. Hn. Margaret

      Millan, Bruce

      Crossman, Rt. Hn. Richard

      Hilton, W. S.

      Miller, Dr. M. S.

      Darling, Rt. Hn. George

      Hobden, Dennis

      Milne, Edward (Blyth)

      Davidson, Arthur (Accrington)

      Hooley, Frank

      Molloy, William

      Davies, G. Elfed (Rhondda, E.)

      Houghton, Rt. Hn. Douglas

      Moonman, Eric

      Davies, Dr. Ernest (Stretford)

      Howell, Denis (Small Heath)

      Morgan, Elystan (Cardiganshire)

      Davies, Rt. Hn. Harold (Leek)

      Howie, W.

      Morris, Charles R. (Openshaw)

      Davies, Ifor (Gower)

      Hoy, James

      Morris, John (Aberavon)

      de Freitas, Rt. Hn. Sir Geoffrey

      Huckfield, Leslie

      Moyle, Roland

      Delargy, Hugh

      Hughes, Rt. Hn. Cledwyn (Anglesey)

      Mulley, Rt. W. Frederick

      Dell, Edmund

      Hughes, Hector (Aberdeen, N.)

      Murray, Albert

      Dempsey, James

      Hughes, Roy (Newport)

      Neal, Harold

      Diamond, Rt. Hn. John

      Hunter, Adam

      Newens, Stan

      Dickens, James

      Hynd, John

      Oakes, Gordon

      Dobson, Ray

      Irvine, Sir Arthur (Edge Hill)

      Ogden, Eric

      Doig, Peter

      Jackson, Peter M. (High Peak)

      Oram, Albert E.

      Dunn, James A.

      Janner, Sir Barnett

      Orbach, Maurice

      Dunnett, Jack

      Jay, Rt. Hn. Douglas

      Orme, Stanley

      Dunwoody, Mrs. Gwyneth (Exeter)

      Jeger, George (Goole)

      Oswald, Thomas

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

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

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

      Eadie, Alex

      Jenkins, Hugh (Putney)

      Owen, Will (Morpeth)

      Edelman, Maurice

      Jenkins, Rt, Hn. Roy (Stechford)

      Palley, Walter

      500

      501

      Page, Derek (King's Lynn)

      Rogers, George (Kensington, N.)

      Walker, Harold (Doncaster)

      Paget, R. T.

      Shaw, Arnold (Ilford, S.)

      Wallace, George

      Pannell, Rt. Hn. Charles

      Shinwell, Rt. Hn, E.

      Watkins, David (Consett)

      Park, Trevor

      Shore, Rt. Hn. Peter (Stepney)

      Watkins, Tudor (Brecon & Radnor)

      Parker, John (Dagenham)

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

      Wellbeloved, James

      Parkin, Ben (Paddington, N.)

      Silkin, Rt. Hn. John (Deptford)

      Wells, William (Walsall, N.)

      Parkyn, Brian (Bedford)

      Silkin, Hn. S. C. (Dulwich)

      Whitaker, Ben

      Pavitt, Laurence

      Silverman, Julius

      White, Mrs. Eirene

      Pearson, Arthur (Pontypridd)

      Skeffington, Arthur

      Whitlock, William

      Peart, Rt. Hn. Fred

      Slater, Joseph

      Wilkins, W. A.

      Pentland, Norman

      Small, William

      Willey, Rt. Hn. Frederick

      Perry, Ernest G. (Battersea, S.)

      Snow, Julian

      Williams, Alan (Swansea, W.)

      Perry, George H. (Nottingham, S.)

      Spriggs, Leslie

      Williams, Alan Lee (Hornchurch)

      Prentice, Rt. Hn. R. E.

      Steele, Thomas (Dunbartonshire, W.)

      Williams, Clifford (Abertillery)

      Price, Christopher (Perry Barr)

      Stonehouse, Rt. Hn. John

      Williams, Mrs. Shirley (Hitchin)

      Price, Thomas (Westhoughton)

      Strauss, Rt. Hn. G. R.

      Williams, W. T. (Warrington)

      Price, William (Rugby)

      Summerskill, Hn. Dr. Shirley

      Willis, Rt. Hn. George

      Probert, Arthur

      Swain, Thomas

      Wilson, Rt. Hn. Harold (Huyton)

      Rankin, John

      Taverne, Dick

      Wilson, William (Coventry, S.)

      Rees, Merlyn

      Thomas, Rt. Hn. George

      Winnick, David

      Rhodes, Geoffrey

      Thomson, Rt. Hn. George

      Woodburn, Rt. Hn. A.

      Roberts, Albert (Normanton)

      Tinn, James

      Woof, Robert

      Roberts, Rt. Hn. Goronwy

      Tomney, Frank

      Wyatt, Woodrow

      Roberts, Gwilym (Bedfordshire, S.)

      Tuck, Raphael

      Robertson, John (Paisley)

      Urwin, T. W.

      TELLERS FOR THE NOES:

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

      Varley, Eric G.

      Mr. Ioan L. Evans and

      Rodgers, William (Stockton)

      Wainwright, Edwin (Dearne Valley)

      Mr. Neil McBride

      Roebuck, Roy

      6.45 p.m.
      Mr. Eric S. Heffer: I beg to move Amendment No. 98, in page 64, line 9, at end insert:
      (12) Where an employer has paid selective employment tax for any contribution week beginning on or after 7th July 1969 in respect of a person employed as a recognised apprentice in the building and construction industries the Secretary of State for Social Security shall make that employer in respect of that person and that week a payment of an amount equal to the tax paid.
      The Temporary Chairman (Dr. A. D. D. Broughton): It will be convenient to discuss at the same time Amendment No. 86, page 64, line 9, at end insert:
      (12) Where an employer has paid selective employment tax for any contribution week beginning on or after 7th July 1969 in respect of a clerk articled to him, the Secretary of State for Social Security shall make to that employer in respect of that articled clerk and that week a payment of an amount equal to the tax paid.
      Mr. Heffer: I indicated clearly yesterday that I was opposed to the application of selective employment tax to the building and construction industry. Whatever arguments can be marshalled in support of applying S.E.T. to the building industry, they cannot be marshalled in support of applying it to apprentices in that industry. Therefore, what I said about the industry as a whole doubly applies to apprentices.
      After 7th July, selective employment tax is to be applied to apprentices over 18 years of age at the rate of 40s. a week and under 18 years of age at the rate of
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      24s. a week. Only yesterday an employer's representative argued that S.E.T. should be removed as it applies to apprentices, but suggested that it should apply to all the workers employed by public industries. I do not go along with that. Nothing which is gained by way of S.E.T. in the publicly-owned industries should make up for the amount lost by not applying it to apprentices. I do not wish to give the impression that I support views of the kind expressed by one of the employer's representatives.
      To apply S.E.T. to apprentices is wrong in principle, because the training of apprentices is important to the future not only of our country, but of the construction and building industries and other industries. Many apprentices begin their training in the building industry and then go into other industries. Some of those other industries are not in a position to give training to apprentices—for example, in maintenance—which can be given in the building industry. It is therefore important that we should recognise the importance of apprentices to the future of our country and industry.
      Yesterday, the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) said that the Chancellor of the Exchequer did not reply to the points which I had made because he believed that my right hon. Friend did not have an answer to them. The position as I understand it is that the Chancellor believed that we would have a full-dress debate on the whole question of the building industry and that the points would be replied to

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      then. Unfortunately, many of the Amendments—some put down by hon. Members opposite and some by myself—which would have given us the opportunity of a debate on the whole question of the application of the tax to the building industry, and especially the point of labour-only contracting, have not been selected. I do not criticise the Chair for that. Therefore, we can have a full dress debate only on the Question, "That the Clause stand part of the Bill."
      Mr. R. Chichester-Clark: Does not the hon. Member agree that it is disgraceful that the Government have so tightly drawn the Money Resolution that a debate on the building industry in this context is virtually impossible? This is an industry employing something like one-seventh of our total work force. Is it not disgraceful that we cannot debate it?
      Mr. Heffer: I would not use the term "disgraceful". I would say that it was unfortunate, which is not quite the same thing, although the point is well taken. I hope, however, that we will have a debate on the Question, "That the Clause stand part of the Bill", so that the points which would have been raised concerning labour-only can be raised then.
      It is true that some extremely good training is given in some of the very big firms in the building industry, but in the main it is the medium and smaller firms in the industry which carry out the training. The larger firm is the exception which proves this rule.
      This is important when we consider the selective employment tax, because the larger firm is able to absorb S.E.T. much more easily than the smaller firm. There are many ways in which this can be done. First, the larger firm can use methods of productivity and new methods with machinery which cannot be applied in the smaller firms. Secondly, the larger firm can probably employ a first-class accountant who is able to find ways and means of absorbing some of the S.E.T. Again, this does not apply to the medium and smaller firms. It is not possible for them to absorb it in the same way as a larger firm is able to do.
      The Amendment is an important one for a number of reasons, which I will outline. First, payment of S.E.T. on
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      apprentices must discourage the smaller firms from employing them. This, in turn, affects considerably the future development of the building and construction industries. It means that potential skill is lost to the country, and lost for ever. It is all very well to say that we should have adult training schemes—I accept that we should have more adult training schemes—hut an adult who trains for six months in a Government training centre or in the Forces can do only a certain type of work. For example, he could not do the work that would be required in the construction of this Chamber. One would need a skilled apprentice to do that type of work. I spent seven years as an apprentice and I know what it means to be properly trained as a joiner in my craft. It is clear, therefore, that skill would be lost to us if we had a situation in which the smaller firms could not take on apprentices.
      Secondly, the period of apprenticeship gives precisely the training that is required. If apprenticeship is a period of training, the output of the young person who is being trained obviously cannot be as great as that of the fully-skilled craftsman. Even during the last two years, when the output has been much higher and has almost reached the level of that of a fully-skilled craftsman, it has never quite reached the level of a highly-skilled craftsman who has completed his training and who may have been working at his craft for many years.
      The third point to be taken into consideration is that S.E.T. has meant the growth of labour-only. Let me explain what I mean, because I was asked yesterday what I meant by "labour-only" and why I was so concerned about it. If I were in the Treasury I would see that labour-only was stopped right now, because I think that a considerable amount of money is lost as a result of labour-only. One of my hon. Friends yesterday was given a figure of something like £75 million as being lost.
      It is not only that. Labour-only means that a certain number of workers do certain jobs. They take work on what is known as the lump. Not only do many of them not pay S.E.T., but there are all sorts of tax evasions. There is insurance evasion. There is a whole series of evasions. Let us remember also that labour-only gangs do

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      not have apprentices, who would slow down the work. They do not have time to be interested in helping to teach a young man how to do a job. This, therefore, is a third and very important reason why we should consider abolishing S.E.T. for apprentices.
      Mr. Peter Archer: Would my hon. Friend agree that a further argument against labour-only subcontractors is that all too often no one is responsible for safety?
      Mr. Heffer: Of course, I agree entirely.
      I should like to refer to some evidence from the Phelps Brown Report precisely on the question of the labour-only gang. I quote from paragraph 376, at page 136:
      "Witnesses who have assessed its other effects very variously have agreed that it is inimical to the traditional form of training for the crafts through apprenticeship: men whose aim is to complete a given task as quickly as possible do not want to carry a learner in their team, or to interrupt their own work in order to instruct him."
      Incidentally, I commend the Phelps Brown Report to all hon. Members who have not read it. It is a very important Report and it is time that some of its recommendations were carried out by the Government.
      The total number of operatives in the construction industry is 1,436,000. That figure was given by the Department of Employment and Productivity on 7th May, 1969, so that it is about as up-to-date a figure as one could get. The figure for apprentices for September, 1967, which is the most recent available, is 103,492, including apprentices working for local authorities and direct labour. If apprentices working for public authorities are included, the figure is approximately 130,000 apprentices in the industry as a whole. The Phelps Brown Report says that that means nearly 10 per cent. of the operative labour force and just under one-fifth of the numbers employed in the main apprenticeship trades.
      7.0 p.m.
      During the last few years the number of apprentices has been falling. The evidence for this is contained in the Phelps Brown Report on page 49, paragraph 130:
      "On the other hand, figures of the number of apprentices employed published by the Ministry of Public Building and Works show a fall of
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      6 per cent. between 1965 and 1966; and a further fall of 7 per cent. between 1966 and 1967. This may reflect wastage as well as the somewhat reduced entry in 1966. The N.J.C.B.I. figures of registrations of apprentices approved under the Council's scheme show a sharp drop of 15 per cent. between 1966 and 1967;"
      It was precisely during this period that S.E.T. was introduced.
      The reasons given in the Report for the falling off are these. First, fewer boys are leaving school. Secondly, there was an increase in unemployment between 1966 and 1967 in the building and construction industries. Thirdly, there was a growth of labour-only, which is not conducive to training. The fourth reason, which is not included in the Phelps Brown Report, is the introduction of S.E.T.
      Mr. Donald Williams: Will the hon. Gentleman also agree that the building industry has the highest rate of bankruptcy and closure in the country, as a result of which many apprentices are displaced and there is great difficulty in getting them back into employment because of the incidence of S.E.T.?
      Mr. Heffer: I certainly agree that the industry has always suffered from bankruptcy. My criticism is that there are too many builders and it is about time that we had a publicly-owned building industry, which would be much better than the present chaotic situation. I am not now arguing for a publicly owned building industry; I am showing why there has been a reduction in the number of apprentices.
      Sir Gerald Nabarro: The hon. Gentleman knows a lot about this industry. I hope to vote with him tonight, so I am encouraging him to vote with me. This "lump" business, that is, men going self-employed—are there many in the building industry and do they escape altogether from selective employment tax? Is the hon. Gentleman supporting apprentices going "lump"? That seems to me to be what he is advocating.
      [Mr. HARRY GOURLAY in the Chair]
      Mr. Heffer: I do not know where the hon. Gentleman has been hiding for the last ten minutes. My point is that labour-only has developed on a much more extensive scale precisely because of the introduction of S.E.T. and this upward

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      trend has a very bad effect on apprenticeships. I do not understand why the hon. Gentleman has made that intervention.
      Training in the building industry has improved, and serious efforts are being made to tackle the training of apprentices and adults. The previous Government established the Construction Industry Training Board in July, 1964 and we took it on. It may have been deathbed repentance, but we have developed it. I pay tribute to the Board for its fine work for the industry. Employers, trade unionists, educationists and assessors from Government Departments are represented on the Board. The Board imposed on the industry a 1 per cent. levy, which brought in about £14 million. On the reverse side, the building trade employers were entitled to grants to assist in training, and for this purpose £8 million was paid out. The levy has since been reduced. It is interesting that the 1 per cent. levy was imposed to help training, whereas the imposition of S.E.T. works completely against the concept of the training programme, the levy, the Board and everything that goes with it.
      The Annual Report of the Board for last year says that there are a number of firms which do not consciously undertake any training. That goes to emphasise my earlier point that more firms will consciously refuse to undertake training because any assistance they get from the Board will be offset by the payment of S.E.T.
      I have not gone into the broader sphere of the application of S.E.T. to the building industry in view of the narrowness of the Amendment, but other hon. Members may take the discussion further. We are faced with a difficult situation, because we are discussing this matter without the Reddaway Report. It would have been much beter to have had this discussion after the Report was published. I should have liked, in particular, an early report, perhaps part of the overall Report, on the building industry. I hope that efforts will be made to ask Professor Reddaway to get cracking on this Report, and perhaps we can have an interim report on the building industry.
      Mr. Chichester-Clark: Is the hon. Gentleman aware that it is much more
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      difficult than that? Professor Reddaway had the greatest difficulty in recruiting staff to help him in his inquiry into the building industry, so much so that the Ministry of Public Building and Works felt compelled to set up an inquiry of its own into the effect of S.E.T. on this industry?
      Mr. Heffer: That underlines the difficulty of the situation. I say no more than that.
      I do not intend to take this matter to a Division.
      Sir G. Nabarro: Why not?
      Mr. Heffer: Because I hope that the Minister will give me some assurances and make that unnecessary. I know that many hon. Gentlemen opposite are most anxious for a united front between myself and themselves on this matter. I should feel a lot happier if we could present a united front on many other issues, but unfortunately that does not happen, and I am therefore a little suspicious about some of their overtures at times like this.
      I am not one of those who will not push things to a Division if necessary, because I am not bamboozled by the Whips or by anybody else. I hope that we shall get some tangible assurances from the Minister that something really is being done about the application of this tax to the building industry. In particular, I hope we can be assured that this tax will be lifted from apprentices at the earliest possible moment.
      If we do not get those assurances, this tax will have the most serious effect on the industry in the next five or six years. The effect will not be immediate, but at the end of that time we shall find ourselves without the skilled craftsmen that our country and our industry need. I have worked in the building industry all my life, and I do not want to support something which could lead to a crisis in my industry in the next five or six years. I therefore ask the Minister to treat this, as I am treating it, in the most serious way, and I hope that we shall get some assurances this evening.
      Mr. Michael Shaw: I shall speak briefly to the Amendment moved by the hon. Member for Liverpool, Walton (Mr. Haffer), because my Amendment is allied closely with it. I agree with much of what the

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      hon. Gentleman said. I am only sorry that he seems to be paving the way for not fulfilling the import of much of what he said. I join the hon. Gentleman in hoping that the Minister will make some really positive concessions, and nobody will be more pleased than myself if that happens.
      The hon. Member for Walton has, on many occasions, expressed his objection to S.E.T., particularly as it affects the construction industry, and he has allied his Amendment with those objections in general in dealing with the position of apprentices in that idustry.
      My Amendment deals with apprentices of another sort—articled clerks in the professions. I draw the Committee's attention to the fact that many of the professions are becoming busier and busier directly as a result of Government legislation. I must disclose my own interest as a chartered accountant still in practice, although many of my partners rather doubt it at times. Nevertheless, I am still in practice, and I have an interest in this matter.
      Year by year, as Finance Bills go by, more and more does the country become dependent on accountants, on solicitors, on estate agents, and on other professional bodies to deal with the complicated and ambiguous legislation passed through this House. The position—ironic on reflection—is that each year taxes go up, and each year the country is forced more to consult experts on how to deal with their affairs, and in so consulting them are forced to pay more and more indirectly by way of S.E.T. for the services of the clerks and staff of these offices.
      We are dealing tonight with, on the one hand, apprentices, and on the other with articled clerks, boys and girls—nay, very often men and women—in training for services which are vital for the future well-being of this country. To get back to the original purpose of S.E.T., is it really suggested that it is the desire of the Government to encourage young men and women not to become, for example accountants, but to go directly into industry? The whole tenor of the Government's legislation shows a greater and greater need for them, and therefore the need for greater encouragement to people to take up these various professions.
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      In effect what the hon. Member for Walton and myself are saying is that this tax, in so far as it affects apprentices and articled clerks, or indeed anyone in training, is a tax on knowledge and on training. It is therefore a tax on the future of the country. I believe that on this ground it is a tax utterly to be condemned, because, whilst it is true that in the construction industry, and in the professions particularly, all the bodies concerned are doing their best to improve training in theory, and also in practice, theoretical training is all right, but it only gets one so far; theory is important and must be learned at university or wherever it may be—theory without experience can be very dangerous indeed. Experience is absolutely vital, and I believe that those employers who undertake to train people, in whatever industry or profession it may be, should not be mulcted by this selective poll tax in the way that they are now.
      I hope that if we do not get positive and satisfactory assurances from the Minister tonight we shall join in opposing the present state of affairs by voting for these Amendments.
      Mr. W. S. Hilton: At the outset I want to make it clear that I would much rather you were chairing a discussion on another Amendment, Mr. Gourlay—the Amendment put down by certain Opposition Members which would provide that only self-employed people should pay selective employment tax. That Amendment has not been called, and I do not intend to start a discussion on it, but apart from the significance that it has for the training of apprentices it would have relieved the gloom in the Committee to have had an Amendment called in respect of which hon. Members on both sides could join triumphantly to force increased revenue on a reluctant Chancellor. It would mean about £30 million a year from the construction industry alone.
      One of my concerns in respect of S.E.T. and training is that there appears to be no recognition on the part of the Treasury that training in our industry is not done basically at schools or colleges; we still require many operatives in order to teach apprentices. Therefore, any great move of operative strength to labour only sub-contracting decreases the total

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      number of men available to train apprentices. It is therefore not possible to talk cogently about apprentice training without referring to S.E.T. and its effect in driving a number of men into labour only sub-contracting in the construction industry.
      I remember a discussion in the last Budget, when S.E.T. was similarly increased, when the Chief Secretary said that he did not believe that that tax or other inducements would encourage men to become labour only sub-contractors, because the industry had a high accident rate and men making that move would not be protected by insurances or legal representation by the trade unions. My concern arises from the fact that the Committee does not realise the great attraction there is for people to become labour only sub-contractors.
      It is not simply a matter of avoiding the 48s. 6d. payment. Besides S.E.T. there is the cost of the National Health Insurance stamp, the industrial training levy, insurances and all the other overheads, which mean that for one man there is a payment of £5 or £6 a week. For the operative it means that the National Health Insurance contribution is not required, besides his tax payment, and altogether it can mean a difference of £9 or £10 a week to him. That applies not only in the construction industry but in almost any other industry. My hon. Friend will agree that labour only sub-contracting is now making a serious inroad into engineering. This is the picture against which we must judge the impact of the tax upon training.
      When a Government increase poll taxes of this kind in respect of certain industries they are putting a high premium on good employers. It is as simple as that. If one is a good employer one is penalised to the extent of £5 or £6 a week per operative. The construction industry is a highly casual industry, not only in respect of the portion of a month during which a man is employed but also because a man may work for only three or four days in a certain week because he has not joined the firm until the Tuesday or the Wednesday. The overheads created by this poll tax amount to a considerable sum in respect of the other three or four days in the week.
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      The first thing that the Treasury should do is to regard seriously the attraction of this tax, plus other inducements, in making people take up labour only subcontracting. Treasury Ministers and others have argued against this point of view. They have said that there is no danger that a man will go to the labour only sub-contracting side of the industry, and therefore will not train apprentices. They have admitted that there has been a genuine reduction in the labour force in the construction industry. In other words, they say, there has been a move towards efficiency through the introduction of S.E.T.
      My figures in respect of the number of operatives are slightly different from those of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) because he dealt with the total number of people employed in the industry and I am speaking of operatives who are normally engaged in training apprentices—not managerial or technical staff. In 1966, when the tax was introduced, there were 1,102,000 operatives in the construction industry. Last year there were 1,027,000 men. In other words, there was a drop of 75,000 men. That is claimed as something of a victory for the objectives of the tax. The statistics show that there are now 250,000 men in labour only sub-contracting. I submit that the introduction of S.E.T. has not driven men out of the industry in terms of improved economy and efficiency; it has merely driven them into an evasion of tax and, in consequence, to an evasion of the things that are vital to the very make up of the industry.
      The Chancellor must seriously consider any tax which not only aims at raising revenue but, as a direct consequence, seriously affects the basic make up of the industry. If we were to exempt employers from paying the tax if they trained apprentices it would cost about £5 million a year to the Treasury. At present the number of men evading taxation by being self-employed, in relation to S.E.T. alone, must represent a loss of at least £30 million a year.
      My hon. Friend the Member for Walton said that the other day an Answer was given in the House to the effect that the right figure was £75 million. That figure relates to self-employment

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      right across the board of British industry. Up to now we have thought that self-employment and labour-only subcontracting was the major danger in the construction industry; we now find that the total amount is £75 million, or three times the evasion in the construction industry alone. The inference is that self-employment is now creeping into other industries.
      The ratio varies according to the trade, but in the construction industry it is between four and six operatives to each apprentice. That was the ratio in my father's day. The 250,000 men who are in the labour only sub-contracting part of the industry are not training even one apprentice between them—never mind any question of an apprentice being trained by a small gang. Even more important, they are not paying the industrial training levy. The small and medium-sized employers who have apprentices are paying. This problem should be considered by the Chancellor and my hon. Friend in this light.
      The Government's basic mistake was to lump the construction industry together with the service industries and to take S.E.T. from both. Anyone who knows anything about the industry must realise that construction is completely different from service industries and is more like manufacturing. Its national machinery, its industrial relations policies and its apprentice training methods are those of manufacturing and not those of services. As soon as it is put into the bracket of distribution and service, all these anomalies arise. Employers are faced with the training of apprentices. If an employer puts a boy on block release training courses a month or three months, any S.E.T. that he pays is not a tax on the services which he gets from the boy but a tax on education and training for replacement of manpower in the construction industry.
      7.30 p.m.
      Therefore, I suggest that my hon. Friend should rectify the anomaly. If we are told that that is not possible, I would ask why it was possible to exempt agriculture. S.E.T. was introduced to sort out the sheep from the goats—manufacturing from services. Nobody can tell me that, in agriculture, they are manufacturing turnips for valuable export, while in the
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      construction industry, in erecting a major building at London Airport, we were acting for home consumption. That is the sort of ridiculous impasse into which we get through the Standard Industrial Classification and the treatment of the construction industry. We want some cogent reply, some understanding of the problem and some assurance that something will be done.
      Mr. Chichester-Clark: Like the hon. Member for Bethnal Green (Mr. Hilton), I wish that we were discussing another Amendment. I find myself going over what I said earlier. How deplorable it is that the Government have so tightly drawn the Money Resolution that we cannot discuss the construction industry in general terms. This is disgraceful especially when we are dealing with an industry employing a seventh of the work force of the country and paying—on my calculation—about 24 per cent. of the total yield from this tax.
      Mr. Hilton: Not only are we the largest employing industry, but our employees are almost exclusively male, so we have to pay 100 per cent. tax on every employee.
      Mr. Chichester-Clark: That is quite right. One wonders why the Money Resolution was drawn so tightly. I cannot help thinking of the time when Cobden was attacking the Corn Laws so strenuously and while he was speaking Peele turned to his Home Secretary, Graham, I think, and said, "You must answer this, for I cannot". One wonders whether the Government have not concluded that they cannot answer the argument and so are trying to avoid debate. One also wonders whether there is any example of a major tax which has been virtually doubled in all its rates within three years of its introduction.
      The effect on the construction industry is particularly severe. We are now discussing an Amendment dealing with apprentices. If apprentices are being laid off or not taken on, this is because something has happened to the industry. The effect is severe, because the tax is paid without refund or premium except for some industrialised building systems which get a refund and, in development areas, attract a premium.

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      I agree with much of what the hon. Member for Liverpool, Walton (Mr. Heffer) said yesterday and today. He established that the tax raises £135 million from the construction industry. On one well-known occasion, I think, on 17th November, 1967, the Treasury was asked the yield of the tax from this industry and could not answer—
      Mr. Heffer: It will actually be between £152 million and £155 million yield after 7th July.
      Mr. Chichester-Clark: This is difficult to establish: the Government could not say, when asked, what the yield was. It is only recently—I think on 3rd April this year—that their statistical services improved sufficiently to show that £220 million had been raised from the industry, which is a useless extra cost on all construction work senselessly put on ratepayers and taxpayers.
      One knows only too well what the Under-Secretary will say in answer to this debate. We have had the same answer from one Minister or another every year. He will tell us all about the great increases in productivity in the industry which S.E.T. has brought about. The Chief Secretary, as recently as 6th May, had the effrontery—
      The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley): Before the hon. Gentleman anticipates my reply any further, may I assure him that I shall say none of these things? I shall give only a reply which is relevant to the Amendment.
      Mr. Chichester-Clark: I should have thought that that was a matter for you, Mr. Gourlay, and that the Under-Secretary should not give you advice on these matters.
      The Deputy Chairman (Mr. Harry Gourlay): Order. I was about to intervene in the hon. Member's speech. I was allowing him to make some general remarks about the tax, but he must relate his speech now to the Amendment.
      Mr. Chichester-Clark: In that case, I shall have to say, as I said before, that this is an absolutely disgraceful situation. The Money Resolution has been deliberately designed to exclude discussion of the construction industry in relation to
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      this tax. It has been virtually impossible to frame an Amendment which is in order. I am not criticising the Chair, but for some reason—one knows that they cannot be given—those Amendments which would have led to a proper, useful and necessary discussion of the industry have not been called. This is very unfortunate in such a large employing industry. I shall make this protest year after year until we get a proper discussion of these matters. With that, I shall now leave my remarks as they are.
      The Under-Secretary of State for Employment and Productivity (Mr. Roy Hattersley): The strength of the case made by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) rests on a series of propositions—not simply that selective employment tax is detrimental to training in the building industry, but, first, that it is crucially detrimental; second, that it is detrimental in a way that cannot be counteracted by other means; and, third, that any supposed reductions in the number of apprentices in the industry would be reversed were S.E.T. abolished for that category of workpeople.
      I shall try to deal with each of these contentions, because no one would think it worthy of discussion were he simply saying that any manpower tax which is levied on the employer for each workman in his employ in itself marginally, but perhaps no more than marginally, deters the employment of any category of work persons, including apprentices. That must be true of any tax and equally of National Insurance contributions. But for my hon. Friend's case to be as strong as he believes, one must add to that the three subsidiary contentions I have outlined. These subsidiary contentions do not accord with the facts if they are carefully examined.
      Before I do that I should tell the House that the Amendment would produce a net cost to revenue of £10 million. Before my hon. Friend rises to tell me that the importance of the matter is not the cost but the merits of the case, I assure him that I agree with what he must be thinking; that if the needs warrant it, the £10 million should not stand in our way. However, an examination of the facts does not warrant this sort of loss, and I say that for four reasons.

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      First, as my hon. Friend dealt at length, and properly so, with the problems of labour-only sub-contracting as it affects apprenticeships, he will know—I cannot go into this at length—and stay in order—that it is at least a matter of debate as to how much the introduction of S.E.T. has accelerated the increase in labour-only sub-contracting. I am able to say no more than that and remain in order. My hon. Friend will also know that it is a matter of debate as to whether that acceleration has been caused by other matters as well as S.E.T., such as National Insurance contributions, the Training Board levy, arrangements for safety and other provisions of the law.
      However, one can say almost categorically that whatever effect S.E.T. has had on the increase of labour-only subcontracting—and, therefore, through labour-only sub-constracting, on the number of apprentices recruited to the industry—it has not had a crucially reducing effect. I say that with some confidence in view of what was said in the Phelps Brown Report. My hon. Friend quoted certain passages from that document, including some extracts from paragraph 131. The final sentence of that paragraph reads:
      "It does not therefore appear"—
      I will not weary the House with the reasoning which justified the use of the word "therefore"—
      "that there is a close relationship between labour-only and recruitment of apprentices."
      I am prepared to stand by that judgment.
      Mr. Speed: Is it not true that that Report came out in July, 1968, before the massive increase in S.E.T. in September, 1968 and before the increase which we are discussing? Does not this mean that what the hon. Gentleman is saying is already a little old hat and that the situation has deteriorated since then?
      Mr. Hattersley: It was kind of the hon. Gentleman not to remind my hon. Friend the Member for Liverpool, Walton of the outdated character of the Phelps Brown Report when my hon. Friend was quoting from it in favour of the Amendment. However, it was equally kind of him to remind me that he believes it to be outdated when I am quoting from it in opposition to the Amendment.
      518
      I intend to say something about the future. The only point I am seeking to make at present is that the only analysis of labour-only sub-contracting which is at our disposal—the Phelps Brown Report which is a comparatively recent document to which the Government are committed and on which they intend to act—draws the conclusion that it would be wrong to assume that as labour-only subcontracting increases, so the number of apprentices falls. I stand by that contention.
      How, then, since that is not the contradictory factor, do we account for the figures which my hon. Friend the Member for Liverpool, Walton gave when introducing the Amendment; a gross fall in the number of apprenticeships in the industry—a crude figure of the reduction in the number of boys who have been taking up apprenticeships?
      As my hon. Friend the Member for Liverpool, Walton said, the principal cause of this phenomenon is to be found in the same paragraph 131 of the Phelps Brown Report. It is the simple fact—there is a special fact, too, concerning this industry—applying to all industries during the period which my hon. Friend discussed. During that period the number of boys leaving school fell. Indeed, the number of boys, in crude terms, going into apprenticeships in industry as a whole fell for every industry during that period.
      Mr. Heffer: If one studies the Phelps Brown Report one finds many qualifying phrases like "It is not clear" and "Therefore it does not appear". There are no clear categorical statements saying that there is not a definite relationship between labour-only and this trend. If one reads further into the Phelps Brown Report—about, for example, the question of training—one finds this comment on page 136.
      "It is true that in our survey there tended to be less apprentices per firm among firms using labour-only than among other firms, but the difference was not particularly marked, and of course there are many other factors affecting the situation."
      I would take that to be definite evidence that labour-only leads to a reduction in apprenticeship training. I suggest that there is no question about it, despite what my hon. Friend has said.
      7.45 p.m.
      Mr. Hattersley: I am surprised if my hon. Friend is normally prepared to accept evidence offered in such a tentative form; indeed, evidence offered in a purely negative form. I would have thought that he would have wished to have substantiated his general conclusion on apprenticeships with the passage which I quoted and which, I am sure, hon. Members will wish to bear in mind.
      Be that as it may, I offer my hon. Friend some precise facts about the level of apprenticeships in the industry. When he quoted the gross figures I think that he was not quoting figures which give the best picture of the apprenticeship position. I offer two sets of figures. The first concerns the number of boys obtaining apprenticeships in the industry between 1963 and 1968. There was certainly a decline in gross terms, of about 4 per cent., but the industry as a whole was contracting, certainly towards the end of that period. It was, incidentally, declining at a rate so fast that it could not be attributed entirely, or in the main, to the increase in labour-only subcontracting.
      But while during that period the number of apprenticeships was being reduced, as was the total manpower of the industry, the percentage of new entrants into the industry who were taking up apprenticeships was increasing. In fact, in 1963 rather more than 63 per cent. of all young men going into the industry took up apprenticeships. By 1968 more than 72 per cent. of all young men going into the industry took up apprenticeships.
      That increase of 10 per cent. in the level of apprentices as a proportion of new entrants into the industry is indicative of the improved and improving training standards in the industry, as in most industries since 1964. This is in no small measure the result of the work of the Construction Industry Training Board to which my hon. Friend the Member for Walton referred in complimentary terms. The Board's endeavours have been extremely succesful, not only in increasing the quantity of training in the industry but in improving the quality of it.
      I give my hon. Friend an absolute assurance that it is neither the Board's intention nor mine nor that of my right hon. Friend that its efforts should be so
      520
      geared that adult retrainees or adult trainees should take the place of apprentices trained in something like the traditional manner, and I emphasise that latter remark.
      My hon. Friend did less than credit to the many men who spend time in Government training centres and who then go on to take a period of related experience outside to become craftsmen of a high calibre. The Board understands that while we need to improve the techniques of apprenticeships and change some of the attitudes towards training in the industry, the majority of craftsmen employed in the foreseeable future must be recruited and trained in something like the traditional way.
      The figures I quoted—the increasing proportion of young men going into the industry and taking apprenticeships—shows the success which the Board has had in bringing that situation about and the fact that it has not been prevented from doing that altogether necessary job by external means, and by S.E.T. in particular.
      My hon. Friend the Member for Liverpool, Walton and my hon. Friend the Member for Bethnal Green (Mr. Hilton) went on to conclude, and rightly so, that an employer required to pay a sum for each apprentice on his books would naturally be reluctant to take on additional apprentices if he was obtaining from them very little productive work. It was specifically my hon. Friend the Member for Bethnal Green who asked me to consider the position of an employer who, while reconciled to making his S.E.T. contributions for an employee engaged in a productive activity, would be more than reluctant to do so if one of his employees was constantly not available for work or was involved in a job which had no genuine direct productive content. I am sure that my hon. Friend the Member for Walton will confirm that throughout their apprenticeships very many building industry apprentices make a very substantial contribution to productive work.
      My hon. Friend told us that his apprenticeship lasted seven years. There is no training authority or anyone with practical training experience—and I suspect that that includes my hon. Friend—who genuinely believes that the techniques of learning alone take seven years.

      521
      Much of the time is spent in productive activity, though there are training activities where this general rule does not apply.
      We accepted at the beginning of the selective employment tax that there was a conceivable situation in which a young man would need to go, would want to go, and would be capable of going for some extended period of off-the-job training but that his employer would be reluctant to send him on the course because, although producing nothing to the firm, he would be a charge against selective employment tax. For that reason, my right hon. Friend the then Chancellor of the Exchequer agreed with the industrial training boards to make specific refunds of selective employment tax to young men who were going on three types of courses.
      The first type consisted of apprentices undergoing full-time, off-the-job training or education. The second concerned those involved in works-based sandwich courses; that is to say, students undergoing a period of theoretical instruction. The third consisted of students undergoing a university course as part of sandwich arrangements. Those young men were clearly not a productive element to the firm or a legitimate charge for selective employment tax.
      That being so, we thought then, and we confirm our continued belief, that that concession should be made. But our examination of the figures and of the level of training in the industry as a whole does not suggest that, at the moment, any further concession can be justified on any of the criteria I have laid down, or by any of the evidence presented today.
      I assure the hon. Member for Meriden (Mr. Speed) that the Government will keep very closely under review the situation to which he has drawn attention. Clearly, if the selective employment tax has a marginal effect, when it is increased the effect is less marginal. The hon. Gentleman will know, as will my hon. Friend the Member for Walton, the devotion of this Government to industrial training and education. With that general principle in mind, we undertake to keep the position under review but, at the moment, I cannot advise the Committee to agree to the Amendment.
      Mr. Ian MacArthur: Before the Minister sits down, will he not refer to the Amendment seeking to alter the effect of selective employment tax in relation to articled clerks, which Amendment was supported by a powerful argument exposing the wretchedness of the tax in this connection?
      Mr. Hattersley: The figures I gave concerned the Amendment which was moved, but the general rules and the general criteria are equally applicable to both Amendments. As the hon. Gentleman asked me to confirm it, I ask the Committee to reject both Amendments.
      Mr. Speed: On a point of order, Mr. Gourlay. I should like your advice. A number of us have tried by our Amendments to widen the scope of the discussion of the incidence of the selective employment tax in the construction industry. We represent many builders and construction people. We find the situation quite impossible. Of course, we do not seek to criticise you or the Chair, but could you guide us how, on a future occasion, we may be able to discuss the tax in relation to the industry and yet keep the discussion within the confines of the Finance Bill?
      Mr. Heffer: I do not want to say that in view of any assurance I have had from the Minister—
      The Deputy Chairman: Order. I thought that the hon. Member for Liverpool, Walton (Mr. Heffer) was seeking to make a further point of order. If he is not, perhaps I may be allowed to deal with the point of order raised by the hon. Member for Meriden (Mr. Speed). That point of order related to the selection of Amendments. The Chair has not selected the Amendments referred to, so that it would not be in order to debate them now. I am afraid that I cannot help the hon. Gentleman to widen the debate in that way.
      Mr. Heffer: I am very disappointed by the Minister's reply, and have had no real assurance that anything will be done. This debate is on a very narrow problem. I should have liked the debate to have been much wider and to have involved, in particular, the whole question of labour-only sub-contracting. My

      523
      difficulty is that I could press the Amendment to a Division, but it is not a particularly responsible attitude merely to waste the time of the Committee—[HON. MEMBERS: "No."] In the circumstances, I feel that I shall have to ask leave to withdraw the Amendment, but I do so, and I want this to be known, extremely reluctantly. The hon. Member for Meriden (Mr. Speed) has referred to the difficulty there is in having a full-scale discussion on the whole subject of the construction and building industry. On that basis, Mr. Gourley, I beg to ask leave to withdraw the Amendment.
      Hon. Members: No.
      Mr. Chichester-Clark: On a point of order, Mr. Gourley. In view of what
      has just been said by the hon. Member for Liverpool, Walton (Mr. Heffer), that he had had to employ what was virtually a device to try to get a discussion of the selective employment tax and the building industry, and in view of my hon. Friends' representations, would you, on this occasion, make an exception by telling us why some of the Amendments on the wider point are not in order?
      The Deputy Chairman: The Chair is not under any obligation to disclose its reasons for selecting or not selecting Amendments.
      Question put, That the Amendment be made:—
      The Committee divided: Ayes 214, Noes 250.

      Division No. 227.]

      AYES

      [7.58 p.m.

      Alison, Michael (Barkston Ash)

      Digby, Simon Wingfield

      Johnson Smith, G. (E. Grinstead)

      Allason, James (Hemel Hempstead)

      Dodds-Parker, Douglas

      Jones, Arthur (Northants, S.)

      Amery, Rt. Hn. Julian

      Doughty, Charles

      Jopling, Michael

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

      Drayson, G. B.

      Kaberry, Sir Donald

      Awdry, Daniel

      du Cann, Rt. Hn. Edward

      Kerby, Capt. Henry

      Baker, Kenneth (Acton)

      Eden, Sir John

      Kershaw, Anthony

      Baker, W. H. K. (Banff)

      Elliot, Capt. Walter (Carshalton)

      King, Evelyn (Dorset, S.)

      Balniel, Lord

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

      Kirk, Peter

      Barber, Rt. Hn. Anthony

      Emery, Peter

      Knight, Mrs. Jill

      Batsford, Brian

      Errington, Sir Eric

      Lambton, viscount

      Beamish, Col. Sir Tufton

      Ewing, Mrs. Winifred

      Lancaster, Col. C. G.

      Bell, Ronald

      Eyre, Reginald

      Lane, David

      Bennett, Dr. Reginald (Gos. & Fhm)

      Farr, John

      Legge-Bourke, Sir Harry

      Berry, Hn. Anthony

      Fortescue, Tim

      Lewis, Kenneth (Rutland)

      Bessell, Peter

      Foster, Sir John

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

      Biffen, John

      Galbraith, Hn. T. G.

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

      Biggs-Davison, John

      Gilmour, Ian (Norfolk, C.)

      Lloyd, Rr. Hn. Selwyn (Wirral)

      Birch, Rt. Hn. Nigel

      Glover, Sir Douglas

      Longden, Gilbert

      Blaker, Peter

      Glyn, Sir Richard

      Lubbock, Eric

      Boardman, Tom (Leicester, S. W.)

      Godbar, Rt. Hn. J. B.

      McAdden, Sir Stephen

      Body, Richard

      Goodhart, Philip

      MacArthur, Ian

      Boyle, Rt. Hn. Sir Edward

      Goodhew, Victor

      Maclean, Sir Fitzroy

      Braine, Bernard

      Gower, Raymond

      Macleod, Rt. Hn. Iain

      Brewis, John

      Grant-Ferris, R.

      McMaster, Stanley

      Brinton, Sir Tatton

      Gresham Cooke, R.

      Macmillan, Maurice (Farnham)

      Bromley-Davenport, Lt.-Col. Sir Walter

      Grieve, Percy

      McNair-Wilson, Michael (W'stow, E.)

      Brown, Sir Edward (Bath)

      Grimond, Rt. Hn. J.

      McNair-Wilson, Patrick (New Forest)

      Bruce-Gardyne, J.

      Gurden, Harold

      Maddan, Martin

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

      Hall, John (Wycombe)

      Maginnis, John E.

      Buck, Antony (Colchester)

      Hall-Davis, A. G. F.

      Marples, Rt. Hn. Ernest

      Bullus, Sir Eric

      Hamilton, Lord (Fermanagh)

      Marten, Neil

      Burden, F. A.

      Hamilton, Michael (Salisbury)

      Maude, Angus

      Campbell, B. (Oldham, W.)

      Harris, Frederic (Croydon, N. W.)

      Maxwell-Hyslop, R. J.

      Campbell, Gordon (Moray & Nairn)

      Harris, Reader (Heston)

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

      Channon, H. P. G.

      Harrison, Brian (Maldon)

      Mills, Peter (Torrington)

      Chichester-Clark, R.

      Harrison, Col. Sir Harwood (Eye)

      Mills, Stratton (Belfast, N.)

      Clark, Henry

      Harvey, Sir Arthur Vere

      Miscampbell, Norman

      Clegg, Walter

      Harvie Anderson, Miss

      Mitchell, David (Basingstoke)

      Cooke, Robert

      Hastings, Stephen

      Monro, Hector

      Cordle, John

      Hawkins, Paul

      More, Jasper

      Corfield, F. V.

      Hay, John

      Morgan-Giles, Rear-Adm.

      Costain, A. P.

      Hesoltine, Michael

      Morrison, Charles (Devizes)

      Craddock, Sir Beresford (Spelthorne)

      Higgins, Terrence L.

      Munro-Lucas-Tooth, Sir Hugh

      Crouch, David

      Hiley, Joseph

      Murton, Oscar

      Crowder, F. P.

      Hill, J. E. B.

      Nabarro, Sir Gerald

      Cunningham, Sir Knox

      Hogg, Rt. Hn. Quintin

      Neave, Airey

      Currie, G. B. H.

      Holland, Philip

      Noble, Rt. Hn. Michael

      Dalkeith, Earl of

      Hordern, Peter

      Nott, John

      Dance, James

      Hunt, John

      Onslow, Cranley

      d'Avisdor-Goldsmid, Sir Henry

      Hutchison, Michael Clark

      Orr, Capt. L. P. S.

      Dean, Paul

      Iremonger, T. L.

      Osborn, John (Hallam)

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

      Jenkin, Patrick (Woodford)

      Osborne, Sir Cyril (Louth)

      Page, Graham (Crosby)

      Scott, Nicholas

      Vickers, Dame Joan

      Peel, John

      Scott-Hopkins, James

      Waddington, David

      Percival, Ian

      Sharples, Richard

      Walker, Peter (Worcester)

      Peyton, John

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

      Walker-Smith, Rt. Hn. Sir Derek

      Pink, R. Bonner

      Silvester, Frederick

      Wall, Patrick

      Pounder, Rafton

      Sinclair, Sir George

      Walters, Dennis

      Price, David (Eastleigh)

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

      Ward, Dame Irene

      Prior, J. M. L.

      Smith, John (London & W'minster)

      Wells, John (Maidstone)

      Pym, Francis

      Speed, Keith

      Wiggin, A. W.

      Quennell, Miss J. M.

      Stainton, Keith

      Williams, Donald (Dudley)

      Ramsden, Rt. Hn. James

      Steel, David (Roxburgh)

      Wilson, Geoffrey (Truro)

      Rawlinson, Rt. Hn. Sir Peter

      Stodart, Anthony

      Wood, Rt. Hn. Richard

      Rees-Davies, W. R.

      Stoddart-Scott, Col. Sir M.

      Woodnutt, Mark

      Renton, Rt. Hn. Sir David

      Summers, Sir Spencer

      Worsley, Marcus

      Rhys Williams, Sir Brandon

      Tapsell, Peter

      Wright, Esmond

      Ridley, Hn. Nicholas

      Taylor, Sir Charles (Eastbourne)

      Younger, Hn. George

      Ridsdale, Julian

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

      Rossi, Hugh (Hornsey)

      Temple, John M.

      TELLERS FOR THE AYES:

      Royle, Anthony

      Thatcher, Mrs. Margaret

      Mr. Timothy Kitson and

      Russell, Sir Ronald

      Thorpe, Rt. Hn. Jeremy

      Mr. Bernard Weatherill.

      Sandys, Rt. Hn. D.

      Turton, Rt. Hn. R. H.

      NOES

      Albu, Austen

      Eadie, Alex

      Jenkins, Hugh (Putney)

      Allaun, Frank (Salford, E.)

      Edelman, Maurice

      Jenkins, Rt. Hn. Roy (Stechford)

      Alldritt, Walter

      Edwards, Robert (Bilston)

      Johnson, Carol (Lewisham, S.)

      Anderson, Donald

      Ellis, John

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

      Archer, Peter

      English, Michael

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

      Ashley, Jack

      Ennals, David

      Jones, J. Idwal (Wrexham)

      Ashton, Joe (Bassetlaw)

      Ensor, David

      Jones, T. Alec (Rhondda, West)

      Atkins, Ronald (Preston, N.)

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

      Kelley, Richard

      Atkinson, Norman (Tottenham)

      Faulds, Andrew

      Kerr, Russell (Feltham)

      Bacon, Rt. Hn. Alice

      Fernyhough, E.

      Lawson, George

      Bagier, Gordon A. T.

      Finch, Harold

      Leadbitter, Ted

      Barnett, Joel

      Fitch, Alan (Wigan)

      Lee, Rt. Hn. Frederick (Newton)

      Beaney, Alan

      Fitt, Gerard (Belfast, W.)

      Lee, John (Reading)

      Bence, Cyril

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

      Lestor, Miss Joan

      Benn, Rt. Hn. Anthony Wedgwood

      Fletcher, Raymond (Ilkeston)

      Lever, Harold (Cheetham)

      Bidwell, Sydney

      Fletcher, Ted (Darlington)

      Lever, L. M. (Ardwick)

      Binns, John

      Foley, Maurice

      Lewis, Arthur (W. Ham, N.)

      Bishop, E. S.

      Foot, Rt. Hn. Sir Dingle (Ipswich)

      Lewis, Ron (Carlisle)

      Blackburn, F.

      Foot, Michael (Ebbw Vale)

      Lomas, Kenneth

      Blenkinsop, Arthur

      Ford, Ben

      Loughlin, Charles

      Booth, Albert

      Forrester, John

      Luard, Evan

      Boston, Terence

      Fowler, Gerry

      Lyon, Alexander W. (York)

      Bottomley, Rt. Hn. Arthur

      Fraser, John (Norwood)

      Lyons, Edward (Bradford, E.)

      Boyden, James

      Freeson, Reginald

      Mabon, Dr. J. Dickson

      Bradley, Tom

      Galpern, Sir Myer

      MacColl, James

      Bray, Dr. Jeremy

      Gardner, Tony

      Macdonald, A. H.

      Brooks, Edwin

      Garrett, W. E.

      McGuire, Michael

      Brown, Rt. Hn. George (Belper)

      Gordon Walher, Rt. Hn. P. c.

      McKay, Mrs. Margaret

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

      Gray, Dr. Hugh (Yarmouth)

      Mackenzie, Gregor (Rutherglen)

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

      Greenwood, Rt. Hn. Anthony

      Mackie, John

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

      Grey, Charles (Durham)

      Mackintosh, John P.

      Buchan, Norman

      Griffiths, David (Rother Valley)

      Maclennan, Robert

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

      Griffiths, Eddie (Brightside)

      McMillan, Tom (Glasgow, C.)

      Butler, Herbert (Hackney, C.)

      Griffiths, Rt. Hn. James (Llanelly)

      McNamara, J. Kevin

      Callaghan, Rt. Hn. James

      Griffiths, WIN (Exchange)

      MacPherson, Malcolm

      Cant, R. B.

      Gunter, Rt. Hn. R. J.

      Mallalieu, E. L. (Brigg)

      Carmichael, Neil

      Hamilton, James (Bothwell)

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

      Castle, Rt. Hn. Barbara

      Hamilton, William (Fife, W.)

      Manuel, Archie

      Chapman, Donald

      Hannan, William

      Mapp, Charles

      Coe, Denis

      Harper, Joseph

      Marks, Kenneth

      Coleman, Donald

      Harrison, Walter (Wakefield)

      Marquand, David

      Corbet, Mrs. Freda

      Hattereley, Roy

      Marsh, Rt. Hn. Richard

      Crawshaw, Richard

      Hazell, Bert

      Mason, Rt. Hn. Roy

      Crosland, Rt. Hn. Anthony

      Healey, Rt. Hn. Denis

      Mellish, Rt. Hn. Robert

      Darling, Rt. Hn. George

      Herbison, Rt. Hn. Margaret

      Mendelson, John

      Davidson, Arthur (Accrington)

      Hobden, Dennis

      Mikardo, Ian

      Davies, G. Elfed (Rhondda, E.)

      Hooley, Frank

      Millan, Bruoe

      Davies, Dr. Ernest (Stretford)

      Houghton, Rt. Hn. Douglas

      Miller, Dr. M. S.

      Davres, Ifor (Gower)

      Howell, Denis (Small Heath)

      Milne, Edward (Blyth)

      de Freitas, Rt. Hn. Sir Geoffrey

      Howie, W.

      Molloy, William

      Delargy, Hugh

      Hoy, James

      Morgan, Elystan (Cardiganshire)

      Dell, Edmund

      Huckfield, Leslie

      Morris, Charles R. (Openshaw)

      Dempsey, James

      Hughes, Rt. Hn. Cledwyn (Anglesey)

      Morris, John (Aberavon)

      Diamond, Rt. Hn. John

      Hughes, Hector (Aberdeen, N.)

      Moyle, Roland

      Dickens, James

      Hunter, Adam

      Mulley, Rt. Hn. Frederick

      Dobson, Ray

      Janner, Sir Barnett

      Murray, Albert

      Doig, Peter

      Jay, Rt. Hn. Douglas

      Neal, Harold

      Dunnett, Jack

      Jeger, George (Goole)

      Noel-Baker, Rt. Hn. Philip

      Dun woody, Mrs. Gwyneth (Exeter)

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

      Oakes, Gordon

      526

      527

      Ogden, Eric

      Robertson, John (Paisley)

      Tuck, Raphael

      Oram, Albert E.

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

      Urwin, T. W.

      Orbach, Maurice

      Rodgers, William (Stockton)

      Varley, Eric G.

      Orme, Stanley

      Roebuck, Roy

      Wainwright, Edwin (Dearne Valley)

      Oswald, Thomas

      Rogers, George (Kensington, N.)

      Walker, Harold (Doncaster)

      Owen, Will (Morpeth)

      Ryan, John

      Wallace, George

      Padley, Walter

      Shaw, Arnold (Ilford, S.)

      Watkins, David (Consett)

      Page, Derek (King's Lynn)

      Sheldon, Robert

      Watkins, Tudor (Brecon & Radnor)

      Pannell, Rt. Hn. Charles

      Shinwell, Rt. Hn. E.

      Wellbeloved, James

      Parker, John (Dagenham)

      Shore, Rt. Hn. Peter (Stepney)

      White, Mrs. Eirene

      Parkin, Ben (Paddington, N.)

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

      Whitlock, William

      Parkin, Brian (Bedford)

      Silkin, Rt. Hn. John (Deptford)

      Wilkins, W. A.

      Pavitt, Laurence

      Silkin, Hn. S. C. (Dulwich)

      Willey, Rt. Hn. Frederick

      Pearson, Arthur (Pontypridd)

      Skeffington, Arthur

      Williams, Alan Lee (Hornchurch)

      Peart, Rt. Hn. Fred

      Slater, Joseph

      Williams, Clifford (Abertillery)

      Pentand, Norman

      Small, William

      Williams, Mrs. Shirley (Hitchin)

      Spriggs, Leslie

      Williams, W. T. (Warrington)

      Perry, George H. (Nottingham, S.)

      Steele, Thomas (Dunbartonshire, W.)

      Willis, Rt. Hn. George

      Prentice, Rt. Hn. R. E.

      Strauss, Rt. Hn. G. R.

      Wilson, William (Coventry, S.)

      Price, Thomas (Westhoughton)

      Summerskill, Hn. Dr. Shirley

      Winnick, David

      Probert, Arthur

      Swain, Thomas

      Woof, Robert

      Rankin, John

      Taverne, Dick

      Wyatt, Woodrow

      Rees, Merlyn

      Thomas, Rt. Hn. George

      Roberts, Albert (Normanton)

      Thomson, Rt. Hn, George

      TELLERS FOR THE NOES:

      Roberts, Rt. Hn, Goronwy

      Tinn, James

      Mr. John McCann and

      Roberts, Gwilym (Bedfordshire, S.)

      Tomney, Frank

      Mr. Neil McBride.

      Clause ordered to stand part of the Bill.

    Schedule 6

      AMENDMENTS TO PART I OF SCHEDULE 1 TO PURCHASE TAX ACT 1963
      Mr. Higgins: I beg to move Amendment No. 44, in page 74, line 20, leave out paragraph 1.
      I think that it would be as well if I were to explain the precise content of the Amendment. Earlier today the Chief Secretary made a statement to the Committee about the provision of documents which are necessary in connection with the debates on which we are engaged on any particular day. We fully appreciate the right hon. Gentleman's desire to ensure that events outside Parliament should not prevent the provision of papers which are necessary to enable the Committee to carry out its duties.
      However, we were right in questioning the right hon. Gentleman to ask him for an assurance, not merely that papers were available which were immediately current and relevant to a particular debate, but also that others papers which were connected with the matters we were debating were available. I asked the Chief Secretary whether the Purchase Tax Act, 1963, was available in the Vote Office. It transpired that it was not, even though the relevance of this Act to this Amendment and to the whole of the discussion we shall be having on purchase tax is clear. I am glad that, in subsequent discussion, the right hon. Gentleman assured me that he would bear the point
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      closely in mind on any future occasion and ensure that both the immediate papers were available and also the other documents necessary for the interpretation of those papers.
      As the Purchase Tax Act, 1963, particularly in its considerably amended form, is not generally available to the Committee, I shall explain the precise effect of Amendment No. 44. The paragraph which we wish to delete reads:
      "In Group 2, paragraphs (1), (2) and (3) of the exemptions shall be omitted."
      Turning to Schedule 1 of the Purchase Tax Act, 1963, to which reference is there made, one finds that the following items would thus no longer be omitted from charge to purchase tax:

      "(1) Sewing thread, and mending and knitting wool.

      (2) Sewing and darning needles, knitting needles, bodkins, crochet hooks, pins of base metal … thimbles, finger shields for needlework and tape measures.

      (3) Paper patterns."

      Thus, the Government now propose to bring those items into the purchase tax range. We oppose such a move. It was first alluded to by the Chancellor of the Exchequer in his Budget speech:
      "To put the point more generally, I do not think that the distinction between floor coverings, mattresses, cushions, furniture and clothing—which are taxed—and household textiles and cloth—which are not taxed—is a valid one. I therefore propose to bring in the latter category, as well as plastic wall-covering, knitting wool and sewing and dressmaking requisites".—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1023.]

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      There is something of a non sequitur there because the antithesis which the right hon. Gentleman initially drew between the items taxed and not taxed did not include the items the subject of the Amendment, and, in particular, knitting wool in all its forms and uses. We have had no justification yet from the Treasury Bench, either in the debates on the Budget or on Second Reading of the Bill, for the inclusion of these items.
      We regard the Government's proposal as retrograde. Successive Chancellors have always recognised that items of this kind—which one may broadly describe as "do it yourself" items—should be exempt from purchase tax. That must be right, because many of the people who use knitting wool, sewing thread or paper patterns are in the lowest income groups, those who can least afford to bear taxation and who sometimes of necessity knit their own clothes or their children's clothes in order to economise.
      It has been estimated that about 75 per cent. of the hand knitting yarn which is used goes to what are called in the jargon socio-economic classes C2, C1 and D, the lowest economic classes. This means that the Government, who are shedding crocodile tears about the lowest paid workers and those who are really suffering from inflation, are none the less imposing a tax which will fall severely on the lowest paid.
      Among the lowest paid, young married couples will inevitably feel the effect of the tax most severely. Young married women knit for their children and for themselves both in order to economise and also, I think, because, to some extent, as the Americans would say, it personalises the objective. I hesitate to declare an interest here in my 9-month old daughter, but perhaps I should.
      I was astounded by some of the statistics in this connection. I had not appreciated that about 60 million garments are hand-knitted annually in nonworking hours in the United Kingdom. That is a startling statistic. But there is another point to be made in the same connection. If all those people were to stop knitting tomorrow and the 60 million garments were not constructed—if that be the right expression—the gross national product would not alter one iota. Similarly, if they double their output, the gross national product would not alter one iota.
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      8.15 p.m.
      I had occasion to say yesterday that the Chancellor is becoming more and more preoccupied with economic indicators and statistics and less and less with the realities of the situation. In the debates on the selective employment tax, I pointed out that his arguments about the cost of living really applied with any validity only to the cost of living index, not to the true cost of living. In this case now, the Government are imposing a burden which will leave the apparent growth, if there be any, in the gross national product where it is but will lead to a real deterioration in the personal satisfaction and actual well being of a large number of families.
      The Financial Secretary to the Treasury is always sympathetic in this kind of matter. I hope that he will tell us that the Chancellor has had second thoughts and is prepared to accept our Amendment. I return to a theme which I pressed throughout our debates on the S.E.T. Despite the Chancellor's avowed intention to do everything he can to balance Britain's payments, almost every individual item in the Budget has an adverse effect on the balance of payments. The provision which we seek to delete now is no exception. If there is some reduction in the number of items knitted—one must, surely, assume that there will be some such reduction as a result of the tax—it is likely that instead of, say, children's clothes being knitted by their mothers, they will be imported as made-up goods from overseas for purchase by those women, thus adding to our import bill, and will not, I understand—the Financial Secretary will, no doubt, confirm it—be taxed.
      Clearly, therefore, the balance of payments will suffer, and this is not something to be overlooked. There will be a deterioration in the overall position.
      There will be an increase in the imports of other made-up goods, and there will be a reduction in the home demand for hand knitting yarns, a reduction which will not be offset by greater export sales because tariffs and import restrictions in overseas markets prevent manufacturers of wool yarn who might reasonably have sold in the home market from exporting it. Thus, we shall not find a corresponding increase in exports as a result of the depression of the

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      home market, if that is what is in the back of the Chancellor's mind.
      On all those grounds, the Amendment should be supported. The industry is an important one. There are about 250,000 people employed directly or indirectly in the production of hand knitting yarns, which has for many years been a staple item of our trade—perhaps going back to the Woolsack, I suppose. It has been of particular importance in the development areas, which the Government say they are trying to stimulate, and in the grey areas too, the problems of which have been analysed in the Hunt Report, although, apparently, the Government do not propose to do anything to take action in that matter.
      There is a final anomaly. I understand that it will arise because purchase tax will be applicable to yarns used for the hand knitting of babies' and young children's garments whereas machine-made garments will not be subject to it.
      The Financial Secretary to the Treasury (Mr. Harold Lever)indicated assent.
      Mr. Higgins: I am glad to have the hon. Gentleman's confirmation. There will thus be an anomaly as between children's garments which are hand knitted and subject to tax and those which are machine made and not subject to tax. That is an odd anomaly to create. We cannot understand the thinking which has gone on between the Chancellor and his colleagues on this matter. I hope that I have made a substantial case. My hon. Friend the Member for Pudsey (Mr. Hiley), who added his name to the Amendment and has both a constituency interest and great expertise in the matter, will no doubt make a more detailed and substantial case if he is fortunate enough to catch your eye, Mr. Gourlay, perhaps just before the hon. Gentleman replies. I hope the Committee appreciates that considerable interests are involved in this matter and we hope for a sympathetic reply.
      The Deputy Chairman (Mr. Harry Gourlay): Before I propose the Question, I should indicate that it may be convenient to the Committee to discuss with Amendment No. 44 the following three Amendments on the Order Paper: No.
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      118, in page 74, line 20, leave out '(2) and (3)' and insert 'and (2)' and No. 119, in line 20, after '(2)', insert:
      'unless such materials are used by disabled persons or those undergoing courses of rehabilitation';
      both standing in the name of the hon. Member for Bodmin (Mr. Bessell) and the names of his hon. Friends, and No. 100, in line 21, at end insert:
      'and the following words inserted "sewing and darning needles, knitting needles, bodkins, crochet hooks, thimbles, finger shields for needlework, and tape measures"';
      standing in the name of the hon. Member for Bromsgrove (Mr. Dance).
      Mr. Peter Bessell: I support Amendment No. 44, so ably moved by the hon. Member for Worthing (Mr. Higgins), who has established an argument which will be impossible for the Financial Secretary to refute. I do not propose to cover the ground he has dealt with so cogently. The purpose of Amendments No. 118 and 119 is quite evident and I need not waste much time of them. They were put down as a sort of step backwards from Amendment No. 44 in the hope that, if we cannot have a whole loaf, we may at least have two or three slices.
      I am concerned, as the hon. Member for Worthing is, that paragraph 1 should be removed entirely and for the reasons he stated. To retain it would have an unfortunate result not only for the industry as a whole but in particular for certain persons in a special position. I have tried to set this out in Amendment No. 119 because the Financial Secretary will be aware that there are many occasions when knitting wool and similar materials, which are included in the Group 2 exemption in Schedule 1 of the 1963 Act, are used by people undergoing rehabilitation. They are used by persons who are blind or incapacitated in other ways.
      Perhaps the hon. Member for Derbyshire, West (Mr. Scott-Hopkins) will recall the days when he was the Member for Cornwall, North and travelled by train from the West Country. He may remember seeing a gentleman who frequently travels on the train. This gentleman is elderly and blind and he knits throughout the journey. He is a charming old gentleman. He knits about 15 ozs. of wool a week and I believe that that is

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      a large amount. It is the thing which keeps him occupied. I am sure that he is not alone in that. I am sure that many blind or disabled people, or people in old people's homes or who are confined to their houses, take up sewing or knitting as a recreation—quite apart from the fact that they contribute something of considerable use to society. Many Liberal, Conservative and Labour Party fetes would suffer were it not for the knitting and sewing done by worthy ladies. But, of course, much more important is the work done for charities.
      The most significant aspect, however, is the rehabilitation of those who have suffered accidents have been victims of war or have suffered from serious illnesses, who find in this activity not just a recreation but a means whereby they can re-establish contact with the world. Any one who has seen some of the homes where knitting and sewing and so forth are done by men and women alike as part of a rehabilitation programme will think, as I do, that it is absurd, if not monstrous, that purchase tax should suddenly be charged on the materials these unfortunate people use and which help to make their life a little easier and simpler and to rehabilitate them and bring them back into society.
      There is a serious objection to the entire proposal contained in this part of the Bill and it can be summed up by saying that, no matter what difficulties the country may be in economically—and I accept that the Government have to take strong action—it is simply playing with the problem to start scratching around in corners to find odd bits of dust or odd items which can be picked out.
      No doubt the hon. Gentleman will tell us what is the total sum involved but it cannot be a sum sufficient to restore the economy or to have any lasting effect upon our balance of payments or to reduce the spending power of the public to the extent where there would be a massive improvement in our exports—indeed, in any of the things to which the Government must look if they are to resolve our deep rooted problems.
      This proposal is an absurdity. It is not even taking financial matters seriously to start imposing purchase tax on items which in the past have been rightly exempt because they have a special social
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      use or may have an even more important use in the sense that they can provide considerable help to certain people.
      I notice that the exempt list in Group 2(4) will retain "Articles knitted or crocheted by hand without mechanical aid …" What is "mechanical aid"? I return to the blind man on the train. Because he is blind he is forced to use a machine to do his knitting. Will he be one of those who will therefore be required to pay purchase tax on the wool he uses? Will the woman in her own home who uses a knitting machine be required to pay purchase tax? Or will it transpire that there will be total exemption for those who knit entirely manually, while those who use special equipment in their own homes, or in hospitals for rehabilitation, will have to pay purchase tax? Or will it be confined to factories and other places where this work is done as a distinct industry? That is the important distinction which must be drawn.
      It seems utterly absurd that purchase tax should be charged on a paper pattern. Will this mean that when one of the ladies' magazines which are sold on bookstalls chooses to give away a paper pattern in a weekly issue, if the normal charge for the magazine is 2s., it will have to be 2s. 1½d., or something like that, to cover the purchase tax on the paper pattern? This is the sort of question which must be answered. There are many other instances of paper patterns being virtually gifts, or being sold at low prices.
      I support the Amendment of the hon. Member for Worthing, but if that cannot be accepted, and I trust that the Committee will accept it, I hope that serious consideration will be given to the two Amendments which I have mentioned, particularly No. 119. Without the Amendments this provision will cause needless suffering and expense to those who should be allowed the use of these materials for purposes which are social within themselves.
      8.30 p.m.
      Mr. James Scott-Hopkins: I support my hon. Friend the Member for Worthing (Mr. Higgins) and I join forces with the hon. Member for Bodmin (Mr. Bessell), whom I congratulate on the way in which he made his

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      case. The Chancellor has incorporated an extraordinary provision into the Finance Bill and I find little reason for it.
      Referring to Group 4 in the original Purchase Tax Act, 1963, the hon. Member for Bodmin asked for the definition of "mechanical aid" and asked whether articles knitted by hand without mechanical aid would retain their exemption from this extraordinary tax. As I understand it, it is the knitting wool which bears the tax while the article does not. If it is knitted by hand the wool which goes into the article bears purchase tax, but the article does not if it is not made with mechanical aid. That is an extraordinary anomaly.
      I cannot help asking myself why the Chancellor is doing this. How much money does he reckon to raise by removing these three exemptions? Will it be a vast sum? As my hon. Friend said, there will be no difference to the G.N.P. and the effect on the balance of payments, miniscule though it may be, will be adverse and certainly not advantageous. Is this intended to be a tax on a particular sector? Is it believed that a sector is "getting away with it", making an absolute bonanza, so much money that the Chancellor must immediately tax it?
      In my constituency there is a training college for the disabled where knitting wool is widely used in therapy. The price of that wool will go up. I cannot believe that the Chancellor intended that this type of therapeutic work should bear the tax. The Chancellor must have taken leave of his senses.
      When the Financial Secretary gets up I know that he will give a spendid explanation, in the most delightful manner, as he invariably does, and we shall all laugh our heads off. We shall say that there is nothing so bad about it after all, but there is, and the Committee should take note of this. This is a bad principle, attacking by purchase tax, making those who are in great need bear the purchase tax. I am talking about the disabled, those who use this knitting wool for therapeutic purposes.
      It is not beyond the ingenuity of the Financial Secretary to find some means, on Report, to exclude such use. Surely the whole of this tax should be scrapped?
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      The amount of money coming in must be incredibly small. In my constituency there are several factories, if one can call them that, where sewing thread is made. The people there are extremely upset over the imposition of this tax. I find it quite extraordinary that the thread used for the mending of garments should now have to bear tax. Why, what is the purpose of this? Is someone getting away with something?
      Why is it that while the Chancellor imposes Purchase Tax on sewing and darning needles he continues to exempt hairpins, hatpins and tiepins? Why is there such a difference here? There must be some splendid reason which we shall undoubtedly hear later. The Financial Secretary must see that the people who will bear the greatest burden are those in the lower income groups the "C's" and "D's". They are the ones who do the home knitting, who have to because of economic circumstances. I am unashamedly speaking for my constituents, and there are plenty of other hon. Members who can say the same. These less well-off people will have to bear this ridiculous imposition. This tax should be laughed out because it is stupid and idiotic. The poor people will have to pay it, and it will be significant for them, even though it may be a few pence or shillings. With the decline in the value of money during the regime of the Chancellor and his predecessor a few shillings today matters, particularly if these people are also unemployed.
      What of the young married couples? My hon. Friend the Member for Worthing highlighted the idiocy of the situation whereby if a person knits a garment for a baby the wool in the garment bears purchase tax but if the same garment is bought then that wool does not bear the tax. Why? This is too stupid for words. So far there has been no explanation, either in the Chancellor's speech or in the Budget debate. This cannot raise a vast amount of money, it certainly will not be of any value whatever to our balance of payments.
      It may increase them marginally, in that people will say that rather than pay the tax on goods that they make, they will buy garments in the shops. If those garments are imported then the Chancellor is losing. This is another self-defeating measure in conflict with the overall

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      Budget strategy. How we hear about this Budget strategy! All the time it is brought up as a shibboleth dictating every action. I hope that my hon. Friend's will lend their support to this Amendment, which will help those in the lower income brackets who will be particularly hard hit by this tax. It is ridiculous in its application. Above all the handicapped will suffer.
      I can understand that it would be difficult for any Financial Secretary, particularly a Financial Secretary of this Government, to accept an Opposition Amendment, but if the hon. Gentleman cannot do that I suggest that on Report he swallows his pride and abolishes this imposition. It cannot do any good. In fact, it must do harm to a great many people who do not deserve it.
      Mr. Michael Shaw: I wish to make two brief points in support of the Amendment.
      First, I take up the point about rehabilitation which has been mentioned several times. I well recall towards the end and after the war being in an establishment whose patients required a considerable amount of rehabilitation. I can say from my knowledge how valuable, and indeed indispensable, work such as rug-making, handicraft and sewing was for these people. It is essential. It is a desirable hobby. The advantage is that the work which people do in following it is not only useful but would not be done if it were not done at home during their own time. It is creative work which should be encouraged. Ever since purchase tax began, people have been encouraged to take up this work in their homes and during their spare time.
      My second point is this. I have managed to get hold of a copy of the Purchase Tax Act, 1963, from the Library; I hope that nobody else is looking for it. The fourth exemption in Group 2 of Schedule 1 relates to
      "Articles knitted or crocheted by hand without mechanical aid, including such articles embroidered by hand-needlework."
      If someone wants to knit an article, she will have to pay purchase tax on the raw materials, namely, the wool and the needles. I take it that knitting needles are not mechanical aids. I hope that
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      that point will be cleared up. I assume that if, perhaps because of disability, a person earns a living by knitting garments and selling them, there will be no purchase tax on those articles. I assume that the raw material, namely, the wool, will have to bear purchase tax when the person buys it to make the garment for sale.
      Mr. Bessell: Under the arrangements proposed by the Bill, if a disabled person knitted a garment but put it together with a sewing machine it might well be said that a mechanical aid had been used. I wonder whether that point has been considered by the Financial Secretary.
      8.45 p.m.
      Mr. Shaw: That certainly is another interesting point. The mechanical aid would not be bought particularly for that purpose. It would merely happen to be in the house and could be used for ease of process. It might even be that whilst the person could knit she could not sew and, therefore, another member of the household would use the machine to apply the finishing touch for her.
      Mr. Higgins: We are put in great difficulty because we do not have copies of the Purchase Tax Act, 1963. If, however, I understand the position correctly, although purchase tax will be imposed on, for example, knitting yarn, articles which are knitted or crocheted by hand without mechanical aid will still be exempt. I presume—perhaps the Financial Secretary will confirm—that the knitting yarn which is used to make the articles will still be taxed. These matters, however, become extremely complicated when we do not have the Act before us.
      Mr. Shaw: By means of my own queries and the valuable additional queries of my hon. Friends, I trust that the various points on this matter will have been clearly made so that the Financial Secretary in due course can elucidate them.
      I return, as I began, to the simple proposition that these exemptions, which have stood the test of time over the years, are now called in question not on any great matter of principle, but simply because of the overriding and ever-growing need of a Socialist Government for more money. The Amendment should be supported and the exemptions continued.
      [Mr. BRYANT GODMAN IRVINE in the Chair]
      Mr. Rafton Pounder: I intervene only briefly, more to ask questions than to seek to make observations or comments. Indeed, there is very little that one can add to the extremely cogent argument presented by my hon. Friend the Member for Worthing (Mr. Higgins). It is no discourtesy to the other and numerous items which are the subject matter of the Amendment if I concentrate my few remarks under two headings only.
      The first concerns paper patterns. I seem to recall seeing my wife—and, indeed, my mother—stretched out on the floor with bits of paper in bygone days. Does this purchase tax on paper patterns also cover patterns for children's garments? My reason for asking is that most children's garments are still, mercifully, excluded from purchase tax. It seems slightly crazy to exclude the finished article and yet to place purchase tax on the paper cut-out for the material.
      My second point concerns knitting wool. I seem to recall half a dozen principles of taxation, but one in particular relates to equity in taxation. How on earth it can be equitable to tax knitting wool is beyond comprehension. What sort of money does the Financial Secretary hope to raise by taxing knitting wool? Furthermore, what is likely to be the cost of collection? I suggest that the benefit to the Treasury is likely to be marginal.
      I should, I suppose, declare an interest in that at home I have a 16-month-old son and I am just beginning to become conscious of the cost of children's clothing. It is obviously infinitely cheaper to knit a sweater or similar garment for a child than to go out and buy one, regardless of the fact that children's made-up garments are not subject to purchase tax. For many people, to go out and buy a sweater or jumper for a child which will be worn for only a few weeks is obviously an extremely expensive business. It is only fair that mothers sitting at home in the evenings should be able to knit garments for their children, and even more so that a mother-to-be should be able to knit for her baby without being penalised for doing so. Baby wool can be used only for one purpose; it cannot be used for knitting an Arran sweater.
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      If the Financial Secretary finds it difficult to concede the principle of this new tax, surely out of the goodness of his heart he will exempt baby wool.
      Mr. John Farr: I support the Amendments which have been so ably put forward by my hon. Friends on this iniquitous new tax. Hon. Members who have spoken from this side of the Committee have made every possible plea, and it may be that it is superfluous for me to add anything, but I feel that the Government should not get away with this. It is scandalous that the Government should put a tax on the initiative of people who are prepared to do a little extra work and knit garments for their families rather than buy them.
      The new tax will hit three main categories. First, there are the very old. The next time the Minister visits the old perhaps he will look to see how many are knitting and what they are knitting with. How will they be able to pay the extra amount imposed by the tax? Secondly, the tax will hit the sick. People in hospital do not always wish to read the newspapers; they often prefer to occupy their minds and hands by knitting garments for the family. Thirdly, the tax will hit those people who train their daughters at an early age in the trade of dressmaking. It is a useful way for young girls to learn how to earn a living and by the imposition of this tax the Chancellor will put a stop to such activities.
      I hope that the Financial Secretary is big enough to change his mind and to accept the Amendment. The tax will not improve the popularity of the Labour Party, and it will do a great disservice to the old, to the infirm and to the young who will be deprived of garments which might otherwise have been knitted for them.
      Mr. James Dance: I shall refer particularly to Amendment No. 100, although I entirely support the Amendments put down by my hon. Friends.
      I wish to point out the iniquity of imposing purchase tax on the needle industry for the first time in its history, Redditch, in my constituency, has traditionally been the centre of the needle industry. Money has recently been collected to restore the Forge Mill, which

      541
      is an old building of great historic interest in which needles were polished by the use of water power. I do not think the Minister will be surprised to know that when my constituents and the needle industry as a whole realised that this imposition was being put on them they were extremely angry, and the headline in a local newspaper was:
      "Chancellor's wanton blow to needle industry."
      That is true.
      The tax does not amount to a great deal. I gather that it amounts to about 2d. on a packet of needles. The amount of income which the Revenue will receive will be pretty small, and people in the industry feel that this is a weak move by the Government, that they are merely saying to the outside world, "We are so hard up that we have to tax needles".
      Are surgical needles included in this tax? Apart from the pop groups who may use surgical needles illegally, these needles are used for health purposes, and surely it would be wrong to include them in this tax? Are needles used in manufacturing included? We are not clear whether they are. I do not know whether it is fully appreciated that the needle industry of Great Britain exports about 80 per cent. of its products. I do not suppose that any industry has a higher percentage of exports, most of which go to North America. This is a highly competitive trade, and any extra burden placed on needle manufacturers will certainly not help them in the fine job they are doing for our export trade.
      I agree with my hon. Friend the Member for Harborough (Mr. Farr). He referred to the use of wool and materials, but they cannot be made into garments without needles. One cannot sew without needles. Again, as my hon. Friend said, a lot of needlework is done by old people who cannot afford to spend large sums of money on buying new clothes from the shops, and they therefore make their own clothes. Are these the people whom the Socialist Government want to penalise? I do not believe it, but that is what they will do if they carry on with this iniquitous form of taxation.
      One cannot conceive that needles are a form of luxury. Admittedly in the past a certain amount of fine needlework was done by ladies of leisure, but few ladies nowadays have that amount of time to
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      do this needlework, and unfortunately this is a dying art. Needlework and knitting are done chiefly by people who want to save money and to help themselves.
      Again as my hon. Friend the Member for Harborough said, some young girls are being encouraged to do needlework in their homes. They may learn a trade and later on get a job because of that knowledge. We keep talking about apprenticeships and helping people to learn a trade. Why tax these young people when they are doing just that?
      Mr. Michael Shaw: Does my hon. Friend realise that material of less than six inches does not count for tax? Perhaps with the modern trend of mini skirt they will escape.
      Mr. Dance: I read in a newspaper the other day about a lady who was wearing a patchwork dress. If they make patchwork dresses they will not pay tax, but they will still have to pay tax on needles. In fact, they will need more needles to sew these patchwork pieces together.
      I sincerely hope that the Government will think again about this wicked, useless, silly form of taxation which will bring in very little revenue. This tax will cause hardship in a minor way. I shall not enlarge on that, or be overdramatic, but I hope that the Government will think again and remove this very stupid and unnecessary form of taxation.
      9.0 p.m.
      Mr. Joseph Hiley: It is significant, Mr. Godman Irvine, that all the hon. Members who have caught your eye and that of your predecessors in this debate have supported the Amendment. I take a certain pleasure in the thought that even the Minister himself may ultimately support it. My hon. Friend the Member for Worthing (Mr. Higgins) outlined the previous history of purchase tax and referred to previous Purchase Tax Acts. It is reasonable to assume that throughout the period of those Acts—and that period includes the Second World War and the very difficult years that followed—former Chancellors of the Exchequer, including former right hon. Friends of the Minister as well as his right hon. enemies, considered and ultimately rejected the idea of putting purchase tax on knitting wool, rug wool, sewing thread and mending wool. The

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      arguments which influenced them in the early 1940s are as cogent today.
      I must declare a personal interest in the production of knitting and rug wool. I also have a strong constituency interest in those two commodities, because large quantities of both are made in the Pudsey constituency. I hope that hon. Members will not, on that account, consider less sympathetically my plea to exclude these materials from the incidence of purchase tax.
      Hon. Members are now listening to one who has spent his life in the production of wools of this kind, and in this instance I may be able to make a contribution of some value, because I shall be talking of something about which I know a good deal—and that rarely happens with speeches made here. I am referring to myself.
      The annual production of knitting and rug wool is about 40 million lbs. My hon. Friend the Member for Worthing told us that it is estimated that 60 million garments or rugs will be produced by hand from this 40 million lb. The garments and rugs are made in leisure time, often by old or incapacitated people. It is not generally known that seafaring men also while away many of their less interesting hours in making rugs. All of these things are produced at no cost to the economy. I conclude that the savings made through the production of garments and rugs by hand is equivalent, in terms of wages, power and what generally comes under the heading of overheads to no less than £37 million a year.
      No one knows what effect the 13¾ per cent. purchase tax will have, but it would not be unreasonable to assume that it may cause a decline in production of 25 per cent., so the saving of £37 million will fall by about £10 million. People knit and make rugs and garments because they want new garments or new rugs. If, as I estimate, the total falls, garments and rugs will have to be supplied by mechanical means. Some may be made in our hosiery factories or will probably be imported from low-cost countries like Hong Kong, Portugal and Italy. I hope that the fact that children's clothing is exempt will not induce the Chancellor to include it. If all the 15 million garments and rugs were imported, I think that that would raise the import bill by
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      £10 million. That is not likely, but if half were imported and half made here, where they tend to be of a higher quality and more expensive, the loss to the economy would be greater still.
      An increase in what is made at home must mean diversion from exports. Our hosiery factories are fully extended, so the capacity used would mean a decrease in exporting, which I think would cost about £12 million. So the total effect is likely to be that the balance of payments will be worse off by about £25 million a year—and all to secure £5 million in purchase tax. Other hon. Members were not sure of the figure, but I know it because I have tried to persuade the Government of the folly of this proposal already. It is not wise to pursue it now or in any circumstance.
      Hand knitting wool and rug wool are used for therapy. They provide many less well-off people with a tremendous amount of pleasure and the satisfaction of knowing that they have produced something with their own hands. At the same time, they make a considerable contribution to the import-export balance.
      I understand that the Chancellor's reason for introducing what I can only describe as this amazing proposal is that he is anxious to broaden the tax base. If he will study Early Day Motion No. 317, he will see from the signatures that a great number of hon. Members on both sides of the Committee support the case I am putting. If he succeeds in broadening the tax base in this way, he will merely be attempting to satisfy a doubtful principle, but he will be doing so in nobody's interest.
      Last night the Chancellor pointed out that the greatest argument in favour of S.E.T. was its low cost of collection. However, to impose purchase tax on hand knitting and rug wool, not to mention sewing thread and mending wool, will cause hundreds of thousands of small accounts to be sent out by producers, which means that the cost to them of collecting these small sums will make this form of purchase tax the dearest tax imaginable to collect.
      Considering the Chancellor's remarks about the need for taxes not to cost too much to collect, I trust that he will consider the imposition of purchase tax on knitting and rug wool in this context.

      545
      Need he upset so many people and make his task more difficult? The case for the Amendment, which I have presented on practical grounds, is unanswerable, and I hope that I shall carry the whole Committee with me in getting it accepted.
      Mr. Harold Lever: The hon. Member for Pudsey (Mr. Hiley) seemed refreshed by the unanimity of criticism of this tax. He can hardly have been present at many Budget Committee debates if this strikes him as being startlingly different from what is normal.
      One of the great consolations of being in Opposition is that one can give full and uninhibited vent to the natural and human feeling that citizens have when faced with the taxpayer whose exactions are to be widened; and particularly when they are to be widened in forms which do not immediately strike one as palatable.
      The hon. Gentleman crowned the series of arguments which we have had along the lines of the dire misfortune that will befall the country as the result of this tax by bringing a kind of econometric exactitude to the predictions of doom which might almost qualify him to come into the Treasury. The fact that he will be proved wildly wrong in his predictions need not totally disqualify him from making that journey.
      Mr. Hiley: Surely the hon. Gentleman would not suggest that an assumption of a 25 per cent. reduction was excessive?
      9.15 p.m.
      Mr. Lever: I think that it is not merely excessive but that it is speculative pessimism at its most extended, and will in the event prove to be very much wide of the mark.
      Nobody enjoys proposing a new tax. I do not want to quote the innumerable, traditional well-worded epigrams on the subject, including my own, but there is no way of introducing a new tax which will immediately arouse enthusiasm from any hon. Member, least of all myself, and certainly not from hon. Members opposite. The fact remains that when one has regard to the disciplines of fiscal policy, one has sometimes to bring in new taxes not immediately agreeable but for excellent reason.
      546
      Hon. Members have tried to play this wrongly in saying that these taxes will bring in trifling sums at each point; that needles will bring in very little; that knitting wool will bring in very little; that paper patterns will bring in very little. But that is the whole point of my right hon. Friend's argument. Most people now believe that we ought to broaden the base of tax, and that we ought to broaden the base of tax so as not to distort by tax patterns the normal human patterns of preference which will express themselves in the expenditure of a normal household budget. It is precisely because these small items bring in very little that they are more agreeable than would be the addition of a still further burden to areas of tax not so immediately susceptible of public appeal, so as to preserve from further distortion the normal patterns of consumption in the country.
      So when I put forward the defence of these taxes it is because we are anxious to broaden the bases of tax, not merely to raise the same sums by further impacting on already highly taxed articles. We must act on the assumption that we need the £26 million which, in total, comes from these goods, and if any hon. Member can suggest where we might get the money to replace that—
      Mr. Robert Cooke: Would not the Financial Secretary think of a very modest sales tax on practically everything?
      Mr. Lever: The hon. Gentleman has given an immediate reply to the challenge. A very modest sales tax on practically everything would be so difficult and so expensive to collect that it would bring into being those hordes of officials that we have heard of—far more than would Purchase Tax on the items.
      Mr. Bessell: The Financial Secretary must be aware of the sales tax which exists in New York State. Everything over one dollar is subject to a tax, except food items. It is collected very simply, and the Revenue benefits very directly.
      Mr. Lever: I have the hon. Gentleman's assurance that the tax is collected very simply. I can only tell him that these things have all been looked at, and we have found that a general sales tax would

      547
      produce hordes, literally hordes of collectors if it were to be universal throughout the country. But if the hon. Member in his examination of the tax system in New York, or even in his reflections on the subject, can offer us suggestions for collecting a general sales tax which would not involve great numbers of officials, I would be very interested to receive his comments.
      Mr. Scott-Hopkins: Perhaps I can bring the hon. Gentleman back to his defence of this tax proposal. He mentioned a sum of £26 million. I presume that he was referring to all the textiles, and was not questioning the £5 mllion mentioned by my hon. Friends?
      Mr. Lever: No. I was referring to the extension of this section. This money has to be found—
      Mr. Cooke: Why did not the Financial Secretary consider the possibility of a system of stamps which could be stuck on a piece of paper in relation to each transaction?
      The Temporary Chairman (Mr. Bryant Godman Irvine): Order. The hon. Gentleman must relate his remarks to paragraph 1 of the Schedule.
      Mr. Lever: I will merely say, so as to avoid discourtesy, that all the hon. Gentleman's suggestions, even though out of order, will be most rigorously scrutinised by me. Unhappily, the one which has just been urged has come too late to be included in the Bill.
      It is not an argument against the tax, but rather in its favour, that it is small in size and in impact. That is exactly the kind of tax that hon. Gentlemen in a different way are urging. I recognise the sincerity with which hon. Members have sought to protect those members of the community who are most hard hit by any tax. The minds of hon. Members have ranged into the possibilities of the Revenue's recovering this loss elsewhere. It is right that hon. Members should have done so.
      I am not being in the least unsympathetic when I say that, nevertheless, the aggregation of this presents a distorted picture of how the tax will bite, if taxes bite, or punch, or whatever they do. The impression any stranger from
      548
      Lilliput would have gained on coming into the Committee tonight would have been that only the blind and disabled knit and that only people confined to bed with great sickness use domestic linen. Amendment No. 111 asks me to exempt—I am sure that this is a genuine and sincere attempt—
      "sheets, pillow cases or blankets, used by persons confined to bed by sickness, and upon the certificate of a medical practitioner for a period in excess of two months".
      So for sickness lasting seven weeks the person must lie on taxed sheets. When he is in bed for eight weeks or longer, the Chancellor is supposed to inquire into his medical condition and, having ascertained that he has been confined for seven weeks in taxed sheets, grant an exemption from the eight weeks onwards. It would be difficult, because we should have to have a medical certificate.
      Mr. Bessell: On a point of order. The Financial Secretary is replying to the next debate.
      Mr. Lever: I am sorry. I will keep that pearl for a later occasion. I know that these suggestions are all very sincerely put forward, as I once put forward suggestions in relation to other tax matters. It is always right to test these taxes by their impact upon those who are most hard hit. This is a case of showing the minorities who are most hard hit sympathy by way of social services. I have no doubt that hon. Members will when we deal with increased old age pensions, increased sickness benefits, and increased assistance for disabled persons, share the general wish of the House of Commons that we take into account the cost of living, which includes the tax paid on these matters.
      We cannot exempt all knitting wool because same people who knit are blind or are sick, although I have a strong predisposition to exempt knitting wool because some of the most romantic moments of my adolescence were spent winding wool for the mother in order to procure some more cordial reception by the daughter. I have no prejudices against this form of activity, but it would impose an impossible burden if we had to exempt all the hard cases that would be affected by the tax. Blind people use motor cars. Blind people use many other articles that are taxed. Much household equipment is taxed.
      Mr. Bruce Campbell: Does the Financial Secretary agree that the only people who need coffins are dead people? The Chancellor by the Budget is putting a tax now on coffin linings.
      Mr. Lever: That is one of the least compelling arguments against the tax, on two grounds. I am acutely sensitive to the emotional appeal in relation to those who are most hard hit, but it is rather difficult, even for one whose temperamental reflexes are so much with the taxpayer, to feel quite the same for the fact that the surroundings of corpses have borne a Revenue tax.
      Mr. John Cordle: Does not the hon. Gentleman agree that there will be a further element of hardship caused by the removal of the exemptions, bcause by the time the knitting wool or rug wool comes on the counter and the customer pays for it it will be paid for not at an increase of 13 per cent. or thereabouts for purchase tax but probably at 20 or 25 per cent., because the retailer has the right to add his profit to the purchase tax before the article reaches the customer?
      Mr. Lever: I am glad to say that the hon. Gentleman is wrong there. The tax on 2s. 6d. worth of wool will work out at about 3d., that is, an increase of about 10 per cent. The hon. Gentleman can be gratified to think that the tax which he will impose can be imposed with a little less enthusiasm because it will be something less than half of what he expected to hand on to the customer.
      The right reaction in respect of disabled people and blind people in relation to these taxes is to take into account the cost of living, which includes such taxes, when we fix the assistance to them. Any other way would, of course, destroy all indirect taxation. Blind people are known to eat ice cream. Disabled people and children eat ice cream and enjoy it, but it is taxed. Those who are likely to be badly affected ought to be taken care of by the social services.
      I do not accept the argument that we shall add to the import bill because people will stop knitting and take to buying imported children's garments or have them made on machines in England which would otherwise be used for exports. This modest tax will have a
      550
      negligible effect on people's knitting habits. It will make a modest contribution to the revenue by broadening the base of the tax, and that is its object. I absolutely reject the view that people will significantly diminish so compulsive an occupation as knitting or dressmaking on account of the trifling sums involved for needles, thread and the like.
      Mr. Dance: Are surgical needles exempt?
      Mr. Lever: Having dealt with the question generally, I am just coming to some of the detailed points.
      First, I take the case of the blind knitter who uses a mechanical device to knit garments. I assume that he is not commercially engaged in knitting, in which case he would not be affected. The wool would be taxed, whether the blind knitter used machinery or not, and, if he was not engaged in business in a commercial way, he would not be affected. The exemption to which reference was made refers to commercial knitting in another context. He would not be involved in tax on the garments themselves. No garment is taxed which is not made in the ordinary course of commerce.
      The purpose of the exemption—this is related only indirectly to the Amendment—is to allow people who do hand knitting in the croft industry to be exempt from tax not on the wool but on the garments produced by their hand knitting, a totally different point. There will be no difficulty in establishing this relief, which has been wisely operated for a long time.
      I was asked by the hon. Member for Bodmin (Mr. Bessell) whether a pattern given away with a newspaper or magazine would bear tax. Yes, it would, but we should collect the tax not from the shop or the man or woman who bought the magazine but from the manufacturer or through the wholesaler. Patterns of the kind given away in such circumstances are so trifling that the tax on them would, presumably, be a fraction of a penny. On the more complex patterns which people use, I think that the tax could come to as much as 6d. for a dress—not a very serious item and not likely to deter any of the more determined domestic dressmakers at that sort of level.

      551
      Surgical needles are exempt. We are proud of our needle industry and its export record, and I am confident that the 20 per cent. domestic production will not be significantly affected. The hon. Member for Bromsgrove (Mr. Dance) has a firm interest in this, and I hope that he will be in a position to give me warning if he finds any serious decline even in that fraction of the needle industry which goes to domestic production.
      9.30 p.m.
      Mr. Dance: I accept that, and I will.
      Mr. Lever: I hardly think that dire effects on domestic production will arise, however.
      For all these reasons, I commend this extension of the tax. It is not because we like taxing people but where so many people have to be taxed it is better to spread the burden wisely and try to get more light taxes and fewer heavy taxes, which distort the natural pattern of consumption. That is my right hon. Friend's aim. I endorse it and commend it to the Committee.
      Mr. Higgins: I was inclined to say that the reply of the Financial Secretary was the worst I had heard on an emotional Amendment of this kind, but that would not be true since it is only as bad as anything that one has heard from the Government. It became clear that the
      hon. Gentleman was using his all-purpose speech for the rejection of any Amendments dealing with this kind of tax. That speech applies more to the next Amendment than to this one.
      Mr. Harold Lever: The argument in respect of the next Amendment to be considered is equally vivid on this one in relation to the claim made in almost every speech that this tax will affect the blind, the disabled or the sick. The hon. Gentleman may have preferred me to have used the argument on the next Amendment but I did not think that I should defer it from this one.
      Mr. Higgins: The hon. Gentleman has made out no case. We are concerned with the disabled, the blind and the sick. We are concerned because these products, particularly knitting wool, are important in the context of these disabilities. Many of these people use knitting wool as a means of relaxation or rehabilitation, and there is also the second group, consisting of those with relatively low incomes and who knit in order to offset them. The best thing we can do is divide the Committee as a protest against that inadequate reply. I hope that the Committee will carry the Amendment.
      Question put, That the Amendment be made:—
      Committee divided: Ayes 210, Noes 269.

      Division No. 228.]

      AYES

      [9.34 p.m.

      Alison, Michael (Barkston Ash)

      Bullus, Sir Eric

      Eyre, Reginald

      Allason, James (Hemel Hempstead)

      Burden, F. A.

      Farr, John

      Amery, Rt. Hn. Julian

      Campbell, B. (Oldham, W.)

      Fortescue, Tim

      Astor, John

      Campbell, Gordon (Moray & Nairn)

      Foster, Sir John

      Awdry, Daniel

      Channon, H. P. G.

      Galbraith, Hn. T. G.

      Baker, Kenneth (Acton)

      Clegg, Walter

      Gilmour, Ian (Norfolk, C.)

      Baker, W. H. K. (Banff)

      Cooke, Robert

      Glover, Sir Douglas

      Balniel, Lord

      Cordle, John

      Glyn, Sir Richard

      Barber, Rt. Hn. Anthony

      Corfield, F. V.

      Goodhart, Philip

      Batsford, Brian

      Costain, A. P.

      Goodhew, Victor

      Beamish, Col. Sir Tufton

      Craddock, Sir Beresford (Spelthorne)

      Gower, Raymond

      Bell, Ronald

      Crouch, David

      Grant-Ferris, R.

      Bennett, Dr. Reginald (Gos. & Fhm)

      Crowder, F. P.

      Gresham Cooke, R.

      Berry, Hn. Anthony

      Cunningham, Sir Knox

      Grieve, Percy

      Bessell, Peter

      Dalkeith, Earl of

      Grimond, Rt. Hn. J.

      Biffen, John

      Dance, James

      Gurden, Harold

      Biggs-Davison, John

      d'Avigdor-Goldsmid, Sir Henry

      Hall, John (Wycombe)

      Birch, Rt. Hn. Nigel

      Dean, Paul

      Hall-Davis, A. C. F.

      Blaker, Peter

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

      Hamilton, Lord (Fermanagh)

      Boardman, Tom (Leicester, S. W.)

      Digby, Simon Wingfield

      Hamilton, Michael (Salisbury)

      Body, Richard

      Dodds-Parker, Douglas

      Harrison, Brian (Maldon)

      Boyle, Rt. Hn. Sir Edward

      Doughty, Charles

      Harrison, Col. Sir Harwood (Eye)

      Braine, Bernard

      Drayson, G. B.

      Harvey, Sir Arthur Vere

      Brewis, John

      du Cann, Rt. Hn. Edward

      Harvie, Anderson, Miss

      Brinton, Sir Tatton

      Eden, Sir John

      Hastings, Stephen

      Bromley-Davenport, Lt.-Col. Sir Walter

      Elliot, Capt. Walter (Carshalton)

      Hawkins, Paul

      Brown, Sir Edward (Bath)

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

      Hay, John

      Bruce-Gardyne, J.

      Emery, Peter

      Heseltine, Michael

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

      Errington, Sir Eric

      Higgins, Terence L.

      Buck, Antony (Colchester)

      Ewing, Mrs. Winifred

      Hiley, Joseph

      Hill, J. E. B.

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

      Scott, Nicholas

      Hogg, Rt. Hn. Quintin

      Mills, Peter (Torrington)

      Scott-Hopkins, James

      Holland, Philip

      Mills, Stratton (Belfast, N.)

      Sharples, Richard

      Hordern, Peter

      Miscampbell, Norman

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

      Hunt, John

      Mitchell, David (Basingstoke)

      Silvester, Frederick

      Hutchison, Michael Clark

      Monro, Hector

      Sinclair, Sir George

      Iremonger, T. L.

      More, Jasper

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

      Jenkin, Patrick (Woodford)

      Morgan-Giles, Rear-Adm.

      Smith, John (London & W'minster)

      Johnson Smith, C. (E. Grinstead)

      Morrison, Charles (Devizes)

      Speed, Keith

      Jones, Arthur (Northants, S.)

      Munro-Lucas-Tooth, Sir Hugh

      Stainton, Keith

      Jopling, Michael

      Murton, Oscar

      Steel, David (Roxburgh)

      Kaberry, Sir Donald

      Nabarro, Sir Gerald

      Stodart, Anthony

      Kerby, Capt. Henry

      Neave, Alrey

      Stoddart-Scott, Col. Sir M.

      Kershaw, Anthony

      Noble, Rt. Hn. Michael

      Summers, Sir Spencer

      King, Evelyn (Dorset, S.)

      Nott, John

      Tapsell, Peter

      Kirk, Peter

      Onslow, Cranley

      Taylor, Sir Charles (Eastbourne)

      Kitson, Timothy

      Orr, Capt. L. P. S.

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

      Knight, Mrs. Jill

      Osborn, John (Hallam)

      Taylor, Frank (Moss Side)

      Lancaster, Col. C. G.

      Osborne, Sir Cyril (Louth)

      Temple, John M.

      Thatcher, Mrs. Margaret

      Lane, David

      Page, Graham (Crosby)

      Turton, Rt. Hn. R. H.

      Legge-Bourke, Sir Harry

      Peel, John

      Vaughan-Morgan, Rt. Hn. Sir John

      Lewis, Kenneth (Rutland)

      Percival, Ian

      Vickers, Dame Joan

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

      Peyton, John

      Waddington, David

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

      Pink, A. Bonner

      Walker, Peter (Worcester)

      Lloyd, Rt. Hn. Selwyn (Wirral)

      Pounder, Rafton

      Wall, Patrick

      Longden, Gilbert

      Price, David (Eastleigh)

      Walters, Dennis

      Lubbock, Eric

      Prior, J. M. L.

      Ward, Dame Irene

      MacArthur, Ian

      Pym, Francis

      Wells, John (Maidstone)

      Maclean, Sir Fitzroy

      Quennell, Miss J. M.

      Whitelaw, Rt. Hn. William

      Macleod, Rt. Hn. Iain

      Ramsden, Rt. Hn. James

      Wiggin, A. W.

      McMaster, Stanley

      Rawlinson, Rt. Hn. Sir Peter

      Williams, Donald (Dudley)

      Macmillan, Maurice (Farnham)

      Rees-Davies, W. R.

      Wilson, Geoffrey (Truro)

      McNair-Wilson, Michael

      Renton, Rt. Hn. Sir David

      Wood, Rt. Hn. Richard

      McNair-Wilson, Patrick (New Forest)

      Rhys Williams, Sir Brandon

      Woodnutt, Mark

      Maddan, Martin

      Ridsdale, Julian

      Worsley, Marcus

      Maginnis, John E.

      Rodgers, Sir John (Sevenoaks)

      Wright, Esmond

      Marples, Rt. Hn. Ernest

      Rossi, Hugh (Hornsey)

      Younger, Hn. George

      Marten, Neil

      Royle, Anthony

      Maude, Angus

      Russell, Sir Ronald

      TELLERS FOR THE AYES:

      Mawby, Ray

      St. John-Stevas, Norman

      Mr. Bernard Weatherill and

      Maxwell-Hyslop, R. J.

      Sandys, Rt. Hn. D.

      Mr. Humphrey Atkins.

      NOES

      Albu, Austen

      Chapman, Donald

      Fletcher, Raymond (Ilkeston)

      Allaun, Frank (Salford, E.)

      Coe, Denis

      Fletcher, Ted (Darlington)

      Alldritt, Walter

      Coleman, Donald

      Foley, Maurice

      Anderson, Donald

      Corbet, Mrs. Freda

      Foot, Rt. Hn. Sir Dingle (Ipswich)

      Archer, Peter

      Crawshaw, Richard

      Foot, Michael (Ebbw Vale)

      Ashley, Jack

      Crosland, Rt. Hn. Anthony

      Ford, Ben

      Ashton, Joe (Bassetlaw)

      Darting, Rt. Hn. George

      Forrester, John

      Atkins, Ronald (Preston, N.)

      Davidson, Arthur (Accrington)

      Fowler, Gerry

      Atkinson, Norman (Tottenham)

      Davies, G. Elfed (Rhondda, E.)

      Fraser, John (Norwood)

      Bacon, Rt. Hn. Alice

      Davies, Dr. Ernest (Stretford)

      Freeson, Reginald

      Bagier, Gordon A. T.

      Davies, Rt. Hn. Harold (Leek)

      Galpern, Sir Myer

      Barnett, Joel

      Davies, Ifor (Gower)

      Gardner, Tony

      Beaney, Alan

      de Freitas, Rt. Hn. Sir Geoffrey

      Garrett, W. E.

      Bence, Cyril

      Dell, Edmund

      Gordon Walker, Rt. Hn. P. C.

      Benn, Rt. Hn. Anthony Wedgwood

      Dempsey, James

      Gray, Dr. Hugh (Yarmouth)

      Bidwell, Sydney

      Diamond, Rt Hn. John

      Gregory, Arnold

      Binns, John

      Dickens, James

      Grey, Charles (Durham)

      Bishop, E. S.

      Dobson, Ray

      Griffiths, David (Rother Valley)

      Blackburn, F.

      Doig, Peter

      Griffiths, Eddie (Brightside)

      Blenkinsop, Arthur

      Dunn, James A.

      Griffiths, Rt. Hn. James (Llanelly)

      Booth, Albert

      Dunnett, Jack

      Griffiths, Will (Exchange)

      Boston, Terence

      Dunwoody, Mrs. Gwyneth (Exeter)

      Hamilton, James (Bothwell)

      Bottomley, Rt. Hn. Arthur

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

      Hamilton, William (Fife, W.)

      Eadie, Alex

      Hannan, William

      Boyden, James

      Edelman, Maurice

      Harrison, Walter (wakefield)

      Bradley, Tom

      Edwards, Robert (Bilston)

      Hattersley, Roy

      Bray, Dr. Jeremy

      Edwards, William (Merioneth)

      Hazell, Bert

      Brooks, Edwin

      Ellis, John

      Healey, Rt. Hn. Denis

      Brown, Rt. Hn. George (Belper)

      English, Michael

      Heffer, Eric S.

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

      Ennals, David

      Herbison, Rt. Hn. Margaret

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

      Ensor, David

      Hilton, W. S.

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

      Evans, Fred (Caerphilly)

      Hobden, Dennis

      Buchan, Norman

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

      Hooley, Frank

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

      Faulds, Andrew

      Houghton, Rt. Hn. Douglas

      Butler, Herbert (Hackney, C.)

      Fernyhough, E.

      Howarth, Robert (Bolton, E.)

      Callaghan, Rt. Hn. James

      Finch, Harold

      Howell, Denis (Small Heath)

      Cant, R. B.

      Fitch, Alan (Wigan)

      Howie, W.

      Carmichael, Neil

      Fitt, Gerard (Belfast, W.)

      Hoy, James

      Castle, Rt. Hn, Barbara

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

      Huckfield, Leslie

      554

      555

      Hughes, Rt. Hn. Cledwyn (Anglesey)

      Marsh, Rt. Hn. Richard

      Roebuck, Roy

      Hughes, Hector (Aberdeen, N.)

      Mason, Rt. Hn. Roy

      Rogers, George (Kensington, N.)

      Hughes, Roy (Newport)

      Maxwell, Robert

      Rowlands, E.

      Hunter, Adam

      Mellish, Rt. Hn. Robert

      Ryan, John

      Hynd, John

      Mendelson, John

      Shaw, Arnold (Ilford, S.)

      Janner, Sir Barnett

      Mikardo, Ian

      Sheldon, Robert

      Jay, Rt. Hn. Douglas

      Millan, Bruce

      Shinwell, Rt. Hn. E.

      Jeger, George (Goole)

      Milne, Edward (Blyth)

      Shore, Rt. Hn. Peter (Stepney)

      Jenkins, Hugh (Putney)

      Molloy, William

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

      Jenkins, Rt. Hn. Roy (Stechford)

      Morgan, Elystan (Cardiganshire)

      Silkin, Rt. Hn. John (Deptford)

      Johnson, Carol (Lewisham, S.)

      Morris, Charles R. (Openshaw)

      Silkin, Hn. S. C. (Dulwich)

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

      Morris, John (Aberavon)

      Silverman, Julius

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

      Moyle, Roland

      Skeffington, Arthur

      Jones, J. Idwal (Wrexham)

      Mulley, Rt. Hn. Frederick

      Slater, Joseph

      Jones, T. Alec (Rhondda, West)

      Murray, Albert

      Small, William

      Kelley, Richard

      Neal, Harold

      Spriggs, Leslie

      Kerr, Russell (Feltham)

      Newens, Stan

      Steele, Thomas (Dunbartonshire, W.)

      Lawson, George

      Noel-Baker, Rt. Hn. Philip

      Strauss, Rt. Hn. G. R.

      Leadbitter, Ted

      Oakes, Gordon

      Summerskill, Hn. Dr. Shirley

      Lee, Rt. Hn. Frederick (Newton)

      Ogden, Eric

      Swain, Thomas

      Lee, John (Reading)

      Oram, Albert E.

      Taverne, Dick

      Lestor, Miss Joan

      Orbach, Maurice

      Thomas, Rt. Hn. George

      Lever, Harold (Cheetham)

      Orme, Stanley

      Thomson, Rt. Hn. George

      Lever, L. M. (Ardwick)

      Oswald, Thomas

      Tinn, James

      Lewis, Arthur (W. Ham, N.)

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

      Tomney, Frank

      Lewis, Ron (Carlisle)

      Owen, Will (Morpeth)

      Tuck, Raphael

      Lipton, Marcus

      Padley, Walter

      Urwin, T. W.

      Lomas, Kenneth

      Page, Derek (King's Lynn)

      Varley, Eric G.

      Loughlin, Charles

      Paget, R. T.

      Wainwright, Edwin (Dearne Valley)

      Luard, Evan

      Pannell, Rt. Hn. Charles

      Walker, Harold (Doncaster)

      Lyon, Alexander W. (York)

      Parker, John (Dagenham)

      Wallace, George

      Lyons, Edward (Bradford, E.)

      Parkin, Ben (Paddington, N.)

      Watkins, David (Consett)

      Mabon, Dr. J. Dickson

      Parkyn, Brian (Bedford)

      Watkins, Tudor (Brecon & Radnor)

      McBride, Neil

      Pavitt, Laurence

      Wellbeloved, James

      McCann, John

      Pearson, Arthur (Pontypridd)

      White, Mrs. Eirene

      MacColl, James

      Peart, Rt. Hn. Fred

      Whitlock, William

      Macdonald, A. H.

      Pentland, Norman

      Wilkins, W. A.

      McGuire, Michael

      Perry, Ernest G. (Battersea, S.)

      Willey, Rt. Hn. Frederick

      McKay, Mrs. Margaret

      Perry, George H. (Nottingham, S.)

      Wiliams, Alan (Swansea, W.)

      Williams, Alan Lee (Hornchurch)

      Mackenzie, Gregor (Rutherglen)

      Prentice, Rt. Hn. R. E.

      Williams, Clifford (Abertillery)

      Mackie, John

      Price, Thomas (Westhoughton)

      Williams, Mrs. Shirley (Hitchin)

      Mackintosh, John P.

      Price, William (Rugby)

      Williams, W. T. (Warrington)

      Maclennan, Robert

      Probert, Arthur

      Willis, Rt. Hn. George

      McMillan, Tom (Glasgow, C.)

      Rankin, John

      Wilson, Rt. Hn. Harold (Huyton)

      McNamara, J. Kevin

      Rees, Merlyn

      Wilson, William (Coventry, S.)

      MacPherson, Malcolm

      Rhodes, Geoffrey

      Winnick, David

      Mallalieu, E. L. (Brigg)

      Roberts, Albert (Normanton)

      Woof, Robert

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

      Roberts, Rt. Hn. Goronwy

      Wyatt, Woodrow

      Manuel, Archie

      Roberts, Gwilym (Bedfordshire, S.)

      Mapp, Charles

      Robertson, John (Paisley)

      TELLERS FOR THE NOES:

      Marks, Kenneth

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

      Mr. Joseph Harper and

      Marquand, David

      Rodgers, William (Stockton)

      Dr. M. S. Miller.

      9.45 p.m.
      Mr. Higgins: I beg to move Amendment No. 45, in page 74, line 25, leave out paragraph 3.
      The Temporary Chairman (Mr. Bryant Godman Irvine): It will be convenient to take at the same time Amendment No. 66, page 74, line 27, after 'textile', insert 'other than jute'.
      Amendment No. 46, page 74, line 29, at end insert:
      'except for linen which will continue to be exempt'.
      Amendment No. 68, page 74, line 29, at end insert:
      'and after the word "Exempt" there shall be added the words "pram quilts, pram blankets, pram sheets, pram pillow cases, cot blankets, cot quilts, cot sheets, cot pillow cases, baby face cloths, pram and cot rubber sheets"'.
      556
      Amendment No. 111, page 74, line 29, at end insert:
      'except sheets, pillow cases or blankets, used by persons confined to bed by sickness, and upon the certificate of a medical practitioner, for a period in excess of two months'.
      Amendment No. 112, page 74, line 29, at end insert:
      'except sheets, pillow cases or blankets used by hospitals, nursing homes or similar institutions'.
      Amendment No. 113, page 74, line 29, at end insert:
      'except sheets, pillow cases or blankets used by boarding schools, youth hostels or similar institutions'.
      Amendment No. 114, page 74, line 29, at end insert:
      'except sheets, pillow cases or blankets supplied for use in hotels and boarding houses'.

      557
      Amendment No. 115, page 74, line 29, at end insert:
      'except towels and soft furnishings supplied for use in hospitals, nursing homes or similar institutions'.
      Amendment No. 116, page 74, line 29, at end insert:
      'except towels and soft furnishings supplied for use in boarding schools, youth hostels or similar institutions'.
      Amendment No. 117, page 74, line 29, at end insert:
      'except towels and soft furnishings supplied for use in hotels and boarding houses'.
      Mr. Higgins: In view of the shortage of copies of the Purchase Tax Act, 1963, it may be helpful if I spell out the significance of the Amendment. Paragraph 3 of Schedule 6 of the Bill reads:
      "In Group 6, for so much of that Group as precedes the word 'Exempt' there shall be substituted the following:—
      'Articles of textile, plastic, paper or similar material of a kind used for soft furnishings, bedding or other domestic purposes.'"
      If one refers to the 1963 Act, it becomes apparent that the Government are proposing to bring into purchase tax a whole range of household textiles, particularly those used for bedding, such as sheets and blankets. We believe that this is a retrograde step because it effectively restores the position which existed prior to 1955–56, when the Conservative Administration took these items outside the scope of purchase tax. It is surely extraordinary, at a time when the Committee is presented with the textile report, there should apparently be no co-ordination between Government Departments on this matter and the Government propose to increase the tax borne by these items.
      On the last Amendment, I had occasion to say to the Financial Secretary that I was a little uncertain about the Amendment to which his remarks referred. He pointed out that they were equally applicable to either Amendment. We are in some difficulty on this Amendment because the scope of the Schedule is far from clear. A number of us on this side of the Committee have received representations which suggest that it goes a great deal wider than was originally expected and possibly wider than the Government intend. I therefore hope
      558
      that the Financial Secretary will be able to clarify a number of points which I should like to put to him.
      Paragraph 3 of Schedule 6 refers to
      "'Articles of textile … of a kind used for … domestic purposes.'"
      But I understand that in the purchase tax notices which have been sent to the trade there is considerable doubt about the exact meaning of these phrases. A number of items which are used for industrial purposes—in other words, industrial cloths—may fall within the scope of the Schedule. I hope that the Financial Secretary will be able to clear up the matter beyond doubt. What is the position regarding cotton filter cloth? Is this caught by the Schedule? What about laundry pressed calico or milk filter cloth? Are these to be brought within the scope of purchase tax again? What is the position concerning many industrial cloths which are used in the production of items which go into exports or commodities used on the home market?
      Secondly, I should like the Financial Secretary to clarify the position concerning items which go into a further stage of production. This part of the Schedule bristles with anomalies. We have received a letter from a firm of great repute which points out that tarpaulins, which are exempt from tax, may continue not to be taxed but that the fabrics used in the tarpaulins will be charged to purchase tax if the customer using the product is not registered. Is that the intention of the Government? Do they intend to impose this tax, through this part of the Schedule, on items which will then be used to make up items which will not be taxed? If that is so, how do the Government propose to deal with this difficulty?
      The second point on which there is considerable difficulty again arises from the purchase tax notices issued by the Government, but of which there has been no mention in the House, because it appears that a number of items—for example, textiles used for making garments or curtains—come within the same category as those used for bookbinding materials. We therefore need the Financial Secretary to make it clear whether textiles which are used as bookbinding materials will be caught within the provisions of the Schedule. There is great ambiguity about the whole matter.

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      The third point which needs to be cleared up relates to the question of stocks. If I understand the question correctly, the retailer who has held a large amount of stock of a certain textile has never since 1955 paid purchase tax on it. Many retailers hold large stocks and, on the whole, this has enabled them to charge lower prices to their customers, because of the effects of inflation, than would otherwise have been the case.
      What will be the position concerning purchase tax, first, if those retailers sell the piece of textile cloth in question to a customer, who then returns it to them and asks them to make it up into an article, and, secondly, if they make up the article and sell it direct to the customer? It appears that in the case of existing stocks there will be a clear anomaly which would entail a number of customers going through the farcical process of having to buy the cloth and hand it back to the retailer for making up to avoid the tax whereas if they got it made up straight away, it would be taxed.
      Would it not be a great deal more simple and sensible if the Government exempted from charge all those stocks which are already held by retailers, the vast majority of whom are not at present registered for purchase tax, whether the stock in question was sold as a raw material, as a textile, or as a finished product—say, a set of curtains? I hope that the Financial Secretary can clarify this for us.
      A further matter on which we have received representation concerns the apparent discrimination between various producers of household textiles. It would appear that some producers operate on a very large scale, others operate on a moderate scale and yet a third set operate on a very small scale. The extraordinary thing with this distinction is that if there is a single large purchaser from these groups, I understand that the Inland Revenue, to maintain equilibrium between the three groups, will upgrade the wholesale price charged by the large firm when sold by a large customer compared with the alternative suppliers. As a result of the imposition of this tax, the effect will be to put the large, efficient, high-quality producer at a disadvantage compared with his smaller or less efficient
      560
      competitor who is, perhaps, producing goods of lower quality.
      Is that the case under the Schedule? I understand it to be so. I presume that the Treasury, like ourselves, has received representations. If so, what does the the Financial Secretary propose to do about it at this stage? It is a matter of considerable urgency because this tax is about to be levied in a few days' time.
      It would be right and proper that we should have explanations from the Financial Secretary on these technical points. On the overall point, however, our con tention is that the Government are bringing into purchase tax a number of items which are clearly of an essential nature and on which purchase tax has not been imposed since we exempted them back in 1955–56.
      The impact on the cost of living is likely to be considerable. For example, the price of a pair of sheets costing £3 10s. may well increase to about £4, and the price of blankets and towels is likely to rise considerably. On all these items the Government are taking discriminatory action against essentials which in turn discriminates against those with the lowest incomes. The wording of the Clause is extremely ambiguous.
      The Government's proposals, we think, are wrong on the basis I have described and, unless the Financial Secretary gives a better answer than the one he gave on the previous Amendment, I hope that my right hon. and hon. Friends will support the Amendment in the Division Lobby.
      Mr. Bruce-Gardyne: I rise to support my hon. Friend on the general case he has made on the main Amendment. I want to address my remarks more specifically to Amendment No. 66. I hope that it is correctly drafted, but I find the Clause more than a little difficult to follow, and this has been aggravated by the difficulty of obtaining access to the text of the original Act. The purpose of the Amendment is to make a special exemption within the general class for wall coverings of hessian and jute.
      My experience bears out what my hon. Friend has said on the confusion which exists about the changes. Firms in my constituency have been entirely unable to discover what are the repercussions of the changes on the textile industry in

      561
      Scotland. They sent a special representative to London to try to ascertain the exact circumstances, but even then they could obtain no clear and specific answer.
      There is one point on which the experience of local firms in my area is opposite to the experience described by my hon. Friend. He referred to large suppliers dealing in bulk being apparently disadvantageously treated. The experience of some firms in my constituency is that they will not be allowed to charge purchase tax, if they have to pay it, on the retail price to the wholesaler less the discount. Their experience is precisely the opposite to the experience described by my hon. Friend. This is an example of the confusion which has arisen.
      My main point is twofold in defence of what is admittedly a special and localised interest. It can be argued that there is no reason why jute and hessian wall coverings should be exempted from purchase tax when other forms of textile or paper wall coverings are not exempted. There are two reasons which I advance in support of my Amendment. First, as I understand it, these hessian wall coverings come very high in the price range of alternative wallpapers available to the customer, and as a result the incidence of the tax which is to be imposed on them under this Clause if it is not amended will be much more severe on the end price—not as a percentage, but in terms of the end price.
      10.0 p.m.
      I did not press that argument too far, because my main argument is that over the years successive Governments have tried to encourage the jute industry in Scotland to diversify its production towards a more sophisticated end of the product range to insulate itself against the effect of low cost competition from India and Pakistan as tariffs and other forms of protection have come down under the Government's encouragement and indeed direction. Some of the firms in Scotland have made a tremendous effort and have achieved great success in doing precisely that, but this has represented a considerable problem, particularly for some of the smaller firms in some of the burghs in my constituency.
      One of the products into which they have diversified, and done so most successfully in recent years, is hessian wall cover-
      562
      ings. I am told that in some of the smaller firms in my constituency hessian wall coverings represent upwards of 10 per cent. of total output, and that this proportion is rising rapidly. They feel that having been urged and begged by successive Governments to go into this sort of production, they now find themselves suddenly attacked with this imposition of purchase tax which will have a serious effect on what is becoming an increasingly important market to them.
      When one bears in mind that in the burghs in which these firms are functioning anything up to 60 per cent. of the total employment in the burgh is provided by one or two jute firms, Ministers can see the seriousness of the position which could arise if this tax has a serious effect on their ability to develop what has become a most successful market.
      I hope that when the Financial Secretary replies he will offer some word of help and encouragement, and perhaps even a word of release, to those firms which are urgently seeking and appealing for what is a not unreasonable narrow measure of relaxation in this respect.
      Mr. Charles Mapp: We have listened to two speeches on this subject. The first contribution did consider the major principle, but rather concentrated on detail. The second was related to the jute industry. As I recall it, that industry has a measure of control which the cotton textile industry would gladly have, but does not. The jute industry is in a legislative position which I gather would never be granted to any other industry in this country. I am not complaining about that. Having tried once or twice to get that form of import and other control for cotton textiles but not having succeeded, I should be sour indeed if I were to try to rob Dundee and other places of the advantages they enjoy.
      I am more than glad that the Chancellor of the Exchequer is here, because I want to look at some words which he used on Budget day and tell him why I abstained on that occasion from supporting his proposals, and why, unless I hear something better, I shall probably do the same this evening. The Chancellor said:
      "Paradoxically, paper handkerchiefs are not taxed but linen and cotton ones are."

      563
      He then put the point more generally and said:
      "I do not think that the distinction between floor coverings, mattresses, cushions, furniture and clothing—which are taxed—and household textiles and cloth—which are not taxed—is a valid one."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1023.]
      My right hon. Friend prefaced this statement by agreeing with what the Opposition speaker had said about the history of the matter, namely, that in 1955 or thereabouts and in 1957 the then Government, for reasons that we all remember, took off purchase tax. In those days the industry was employing about 250,000 people. It is now employing about 100,000. In the last 15 years in my town—which is fairly typical of Lancashire—15,000 jobs have disappeared, together with half the mills. The Chancellor said that in order to tidy up an untidy position in his administrative machine he has decided that the industry will bear in a full year most of £30 million in additional taxation. He acknowledged what had been said about the history of purchase tax and its having been lifted, but he added that a good deal of the commodity was imported. We know that. The point is that both imported and home-made textiles are subject to purchase tax. That might have been a casual slip on his part. If it was a deliberate statement, however, it has no validity.
      I take the view that the cotton textile industry is keeping too many of its troubles to itself. During the last seven or eight years it has undergone a major transformation such as no other industry has known. Hon. Members on both sides of the Committee have tried to ensure that the industry has some solidity, and some future. I do not want to be too controversial, but in my opinion the recent efficiency study which has been carried out has been more forthcoming than any previous study of the industry.
      I know the industry reasonably well, and I was very pleased to see that it has begun to look outwards instead of inwards. It should do more in this direction. It now has a leadership, which it had patently lacked for some time. The report is now before the Government and the President of the Board of Trade is giving it his deep consideration. I hope that hon. Members on both sides of the
      564
      Committee are also considering it. The industry has gone through some violent storms. Possibly it has gone through its last one, although I should not like to be too sure about that.
      The industry is down on its uppers. In my town, which was a typical cotton town, during a short period of years more than 12,000 out of 20,000 left the industry. At this moment the Chancellor of the Exchequer, presumably adopting a Whitehall point of view, has decided that in order to straighten out the administrative pattern—and, at the same time, to collect most of £30 million—he will inflict upon the industry a burden of this kind, whether 40 per cent. of our textiles are imported or not, because both imported and home-produced textiles bear precisely the same Purchase Tax across the counter.
      I appeal to the Chancellor to reconsider his decision. No hon. Member will object personally to paying purchase tax in respect of the textile furnishings for his or her home, but every hon. Member will know that in his constituency there are many homes where the mothers have two or three children, or perhaps more, and where the income is very limited. This tax will hurt such women. Their requirements in bed linen and personal linen are wholly different to those of the rest of us. They will bear the brunt of this tax. I can see how nice and straightforward the administrative argument might have looked in Whitehall, but I hope that some humanity will be shown.
      My right hon. Friend may not have seen the dissolution of the textile industry across Lancashire and parts of Yorkshire. We have partly got over these drawbacks. I want to hear some soothing words or I cannot support the Government. It is a little late to expect my right hon. Friend to say them tonight, but perhaps he can say that he will look at this again or that this is not the Government's final policy towards the textile industry. If I abstain alone tonight, I will know that 40 or 50 Labour Members from Lancashire and Cheshire broadly agree with me. I beg my right hon. Friend to consider the feelings of this vast number who are mainly loyal to the Government. I may be a notorious cotton man, but I am always proud to state this case. I have 40,000 voters in my constituency, which may be a vested interest.

      565
      The Chancellor should think again about this unfortunate blow at an industry which has just come out of 10 or 15 years of blow upon blow. The waves are now a little smoother and with courage and Government support the future could be brighter, yet now he imposes this new blow. Whatever the decision in the Lobbies, I beg him to consider this urgently. The county, the industry and, above all, the woman with a young family deserve this consideration.
      [Mr. HARRY GOURLAY in the Chair]
      Mr. Bessell: The hon. Member for South Angus (Mr. Bruce-Gardyne) expressed the fears of many of us who have drafted Amendments to this part of the Bill. As he said, it has been difficult to obtain a copy of the parent Act of 1963, upon which the Schedule depends. Ten days ago, I applied to the Stationery Office for a copy, and was told that it was impossible to get one. Had it not been for the assistance of the Library, whose staff generously duplicated the essential pages for me, I and my hon. Friends could not have drafted the Amendments.
      This matter cannot be emphasised enough. It is wrong that hon. Members should be inconvenienced—even more so if some Amendments are not worded correctly simply because we cannot give the relevant Act the normal study which we would wish. I support everything that was said by the hon. Member for Worthing (Mr. Higgins) in moving what I regard as an extremely important Amendment.
      10.15 p.m.
      Mr. Harold Lever: Before the hon. Gentleman continues, it might assist him to know that a bound copy of the Act is available in the "No" Lobby. I take it that he is likely infrequently to be in that Lobby tonight, but if between deploying arguments he wishes to refresh his memory, he will find a copy of the Act there.
      Mr. Bessell: I am obliged to the hon. Gentleman, but he will agree that that only emphasises the difficulty in which we find ourselves. I notice that the hon. Member for Worcestershire, South (Sir G. Nabarro), who is seated on the bench before me, has a copy of the Act, and for all I know it is the one to which the Financial Secretary referred.
      Sir G. Nabarro: It is not. I am voting "Aye". I got my copy from the "Aye" Lobby.
      Mr. Bessell: I am obliged to the hon. Gentleman, not only for handing it to me but for having marked the relevant passages. I take it that he intends to refer to the Act when he speaks, which prevents me from handing his copy round. In any event, if three copies are available, one in the "Aye" Lobby, one in the "No" Lobby and one in the Library, the Financial Secretary will agree that that is not sufficient to enable 600-odd hon. Members to draft appropriate Amendments.
      I will not delay the Committee by referring to all the Amendments which we are discussing, save a few which I regard as particularly important. I hope that the Financial Secretary will not attempt to deploy the sort of arguments he used when replying to the debate on the last Amendment. When he reads what he said in the OFFICIAL REPORT in a few weeks' time, if not a few years' time, he will not be proud of those comments, particularly since he is a man of considerable integrity who is respected by hon. Members on both sides, which I hope does not sound patronising.
      The Financial Secretary argued that because a group of people in the community suffered from some sort of disability, they should not be exempt from paying purchase tax because, he said, they had to pay this tax to ride about in motor cars. His argument will not stand examination. There are certain groups of people who are entitled to be exempted from certain forms of taxation; for example, because they are compelled to use certain articles. The case of persons being rehabilitated was put when we discussed the last Amendment. My Amendment No. 111 suggests that people who are confined to bed on a permanent basis should be exempt from paying purchase tax on sheets, blankets, pillow cases and similar articles, simply because they suffer a hardship which does not apply to the rest of the community.
      A person who is bedridden will use far more sheets, blankets, pillow cases and so on than those of us who enjoy good health and are rarely confined to bed, except for the normal purpose of sleeping. The period of two months

      567
      which I mention in my Amendment may not meet the Financial Secretary's wishes. Perhaps it should be two weeks. I had to strike a balance to prevent people suffering from a temporary sickness like 'flu from being able to send out a friend or neighbour to buy new sheets, blankets and pillow cases free of purchase tax. A person confined to bed for a long period or semi-permanently as a result of an especially severe illness should be able, on production of a doctor's certificate, to obtain exemption. People like that will suffer a very much greater hardship than will others.
      Turning to Amendment No. 112, it seems ridiculous that the cost of running nursing homes, and hospitals under the National Health Service should be increased. For hospitals coming under the National Health Service, it is quite obvious that the Secretary of State for Social Services will have to make additional allocations. This will be just another example of imposing a tax on the one hand and compensating for it on the other.
      Mr. Eric Lubbock: Does not my hon. Friend think that it would be useful if the Financial Secretary were to tell the Committee what additional moneys are to be made available by the Chancellor of the Exchequer to the National Health Service, and whether these institutions will be fully compensated for the additional costs which will fall on them?
      Mr. Bessell: I am very grateful to my hon. Friend—
      The Deputy Chairman (Mr. Harry Gourlay): Order. The hon. Member for Bodmin (Mr. Bessell) would be out of order if he were to reply to his hon. Friend's question.
      Mr. Bessell: I accept your guidance, Mr. Gourlay, but I am sure that you will agree that a very important point—
      Mr. Lubbock: On a point of order. Mr. Gourlay. I would not for one moment dispute your Ruling, but surely it would be relevant if the Chancellor were to say that these costs would be fully reimbursed, because my hon. Friend might then not be so inclined to press his Amendment as he might otherwise be, because he would be satisfied that the cost would not fall on the National
      568
      Health Service. The added cost would not come, for instance, out of the sums for nurses' pay or for their meals.
      The Deputy Chairman: I am seized of the point raised by the hon. Gentleman. It would be in order to make an incidental reference, but on this Amendment we cannot debate the National Health Service.
      Mr. Bessell: I was not proposing to discuss the National Health Service, nor do I think my hon. Friend would wish to do so, but unless Amendment No. 112 is accepted it is a matter of fact that the National Health Service, through the hospital service, will have to bear a considerable additional burden of taxation. It is, therefore, clear that, as my hon. Friend suggested, it would be very worth while to know whether the Chancellor of the Exchequer intends to compensate the National Health Service by making a special refund to the Department for this purpose.
      Amendment No. 113 seeks exemption from tax on similar purchases made on behalf of boarding schools, youth hostels and like institutions. The tax proposed will, again, considerably increase the cost of running these institutions, to the serious detriment of their users. Hon. Members opposite, and one of my hon. Friends, may not be sympathetic with the idea of the retention of boarding schools, but those of us who have children at them, and I have a son at a boarding school, know that the fees seem to rise every term which passes. The tax proposed will add to the burden of those who choose to have their children educated privately. Nor do I think that anyone would wish to see youth hostels and institutions of that character having to bear this additional burden.
      I hope that the Financial Secretary will be among those who will agree with me that there is a special case to be made out for hospitals, schools and other such institutions which will pay a tax which cannot be recovered or, if it is recovered, will be recovered only by means of increasing the cost of living. Those who are confined in their homes and who require additional bed linen will suffer a real hardship and one which could be avoided by a simple exemption on the lines suggested by my Amendment

      569
      which, though it may not be perfect, could be put into a form which would be acceptable to the Chancellor on Report.
      I shall not refer to some of the other equally important Amendments which are being discussed with Amendment No.
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      45. I am certain that many hon. Members on this side will wish to speak to those Amendments. I hope that many of the Amendments will commend themselves to the Financial Secretary and that we shall this time have a less disappointing answer than that which we received in the debate on the previous Amendment
      Sir G. Nabarro: I hope that the two Members for Oldham—my hon. and learned Friend the Member for Oldham, West (Mr. Bruce Campbell) and the hon. Member for Oldham, East (Mr. Mapp)—who expressed such antipathy towards this increase in purchase tax on household textiles will be seen walking through the Lobbies in unison, thus representing the staple industry of the famous borough of Oldham in Lancashire. If the hon. Member for Oldham, East runs out on it and either abstains or votes with his party, I hope that my hon. and learned Friend the Member for Oldham, West will ensure in his constituency that his counterpart in the other half of Oldham is castigated for his insincerity and hypocrisy.
      If there was anything that I disliked more than enough it was the behaviour of the Chancellor on Budget day in the context of the goods we are discussing on the Amendment. Had the right hon. Gentleman been unequivocal and forthright he would have risen in his place on Budget day and said, "I propose to bring into the purchase tax schedules, for the first time for 14 years, bed linen, towels and blankets". All of us sleep between bed linen.
      Mr. Lubbock: Not all of us.
      Sir G. Nabarro: Does not the hon. Gentleman? He is a coarse fellow. I exclude him at once. All civilised people sleep between bed linen. We understand what bed linen is. All civilised people keep themselves warm with blankets.
      Mr. Lubbock: I have an electric blanket, Gerald.
      Sir G. Nabarro: The hon. Gentleman must not call me "Gerald" in a debate. I, too, have an electric blanket, but the hon. Gentleman must be careful not to get himself out of order. Electric blankets are taxed as electrical accessories, not at 13¾ per cent. Were I to talk about electric blankets, Mr. Gourlay—I hope I am not instructing you; I am merely suggesting this to you—you would rightly rule me out of order at once.
      The Chancellor did not talk about bed linen, blankets and towels. In a
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      mealy-mouthed fashion characteristic of the right hon. Gentleman he used these equivocating terms:
      "… I do not think that the distinction between floor coverings, mattresses, cushions, furniture and clothing—which are taxed—and household textiles and cloth—which are not taxed—is a valid one. I therefore propose to bring in the latter category, as well as plastic wall-covering, knitting wool and sewing and dressmaking requisites, and paper tableware and handkerchiefs, at the lowest rate of 13 … per cent."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1023.]
      The right hon. Gentleman left us to deduce what was intended in the new additions to the purchase tax schedule.
      10.30 p.m.
      It took the trade nearly 72 hours before it realised fully what was to be brought from household textiles into this purchase tax bracket. It still does not realise entirely what is to be taxed and what is not to be taxed. Here I have the substance, were I to take unfair advantage, of another 400 Parliamentary Questions on purchase tax, so much disputation and doubt is there throughout the textile trade and the retail and wholesale trades serving the textile manufacturing industry as to what is to be taxed and what is not to be taxed. For example, I have a letter here about stockingette. We all know the importance of stockingette.
      Sir Douglas Glover: Tights.
      Sir G. Nabarro: I am exhorted to read the letter because it is important. It says:
      "Due to the new Purchase Tax regulations which come into effect as from the 27th May, 1969, Stockingette in its present form will be subject to such tax.
      "However, in order to exempt this material we must exclude one needle in fifty needles, so giving a continuous ladder in the material. The number of ladders depends on the width of the fabric, i.e., a 12″ wide fabric would probably contain 8–9 ladders.
      "The above applies only to Stockingette in rolls or cut lengths (including bags) and unbleached and undyed. For Bleached or Coloured Stockingette, the needles must be excluded as above and the fabric cut into lengths of less than 1 yard.
      "Stockingette Dusters that are stitched at both ends will not be exempt and therefore this material will continue to be manufactured in a perfect state.

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      "Unless our customers inform us to the contrary, all stockingette despatched after the 27th May, 1969, will be made up in the form as mentioned above.
      "Assuring you of our best attention, we are,
      "Yours faithfully,
      "J. C. Ley & Sons Ltd."
      The address is Caterbury Road Mills, Old Radford, Nottingham.
      I was asked to interpret this and my reply was, "Search me!" No one knows, whether it be stockingette in rolls, stockingette in packs, stockingette part-manufactured, stockingette manufactured only or stockingette in other forms, which is to attract purchase tax at 13¾ per cent. and which is to be exempt. I quote that as one example at random.
      I return to something a little more hoary. A face cloth is a household textile. Hitherto it was tax-free. There was always a certain amount of dubiety about it because whereas a face cloth that is used with soap to perform one's ablutions was said to be tax free most of the soap used with the face cloth was subject to tax at 36⅔ per cent. if perfumed, but if plain was not so subject to tax. This whole question of the performance of one's ablutions was surrounded by grave dubiety in the fiscal sense. The hon. Member for Bodmin (Mr. Bessell) will at once take the importance of the point of whether a face cloth is now free of tax.
      Dame Joan Vickers: If it is a baby's face cloth it will be taxed.
      Sir G. Nabarro: I am coming to babies in a minute. Is a face cloth taxed or not? Even it if it is taxed at 13¾ per cent., why is ordinary toilet soap taxed at 36⅔ per cent.? Why, in a comparable sense, is a tooth brush not taxed whereas toothpaste is taxed at 36⅔ per cent.? Are we all supposed to clean our teeth with salt and water and not buy toothpaste at a chemist's shop? The Financial Secretary need not look so grim and cross with me.
      Mr. Harold Lever: I am not grim and cross but nostalgic at hearing the hon. Gentleman's act in rather different circumstances from those in which I have heard it so many times under a Conservative Government.
      Sir G. Nabarro: The hon. Gentleman is being unkind. Unless I am much mistaken, I have been talking in this place about purchase tax for 19 years and have never mentioned tooth brushes before.
      Mr. Lever: Oh, yes, he has.
      Sir G. Nabarro: It is no good the Financial Secretary saying that I have. My memory may have failed me, but I do not believe that I have. [HON. MEMBERS: "What about dentures?"] I am not concerned with dentures. I have all my own teeth. I get through a large number of tooth brushes annually. A tooth brush is an important item in performing one's ablutions. I want to know why toothpaste is taxed at 36⅔ per cent. whereas a tooth brush is let off scot-free.
      My hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) mentioned babies. Most of us who have families are aware of the cost of having a baby. I am painfully aware myself of the cost of having a baby.
      Sir D. Glover: Very painful.
      Sir G. Nabarro: I have paid four times over the cost of having a baby. I want to say something about a serious matter this evening. Every year several hundred thousand families in Britain have new babies. In spite of the solicitude for babies which the Labour Party showed on the hustings—Labour candidates were breaking their hearts in 1964 and 1966 about how well they would look after babies in Oldham and Torrington and all over the country, saying how the wicked Tories had oppressed the babies and made it most expensive to have babies—here the Labour Government are putting a tax on motherhood, I call it, for the first time, deliberately inflating the pecuniary cost of producing a child.
      I shall exclude baby clothes because most expectant mothers knit most of the baby clothes for their children.
      Mr. Scott-Hopkins: Those clothes will be taxed now.
      Sir G. Nabarro: I agree, but I shall omit them and refer to the layette—what do you call what goes into the pram?
      Mr. Michael Shaw: A baby.
      Sir G. Nabarro: The manufactured textiles that go into the pram and on the bed and so on. I shall tell the Committee approximately how much the wicked Treasury Ministers propose to extract from the pockets of mothers of new babies by this iniquitous purchase tax. [Interruption.] I see the hon. Member for Stockport, South (Mr. Orbach) sitting below the Bar of the House bawling at me. Would you please stop him, Mr. Gourlay, and bring him into the Committee so that I may deal with him?
      The Temporary Chairman: Order. I would merely say that interruptions are to be deprecated at all times, and when they are from outside the Committee much more so.
      Sir G. Nabarro: I am grateful for your protection, Mr. Gourlay. I now return to babies. Take a quilt set for the perambulator. It costs £1 17s. 6d., tax will now be 3s. 4d. For the blankets, at £1 15s. two of them, the tax now will be 3s. 2d.; rugs at £3, two of them, the tax will now be 5s. 6d.; the sheets at 30s. three of them, the tax will be 2s. 6d.; take pillow cases at a guinea, three of them, the tax will be 2s.; take a "Mattrillow" at 18s., two of them, the tax will be 1s. 8d.; take rubber sheets—
      Hon. Members: Hear, hear.
      Sir G. Nabarro: I do not know why the hon. Member for Buckingham (Mr. Maxwell) is roaring with laughter. He has been through the performance seven times. I have only been through it four times. He knows what rubber sheets are for. It will be 5s. 6d. for the rubber sheets, the tax on them will be 6d. The cot quilt costs 33s., tax 3s. ld.; blankets £3 7s., tax 6s. 4d. for two; sheets £5 10s. for four, the tax 10s. 4d.; pillow cases at 28s. for four, tax 2s. 8d.; rubber sheets, 11s. for one, tax 1s.
      Take the miscellaneous items, baby's first blankets, 22s. for two, tax 4s.; face cloths, 6s. for four, tax 8d.; bath towels. 30s., three of them, tax 2s. 9d.; safety pins, 3s. for two packs, tax 4d.; knitting wool, 26s. two packs, tax 2s. 2d.; one pushchair quilt, 58s. 6d., tax 5s. 6d.
      The total cost of all those accoutrements for the baby's arrival, leaving out the baby clothes, retail, is £30 1s. 6d. Purchase tax levied is £2 17s. 6d. repre-
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      senting an increase of 9½ per cent. in the cost of motherhood. The Labour Government's newest tax, the tax on motherhood, is at the rate of 9½ per cent. It is no good the Financial Secretary nodding disapproval—I know that I am hurting him; I intend to hurt him. He is a wicked, uncharitable chap putting a tax on motherhood, and I shall rub it into him at the next election. I can almost hear myself on the hustings now.
      Mr. Mapp: I am listening with care to an interesting and humorous speech, but some of us are wondering why there is a gap between the day of birth and the "pins and layette" stage. Why has the hon. Gentleman missed out the napkins? They are subject to the tax.
      Sir G. Nabarro: I had not got them on my list. I apologise for excluding the diapers. I did not make up these figures. My source is one of the largest firms in the country engaged in the manufacture of textiles and so on of this kind. The firm is called Mothercare, and it sent me these statistics. I have no doubt they are absolutely accurate. The Financial Secretary need not worry and send off his civil servants for a copy, I intend to give him this copy. I want him to be thoroughly initiated into mothercare matters and to study all the delightful illustrations in the book.
      I have said enough to convince the Chairman of my party, my right hon. Friend the Member for Altrincham and Sale (Mr. Barber), what his line should be at the next General Election, and what should be the nature of his propaganda, if he has not already perceived it.
      I join my hon. Friend the Member for Worthing (Mr. Higgins), who led me forward so intelligently and who inspired this speech from me this evening. I warmly congratulate him on his speech at the outset of the debate, and I assure him and the whole of my party that I will vote with alacrity, taking with me—carrying if necessary—the hon. Member for Oldham, East and my hon. and learned Friend the Member for Oldham, West, both of whom should be our important confederates in this Amendment.
      10.45 p.m.
      Mr. Pounder: Together with Amendment 45, several other Amendments have been bracketed, one of which is No. 46

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      which seeks to exempt linen from the proposed imposition of purchase tax at the rate of 13¾ per cent. I shall be very brief, since many other hon. Members wish to speak.
      The Amendment refers to linen, although, as a Member for a Northern Irish constituency, I have Northern Irish linen uppermost in my mind. I understand there is a linen factory in Dumfries, and it would be wrong, therefore, to exclude Dumfries.
      There is little doubt that the imposition of purchase tax on a wide range of textiles, which for many years have been exempt, will be harmful to the entire textile industry in the United Kingdom. The hon. Member for Oldham, East (Mr. Mapp), spoke forcefully on behalf of the cotton industry and, of course, the linen industry is also part of the textile trade.
      Potential customers will genuinely be tempted to purchase cheap imported cloth. I understand that the present quota system is in operation only until 1971 and that as matters stand at present thereafter the floodgates will be wide open for cheap overseas imports. The serious consequences which would flow from this do not have to be emphasised to the Committee.
      It would not surprise me if the Financial Secretary reminded the Committee that until 1955 purchase tax was levied on linen and other textiles; but the reason why textiles were exempted was the worsening employment position in the industry at that time. I well remember, when I was a student accountant, in the 1950s being engaged in the audit of a large number of small and medium sized linen firms in Northern Ireland. In those days this traditional Ulster industry was passing through a critical time. Many firms had gone into liquidation and others were eking out a meagre existence, while a small number of firms who had gambled all their substance on modernisation managed to stay in business. The abolition of purchase tax in 1955 was a lifeline to the industry.
      About 35,000 people are now employed in the linen industry and its ancillaries in Northern Ireland. This may not sound a large number, but it nevertheless represents 7·2 per cent. of the entire insured working population in
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      Northern Ireland, and it will readily be appreciated that I am talking about a major industry and a major source of employment. Inevitably, the imposition of purchase tax will lead to a reduction in home market demand, with a consequential cut-back in production.
      It is an accepted industrial axiom that, in order to have a competitive export trade, there must be a buoyant home market which can absorb a fair proportion of the overhead expenses. At present the Irish linen industry has an annual export market valued at £13 million, the bulk of which goes to North America, where it is a substantial dollar earner. Exports amount to 50 per cent. of the total output of the industry.
      In view of the even balance between export and home sales, a cut-back in home demand will obviously set off a regrettable trend in reduced export sales. It is unrealistic to imagine that a slackening of home demand will be taken up by greater export sales. I therefore respectfully suggest to the Committee that the imposition of purchase tax at any figure, and certainly at 13¾ per cent., would undeniably have a serious adverse effect on the trading and employment position of the linen industry.
      I conclude by trying to correct the impression in some people's minds as a justification for imposing purchase tax on linen that it is a luxury article. That is nonsense. The fact that it is a quality article does not mean that it is necessarily a luxury article. Since when have drying cloths become classified as luxury items? Yet they represent a substantial part of linen production.
      I hope that the Chancellor will be prepared to reconsider his decision to levy purchase tax on linen goods, bearing in mind the major rôle which linen manufacture plays in an area such as Northern Ireland, where employment opportunities, although steadily improving, are limited and where, if there were a recession, it could have serious economic consequences for the area.
      Mr. Michael Noble: I should like to keep the Committee for only two short minutes, first, to support my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) in his plea on behalf of the jute industry. I remember only too well that four or five years ago,

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      when the jute industry was in considerable trouble due largely to competition with cheap imports from India and Pakistan, it was the policy of everybody to try to switch as much as possible of their production to higher-quality and, therefore, more remunerative goods. This was successfully done by a number of firms. I hope, therefore, that in considering this problem, the Financial Secretary will find it possible in his heart to give some sort of help to them, because they were trying to achieve in what is a traditionally difficult industry, a viable way out of a difficult problem.
      I should also like the Financial Secretary to consider for a moment the problem of a quite different type of textile industry, scattered more on my side of Scotland than in the jute industry side, which is largely in the Dundee area. There has been growing up in recent years a quite considerable number of very small units of people who are making a variety of mostly very attractive textiles on hand looms. This is not, as in the old days, a croft industry, although some crofters, no doubt, take part in it, but is a craft industry and one which is of real value to the whole area. It produces some exports and certainly some very useful goods which tourists buy.
      These people are finding it exceedingly difficult not only to pay the purchase tax—this, perhaps, they can often recoup—but, when producing a quite small number of goods and without the support of an efficient industry, keeping all the forms, filling them up and returning them regularly week after week. This discourages people from doing a useful piece of work not only for themselves, but for the community and for the tourist industry.
      I hope that in considering the problems of purchase tax on goods of this type, the Financial Secretary may be able in some way to exempt those small industries, which are essentially craft industries and not a large industrial concern.
      Mr. David Waddington: I hope that when he replies the Financial Secretary will not advance the same arguments as he advanced in the last debate. He can be very beguiling, but he will have to do a lot better than he did last time to beguile us
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      when we are dealing with these important matters.
      I thought that it was rather disgraceful to suggest that it really did not matter very much increasing the tax on knitting wool because the old people who knitted could be compensated by an increase in social security benefits. That did not seem to me to be a very good argument.
      Mr. Harold Lever: It is not a very good argument, and it was never used by me.
      Mr. Waddington: I was here throughout the debate, and it was precisely the argument advanced by the Financial Secretary. It is certainly not a valid argument when we are dealing with household textiles and furnishing fabrics. It is beyond argument that many of the people who will be affected by this tax cannot, and will not, be compensated by increased social security benefits. Take, for instance, people who are about to get married. Take the increased cost of a pair of sheets as a result of this new tax. It will be an increase to the tune of 10s. a pair.
      In dealing with this group of Amendments we have to remember the history of purchase tax, as has been mentioned by my hon. Friend the Member for Belfast, South (Mr. Pounder). It was not for nothing that in 1955 these goods were exempted. They were exempted because it was acknowledged at that time that the textile industry was suffering from special difficulties. Anybody who has read the Textile Council's Report, published a few days ago, would realise that the textile industry is still facing considerable difficulties. I make no apology for speaking again on this matter, having done so on Second Reading. It is outrageous that the Government for months and months fobbed us off when we asked questions about the textile industry with the reply "Wait for the Textile Council's Report" and, having waited for it, within three weeks of publication gave the industry the biggest kick in the teeth it has had for years and years.
      We have to consider the impact on young people of the new tax; the impact on elderly people who have reached the stage in life when they have to spend money on re-equipping themselves with bed linen; and to consider the serious

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      have on the textile industry which al-effect the increased tax will undoubtedly ready has enough problems on its plate. I hope that when the Financial Secretary comes to reply he will not fob us off with the sort of arguments he advanced an hour or two ago, and that he will not reply in the spirit of the Minister of State when he replied on Second Reading and said what nonsense it was to suggest, when one is arguing in favour of spreading the tax net more widely, that no tax should be imposed on household textiles. That also is not a good argument.
      I am prepared to argue in favour of widening the tax net, but what a funny time to impose 13¼ per cent. on a narrow range of necessities bought by elderly people, who certainly did not need clobbering in the way the Chancellor is now choosing to clobber them, and young people about to marry. I ask the Government to give way on this and to think again, very hard indeed.
      Mr. F. A. Burden: I would like to ask the Financial Secretary about a closely defined area. The Government, it would be agreed, have constantly increased the cost of living for the young marrieds since they have been in power. They have increased the cost of their homes and made it more difficult for them to make both ends meet.
      I do not take the view of some of my hon. Friends that the Chancellor is devious or hard-hearted. I have always found him realistic and approachable. We all know that when a Chancellor introduces a Finance Bill he has a little something up his sleeve and that he can give way where it is considered necessary, and indeed desirable. Under this Bill a further burden is to be imposed on people by the introduction of purchase tax on cot and pram items. I put down an Amendment to deal with this, but because I suggested that it was to deal with pram and cot items, despite the fact that I asked for guidance in getting it into order, I understand that those words put it out of order. Nevertheless, it can be discussed in the context of this debate.
      11.0 p.m.
      The Government are now proposing to impose purchase tax at 13¾ per cent. on cot and pram items. I listened with great interest to the points made by my hon.
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      Friend the Member for Nelson and Colne (Mr. Waddington), and I congratulate him on the fluency and cogency of his argument. He said that this rate of purchase tax would increase the cost of a pair of sheets by 10s. As profit is taken on purchase tax plus the price of the goods, the cost of articles will be increased by at least 20 per cent.
      The Financial Secretary shakes his head. If he does not believe that he is living in a fool's paradise. He does not know the facts of life, and it is time that he went to the shops and found out what happens when purchase tax is imposed. The hon. Gentleman is the Financial Secretary to the Treasury. What he is saying is that if he were in business he would not charge his profit on the prime cost of the goods but on half the cost of the goods. That is nonsense, as everybody who is engaged in trade, and particularly this trade, knows full well. I see that the hon. Gentleman agrees with me.
      Mr. Cyril Bence: Who, me?
      Mr. Burden: Well, the hon. Gentleman was shaking his head.
      Mr. Bence: When some of us used that argument to Lord Butler, as he now is, he used to say that it was nonsense.
      Mr. Burden: I do not care whether Lord Butler said it was nonsense, or whether Fanny Adams said it was nonsense. I know that when merchandise is sold the cost to the buyer includes the profit on the cost of the article plus the purchase tax. It is no good the hon. Gentleman saying "No" unless he can prove it that that is not the case, because the Government have passed legislation which makes it impossible for shops to put their profit on to the total cost of the goods they buy. People will have to pay about 20 per cent. more for pram and cot covers, as well as for household linen.
      Under the extended purchase tax orders, cot and pram quilts, cot sheets, pillow cases, blankets and rugs come under the all-embracing heading of
      "Articles of textile, plastic, paper, or similar material of a kind used for soft furnishings, bedding or other domestic purposes …"
      There is the strongest case for these proposals being reconsidered, since the following items are already specifically

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      exempted, on a long-established basis—purely and simply because they are items used by young children: young children's clothing, babies' carrying shawls, bibs and feeders, baby bags with finished head openings and sleeves, or shaped armholes, babies' headgear, infants' napkins—my hon. Friend said that napkins were not excluded, but they are; I am glad to be able to tell him that they are—and perambulators and cots themselves. But now it is proposed to put on a tax—
      Sir G. Nabarro: I defer to my hon. Friend's superior knowledge of diapers and the tax arrangements in respect of them. I accept that diapers are excluded. But diaper pins are not excluded, so we now have the further anomaly that the nappy is excluded but the pin is included.
      Mr. Burden: Has my hon. Friend thought that safety pins could be extremely dangerous implements, and it may be that some better way of fastening napkins has been found, and this is intended as a deterrent?
      The Temporary Chairman (Mr. Bryant Godman Irvine): Order. I can find nothing about safety pins in the Amendment.
      Mr. Burden: I was led out of order by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), and I apologise. The Bill does not propose to introduce purchase tax on any of the items that I have listed. We must be thankful, because I presume that these are easily identifiable articles, as those required by small children. I hope that the Minister will agree that they are not easily adaptable for any other use. It is obvious that the Chancellor deliberately excluded them from tax, realising the hardship that would be created, especially upon poor families. We must therefore logically assume, that there was no intention whatsoever to include these articles, which are now threatened by purchase tax. They are all required for the welfare and comfort of small children.
      I believe that these items slipped in without the knowledge of the Chancellor, and that it was an oversight, and that tonight the hon. Member will be able to give an undertaking that the tax on these items will be removed. I appreciate that the Minister is engaged in
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      serious conversation at the moment, to see whether he cannot give way, but if he will give me his attention I should like to hammer home my argument a little further. I know the problems that face the Minister. There is often the question of definition. But there is no such problem here.
      I have here a letter from the Household Textile Association which says:
      "This Association, whose members are engaged in the production and distribution of made-up household textiles, is of the opinion that it is incongruous that certain items used by or for babies should be exempted from Purchase Tax whilst others are not. We refer, of course, to the fact that under the extended Purchase Tax orders, cot and pram quilts, sheets and pillow cases, blankets and rugs, etc., become chargeable under the all-embracing heading of 'articles of textile, plastics, paper or similar material of a kind used for soft furnishings, bedding or other domestic purposes'."
      They take great exception to this.
      Let me add some facts about the increased cost which will now fall on the mother having a new baby. It has been estimated that a minimum equipment comprising one cot quilt, two pillow cases, two blankets, and two flannelette sheets, now costing £12 10s., will go up to £13 10s. That is the absolute minimum, but an average equipment consisting of one pram rug, one cot quilt, two pillow cases, four blankets and six flannelette sheets now costing £20 18s. 6d. will, after the increase of Purchase Tax, cost £23 15s. 4d.
      I believe that the hon. Gentleman has a family, and I think he will agree with me that equipping a baby is quite an expensive operation, and there are many other items of expenditure which put great strains on young people's budget when they have a child. I do not believe it is the intention of the Government to single out new parents particularly for the imposition of additional financial hardship.
      In many cases when families have their first child they suffer a very considerable cut-back in the family income.
      Really I must ask hon. Gentlemen—
      The Temporary Chairman: Order. Noise contributes nothing to the proceedings.
      Mr. Burden: I am quite sure it is not the intention of the Government to increase the hardship on families with

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      young children. In many instances, in order to have their first child, the wife, who has probably been contributing considerably to the family income by going out to work, has to give that up, and for the first time there is not only the cost of having the infant, and all that that brings about, but also there is a considerable cut-back in the family income. I hope the hon. Gentleman will take that into consideration when he comes to reply.
      If these items are not exempted from tax they will make the financial position of many new parents utterly unbearable. There is no question of being able to avoid the outlay. These are all items which are absolutely necessary when a new child comes into the world. I must ask the Chancellor to accept this Amendment and to give way on this. Surely the cost is not substantial? Whatever the cost may be, would it not be better to lose the tax that will be derived from this rather than attract the odium that will fall on the Government from young mums and dads if they have to pay this very considerable extra cost that will be imposed?
      I hope the Chancellor will not exaggerate the difficulties of exempting these particular items because of problems of precise definition. There was no difficulty when items for babies were omitted before. The textile associations are confident that exemption could be safely administered on a maximum size criterion by arrangement with the Customs and Excise. I hope that the hon. Gentleman will be able to give way on this point.
      11.15 p.m.
      Mr. Harold Lever: We have had an interesting debate, and a great deal of passion. Unlike some hon. Members, I always accept that hon. Members speak on these matters with great sincerity and feeling. It was never part of my case in our similar discussion earlier that we should not be sympathetic to people who are blind or disabled or bedridden. I said that it was impossible effectively to show that sympathy by exempting from purchase tax the classes of people who most excite our compassion. One cannot look to the destination of the goods but only to the category of goods when imposing purchase tax. Any attempt to
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      do otherwise would destroy any possibility of indirect taxation at all.
      Our argument this time has ranged around babies, mothers and the bedridden. I noticed—I am not questioning anyone's sincerity—that the hon. Members for Bodmin (Mrs. Bessell) and Worcestershire, South (Sir G. Nabarro) and others, who were incensed at the notion that the invalid section of the community, who presumably wear out their bed linen faster than the healthy section, seem to have ignored the tax on mattresses, which has existed since 1940 and was doubled in 1962 by the Conservative Government. This seems to have escaped their passion, although it is a not unreasonable inference that the bedridden and the sick appreciate their mattresses at least as much as the rest of us.
      I do not suggest that the debate has been widespread, but all this talk of beds and mattresses and linen might produce some curtailment in my speech, in the hope that hon. Members might feel that a brief summary of their arguments might facilitate their practical experience of those desirable household textiles.
      Mr. Bessell: Since I was not here in 1962, could the hon. Gentleman tell me whether his party opposed the purchase tax on mattresses? If they did, how does it come about that they are now imposing a purchase tax on blankets?
      Mr. Lever: I never keep a tally of the battles between Opposition and Government on the details of purchase tax and the Finance Bill. I have heard hon. Members under one Government passionately denouncing the tax on toothpaste as undermining the nation's health, and the same hon. Members, in right hon. guise, solidly defending the right to increase that same tax a year or so later. This is one of the troublesome aspects of Finance Bill Committees which I have not been able altogether to reassure myself about.
      The hon. Member for Worthing (Mr. Higgins) said that there was some doubt in the minds of the public about which articles are affected. All cloths exempt under pre-1955 regulations will be exempt here. We are going back to the pre-1955 position, when there were careful regulations, which are now being restored,

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      which will exempt all cloths which are intended for industry and which are not household textiles as such.
      He asked me about the scope of the tax on items going into further states of production, and especially into nontaxable articles. If a taxable cloth were used in a non-taxable tarpaulin for example, he wanted to know what would happen. There is a general rule, with which many hon. Members may be familiar, that where one uses a taxable article in making a non-taxable article, one can register and get one's supplies in such a form that one does not pay tax on the taxable article, since its ultimate destination is thought, for one reason or another, to be non-taxable.
      I assure the hon. Member for Bodmin that in dealing with the points he raised in quoting from his Amendment I am not intending to ridicule his proposal, which, I am sure, comes from a warm heart if not from a practical administrative head. I invite him to examine the words:
      "… except sheets, pillow cases or blankets, used by persons confined to bed by sickness, and upon the certificate of a medical practitioner, for a period in excess of two months."
      He is prepared to accept a period longer or shorter than two months, but he will appreciate that the whole idea of exempting bedlinen on condition that it has been certified that somebody is in bed for two or three months, or for any other specified statutory period, would be impossible to administer.
      We would need not only a certificate of illness, but a certificate of occupancy of the sick bed and a certificate to the effect that only the sick person was using the items. This would be a considerable administrative burden, especially if we were to carry the idea into the realm of the other areas into which the hon. Gentleman wants to go, such as boarding schools, hospitals, nursing homes and so on. I am sure that, on reflection, the hon. Gentleman will agree that there are insuperable practical difficulties.
      Mr. Bessell: Is not the Financial Secretary aware that during the war special allocation of coupons were issued for clothing and other articles of a similar nature for cases such as this? There were administrative difficulties, but they
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      did not prove insuperable. I am sure that they could be overcome for the permanently bedridden.
      Mr. Lever: I cannot see a satisfactory analogy between issuing coupons entitling people to buy rather more of certain articles and making tax free articles on which the rest of the population must pay tax.
      I must disappoint hon. Members who have been able to lash themselves into a state of indignation over this matter. I understand the sincerity of their feelings on behalf of the sick, disabled and blind, but what they are discussing is not the original sin of this Government. This has been the practice of successive Governments, who have said that one cannot exempt unidentifiable articles from purchase tax in this way. We have still left exempt specialised equipment for people who are bedridden or sick, and we will no doubt continue to do that wherever possible, but we cannot exempt items in general use.
      It was suggested that this would be a death blow to the textile industry. This is nonsense because the languishing condition of the cotton textile industry, to which my hon. Friend the Member for Oldham, East (Mr. Mapp) referred, has been arrived at during the last few years, when its products have been wholly exempt.
      My hon. Friend must not anticipate events. Whatever the industry's present condition, it cannot be attributed to a tax that has not yet come into force. I hope that my hon. Friend will, with this assurance, feel relieved in the knowledge that this tax cannot have produced the difficulties at present being experienced by the industry and will come into the Lobby with us. Next year, if he finds that some damage has been done and if he has evidence to support that view, he might consider abstaining.
      My right hon. Friend has commented on the question of this being a blunt instrument for dealing with the regions, particularly when one bears in mind the possibility of giving exemptions to products which may or may not be made in particular regions.
      I have left aside the point made by the hon. Member for Worthing about the retail trade, which is treated in exactly the same way for the purpose of this tax

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      as it is in relation to any other purchase tax change. If the hon. Gentleman wants further details, I will let him have them at a convenient time. I assure him that it applies on this score as it does in every other purchase tax change.
      For the reasons which I gave before, and which I do not wish to repeat, those who are anxious to broaden the tax basis and make it less distorted in its consequences will opt for this sort of tax at a low level instead of adding to the burden on goods which are already sufficiently highly taxed—
      Mr. Bruce-Gardyne: I do not know whether the Financial Secretary's reference to the regional arguments is all that he proposes to say about the special position of the jute industry, which is not a regional matter but a separately identifiable issue which has not raised the objections which the hon. Gentleman earlier mentioned.
      Mr. Lever: The same argument applies to particular industries. I do not think that any case has been sufficiently made out for exemption from a very small tax—which is not 20 per cent., as the hon. Gentleman believes. His hon. Friend the Member for Worcestershire, South is, I think, more experienced and accurate on this point. He is roughly right in saying that between 9½ per cent. and 10 per cent. is the incidence of this tax on retail prices. It is no use the hon. Gentleman shaking his head. On this issue, the hon. Member for Worcestershire, South, who is an experienced man and not, I think, prone to understatement in matters of this nature, agrees with me—
      Sir G. Nabarro: Is not the Financial Secretary not now admitting, for the benefit of posterity, that what I alluded to as a tax on motherhood is between 9½ per cent. and 10 per cent.? Would he make it perfectly clear—I want it on the record—that it is a tax on motherhood of between 9½ per cent. and 10 per cent.?
      Mr. Lever: This is not tax on mothers, thought there are some hon. Members who might think that in some cases one would wish to put a tax on particular mothers of particular children. This is merely a tax on certain textiles which, admittedly, form part of the expenses of
      590
      motherhood and, of course, it naturally adds to the cost of it. But it is a general tax on household textiles.
      For these reasons, I would urge the Committee—
      Mr. Burden: Will the hon. Gentleman give his arguments for not taking off the tax on prams and cots, and items for small children? Will he also tell the Committee how he arrives at the view that whereas the charges are 13¼ per cent. the retail price will rise only by 9 per cent.?
      Mr. Lever: Prices will rise by between 9½ per cent. and 10 per cent. on the purchase tax as calculated on the wholesale price. That is the short answer to the hon. Gentleman.
      For the reasons I have given, I hope that the Committee will now feel able to come to a decision favourable to the Chancellor of the Exchequer's proposals and reject the Amendment.
      Mr. Higgins: I very much hope that the Committee will do no such thing. It is perfectly clear that in this Amendment, as in many other Amendments, we seek to do something to help the balance of payments, about which the Government seem to do nothing at all in the Budget. It is quite clear that if one imposes an ad valorem tax of this kind it will be likely to fall more on the dearer home products than on the cheaper import end of the market. I say in all seriousness that I am very disappointed with the Financial Secretary's reply, because quite apart from the merits or demerits of the tax increase as such there is grave concern in the industry on the very points to which I have already referred. The answers given by the hon. Gentleman on those points are not adequate.
      I asked, first of all, what was the position in regard to industrial cloths. The hon. Gentleman said that the position was the same as it was in 1955. If that is so, it would have been the simple answer to give those firms that have been in business as long as that, but they have not been given that answer, and they are still in grave confusion about the position. It would appear that the officers under him are not giving them the assurances that they require.

      591
      11.30 p.m.
      The second point I raised was with regard to the imposition of tax at one stage when the product which it was used in was not taxed. The hon. Gentleman said that it is clear that it is registration certificates. I quote just one example. A large producer of cotton textiles had, as of the 13th of this month, a list of 17 firms which had not so far provided a tax registration certificate, including firms as large as I.C.I., Courtaulds, and so on. Given the state of the post, and given the fact that the tax comes into operation on 26th and 27th May, the Financial Secretary's answer was not satisfactory. I hope that he will pursue the matter within the industry at the earliest possible moment and with the greatest possible urgency.
      Again, I asked a specific question about book binding. I got absolutely no reply from the Financial Secretary. I asked a specific question with regard to the question of discrimination, the way in which the tax will fall against a large, efficient, high quality producer as against producers in the middle and at the tail end of the market. I got absolutely no semblance of reply from the hon. Gentleman. Therefore, on all these points, about which the industry itself is gravely concerned, the hon. Gentleman has failed to take this opportunity of clarifying the position.
      Mr. Harold Lever: It is impossible in this Committee for me to define with legal exactitude and comprehensiveness the vast number of exemptions covered under the 1955 Regulations. I will, however, take the hon. Gentleman's point
      and ensure, if it is not already being done, that all those affected are fully informed in detail—it spreads over many pages—of the definitions. I did not think that the Committee would want me to read all that at this hour. If the hon. Gentleman wants it, I shall be happy to see that any particular area is informed with special care on the points he raised.
      Mr. Higgins: The hon. Gentleman could have given a clearer answer than that which he gave and he did not deal with the three points I have mentioned. This is not a satisfactory state of affairs. Now, more than a month after the Budget, and with the tax due to take effect on the 26th or 27th of this month, we are told that the Financial Secretary will chase the matter up. This is not good enough. I will not labour the point any more. I should have thought that I have made sufficient of it, and I hope that the hon. Gentleman will now do what he can in the short time available to reassure the industry on these points.
      The fundamental point has been made by my hon. Friends that this is an untimely measure coming on top, as it does, of the Textile Council's Report. It is one which hits, as my hon. Friends have stressed at great length, invalids and those with young children. I do not believe that it is a measure which should be applied at this time. I hope that my right hon. and hon. Friends and those who have spoken against it from other parts of the Committee will join us in the Lobby in support of the Amendment.
      Question put, That the Amendment be made:—
      The Committee divided: Ayes 212, Noes 256.

      Division No. 229.]

      AYES

      [11.34 p.m.

      Alison, Michael (Barkston Ash)

      Boyle, R. Hn. Sir Edward

      Crouch, David

      Allason, James (Hemel Hempstead)

      Braine, Bernard

      Crowder, F. P.

      Amery, Rt. Hn. Julian

      Brewis, John

      Cunningham, Sir Knox

      Astor, John

      Brinton, Sir Tatton

      Dalkeith, Earl of

      Awdry, Daniel

      Bromley-Davenport, Lt.-Col. Sir Walter

      Dance, James

      Baker, Kenneth (Acton)

      Brown, Sir Edward (Bath)

      d'Avigdor-Goldsmid, Sir Henry

      Baker, W. H. K. (Banff)

      Bruce-Gardyne, J.

      Dean, Paul

      Balniel, Lord

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

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

      Barber, Rt. Hn. Anthony

      Buck, Antony (Colchester)

      Digby, Simon Wingfield

      Batsford, Brian

      Bullus, Sir Eric

      Dodds-Parker, Douglas

      Beamish, Col. Sir Tufton

      Burden, F. A.

      Doughty, Charles

      Bennett, Dr. Reginald (Gos. & Fhm)

      Campbell, B. (Oldham, W.)

      Drayson, G. B.

      Berry, Hn. Anthony

      Campbell, Gordon (Moray & Nairn)

      du Cann, Rt. Hn. Edward

      Bessell, Peter

      Channon, H. P. G.

      Eden, Sir John

      Biffen, John

      Clark, Henry

      Elliot, Capt. Walter (Carshalton)

      Biggs-Davison, John

      Clegg, Walter

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

      Birch, Rt. Hn. Nigel

      Cooke, Robert

      Emery, Peter

      Blaker, Peter

      Cordle, John

      Errington, Sir Eric

      Boardman, Tom (Leicester, S. W.)

      Corfield, F. V.

      Eyre, Reginald

      Body, Richard

      Costain, A. P.

      Farr, John

      Fisher, Nigel

      Lane, David

      Renton, Rt. Hn. Sir David

      Fortescue, Tim

      Legge-Bourke, Sir Harry

      Rhys Williams, Sir Brandon

      Foster, Sir John

      Lewis, Kenneth (Rutland)

      Ridley, Hn. Nicholas

      Galbraith, Hn. T. G.

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

      Ridsdale, Julian

      Gilmour, Ian (Norfolk, C.)

      Lloyd Ian (P'tsm'th, Langstone)

      Rodgers, Sir John (Sevenoaks)

      Glover, Sir Douglas

      Lloyd, Rt. Hn. Selwyn (Wirral)

      Rossi, Hugh (Hornsey)

      Glyn, Sir Richard

      Longden, Gilbert

      Russwll, Sir Ronald

      Godber, Rt. Hn. J. B.

      Lubbock, Eric

      St. John-Stevas, Norman

      Goodhart, Philip

      McAdden, Sir Stephen

      Scott, Nicholas

      Goodhew, Victor

      MacArthur, Ian

      Scott-Hopkins, James

      Gower, Raymond

      Maclean, Sir Fitzroy

      Sharples, Richard

      Grant-Ferris, R.

      Macleod, Rt. Hn. Iain

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

      Gresham Cooke, R.

      Macmillan, Maurice (Farnham)

      Silvester, Frederick

      Grieve, Percy

      McNair-Wilson, Michael

      Sinclair, Sir George

      Gurden, Harold

      McNair-Wilson, Patrick (New Forest)

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

      Hall, John (Wycombe)

      Maddan, Martin

      Smith, John (London & W'minster)

      Hall-Davis, A. G. F.

      Maginnis, John E.

      Speed, Keith

      Hamilton, Lord (Fermanagh)

      Marples, Rt. Hn. Ernest

      Stainton, Keith

      Hamilton, Michael (Salisbury)

      Marten, Neil

      Steel, David (Roxburgh)

      Harris, Frederic (Croydon, N. W.)

      Maude, Angus

      Stoddart-Scott, Col. Sir M.

      Harris, Reader (Heston)

      Maxwell-Hyslop, R. J.

      Summers, Sir Spencer

      Harrison, Brian (Maldon)

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

      Tapsell, Peter

      Harrison, Col. Sir Harwood (Eye)

      Mills, Peter (Torrington)

      Taylor, Sir Charles (Eastbourne)

      Harvey, Sir Arthur Vere

      Mills, Stratton (Belfast, N.)

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

      Harvie Anderson, Miss

      Miscampbell, Norman

      Taylor, Frank (Moss Side)

      Hastings, Stephen

      Mitchell, David (Basingstoke)

      Temple, John M.

      Hawkins, Paul

      More, Jasper

      Thatcher, Mrs. Margaret

      Hay, John

      Morgan-Giles, Rear-Adm.

      Thorpe, Rt. Hn. Jeremy

      Heald, Rt. Hn. Sir Lionel

      Morrison, Charles (Devizes)

      Turton, Rt. Hn. R. H.

      Heseltine, Michael

      Munro-Lucas-Tooth, Sir Hugh

      Vaughan-Morgan, Rt. Hn, Sir John

      Higgins, Terence L.

      Murton, Oscar

      Vickers, Dame Joan

      Hiley, Joseph

      Nabarro, Sir Gerald

      Waddington, David

      Hill, J. E. B.

      Neave, Airey

      Walker, Peter (Worcester)

      Holland, Philip

      Noble, Rt. Hn. Michael

      Wall, Patrick

      Hooson, Emlyn

      Nott, John

      Walters, Dennis

      Hordern, Peter

      Onslow, Cranley

      Ward, Dame Irene

      Hunt, John

      Orr, Capt. L. P. S.

      Weatherill, Bernard

      Hutchison, Michael Clark

      Orr-Ewing, Sir Ian

      Wells, John (Maidstone)

      Iremonger, T. L.

      Osborn, John (Hallam)

      Whitelaw, Rt. Hn. William

      Jenkin, Patrick (Woodford)

      Page, Graham (Crosby)

      Wiggin, A. W.

      Johnson Smith, G. (E. Grinstead)

      Pardoe, John

      Williams, Donald (Dudley)

      Jones, Arthur (Northants, S.)

      Peel, John

      Wilson, Geoffrey (Truro)

      Jopling, Michael

      Peyton, John

      Winstanley, Dr. M. P.

      Kaberry, Sir Donald

      Pink, R. Bonner

      Wood, Rt. Hn. Richard

      Kerby, Capt. Henry

      Pounder, Rafton

      Woodnutt, Mark

      Kershaw, Anthony

      Price, David (Eastleigh)

      Worsley, Marcus

      King, Evelyn (Dorset, S.)

      Prior, J. M. L.

      Wright, Esmond

      Kirk, Peter

      Pym, Francis

      Younger, Hn. George

      Kitson, Timothy

      Quennell, Miss J. M.

      Knight, Mrs. Jill

      Ramsden, Rt. Hn. James

      TELLERS FOR THE AYES:

      Lambton, Viscount

      Rawlinson, Rt. Hn. Sir Peter

      Mr. Anthony Royle and

      Lancaster, Col. C. G.

      Rees-Davies, W. R.

      Mr. Humphrey Atkins.

      NOES

      Albu, Austen

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

      Edelman, Maurice

      Allaun, Frank (Salford, E.)

      Buchan, Norman

      Edwards, Robert (Bilston)

      Alldritt, Walter

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

      Edwards, William (Merioneth)

      Anderson, Donald

      Callaghan, Rt. Hn. James

      Ellis, John

      Archer, Peter

      Cant, R. B.

      English, Michael

      Ashton, Joe (Bassetlaw)

      Carmichael, Neil

      Ennals, David

      Atkins, Ronald (Preston, N.)

      Chapman, Donald

      Ensor, David

      Atkinson, Norman (Tottenham)

      Coe, Denis

      Evans, Fred (Caerphilly)

      Bagier, Gordon A. T.

      Coleman, Donald

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

      Barnes, Michael

      Corbet, Mrs. Freda

      Faulds, Andrew

      Barnett, Joel

      Crawshaw, Richard

      Fernyhough, E.

      Beaney, Alan

      Crosland, Rt. Hn. Anthony

      Finch, Harold

      Bence, Cyril

      Davldson, Arthur (Accrington)

      Fitt, Gerard (Belfast, W.)

      Benn, Rt. Hn. Anthony Wedgwood

      Davies, G. Elfed (Rhondda, E.)

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

      Bidwell Sydney

      Davies, Dr. Ernest (Stretford)

      Fletcher, Raymond (Ilkeston)

      Binns, John

      Davies, Rt. Hn. Harold (Leek)

      Fletcher, Ted (Darlington)

      Bishop, E. S.

      Davies, Ifor (Cower)

      Foley, Maurice

      Blackburn, F.

      de Freitas, Rt. Hn. Sir Geoffrey

      Foot, Rt. Hn. Sir Dingle (Ipswich)

      Blenkinsop, Arthur

      Dell, Edmund

      Foot, Michael (Ebbw Vale)

      Booth, Albert

      Dempsey, James

      Ford, Ben

      Boston, Terence

      Diamond, Rt Hn. John

      Forrester, John

      Dickens, James

      Fraser, John (Norwood)

      Bottomley, Rt. Hn. Arthur

      Dobson, Ray

      Freeson, Reginald

      Boyden, James

      Doig, Peter

      Gardner, Tony

      Bradley, Tom

      Dunn, Jamee A.

      Garrett, W. E.

      Bray, Dr. Jeremy

      Dunnett, Jack

      Gordon Walker, Rt. Hn. P. C.

      Brooks, Edwin

      Dunwoody, Mrs. Gwyneth (Exeter)

      Gray, Dr. Hugh (Yarmouth)

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

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

      Greenwood, Rt. Hn. Anthony

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

      Eadie, Alex

      Gregory, Arnold

      594

      595

      Grey, Charles (Durham)

      McBride, Neil

      Rees, Merlyn

      Griffiths, David (Rother Valley)

      McCann, John

      Rhodes, Geoffrey

      Griffiths, Eddie (Brightside)

      MacColl, James

      Roberts, Albert (Normanton)

      Griffiths, Will (Exchange)

      Macdonald, A. H.

      Roberts, Rt. Hn. Goronwy

      Gunter, Rt. Hn. R. J.

      McGuire, Michael

      Robertson, Jotan (Paisley)

      Hamilton, James (Bothwell)

      McKay, Mrs. Margaret

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

      Hamilton, William (Fife, W.)

      Mackenzie, Gregor (Rutherglen)

      Rodgers, William (Stockton)

      Hamling, William

      Mackie, John

      Roebuck, Roy

      Hannan, William

      Mackintosh, John P.

      Rowlands, E.

      Harper, Joseph

      Maclennan, Robert

      Shaw, Arnold (Ilford, S.)

      Harrison, Walter (Wakefield)

      McNamara, J. Kevin

      Sheldon, Robert

      Hart, Rt. Hn. Judith

      MacPherson, Malcolm

      Shore, Rt. Hn. Peter (Stepney)

      Hattersley, Roy

      Mallalieu, E. L. (Brigg)

      Silkin, Rt. Hn. John (Deptford)

      Hazell, Bert

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

      Silkin, Hn. S. C. (Dulwich)

      Healey, Rt. Hn. Denis

      Manuel, Archie

      Silverman, Julius

      Heffer, Eric S.

      Marks, Kenneth

      Skeffington, Arthur

      Hilton, W. S.

      Marquand, David

      Slater, Joseph

      Hobden, Dennis

      Marsh, Rt. Hn. Richard

      Small, William

      Hooley, Frank

      Maxwell, Robert

      Spriggs, Leslie

      Houghton, Rt. Hn. Douglas

      Mellish, Rt Hn. Robert

      Stonehouse, Rt. Hn. John

      Howarth, Robert (Bolton, E.)

      Mendelson, John

      Strauss, Rt. Hn. G. R.

      Howell, Denis (Small Heath)

      Mikardo, Ian

      Summerskill, Hn. Dr. Shirley

      Howie, W.

      Millan, Bruce

      Swain, Thomas

      Hoy, James

      Milne, Edward (Blyth)

      Taverne, Dick

      Huckfield, Leslie

      Miller, Dr. M. S.

      Thomas, Rt. Hn. George

      Hughes, Hector (Aberdeen, N.)

      Molloy, William

      Thomson, Rt. Hn. George

      Hughes, Roy (Newport)

      Morgan, Elystan (Cardiganshire)

      Tinn, James

      Hunter, Adam

      Morris, John (Aberavon)

      Tomney, Frank

      Hynd, John

      Moyle, Roland

      Tuck, Raphael

      Irvine, Sir Arthur (Edge Hill)

      Mulley, Rt. Hn. Frederick

      Urwrn, T. W.

      Janner, Sir Barnett

      Murray, Albert

      Varley, Eric G.

      Jay, Rt. Hn. Douglas

      Neal, Harold

      Wainwright, Edwin (Dearne Valley)

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

      Newens, Stan

      Walker, Harold (Doncaster)

      Jenkins, Hugh (Putney)

      Oakes, Gordon

      Wallace, George

      Jenkins, Rt. Hn. Roy (Stechford)

      Ogden, Eric

      Watkins, David (Consett)

      Johnson, Carol (Lewisham, S.)

      Oram, Albert E.

      Watkins, Tudor (Brecon & Radnor)

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

      Orbach, Maurice

      Wellbeloved, James

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

      Orme, Stanley

      Wells, William (Walsall, N.)

      Jones, J. Idwal (Wrexham)

      Oswald, Thomas

      Whitaker, Ben

      Jones, T. Alec (Rhondda, West)

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

      White, Mrs. Eirene

      Kelley, Richard

      Owen, Will (Morpeth)

      Whitlock, William

      Kerr, Russell (Feltham)

      Padley, Walter

      Wilkins, W. A.

      Lawson, George

      Page, Derek (King's Lynn)

      Willey, Rt. Hn. Frederick

      Leadbitter, Ted

      Pannell, Rt. Hn. Charles

      Williams, Alan (Swansea, W.)

      Lee, Rt. Hn. Frederick (Newton)

      Park, Trevor

      Williams, Alan Lee (Hornchurch)

      Lee, John (Reading)

      Parker, John (Dagenham)

      Williams, Clifford (Abertillery)

      Lestor, Miss Joan

      Parkin, Ben (Paddington, N.)

      Williams, Mrs. Shirley (Hitchin)

      Lever, Harold (Cheetham)

      Parkyn, Brian (Bedford)

      Williams, W. T. (Warrington)

      Lever, L. M. (Ardwick)

      Pavitt, Laurence

      Willis, Rt. Hn. George

      Lewis, Arthur (W. Ham, N.)

      Pearson, Arthur (Pontypridd)

      Wilson, Rt. Hn. Harold (Huyton)

      Lewis, Ron (Carlisle)

      Peart, Rt. Hn. Fred

      Wilson, William (Coventry, S.)

      Lipton, Marcus

      Pentland, Norman

      Winnick, David

      Lomas, Kenneth

      Perry, Ernest G. (Battersea, S.)

      Woof, Robert

      Loughlin, Charles

      Perry, George H. (Nottingham, S)

      Wyatt, Woodrow

      Luard, Evan

      Prentice, Rt. Hn. R. E.

      Lyon, Alexander W. (York)

      Price, Thomas (Westhoughton

      TELLERS FOR THE NOES:

      Lyons, Edward (Bradford, E)

      Price, William (Rugby)

      Mr. Alan Fitch and

      Mabon, Dr. J. Dickson

      Probert, Arthur

      Mr. Charles R. Morris.

      11.45 p.m.
      Mr. Bessell: I beg to move Amendment No. 47, in page 74, line 30, leave out paragraph 4.
      The Temporary Chairman (Mr. Bryant Codman Irvine): It will be convenient also to take with this Amendment, Amendment No. 67, line 40, at end insert:
      (d) in paragraph (1) of the exemptions after the word 'fabrics' on the last occasion on which it occurs there shall be inserted the words 'other than window display material of jute'.
      Mr. Bessell: I say at once to the Financial Secretary that this is largely a probing Amendment. As the Schedule
      596
      stands, we have this rather complicated piece of legislation reading:
      "In Group 7—
      (a) after the words 'otherwise treated' there shall be inserted the words 'and plastic sheeting in the piece or in cut lengths, being sheeting of a kind suitable for making garments or curtains, tablecloths and similar soft furnishings'."
      That removes the words:
      "Tissues and fabrics not exceeding 12 inches in width."
      In (4)(b) we read:
      "For the words 'Tissues and fabrics not exceeding 12 inches in width' there shall be substituted the words 'Articles not comprised below in this Group'."
      I take it that, looking at page 128 of the 1963 Purchase Tax Act, this means

      597
      that those items listed as being exempt, fabrics of various kinds, braids, fringes, trimmings, jute, glass fibre, asbestos fabrics, etc., are included.
      This is also the effecr of (4) (c) and (d). We have a rather strange change, because instead of the adhesive gloss tape which was acceptable, provided it did not exceed three inches in width, it is now to be exempted at six inches in width. I want to know how much it is anticipated will be raised by way of the tax by including this group of items under the list of those which will now attract tax. What is this likely to mean in a full year in terms of revenue, and how valuable is it to create this additional complicated piece of taxation?
      I say "complicated" because of the number of exemptions which remain and the difficulty that must be caused to retailers and others who sell these materials, in having to decide which are exempted items. There will have to be purchase tax returns and so on. If the Financial Secretary can satisfy me that there is to be a substantial increase in revenue as a result of the inclusion of these items I would not wish to press this to a Division, because I do not think that these items are in anything like the same categories as those we discussed earlier, when hardship will be caused. I am satisfied that it will be caused by virtue of the Committee rejecting the Amendments tabled by this side of the Committee.
      I am only continuing to talk to enable the Financial Secretary to get the answer from the box. I believe that it is coming now—no, there is further discussion. I believe that the answer is at hand now.
      Mr. Broce-Gardyne: I wish to refer briefly to Amendment No. 67, which proposes to insert in paragraph (1) of the exemptions in the principal Act of 1963, after "fabric" the words:
      "other than window display material of jute".
      The point about this is that there may have been a genuine misconception in the way in which the new purchase tax arrangements are to be applied. Once again, I am not absolutely certain whether the Amendment is in the right place. I see the Financial Secretary shaking his head, so it appears that it is
      598
      not. I hope that he will extend some sympathy to me, because, if one goes back to the principal Act, one finds that one is dealing with exemptions on exemptions on exemptions, and these are further complicated by the Amendments which have been introduced in Schedule 6.
      The effect of the Amendment to the Schedule, as I understand it, and the Financial Secretary will correct me if I am wrong, is to include in Group 7 of the principal Act all articles not comprised among the exemptions, regardless of the fact that they are more than 12 inches in width, which previously made them exempt. Among the exemptions, clearly set out as exemption No. (1), is jute. But then, unfortunately, and this is where the complication comes in, under the same heading of exemption No. (1) there is a parenthesis which states:
      "fabrics of the following descriptions (not being …".
      There follows a series of items which are exempted from the exemptions, and which presumably attract tax, the last one being:
      "… fabrics which have been shaped or partly made-up or have been bleached, printed, embroidered or otherwise decorated".
      I understand from information received from firms in my constituency that according to this parenthesis window display material of jute would now be subject to tax under Schedule 6. If those firms have been misinformed, I hope that the Financial Secretary will be able to put this right.
      The reason for waiving the exemption previously enjoyed by window display materials of jute is that it has been discovered that window display material which is designed to back a window display in a shop—and this is clearly not the type of end use which would attract purchase tax—can also be used as curtaining material. Because it was used and even sold as curtaining material it was felt that it should attract purchase tax. However, jute material cannot be used for curtaining because it inevitably fades in sunlight and is therefore unsuitable for this purpose. When it is sold as window display material the purchasers are warned that it should not be resold for curtaining, and it should not, therefore, attract purchase tax. The fact that it is to attract the tax—my

      599
      understanding from firms in my constituency is clearly that they have been told that it does fall within the Schedule—must clearly have arisen from a misunderstanding. I hope that the Financial Secretary will be able to put this right.
      Mr. Harold Lever: As far as I can have it estimated, without any pretence to accuracy, the cost of cancelling the extension of the tax to cloth would be about £7 million a year. In practice, it would be difficult to make that withdrawal alone and the consequential withdrawals which would be likely to follow would cost, together with the £7 million, a total of about £23 million a year. It works out rather expensive.
      I am advised that the Amendment of the hon. Member for South Angus (Mr. Bruce-Gardyne) is meaningless as it stands. This is no reflection upon the hon. Member. He would have had to show considerable ingenuity to have drafted his purpose, in the circumstances, to give effect to what he intended. I understand his intention to be that felt, hemp and hessian fabrics used for window display should be exempt when processed. They are already exempt when used for window display purposes in unprocessed forms, and so is jute. Once it has been processed, bleached, printed, embroidered or otherwise decorated, it becomes liable to tax.
      It is quite impossible to give effect even to the hon. Member's intention in the Amendment, because it would involve our determining, at the stages of manufacture when tax liability has to be determined, what was the intended use of the article. That would be quite beyond our power. Moreover, in principle, it is not the ultimate use of an article, which may have many different uses, which determines its taxability. One has inevitably to rely on broad categories. I have already dealt with the possible regional appeal, which the hon. Member disavowed on the previous occasion, concerning jute and hessian.
      Mr. Bruce-Gardyne: There seems to be confusion about this. I understand from firms in my constituency that in any event, when the end use of a product is clearly commercial, purchase tax will not be payable. The only reason why purchase tax is payable in the case of
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      window-dressing material is that it has been found that other types of textile window-dressing material can be used for curtaining, whereas jute cannot. This is the distinction that I was trying to make. I apologise if I tried to do so in the wrong place.
      Mr. Lever: I was endeavouring to divine the hon. Member's intentions. I can only say that the end purpose is relevant only where that end purpose is exclusively, or nearly exclusively, the end purpose of the material itself. In those circumstances, I do not think that I can help the hon. Gentleman. If, however, he can satisfy me that the only end purpose of this material is commercial, I will certainly look at the matter again.
      Mr. Bessell: If I may use a well-established Parliamentary formula with which the Financial Secretary will be familiar, on the understanding that we may want to look at this matter again on Report, I beg to ask leave to withdraw the Amendment.
      Amendment, by leave, withdrawn.
      Mr. Bessell: I beg to move Amendment No. 122, in page 75, line 10, leave out "potato crisps".
      The Temporary Chairman (Mr. Bryant Godman Irvine): With this Amendment it will be convenient to take also the following Amendments:
      Amendment No. 123, in page 75, line 15, at end insert
      "unless such products are packaged within a development area as designated by the Board of Trade".
      Amendment No. 124, in line 15, at end insert
      "unless such products are packaged in Scotland".
      Amendment No. 125, in line 15, at end insert
      "unless such products are packaged in Wales".
      Amendment No. 126, in line 15, at end insert
      "unless such products are packaged in Devon and Cornwall".
      Mr. Bessell: This is a rather different Amendment in the sense that we are on quite positive ground. I do not suggest that I am seeking to probe the intentions of the Chancellor of the Exchequer or to ascertain the sum which is likely to be

      601
      involved as a result of this tax. My purpose in moving the Amendment is to oppose the proposal contained in the Schedule at line 11, page 75.
      [MR. HARRY GOURLAY in the Chair]
      12 m.
      It seems to me to be a very strange decision for the Government to have taken to impose purchase tax of 22 per cent. on the items which are listed in paragraph 6. Nothing seems more absurd to me than to include potato crisps among those items. I say that because it is an item of food consumed on quite a large scale by a number of young people and others who want a quick snack. It is a wholesome item of food and is well worth selling as cheaply as possible. As the Financial Secretary well knows, there is one major company whose name is always associated with potato crisps in this country and that company has recently been taken over by an American group which has expended a considerable sum in expanding its activities and increasing the number of factories and their output. It is no secret that this has been a costly and not particularly profitable operation. Although I have not been in touch with them, nor they with me, the imposition of purchase tax will hit them badly and this is a particularly unfortunate choice of article for the imposition of tax, because, as with many other firms considering entering the British wholesale or retail trade, this must have come as a shock to the American corporation.
      It might act as a deterrent to others who might come into this country with expertise, specialised knowledge, and the ability to improve the whole of our capacity and output. If a particular industry is suddenly singled out in this way, and if the Financial Secretary is unable to give an assurance, will he before Report stage look at the effect on this company whose name I have deliberately avoided mentioning, to see whether it is wise to impose a tax on the food items when the consequences at which I have just hinted might result?
      Turning briefly to the other Amendments, I want to pay particular attention to Amendment No. 123. I am suggesting by that Amendment that at the end of this group there should be included the words
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      "unless such products are packaged within a development area as designated by the Board of Trade."
      I can imagine that the Financial Secretary will say, in reply, "If we exempted the payment of purchase tax on items in this group, if produced within a development area, the immediate result would be that factories would move to development areas to escape purchase tax and to be able to sell the items more cheaply to the general public". Of course they would, and that is exactly my intention. I make no secret of the fact that I want to further the Government's avowed policy of giving the maximum possible assistance to areas designated as development areas.
      I include in that Cornwall, and my constituency. There is nothing more desirable than that factories should be established in South-East Cornwall making crisps, since the potatoes—
      "and similar products made from the potato, or from potato flour, or from potato starch, and savoury food products obtained by the swelling of cereals or cereal products; and salted or roasted nuts other than nuts in shell."
      are farmed or can be found in the area, and it would be much cheaper for manufacturers to produce these goods in development areas, particularly the West Country and Cornwall, than if they have to produce them in some big industrial area where the base product has to be taken from rural areas and prepared.
      My proposal that these products should be exempted provided they are produced within development areas is in line with the Government's programme, and even though, as I said earlier in relation to potato crisps, I should not expect the Financial Secretary to accept the Amendment tonight, I hope that he will look at this matter again and see whether he can make some concession before we get to the Report stage.
      Mr. Robert Cooke: The hon. Member for Bodmin (Mr. Bessell) mentioned a nationally known firm which we must not mention as being pretty well the sole producer of that vital product the potato crisp.
      Mr. Bessell: The main producer.
      Mr. Cooke: I should like the hon. Gentleman to understand, and I hope the Minister knows, that a certain other nationally known concern in the Bristol

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      area has diversified into this field and I believe that its potato crisps are just as good. I hope that if consideration is given to the chips belonging to the hon. Member for Bodmin, the Bristol chips will be given the same thought and care.
      Mr. Harold Lever: I think that I must leave the two hon. Members to chip each other in accordance with their constituency interests. I can only say that the question whether one should apply to crisps the tax that is already applied to confectionery and ice cream is a matter of judgment and does not lend itself to detailed expatiation.
      The Chancellor's judgment is that if someone has a sweet tooth he contributes to the revenue, and if he has a savoury tooth he contributes to the revenue. This is the counterpart of ice cream for those who do not have a sweet tooth. It does not mean that my right hon. Friend is opposed to that entirely wholesome food, whether sweet or savoury, which is brought within the revenue charge.
      It is not possible to give this advantage in the form that the hon. Member for Bodmin (Mr. Bessell) wants. The object of regional policy is to encourage new industry to go in there, not to ruin the industries which are outside. If we start giving this concession in the manner suggested by the hon. Gentleman, we would not bring new industry to the regions, we would demolish the taxed industry which was left to compete with the exempt industry of the region. Moreover, it would be illegal under our international obligations, because we would give the regions a tax advantage against imported goods.
      For those reasons I hope that with his customary moderation the hon. Gentleman will feel inclined to reserve his position by withdrawing the Amendment.
      Mr. Bessell: Right through the Financial Secretary's argument I was not prepared to waiver for a second, and I hoped that his coat tail would be pulled by the Chancellor so that he might change his mind and give a totally different answer. Alas, that did not happen.
      But there is one point on which I readily admit the hon. Gentleman has floored me, and that is the position of this country in relation to G.A.T.T., and of course it is G.A.T.T. which might be
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      affected. If the hon. Gentleman is correct in that assumption and I believe him to be, then obviously my Amendment must be withdrawn, but I am sure that both he and I will make doubly certain that he is correct before we get to Report.
      Holding that one reserve in hand, I beg to ask leave to withdraw the Amendment.
      Amendment, by leave, withdrawn.
      Mr. Richard Sharples: I beg to move Amendment No. 48, in page 75, line 16, leave out from beginning to end of line 20.
      The Deputy Chairman (Mr. Harry Gourlay): With this Amendment we can take the following Amendments:
      Amendment No. 71, in page 75, line 19, leave out 'poultry or game' and insert:
      'poultry, game or wild birds'.
      Amendment No. 127, in line 20, at end add:
      'unless such foods are canned, packaged or prepared in a development area as designated by the Board of Trade'.
      Amendment No. 128, in line 20, at end add:
      'unless such foods are canned, packaged or prepared in Scotland'.
      Amendment No. 129, in line 20, at end add:
      'unless such foods are canned, packaged or prepared in Wales'.
      Amendment No. 130, in line 20, at end add:
      'unless such foods are canned, packaged or prepared in Devon or Cornwall'.
      Amendment No. 72, in line 20, at end insert:
      Nothing in the foregoing shall apply to food for guide dogs for the blind, for which special tax-free supplies shall be arranged.
      Amendment No. 73, in line 20, at end insert:
      Nothing in the foregoing shall apply to food for cats or dogs owned by old age pensioners for which special tax-free supplies shall be arranged.
      Mr. Sharples: The Chancellor of the Exchequer, whom I am glad to see in his place, said in his Budget speech:
      "I also propose to bring prepared pet foods—widely advertised, no doubt appreciated, but not an essential means of feeding a pet—into tax at the same rate."—[OFFICIAL REPORT, 15th April 1969; Vol. 781, c. 1024.]
      The majority of hon. Members who were present in the House at that time gained the impression that those tax proposals

      605
      were intended to hit out at those pet foods which are widely advertised on television, and that it was the Chancellor's intention not to go further than that.
      Now that we have had an opportunity of studying the Schedule we see that this was not the only occasion on which the Chancellor did not take the House fully into his confidence—to put it politely—as to the proposals he was making in his speech. If we look at the words in the Schedule we see that they go considerably further than that. Not many members of the public outside have yet realised that what the Chancellor's proposals meant was a tax of £4 10s. on every domestically-owned cat and an increase in the tax on dogs, of every kind, of approximately £9. If my figures are incorrect I hope that the Minister will tell me what the correct figures are—because these are the best that I can obtain.
      The Committee should also realise the number of households involved, and the extent of this new tax which the Chancellor has slipped quite cheerfully into his Budget speech. Nearly 9 million households will be affected. A high proportion of those are the households of retirement pensioners and those on lower income scales. Of those 9 million households—and again these are the best figures that I have been able to obtain—30 per cent. are those of retirement pensioners, who will have to bear this additional tax and 36 per cent. have incomes which fall into the lower brackets—what the pollsters classify as the D and E categories. A high proportion of those 9 million households have young children, who are also having to bear additional costs.
      I should like to quote from a letter that I have received from the Royal Society for the Prevention of Cruelty to Animals. The Secretary of the Society says:
      "At the last meeting of the Society's Council considerable concern was expressed at the proposal to introduce a tax of 22 per cent. on pet foods. It was felt that this would undoubtedly cause great hardship particularly to owners of animals living on a small fixed income and could well result in their pets being denied sufficient food particularly because their owners could not afford the additional costs involved."
      The Chancellor implied in his speech that the foods that he was proposing to
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      tax were not essential for these animals. I hope he has had an opportunity of reconsidering this position, because of course it is quite impossible for any person living in one of the larger cities to be able to keep a cat or a dog as a pet without using prepared foods of one kind or another which now fall within Schedule 6 of the Finance Bill. If there are other methods which the Chancellor has in mind, perhaps the hon. Gentleman who is to reply to the debate will tell the Committee what they are.
      12.15 a.m.
      Of course the tax falls not only upon the animals which are classified as pets. It falls upon working dogs as well. It falls on dogs which are employed in agriculture, and the Financial Secretary will know that a very large proportion of the dogs employed in agriculture are employed on the smaller farms, the hill farms and others, which are going through a most difficult stage at the present time. I hope that the hon. Gentleman will say what is the estimated additional cost to agriculture of this proposed tax.
      The tax also falls on dogs employed as security patrols, but most of all perhaps—and I think the Committee will want to give serious consideration to this—it falls upon the kind of dogs employed as guide dogs to the blind. Perhaps the constituents of the hon. Gentleman the Member for Bilston (Mr. Robert Edwards), who is laughing, might like to know that he finds this extremely funny.
      If I may quote from a letter dated 19th May sent to me by the general manager of The Guide Dogs for the Blind Association, he says
      "Unfortunately, of necessity, the guide dog is generally a large animal, either an Alsatian or Labrador or other breed of equivalent size, and consequently they are expensive to feed. Furthermore, the blind community tend to fall into the lowest income brackets. Those who are employable do not normally command high wages, and a very large proportion are unemployed and live on national assistance."
      He later goes on
      "After making some allowances for the use of fresh meat in feeding their dogs, I calculate that Purchase Tax will cost a guide dog owner an additional £10 per annum on his feeding bill."
      I understand that representations were made by The Guide Dogs for the Blind

      607
      Association to the Chancellor of the Exchequer, and that they received the usual reply.
      The Chancellor's secretary, in a letter dated 8th May, said
      "it is recognised that this tax is bound to have an effect on the cost to a blind person of keeping a guide dog, because in the nature of things he or she is likely to be buying the more convenient canned and packaged foods which fall within the scope of the tax."
      The letter ends
      "Much therefore as the Chancellor sympathises with your request for relief from tax on food for guide dogs for the blind he regrets that he is unable to help."
      Whatever other reply may be made to this Amendment, I hope that the Chancellor of the Exchequer will give further thought to this request from The Guide Dogs for the Blind Association. I believe that in this instance, whatever else may be thought about this tax, it will result in real hardship which I do not believe the Chancellor could have considered when he introduced the tax in his Budget speech.—[Interruption.] If the hon. Gentleman wants to interrupt, perhaps he would do so from a standing position.
      The R.S.P.C.A. believes, as I do, that this tax will lead to an increase in the practice of abandoning animals. There have been Press reports of animals being abandoned on motorways, and I am certain that, if the Chancellor wanted to raise additional revenue from dog owners, he should have accepted the R.S.P.C.A. proposal that the right method was to raise the dog tax and not the cost of keeping the animals.
      This tax was not thought out. The public do not realise its extent, and the cost which will fall on many families. I ask the right hon. Gentleman at least to consider what I have said.
      Mr. Peter Hordern: I support the Amendment which my hon. Friend the Member for Sutton and Cheam (Mr. Sharples) moved so eloquently. This new tax will hit the lonely, the old and the poor. It will not mean a considerable increase in revenue. The Chancellor said that purchase tax on potato crisps, salted and roasted nuts and pet foods will together bring in £22 million. What will be the extra revenue from this proposal? But it will have a great impact on the old-age pen-
      608
      sioner. It is estimated that the resultant extra cost of keeping a pet will be £9 a year. The increase in the pension, about which we have heard so much, at the end of this year, will be £26, so over a third will be consumed by this tax. This will have no small effect on the annual budgeting of the old-age pensioner.
      I wish that the Chancellor had given more thought to this and other matters, instead of making some rather cheap remarks about the advertising profession. He said:
      "I also propose to bring prepared pet foods—widely advertised, no doubt appreciated, but not an essential means of feeding a pet …"—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1024.]
      This is arguable.
      I am informed that this proposal is likely to mean that the cost of food generally will rise. Horse meat is used in the preparation of dog foods, and it may not be possible to do so to the same extent, so there will be a small but noticeable increase in the cost of living. It is difficult to know to which field the Government can stray next to raise revenue.
      During their period in office the Labour Party have seen the revenue of the Exchequer increase from £7,455 million to over £15,000 million this year. Now they have put a tax on pets. Although the Chancellor did not dare increase the dog licence, he achieved virtually the same end by this imposition on dog food. What will he turn to next? I wonder if next year he will tax children's pets such as white mice and tortoises.
      Mr. John Farr: In supporting the comments of my hon. Friends, I cannot help wondering if, in the mechanics of the Treasury, the Chancellor's intentions were understood, for the right hon. Gentleman clearly said in his Budget speech:
      "I also propose to bring prepared pet foods—widely advertised, no doubt appreciated, but not an essential means of feeding a pet—into tax at the same rate."—[OFFICIAL REPORT, 15th April, 1969; Vol. 781, c. 1024.]
      Dog biscuits are an essential means of feeding a dog, but they are not widely advertised. My hon. Friends and I think we know to what the Chancellor was referring. Did not he have in mind those dog foods which are advertised on television with the frequency with which

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      cigarettes were advertised before cigarette advertising was banned from TV? We never see dog biscuits being advertised on TV.
      Mr. Albert Murray: Yes, we do.
      Mr. Farr: It is possible, though difficult nowadays, for people to obtain scraps of meat from the local butcher for use as dog food, but there is no substitute for the biscuit in a dog's diet, a fact which has for long been appreciated.
      Mr. Murray: A brand of dog biscuit called "Crunchy Mick" is advertised widely on TV. In any event, I do not think that my right hon. Friend was referring only to TV advertising. All dog biscuits are advertised by one means or another.
      Mr. Farr: That intervention shows that we are not sure what the Chancellor meant. As he is in his place, will he make the position clear? His reference in his Budget speech seemed clear when he spoke of inessential means of feeding pets. Are not dog biscuits an essential part of a dog's diet? Should people use bread crusts instead?
      In addition to Amendment No. 44 we are discussing Amendments Nos. 71, 72 and 73 and I will deal briefly with each. I hope that, at this late stage, the Financial Secretary will sweeten the bitter Budget pill by making a small concession, if not to the aged then at least to the blind, by exempting guide dogs for the blind.
      Amendment No. 71 seeks to exempt packaged food for wild birds in the same way as there is an exemption in the Bill for poultry and game. The cost of collecting the tax on wild bird food would be out of proportion to the yield, which would be infinitesimal. On the other hand, old people and children get a good deal of pleasure in hard weather out of sprinkling these prepared package foods on the lawn or the streets.
      12.30 a.m.
      Amendment No. 72 seeks to deal with a difficulty referred to by my hon. Friend the Member for Sutton and Cheam (Mr. Sharples). Guide dogs are essential to many blind people, and these people will be faced by an extra cost in feeding their
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      animals. These dogs cannot really be called pets: they are as essential to their owners as are eyes to other people. The bill for meat and biscuits will rise substantially. I estimate that the present cost in London or any big city to be about 10s. or 15s. a week, and the tax will add 2s. to that bill.
      There is no substitute for a guide dog. A blind person would be just as helpless if the right hon. Gentleman were to treble this tax—the dog must still be fed, whatever may be the cost of its food. The blind are in the hands of the Committee in that respect. The Amendment provides the Chancellor of the Exchequer with an admirable opportunity to flavour some of the rather resonant "Noes" we have had from him during the last four days of discussion with something a little more palatable.
      The other Amendment relates to the slightly wider range of people who, in old age, find a cat or a dog a great companion. Their children may have married and left the family home. These old people will still be able to have the companionship of their cat or dog if they can afford the extra cost of the food. If they cannot afford it, they will have to do away with their pet or may be tempted to spend no more money on the animal's food and so provide insufficient food. Either of the last two solutions would be unsatisfactory.
      I ask the Financial Secretary, who is straining at the leash—
      Mr. Arthur Lewis: Instead of paying about 10s. or 15s. a week, people would find it easier and cheaper to buy continental fresh meat at about 2s. a pound. They would save money, and the pet would be just as well off on continental food.
      Mr. Farr: I agree that it is still possible to get fresh meat scraps from the butcher, but that will become more and more difficult because butchers do not want to be bothered with such business. In any case, biscuits are an essential part of the diet, and there is no substitute for them.
      I am very glad to see the Financial Secretary straining at the leash to make this small concession, which will cost him nothing but will mean so much to quite a number of people.
      Mr. Robert Cooke: This tax will mean that very much loved family pets will now cost more to maintain on their favourite tinned food. The Chancellor has suggested, at any rate by inference, that good plain food is still exempt and that pets will be able to continue to enjoy that. If the Chancellor is right, he will get no revenue from the tax, because all expensive dog foods will go by the way. That would seem to defeat part of his argument. Then the Chancellor will probably say that the Inland Revenue has just announced that the cost of keeping watchdogs can be a charge against tax. That concession will apply only to those who pay tax against which the charge can be set. Most of those whom we seek to help by these Amendments do not have taxable income. So that is another argument against us that I have disposed of.
      In any case, the whole thing is full of anomalies. The Amendments draw attention to these anomalies. Even if the Bill is left as it is, certain fish foods will escape, although all pet foods were meant to come within the thrall of the Schedule. Ant eggs are not covered. They are not prepared. They are merely collected and are often sold loose. Bird seed sold loose, in whatever amount, would seem to be outside the scope of the Schedule. I hope that what I say will not induce the Chancellor to include it at a later stage. Perhaps most of it is sold in packets. Why tax packeted bird seed? It will only drive people to buy it loose, thus destroying the trade in packeted bird seed. It will be more troublesome for purchasers to go along with their own paper bag, but it will be possible to get round this. The whole thing is a futile exercise which will cause everybody a good deal of trouble.
      Then there is the point about exemption for pensioners. This is a laudable proposal. However, the Chancellor will argue that if the concession were granted it would be possible for pensioners to run an enormous boarding kennel at an unfair advantage compared with non-pensioners. I can visualise these arguments being dreamed up by the Treasury to ensure that the Minister puts up a good defence of the indefensible. In view of all the anomalies and difficulties, we must support the Amendment which would take the whole thing out.
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      I come, lastly, to the vexed question of guide dogs for the blind. A point which has not been made is the considerable difficulty that a blind person has in preparing for his dog a meal consisting of raw food. It is virtually impossible for a blind person to know exactly what he is preparing and to get it right. It is easy for a blind person to open a tin. The blind depend on a tin of a certain shape and size. It can be recognised easily by a blind person and opened easily. A blind person cannot feed his dog unless he does so from a tin. Tinned dog food will now cost more.
      The last argument that I suspect the Chancellor will advance is that he cannot do without the revenue. Why does he not go for what has already been suggested—a low-level sales tax which would cover many things? Small purchasers would be exempt from such a tax. Those whom we want to help—the unfortunate, old-age pensioners, and the blind—would all be exempt, because they would be making small purchases.
      I think I have made a case in support of the Amendment and have filled in any gaps which my hon. Friend may have left. I hope that we have persuaded the Financial Secretary, even if he is not authorised by his boss to yield to our pleas this evening, at least to say that he will reconsider the matter.
      Mr. Harold Lever: I do not know whether the last invitation was for me to strain at the leash or strain at my job. I must disappoint hon. Members who have spoken. It is not from lack of sympathy, because a concession for guide dogs for the blind in particular would involve a negligible cost if it were practicable to arrange concessions in relation not to the articles but to the kind of people using them and deserving of our compassion. I have explained on innumerable Amendments that this is not a possibility and could not be attempted.
      It is true that pets can for the most part be fed quite readily in other ways than on tinned foods. I cannot accept that this is no longer practicable. Indeed, the inevitability of feeding pets on tinned foods seems to bear a direct ratio to the amount of money spent on television advertising. It seems that only seven years or so ago only about half the pet foods were being sold that are sold today. One cannot claim that the habits of diet

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      of pets have suddenly changed in that time, since they managed on half the amount of tinned food seven years ago.
      Mr. Sharples: The hon. Gentleman obviously has not seen the notice put out by the Board of Trade on this. It refers not only to tinned foods but to frozen foods—indeed virtually all foods except butcher's scraps.
      Mr. Lever: I was referring to the growth in the sale of prepared pet foods, which has increased at the rate of 10 per cent. per annum compound. I have done some rough arithmetical calculations and have found that approximately double the amount is being consumed compared with seven years ago.
      Having been accused earlier of being unsympathetic to the blind and disabled, I hope that I shall be acquitted of having a distaste for dogs, cats and other pets or for the people who keep them and need them or derive pleasure from them. This is a matter of judgment and the Committee is always ready to make wise, speedy judgments at this sort of hour. I do not think that a documented argument is really wanted from me, so I say only one thing to the Committee—that is, keep this in proportion. The total tax to be raised on pet foods is about £10 million. I understand from the hon. Member for Sutton and Cheam (Mr. Sharples) that 9 million households derive encouragement, comfort and assistance from their pets. This tax will therefore cost £1 per year per such household. It comes to about 4½d. a week each.
      But I am exaggerating the figure, because the heaviest consumers are among the commercial dog proprietors—the great Securicor fleet of massive Alsatians which guard our empty warehouses and the like. They are the great consumers. I am thus exaggerating slightly in saying that the cost will be 4½d. per pet-keeping family per week. We do not relish putting this burden on them, but I base the argument on broadening the tax base through small amounts of tax rather than on large taxes on certain goods which distort the pattern of consumption.
      Mr. Sharples: I cannot pretend to be satisfied with the reply. I do not think that the hon. Gentleman has tried to answer the debate or the arguments, but in order to leave the matter open so that it can be raised again on Report, I beg to ask leave to withdraw the Amendment.
      Amendment, by leave, withdrawn.
      Question proposed, That the Schedule be the Sixth Schedule to the Bill.
      Mr. Iain Macleod: I do not intend to invite debate, much less a Division, on this Schedule. We have made our position clear. I merely take 30 seconds, particularly with the Chancellor present, to record the end of what I think he will agree has been a most interesting experiment. By bad luck, we lost an hour today in injury time and 45 minutes yesterday. But taking that into account, the four subjects were discussed exactly on schedule without any Closures and with some excellent debating. This experiment was entered upon in our ceaseless search for the best way of accommodating the Finance Bill to the convenience of the Committee and the House, and we should record that, on the whole, it has been something of a success.
      12.45 a.m.
      The Chancellor of the Exchequer (Mr. Roy Jenkins): I am delighted to follow the right hon. Member for Enfield, West (Mr. Iain Macleod) and say that I, too, think that the four days have been usefully employed. This year we have moved a substantial distance, and I am grateful to the right hon. Gentleman for his co-operation and that of his right hon. and hon. Friends in finding a satisfactory means of dealing with the Finance Bill on the Floor of the House and in Committee upstairs. I think that they have been good debates. No doubt we have not yet achieved perfection, but we have moved a long way towards finding the best solution.
      Question put and agreed to.
      Schedule agreed to.
      Bill(Clauses 7, 8, 36, 38, 43, 44 and Schedule 6) reported, with Amendments; to lie upon the Table.

  STATUTE LAW (REPEALS) BILLS
  So much of the Lords Message [20th May] as communicates the Resolution, That it is desirable that, in the present Session, all Bills prepared by one or both of the Law Commissions to promote the reform of the Statute Law by the repeal, in accordance with Law Commission recommendations, of certain enactments which (except in so far as their effect is preserved) are no longer of practical utility, and by making other provision in connection with the repeal of those enactments, together with any Law Commission report on any such Bill, be referred to the Joint Committee on Consolidation, &c., Bills; and that, on any such Bill, the Joint Committee do report whether the enactments proposed for repeal in the Bill ought to be repealed on the ground that they are no longer of practical utility, and do make such other report as they may think fit, to be considered forthwith.—[Dr. Miller.]
  So much of the Lords Message considered accordingly.
  Resolved,
  That this House doth concur with the Lords in the said Resolution.—[Dr. Miller.]
  Message to the Lords to acquaint them therewith.
  Motion made, and Question proposed, That this House do now adjourn.—[Dr. Miller.]

  AGRICULTURE (NORTHERN IRELAND)
  12.47 a.m.
  Lord Hamilton: The House is only too conversant with the recent problems afflicting Northern Ireland. However, neither the headlines nor the television cameras have focussed attention on the prevailing problems of agriculture, since these problems do not constitute that all-important word "sensationalism", although they are seriously affecting the health and morale of our biggest industry, agriculture.
  These problems represent a mixture of geographical disadvantage, ineptitude of Government action and the size of the average farm holding. Again, the lack of will and determination to implement
  616
  the Anglo-Eire Free Trade Agreement continue to hit the industry.
  The remoteness from our main market, Great Britain, which consumes more than 80 per cent. of our annual £125 million production, represents a farm income disparity of £7 million per annum compared with average prices in this country. This is a most serious and alarming situation as the net income of Northern Ireland agriculture was £26 million in 1966–67.
  Every farm commodity, except pig production, suffers from this price disadvantage which, through inflation, continues to expand. For example, returns on fat cattle and sheep are approximately £4 million less and the milk producer receives 4½d. per gallon less than his counterpart in this country, while feeding-stuff costs are at least £2 million per annum more.
  The remoteness grant meets only £l¾ million of this disparity, since the disadvantage of remoteness is still costing the industry £5½ million per annum, which represents a loss of income of 20 per cent.
  It must be realised that the cost of transporting the processed product across the Irish Sea has to be borne by the Northern Ireland farmers, for, unlike other industries, agriculture is unable to pass on this additional burden through increased prices.
  As a result of the debate on the high cost of imported feedingstuffs, initiated by my hon. Friend the Member for Antrim, North (Mr. Henry Clark) on 3rd July, 1968, the Joint Parliamentary Secretary to the Ministry of Agriculture gave an assurance that an examination would be carried out jointly by Whitehall and Stormont into the question of farming costs in Northern Ireland. According to reliable Press reports the result of this examination was an agreed differential of £2 million per annum. The Northern Ireland farmer is now waiting impatiently for the Government to take action to close this yawning gap.
  It must be recognised that Northern Ireland is a country of smallholdings and therefore a small farmer is particularly dependent on imported feedingstuffs, as he is forced into intensive production of either pigs or eggs, both of which require high concentration of imported feeding-stuffs.

  617
  The result is that he is having to pay at least £1 per pig and 2½d. per dozen eggs more on higher feeding costs. The output of the pig and poultry industries account for almost 42 per cent. of the farming output of Northern Ireland. It must be remembered that these industries were developed during the days of parity in feedingstuff costs with Great Britain. During the past year, production of pigs in Great Britain has increased by between 7 per cent. and 10 per cent., while production in Northern Ireland has remained static. It is vital for the preservation of a healthy agricultural industry that Government action is taken to alleviate this handicap in feed costs. Almost all farm capital investment has to be found out of income. To keep pace with new developments there is a constant need for further capital injection but it is extremely difficult to meet this need owing to the lower profitability of Northern Ireland farms and as a result, capital expenditure is static and shows a downward trend in real terms.
  The Government are fully aware of the feelings and reaction throughout Great Britain about this year's Price Review. I can assure the Minister that when an inadequate award is given, with price levels failing to provide incentive and investment, the results are disastrous in Northern Ireland. There is a real threat, and this is no exaggeration that agriculture in Northern Ireland might become a depressed industry. The Government must realise that owing to our remoteness from our main markets, we have to be ahead of the rest of the United Kingdom in efficiency and productivity. This is impossible under present conditions. If our financial returns were on parity with Great Britain we could be investing to the tune of £5,500,000 per annum in stock and capital equipment without loss of personal income.
  There is much concern about the future of the egg industry. When the guarantees are phased out by March, 1974, the advent of a free market after March, 1971, will make it more difficult for remote areas to continue in egg production. Northern Ireland transports 90 per cent. of its £17 million per annum production to Great Britain. The result of the Government's intended policy would have serious social and economic consequences. Since egg production is carried on by 55 per cent. of all farm
  618
  holdings, the only alternative source of revenue for a small acre specialist is in pig production, which does not present a favourable outlook owing to the lower guaranteed prices and the high capital investment.
  The recent Price Review was a bitter disappointment for the Northern Ireland egg industry, which produces a higher quality commodity than in Great Britain. There is widespread suspicion that the Government's intention is for production to fall and for any deficiency to be met from increased levels of imports, which will only aggravate our balance of payments further and hit the small farmer particularly hard.
  I welcome the Government's intention to contribute towards the cost of sea transportation across the Irish Sea, but this grant must be both realistic and on a long-term basis; it must represent the full cost of sea transport by all routes used and take into account future cost increases due to inflation. This subsidy should not identify Northern Ireland egg production as the lame duck of the industry, but should be a recognition of our efficiency and quality. If the Government's proposed central authority materialises, I trust that the authority will be run with the minimum of expense, since Northern Ireland egg producers will be contributing towards the cost of the authority. Northern Ireland should have representation on the authority. The Government must realise that the whole future of egg production in Northern Ireland is in the balance.
  Ten years ago, egg producers could have left the industry overnight. Today, because of high capital involvement in equipment, housing and stock, it is economically impossible to do so, in spite of the future instability of the market and the fact that margins of profitability have been falling in recent years.
  Egg production in large units near cities would increase demands on the scarce resources of labour and space in these areas. This would be in direct contrast to the Government's declared policy of industrial development certificates. There would be an inevitable manure disposal problem. Furthermore, this concentration of egg production into relatively few large units would endanger supplies from the disease risk point of view, and enhance the distinct possibility

  619
  of monopoly, which would not be in the interests of the consumer.
  The need to maintain and develop further a viable meat export industry in Northern Ireland results from the increasing difficulties in shipping live cattle, the saving in the transport costs of meat as opposed to livestock and the all-important employment aspect. It is estimated that the transportation saving on meat on the hook is £1 16s. 9d. per ten cwt. animal.
  The effects of the Anglo-Eire Trade Agreement are undermining and endangering the viability in the whole of the dead meat industry.
  In 1968, the Eire meat plants received subsidies on meat exported to Great Britain amounting to £5½ million. The British Government alone paid the Eire Government about £1½ million for 25,000 tons of beef and 5,000 tons of mutton, as agreed in the Agreement. The Eire producer receives a small proportion of this subsidy whilst the dead meat industry receives the major benefit of the payment, which enables the industry to subsidise exports of meat to the British market.
  In 1968, the subsidy paid to the Eire plants averaged a little over 3d. per pound, whereas in the same year, the Northern Ireland meat plants received a direct subsidy of about ½d per pound. As a result, the Eire dead meat industry is in the unfair position of manipulating the market price as and when they desire, thus undermining selling prices.
  The increase in the guaranteed price of beef in the 1969 Price Review will tend to increase the advantage enjoyed by the Eire meat plants in that the subsidy paid to them has in the past been based on the British deficiency payment.
  When Britain devalues, decimalises or abandons Greenwich Mean Time, Eire complies. Now is the time for the Government to ensure that Eire complies in the correct allocation of the subsidy by making sure that the subsidy goes to the producers and not to the dead meat industry.
  12.58 a.m.
  Mr. Henry Clark: I am obliged to my hon. Friend the Member for Fermanagh and South Tyrone (Lord Hamilton) and endorse his admirable, detailed speech, in which he men-
  620
  tioned the handicaps suffered by the Northern Ireland farmer. Every farmer suffers handicaps but I am not being a Jeremiah when I say that the Northern Ireland farmer suffers from more handicaps for more of the time than most other farmers in the United Kingdom.
  The figures recently produced by the Government were seasonally adjusted for the disastrous weather suffered last year by the English farmer. I hope that the figures for recent months will be slightly more optimistic and that they will be seasonably adjusted for the remarkably fine weather which we enjoyed in Northern Ireland last year, which made things look better than they would normally be.
  My hon. Friend has pointed out that there is a 20 per cent. shortfall between Northern Irish farmers and farmers on this side of the Irish Sea. Farming is a varied industry. It would be incredible if that 20 per cent. were evenly spread throughout the industry. There are, therefore, inevitably many farmers who are 30 and even 50 per cent. worse off than their counterparts, who are equally efficient and work equally hard, on this side of the Irish Sea. Some farmers are suffering real hardship and losing on their operation.
  There are a number of alternatives which have been made clear to the Government which they could follow. They could—they have been generous in this in the past and they could do it again—increase the standard quantity of liquid milk in Northern Ireland so that a better price could be paid to the farmers. They could prohibit all egg imports into the United Kingdom. They could retain eggs as a Price Review commodity and see that the price achieved for them was balanced in the Price Review every year even if no guarantee was actually made.
  The Government could force the Southern Irish Government to observe not only the letter, but the spirit, of the Anglo-Irish Trade Agreement. They could take steps—and various steps have been outlined at various times—to bring the cost of feedingstuffs in Northern Ireland in line with the cost of feeding-stuffs in other parts of the United Kingdom. Finally, they could, possibly, increase the remoteness grant to a realistic level, although this is the last thing, I think, that the Northern Irish farmer wants.

  621
  We in Northern Ireland are quite prepared for a reasonable level of drift from the farm to the factory. We know that in this modern age that is inevitable. The Under-Secretary of State may remember some of the speeches I made in Committee on the Agriculture Bill. He knows something of the structure of Northern Ireland. I will not repeat what I said then. If the rate of drift from farm to factory, or from the farm to unemployment, increased by any considerable amount at this difficult time in Northern Ireland, we would have a steep increase in unemployment and a real degree of hardship and difficulty all through the countryside in Northern Ireland. I hope sincerely that the Under-Secretary has listened to the remarks of my hon. Friend.
  1.2 a.m.
  The Under-Secretary of State for the Home Department (Mr. Elystan Morgan): The House will be grateful to the noble Lord the Member for Fermanagh and South Tyrone (Lord Hamilton) for initiating what he described as an unsensational debate and drawing our attention to some of the current problems of agriculture in Northern Ireland. I will return presently to the specific points which both the noble Lord and his hon. Friend the Member for Antrim, North (Mr. Henry Clark) have raised.
  The Government fully recognise the supreme importance of agriculture to the economy of Northern Ireland. It remains the largest single user of labour despite the energetic efforts which have been, and are being, made to increase employment in the industrial sector. The Government also recognise that agriculture in Northern Ireland faces very real problems.
  The basic causes of those problems will be familiar to the noble Lord and his hon. Friend. As he knows better than I, the climate of Northern Ireland is less suitable for cereals or horticultural production and agriculture must, therefore, depend substantially upon livestock. There is also the different pattern of costs.
  Furthermore, there exists the problem of farm structure. There are about 40,000 farming units in Northern Ireland. Of these, 18,000 are regarded as being too small to be viable in the sense of yielding a full-time livelihood to the farmer, but about half of those 18,000 provide the
  622
  only source of income for their occupiers. Even of those units which can be regarded as viable by that standard, many are still very meagre holdings. Finally, there is the difficulty caused by the remoteness of Northern Ireland from the main markets for agricultural produce.
  We must, however, remember that similar conditions face farmers in other parts of the United Kingdom. There is sometimes a tendency to talk as if the problems were peculiar to Northern Ireland, but Great Britain has a considerable number of small farm units and production costs are not the same in every part of the United Kingdom. The wetter and hillier areas of England, Scotland and Wales are limited in the amount of crops they can produce.
  As a private Member, I have sought to draw attention on a number of occasions to the different production costs in Wales. Feeding costs in Wales tend to be £3 a ton higher than the average in the United Kingdom, and the cost of milk production about 3d. to 4d. a gallon higher, while the return on any product is also different. The price for fat cattle is about 7s. or 8s. lower than the average for the United Kingdom.
  What differentiates Northern Ireland is that the problems are concentrated in a smaller area and this means that a number of the grant schemes designed to help less favoured areas are often of assistance to Northern Ireland. These include the Small Farmer Scheme and its successor, the Small Farms (Business Management) Scheme which is being extended for another year and is now due to run to August, 1970. These have been widely used.
  Then there are the grants introduced in the Agriculture Act, 1967, to encourage voluntary farm amalgamations and thus create economically more viable holdings. These should be of special value in view of Northern Ireland's farm structure.
  In addition to these general measures, and to the usual United Kingdom guaranteed price and production grant schemes, there is the special support to agriculture in Northern Ireland afforded by the special assistance, or "remoteness" grant. We have been told that this is now running at £1¾ million a year. The purpose of this grant is specifically to offset the disadvantage of Northern

  623
  Ireland producers, arising from the remoteness of the main United Kingdom markets over and above the disadvantages of producers in other parts of Great Britain. Most of the money is used to help livestock producers and is spent on schemes to encourage good marketing and good quality production.
  I should like to turn to some of the special points raised by the hon. Member for Fermanagh and South Tyrone. First there are farm incomes. It is true that farmers in Northern Ireland have average incomes lower than those in England and Wales, but it is fair to remember that not all the factors which distinguish Northern Ireland agriculture from that of the rest of the United Kingdom are to the disadvantage of Ulster. Furthermore, although the Government can take no credit, we should not forget that last summer's harvest was the best this century for Northern Ireland, and in spite of what the hon. Member for North Antrim said, I would suggest that this is a not unimportant part of the total picture of current agricultural fortunes in Ulster.
  The basic problems of farm structure involve factors which cannot be readily redressed. In particular, it must take a considerable time to strengthen the holdings, although considerable progress is being made. But Northern Ireland farmers have at least benefited from the relatively favourable experience of livestock producers compared to arable producers in the last two years. In 1967, as hon. Members will concede, there were substantial increases in average incomes for all main types of farming enterprise in Northern Ireland, and the trend is expected to have continued in 1968. Although average incomes continue to lag behind in Northern Ireland as they do in other remote areas of the United Kingdom, farmers there are now doing as well as those in similar situations in Great Britain. This certainly represents not only an absolute, but also a relative improvement for Northern Ireland, and I think we may take it as an indication that the measures which the Government have taken over the years have borne fruitful results.
  The noble Lord has suggested that the Northern Ireland producers are at a dis-
  624
  advantage because of the higher costs of feedingstuffs there. This problem has been studied by the Ministry of Agriculture for Northern Ireland with assistance from the United Kingdom Ministry of Agriculture and agreement has been reached on the technical facts. In brief these amount to the acknowledgement that there is a disparity between the costs of feedingstuffs in Great Britain and in Northern Ireland assessed at £½ million in 1962–63, then increasing to about f2½ million in 1967–68. Recently, however, the gap appears to have narrowed. The action, if any, which should be taken to offset this disparity is still under consideration.
  Another point which the noble Lord raised was the question of the Anglo-Irish Trade Agreement.
  Mr. Henry Clark rose—
  Mr. Morgan: I am in competition with the clock, and I am sure the hon. Gentleman will understand if I do not give way. There is a great deal to be said about the Anglo-Irish Trade Agreement, but I confine myself to the comment that when this was discussed in this House in 1964–65 the Conservative Party did not see fit to object to that agreement as a whole, and many of the conditions which have been mentioned—
  Mr. R. Chichester-Clark: At the time we presented strong objections, or rather warnings, on the subject of agriculture, and virtually forecast exactly what has happened.
  Mr. Morgan: There were some rumblings of discontent. I was not a Member then, but I am not aware of a Motion of censure having been moved with regard to that important matter.
  The noble Lord mentioned the difficulties which meat plants in Northern Ireland are experiencing, and he referred particularly to the effects on their competitive position of the subsidy paid by the Government of the Republic of Ireland on exports of carcase beef. The concern which has been expressed in Northern Ireland about the effect of the subsidy is well understood both by this Government and the Government of Northern Ireland. My right hon. Friend the Minister of Agriculture has been discussing with his opposite number in the

  625
  Republic the whole question of the balance and the phasing of the trade in cattle and beef, with particular reference to the effects of this subsidy. The Ministry of Agriculture in Northern Ireland has been associated with these talks throughout, and I assure hon. Gentlemen opposite that the particular problems which arise there have been kept firmly in mind. Active consideration of this problem is still continuing. I am afraid, however, that for that reason I cannot expand on this statement tonight.
  I should like also to say a word about eggs, referred to by the noble Lord. This commodity represents a particularly significant proportion of the total farm output of Northern Ireland—15 per cent. as against 8 per cent. in Great Britain as a whole. It is noteworthy that the Reorganisation Commission for Eggs was impressed by the efficiency of Northern Ireland producers and by the high quality of their products. My right hon. Friend the Minister of Agriculture informed the House on 22nd January that the Government accepted the Reorganisation Commission's recommendation that it would be right to move to a free marketing system. The Government have accepted that there is a special problem for egg producers in Northern Ireland in the context of the transition to such a system.
  As my right hon. Friend announced, the Government are discussing with the Northern Ireland authorities the provision of special assistance towards sea transport costs for Northern Ireland producers. This is not, however, a problem that will present itself until 1971, since the Egg Marketing Board has been asked to continue until then with the present arrangements, which include equalisation of transport costs.
  I should like also to say a word on the awards on livestock at the last two Annual Reviews which have been beneficial to Northern Ireland, relying as she does on her large grassland areas and her traditional skill in producing bacon pigs.
  For beef, the guaranteed price has been increased by 26s. per live hundredweight over these two years, the hill cow subsidy has been increased by £3 per head,
  626
  and the beef cow subsidy by £2 10s. per head. The maximum acreages on which these subsidies can be paid have been increased by 25 per cent. this year. We are confident, therefore, that the expansion in the beef herd, which has already been taking place at a higher rate than in the United Kingdom as a whole, will continue.
  For pigs, at the last two Reviews we have aimed at a steady expansion towards the large numbers we need. But we have sought to avoid speculative increases which can readily lead to market instability. In two years we have raised the basic guarantee by 1s. 6d. per score; but our main strategy has been to give confidence to the regular and efficient producer that he can expand without running into heavy cuts in his effective return under the flexible guarantee system. We have done this by raising the ceiling of the middle band by 700,000 forecast certifications to 14½3 million pigs. This obviously favours the committed producers such as those in Northern Ireland, as opposed to the "in-and-outers". It is reflected in the latest Northern Ireland census figures for March, 1969, which show nearly a 5 per cent. increase in the total breeding herd compared with the revised figures for March, 1968, and also an increase of about 30 per cent. in the number of gilts in pig.
  I am not denying that there are real problems in Northern Ireland. Nor do I belittle them. But I hope that I have said enough to show that the Government recognise their existence. It does not, however, necessarily follow that the solution to the agricultural problems of Northern Ireland lies simply in the provision of extra financial assistance. Quite apart from the urgent need to restrict public expenditure, it may not be economic sense to look simply at the symptoms of disparity of development. We must also look at the deeper causes and seek to promote the correct changes and adaptations over the course of time.
  This may seem to be a gradual and lengthy process, but I believe that the general trend in Northern Ireland agriculture shows that we are moving towards the attainment of our goals. I have, nevertheless, listened with great interest to the noble Lord's views and I will certainly see that they are borne

  627
  in mind. While there may be particular problems affecting agriculture in Ulster—
  The Question having been proposed after Ten o'clock on Wednesday evening
  628
  and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  House adjourned at seventeen minutes past One o'clock.

TECHNOLOGY
  British Petroleum (Baglan Bay Project)
  British Petroleum (Baglan Bay Project)
  Centrifuge Process Research
  Centrifuge Process Research
  Concorde Aircraft
  Concorde Aircraft
  Motor Industry
  Motor Industry
  C. A. Parsons Ltd. and Bruce Peebles Ltd. (Merger)
  C. A. Parsons Ltd. and Bruce Peebles Ltd. (Merger)
  Racing Cars (Fuel)
  Racing Cars (Fuel)
  Anglo-Soviet Trade
  Anglo-Soviet Trade
  Metrication Board
  Metrication Board
SCOTLAND
  Mental Welfare Commission
  Mental Welfare Commission
  Housing
  Housing
  Local Authority Expenditure
  Local Authority Expenditure
  Betterment Levy
  Betterment Levy
  Land Commission
  Land Commission
  Unqualified Teachers (Lanarkshire)
  Unqualified Teachers (Lanarkshire)
  Teachers (Registration)
  Teachers (Registration)
  Great Western Road, Glasgow (Traffic)
  Great Western Road, Glasgow (Traffic)
  Chevron Oil Complex, Portencras (Employment)
  Chevron Oil Complex, Portencras (Employment)
  Directors of Social Work
  Directors of Social Work
  Orkney and Shetland (General Medical Services)
  Orkney and Shetland (General Medical Services)
  Family Planning
  Family Planning
  Murders
  Murders
  Glen Muick and Glen Esk (Road Link)
  Glen Muick and Glen Esk (Road Link)
  Education (Local Authority Expenditure)
  Education (Local Authority Expenditure)
  White Fish Authority (Prices Scheme)
  White Fish Authority (Prices Scheme)
  Fuel Duty
  Fuel Duty
BOARD OF TRADE
  Dried Milk
  Dried Milk
  Motor Cars (Hire-Purchase Regulations)
  Motor Cars (Hire-Purchase Regulations)
  Cheddar Cheese
  Cheddar Cheese
  Employment (Sunderland)
  Employment (Sunderland)
  Import Controls
  Import Controls
  Playing Cards (Import Duty)
  Playing Cards (Import Duty)
  Beef (Import from Yugoslavia)
  Beef (Import from Yugoslavia)
  Bones and Hides (Imports)
  Bones and Hides (Imports)
  Cigarette Filter Tips (Monopolies Commission's Report)
  Cigarette Filter Tips (Monopolies Commission's Report)
  Milan Trade Fair
  Milan Trade Fair
AVIATION
  Commercial Aircraft (Supersonic Flights)
  Commercial Aircraft (Supersonic Flights)
  Air Traffic Control
  Air Traffic Control
  Fares
  Fares
  Stacking of Aircraft (Luton and Dunstable)
  Stacking of Aircraft (Luton and Dunstable)
MINISTRY OF DEFENCE
  Malaysia
  Malaysia
  Naval Officers (Correspondence Courses)
  Naval Officers (Correspondence Courses)
AGRICULTURE, FISHERIES AND FOOD
  Early Potatoes
  Early Potatoes
  Northumberland Committee (Report)
  Northumberland Committee (Report)
  New Zealand Lamb (Marking)
  New Zealand Lamb (Marking)
  Flood Warning
  Flood Warning
NATIONAL FINANCE
  Northern Ireland Bank Notes
  Northern Ireland Bank Notes
  Employees (Bradford Area)
  Employees (Bradford Area)
WALES
  Official Forms (Welsh Language)
  Official Forms (Welsh Language)
EMPLOYMENT AND PRODUCTIVITY
  Railway Workshops, Inverurie
  Railway Workshops, Inverurie
  Electronic and Telecommunications Industries (Midlothian)
  Electronic and Telecommunications Industries (Midlothian)
RAILWAYS
  Railway Accident, Beattock Summit
  Railway Accident, Beattock Summit
HOME DEPARTMENT
  No-Waiting Streets
  No-Waiting Streets
  Attempted Suicides
  Attempted Suicides
  Moor Court Prison
  Moor Court Prison
  Criminal Injuries Compensation Scheme
  Criminal Injuries Compensation Scheme
HOSPITALS
  Geriatric Beds (Blackpool and Fylde)
  Geriatric Beds (Blackpool and Fylde)
  Hospitals, Ottery St. Mary and Honiton (Expenditure)
  Hospitals, Ottery St. Mary and Honiton (Expenditure)
SOCIAL SERVICES
  Arthritis and Rheumatism
  Arthritis and Rheumatism
PUBLIC BUILDING AND WORKS
  Brick Supplies (Scotland)
  Brick Supplies (Scotland)
  Building Research (Fuel Ash)
  Building Research (Fuel Ash)

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

KEW GARDENS
LORD ILFORD: My Lords, I beg 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 it is their intention to close Kew Gardens to the public]
LORD BESWICK: My Lords, I can assure the noble Lord most firmly that Her Majesty's Government have no intention of closing Kew Gardens to the public. There has been some speculation in the Press that the needs of botanical and horticultural research at Kew might require that the public should be excluded from the Royal Botanical Gardens, but this is not so.
LORD ILFORD: My Lords, I thank the noble Lord for that Answer. May I ask whether Her Majesty's Government appreciate that it will relieve the anxiety of a very large number of persons in different parts of London who resort to Kew Gardens?
LORD BESWICK: My Lords, I am sure that that is so. It was tantamount to undermining the Constitution to put out a rumour of that kind. What interests me is how it started in the first place, and why the Press should publish an apparently circumstantial article which, so far as I can see, had no basis at all in fact.

THE CASE OF DR. ALFRED LAURENCE
2.36 p.m.
THE LORD BISHOP OF SOUTHWARK: 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 they are satisfied that the actions of Dr. Alfred Laurence, of Purley, Surrey, have in no way offended against the Official Secrets Act of 1911.]
THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM): My Lords, my right honourable friend the Home Secretary has explained that he hopes to be able to make a Statement about this case in the near future. I must ask the right reverend Prelate to await that Statement.
THE LORD BISHOP OF SOUTHWARK: My Lords, I thank the noble Lord for his reply. I have no wish to embarrass him, but as Dr. Laurence, who spent part of his life in a concentration camp at Dachau, is now a member of my diocese and under my pastoral care, I should like to ask the noble Lord whether, when the Government make their Statement, and if Dr. Laurence should be declared as one who has in no way offended against the Official Secrets Act, they will be prepared to compensate him for what has happened to him during this difficult period, in so far as it has affected his income.
LORD STONHAM: My Lords, the supplementary question asked by the right reverend Prelate is a hypothetical one; but, even so, I cannot answer it now. I will do my best to answer it when the Statement has been made.
LORD BROOKE OF CUMNOR: My Lords, are the Government aware that there is considerable public concern at what has happened and at the fact that no Statement has been made by the Government, over a very long period? Will the noble Lord do everything he can to expedite the Statement which he promises?
LORD STONHAM: My Lords, I have already done everything I can to expedite the Statement. As I said in my original Answer, a Statement will be made by my right honourable friend in the very near future.
LORD BYERS: My Lords, may I ask what the noble Lord means by the "very near future"? Will a Statement be made to Parliament before the Recess?
LORD STONHAM: My Lords, I cannot add to what I have said.
THE LORD BISHOP OF SOUTHWARK: My Lords, will the noble Lord answer this question? As I say, I have no desire to embarrass him, and I am sure that everyone appreciates the difficulty of the situation. But can the noble Lord tell us why, when Dr. Laurence's house was raided, there appeared to be the maximum publicity which did great damage to his status in Purley as a resident and also to his position as an earner? Were Her Majesty's Government aware of the publicity that was likely to attend this action; and, if so, why were not precautions taken to give Dr. Laurence the rights which we should expect for anybody who lives in this country?
LORD STONHAM: My Lords, I am most grateful to the right reverend Prelate for giving me advance notice of the kind of questions he is likely to ask when opportunity affords, but, as I made clear, I cannot answer them now.
LORD MOLSON: My Lords, will the Government bear in mind that on many occasions in the past, when there have been serious breaches of security, the Government and the police have been blamed for not taking action? Is it not inevitable that in some cases investigations may prove not to have been justified? Will the Government bear in mind that zeal in this matter is not to be deprecated and that an occasional accident reflects discredit neither upon the Government nor upon the police?
LORD STONHAM: My Lords, I am much obliged to the noble Lord for his contribution. I am sure that the sentiments he has expressed are shared by the great majority of the people in this country.

S.E.T. AND WAREHOUSING OF GOODS
LORD JACQUES: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether it is their policy by selective employment tax and investment grants to encourage warehousing at the point of manufacture, when in such trades
322
as grocery, drawing supplies from many manufacturers, there is usually more efficient distribution when the warehousing is done by the wholesaler or multiple retailer.]
LORD BESWICK: My Lords, the Government's policy is to encourage greater efficiency in industries which bear S.E.T. While it is necessary to await the outcome of the Reddaway Inquiry before coming to final conclusions, the evidence so far available is that S.E.T. has contributed to increased productivity.
LORD JACQUES: My Lords, I thank the noble Lord for his Answer. May I ask whether he would be prepared to receive evidence that what is suggested in the Question has taken place and is taking place as a result of S.E.T.?
LORD BESWICK: My Lords, I would say that it would be an imprudent action on the part of any company to make, in advance of the recommendations in the Reddaway Report, the sort of significant changes that are referred to in the Question. But, of course, if my noble friend has any evidence (he is in a very good position to know what is going on) and will let me have it I will certainly see that it is considered.
LORD STRATHCLYDE: My Lords, is the noble Lord saying that there has been an overall increase in productivity in all manufacturing and trading work, or is he saying that in some cases there has been an increase in productivity?
LORD BESWICK: My Lords, I am saying that in this tax-bearing sector there is evidence of increased productivity related to this tax.

S.E.T. AND INDUSTRIAL CATERING SERVICES
LORD JACQUES: 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 whether it is their policy to discourage specialist industrial catering by selective employment tax in the many cases where the manufacturer has found that contracting for such a service was the most efficient way of meeting the needs of his employees.]
LORD BESWICK: My Lords, there are clearly advantages to manufacturers in using special services of all kinds. If the noble Lord knows of any cases where S.E.T. has induced manufacturers to take them over themselves, I shall be glad to have details.
LORD JACQUES: My Lords, I thank my noble friend for his answer. I shall be very pleased to produce the evidence.
LORD WYNNE-JONES: My Lords, is my noble friend aware that while many of us regard selective employment tax as a very useful form of taxation, the indiscriminate way in which it is often employed seems to be against the whole idea of selective employment?
LORD BESWICK: My Lords, a selective employment tax is not an indiscriminate employment tax. But I accept from my noble friend that all the difficulties and criticisms which arise about this lax really stem from the distinction that is made between one form of activity and another. It is not the tax itself but its selectivity. That is the sort of question into which the Reddaway Inquiry will go.

RHODESIA: MR. IAN SMITH'S BROADCAST
EARL JELLICOE: My Lords, I beg leave to ask the Government a Question of which I have given them Private Notice. The Question is as follows:
"To ask Her Majesty's Government if they will make a Statement on the situation concerning Rhodesia, following Mr. Ian Smith's broadcast last night?".
LORD BESWICK: Yes, my Lords, my noble friend Lord Chalfont will be replying to this Question by way of a Statement at a convenient moment after half-past three o'clock.

PRIVATE BILL STANDING ORDERS
2.45 p.m.
THE CHAIRMAN OF COMMITTEES (THE EARL OF LISTOWEL): My Lords, in moving these Amendments to our Standing Orders on Private Bills, I have to explain that they provide for an
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increase in the fees charged by the Official Shorthand Writer for certain duties—for attendance at proceedings on Private Bills and at certain Sessional Committees and for the provision of transcriptions. These fees were last revised in August. 1965. The increases have been agreed by the Treasury. To save the time of the House, I should like to move these four Amendments en bloc. I beg to move.
Moved, That the following Amendments be made to the Standing Orders relative to Private Bills etc., effecting an increase in the fees payable to the Shorthand Writer:
Table of fees, page 99, line 34, leave out "6–10–6" and insert "7–16–6";
Table of fees, page 99, line 35, leave out "7–14–6" and insert "9–5–6";
Table of fees, page 99, line 37, leave out "2–3" and insert "2–8";
Table of fees, page 99, line 38, leave out "3–2" and insert "3–10".—(The Earl of Listowel.)
LORD LINDGREN: My Lords, may I ask my noble friend whether these changes have been agreed to in conjunction with the appropriate organisation representing the shorthand writers?
THE EARL OF LISTOWEL: My Lords, these charges were decided by a Committee of your Lordships' House and they are the consequence of that decision. I cannot tell my noble friend whether the union representing the Official Shorthand Writer, assuming that he is represented by a union, was consulted before these changes were submitted to the Committee of this House.
LORD INGLEWOOD: My Lords, if it is so easy for a Committee of your Lordships' House to agree to these changes, may I ask why the Government continually put obstacles in the way of revising the rate by which Members who have to use motor cars to attend your Lordships' House can have reimbursement on a proper scale?
THE EARL OF LISTOWEL: My Lords, may I suggest that the noble Lord should address that question to the Government, rather than to me.
On Question, Motion agreed to: the said Standing Orders amended accordingly.

CALDERDALE WATER BILL [H.L.]
THE CHAIRMAN OF COMMITTEES THE CHAIRMAN OF COMMITTEES rose to move. That Private Bill Standing Order No. 104 be dispensed with for the purpose of allowing the Select Commitee to whom the Calderdale Water Bill has been committed to consist of seven and not five Lords. The noble Earl said: My Lords, I should like to point out to your Lordships that Private Bill Standing Order No. 104 provides that Select Committees on Opposed Private Bills shall consist of five noble Lords. The Select Committee on this Bill, which will have to consider a number of Petitions opposing it, is likely to sit for at least three weeks. In order to ensure a full attendance throughout this unusually long period, the Committee of Selection of this House have recommended that the Select Committee should consist of seven and not five noble Lords. I am asking the House to dispense with the Standing Order in order to enable this recommendation to be implemented. I beg to move.
Moved, That Private Bill Standing Order No. 104 be dispensed with for the purpose of allowing the Select Committee to whom the Calderdale Water Bill has been committed to consist of seven and not five Lords.—(The Chairman of Committees.)
On Question, Motion agreed to.

FUTURE OF BROADCASTING
2.47 p.m.
LORD BYERS LORD BYERS rose to call attention to the future of broadcasting in this country; and to move for Papers. The noble Lord said: My Lords, I hope that the lack of consultation, if there has been such, with the shorthand writer's union does not result in a strike in the course of this debate, because if that were to happen I am sure that many important contributions would be lost to history.
I beg to move the Motion standing in my name on the Order Paper; namely, to call attention to the future of broadcasting in this country. I think that I could start best by saying that the Crawford Committee of 1926 laid down the constitution of the B.B.C. as a public corporation. About ten years after that, the Ullswater Committee was appointed
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and duly reported in 1935. Because of the war, no further review was taken until the Beveridge Committee reported in 1951. The next milestone was the Pilkington Committee of 1960, headed by the noble Lord, Lord Pilkington. who has now joined us and who, I am delighted to know, is going to speak in this debate. In 1967 the present Minister of Education, then the Postmaster General, stated that in the spring of 1969 a long, cool look would be taken at the whole system of broadcasting in this country. That statement was made, I hope appropriately enough, on a Liberal Supply day in another place. It looks, therefore, as though a review of broadcasting is traditionally called for every 10 to 15 years and I would hope that this debate is not altogether ill-timed.
I believe that the next review could be the most important that has yet been held, partly because of the speed of technological development and partly because of the universality of television as a mass medium of communication. The generation which is now coming on to the electoral register has lived with television ever since it was born. That is one fact that points to the need to consider very carefully the form which the next review should take, and I hope that this is something we may discuss to-day during the course of this debate.
The background of technological development over the next 10 to 15 years is, I believe, from what I have been able to gather, really an exciting and challenging one. The television revolution is social. It is changing our ways of living and opening up new perspectives; it is stimulating new tastes and reorganising in many ways the relationships in politics between leaders and peoples in different parts of the world. Above all, television is becoming, almost has become, a world medium. Ten years ago, I believe there were 95 million sets in use; to-day there are 225 million. The advent of the satellite is carrying out another revolution. I am told that at this moment four satellites stationed over the oceans can transmit television to and from most of the inhabited world. I believe that by the end of this year there may be something like nine of them. By 1975, satellites may be able to beam signals directly into television sets without going through the medium of national broadcasting systems.
The implication of this on national sovereignty, on international law and on international practice can be imagined. I am told that there are other developments round the corner of which the most significant may turn out to be the new low-cost recording system which could well be a commercial proposition, I am told, within five years. Such a system provides a new dimension for television. It means that one will be able to record on to a cassette any programme one wants, even in one's absence. One can then play them back at leisure. In addition, it will be possible to buy, borrow or hire cassettes already recorded. This would be a boon to many of your Lordships who have missed some of the better programmes because of the other engagements that you have to undertake. I personally saw only two or three of the Mountbatten series; I saw very few of the Sir Kenneth Clark series. I have the feeling that there is a little man in the B.B.C. who knows where I am at any one moment who puts programmes on so that I cannot see them.
My Lords, if we get this review it could be a very important one indeed. Apart from the major problems of copyright and mass manufacture at economic prices (both of which I am convinced can be solved), it opens up new vistas for learning and entertainment which could cause a social revolution. That is why I say that against this background it is pretty clear that the next reviewing body, if it is a body, will have to be chosen with unusual skill and care. I am not suggesting that it must consist of technologists; but certainly those chosen must be able to appreciate the speed of technological advance which may be achieved over the next 15 or 20 years. I should have thought that it might be well to consider that a full study of likely technological developments should be undertaken before any review body is appointed. How to get agreement between technologists on what the development may be is an entirely different matter, but I should have thought that some attempt ought to be made to do this. I go further: I would suggest that if possible a series of public discussions should be organised on policy, on the alternative forms of organisations for the B.B.C. and I.T.V. which might be available and which might be considered, and that these
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public discussions should be mounted well in advance of the appointment of the body itself.
I believe that we are on the threshold of a most important era in mass communications and that we ought to take it as seriously as we can. If we did this, it would enable the terms of reference and the background against which the decisions have to be made to be clearly defined in advance. In addition, there is the whole question—much bigger than I want to touch on to-day—of international standards and possibility of the need for some international code of practice in communications. Before I leave the question of the next review of broadcasting I should like to say just this. In the course of my discussions with various people, I have come to the conclusion that we ought to appreciate the tremendous burden which appears to be put on an organisation like the B.B.C. by the almost constant review which takes place of its activities. It is, so far as I know, responsible to the Public Accounts Committee, to the Estimates Committee. It now has McKinsey going through the organisation and if, in two years' time, there is another reviewing body, we are going to find that we are pulling the plant up far too often to examine the roots to see whether it is still growing. The extra time which has to be devoted to these various activities by top management must be quite considerable. I think it is something that ought to be recognised as a problem in itself.
Next, my Lords, I should like to turn briefly to the structure of the B.B.C. itself. It is a vast organisation. It has a tremendous budget to dispose of. I believe I am right in saying that the operating expenditure is something like £68 million a year and that the total expenditure is more than that. It has a most peculiar accounting system which I do not understand. I do not know how they differentiate between capital and operating expenses; but that is a subject for an entirely different debate. It is difficult to know whether it gives value for money. Yet, when one considers the various alternatives which are open to us, I find it very difficult to see any other structure which would in fact be more appropriate to the job. I am willing to be convinced, but at the moment I cannot see it. It has been suggested that there could be different independent corporations for

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each service: one for sound, another for television. It has been suggested that one could go further and set up in competition with one another the actual channels themselves. It is possible that one could come to a system of autonomous broadcasting regions. I do not know. I am not persuaded that these choices are any better than what we have at the moment. While on the question of regionalism, I hope that every effort will be made to preserve in this country a proper regional system. I was extremely worried to hear the other day that, I think it was, the North Regional headquarters has suffered a cut of something just under £2 million a year. I hope that this does not mean that there is going to be a movement towards centralisation back to London, keeping only a skeleton organisation in the regions. This would be a very retrograde step. We want to develop the regions so that they can make a real contribution not only to regional affairs but to the network and, if necessary, to the international network, stemming from the regions.
As I have said, I am not persuaded of any changes at the present time. Although the B.B.C. is monolithic, its very size gives it the measure of strength which enables it to withstand pressures if it wants to do so. In fact, I think that the character, personality and integrity of the men and women who run the B.B.C. are much more important than the organisational structure which it adopts. I hope that we shall never lose the almost judicial approach which the B.B.C. has. I hope therefore that in any proposals for changing the organisation, for altering the relationships or control, the vital necessity of preserving the fundamental freedom of the B.B.C. will always be put as priority No. 1. We have experience of too many countries—by no means all of them behind the Iron Curtain—where the Governments have eroded the freedom of those charged with national mass media. We know that there are all sorts of pressures put on the B.B.C. and as this broadcasting, through new developments, becomes an even greater influence in our lives, so the tendency to want. to control could well increase.
I am not against pressure being exerted. I am all in favour of the freedom of any individual expressing his views about the B.B.C, in Parliamentary or even non
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Parliamentary language. I think that there is little danger in this, provided that the protest is open or at least that it is not secret, that it is not improper; and secondly, so long as we have men and women of integrity at the top working in an atmosphere of freedom which allows them to be the sole judges of how they ought to react to the protests and the pressures. If we ever lose that freedom, we are on the slippery slope. I am sure that we have all at times protested to the B.B.C. about one thing or another. I certainly have. I have always had a reasonable reaction, even if it has not always been satisfactory; and it certainly has not. But I think this is healthy. What can be unhealthy is when pressure mounts up against experiment and pioneering; when the pressure gets so great that those in the B.B.C, or in the I.T.V. for that matter, come to prefer a much quieter life. Then we lose the impetus which every creative organisation needs if it is to be adaptable and courageous.
Having said that, and having made it clear that I believe in freedom for the broadcasting authorities to make their own decisions, I think one is entitled to express a view on some of the problems which both the B.B.C. and the I.T.V. have to face on an almost daily basis, and for which they are quite often criticised. First, there is the treatment of news. I think this is a tremendously difficult problem. I do not think there is much doubt that an underlying hysteria (perhaps that is too strong a word) can be set up in an audience if worse news is heaped on bad news. I have no doubt that some news events, like militant student demonstrations, induce more news events about militant student demonstrations. I understand that in America there is a programme going out now which concentrates entirely on good news. I think it would be a good thing if one could tune in to good news. I am sure that the Prime Minister would appreciate a programme of that nature, as I am sure from time to time we all should. No one of us would wish to smother these events which we do not like, or pretend that they never take place. I think the danger is minimised so long as the authorities are aware of the problem and treat it as a serious social phenomenon.
A good case in point was the way in which the B.B.C. covered the Grosvenor

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Square demonstrations. We have already praised the police for what they did in a remarkable contribution to crowd control. It was quite remarkable. But I think the B.B.C. television coverage showed what a first-class balance could be achieved by intelligent anticipation, by planning and by editorial control. I think this is where a great deal of hard work and thought goes on which is never appreciated by the public: and I am delighted to know how much effort went into that particular event.
I think that one of the most important vehicles for maintaining balance in broadcasting, in addition to intelligent news reports, and one which can damp down the temper of the people, is proper and adequate current affairs programmes. This is where one can get a much deeper understanding over to people of what the true background is to the news. But I still think there is much research which could usefully be done into the way in which news is treated, and the effect that the treatment of news can have over a long period. It is possible that the very act of reporting an event dramatically with a camera can in fact give it a different characteristic than would be the case if somebody is just talking to the reporter, who has his pad and pencil out before him. I do not think that nearly enough work has been done on this and I think it is a fruitful field for research.
This brings me to the almost more intractable problem of violence on television. I have no answer to suggest, but I think this is something which ought to be discussed deeply and continuously. What is important, I think, is that the broadcasting authorities themselves are seriously concerned about it. That is all to the good. But among the various problems associated with violence, one of the most difficult, which does not yet seem to have been solved, is to get a proper definition of what we mean when we refer to violence in this context. There are bound to be different views as to what constitutes violence, and it is surely important that an attempt at an agreed definition should be made before we can get any satisfactory statistical analysis. Otherwise, we do not know what we are talking about.
As to the frequency of violence—undefined violence—on television, the
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Christian Science Monitor some time ago viewed several weeks of American network television and found over 200 incidents with 70 or 80 killings in each 80 hours of output. These figures were completely disputed by the television companies, and I think this was almost certainly because there was no definition of what in fact constitutes violence on the screen—although I should have thought that the killings were not likely to be in dispute as being violence. I am told that "The Avengers" was the most violent programme on the American network. "High Chapparal" came tenth, and "The Virginian" was very low indeed. There seems so far to have been no check (there may well have been, but I cannot find it) on British programmes over a similar period. This surely is something that should be done: there ought to be constant monitoring of this. First I think we need the definition of violence and then we need the count of how many incidents of violence take place.
There seems to be relatively little research into the effect of violence on television, and I believe that such violence must have some effect on the society in which we live. I think it must be clear that television reinforces existing tendencies, whether they are good or bad; and one would expect violence on the screen at least to have an undesirable effect on the weaker-minded and less stable members of our society. But—and this is the point—we do not know. I should have thought that far more time and money should be devoted not only to the repercussions of screen violence, but to the effect of television on society in all its aspects.
I was interested to read the Progress Report of the National Commission on the Causes and Prevention of Violence in the United States. The Commission dealt specifically with mass media, and I was interested to see that they have set up what they call a "mass media task force" to inquire into the effect of television. Perhaps I may quote one part of the Report. They said:
"Concern over the effects of media portrayals of violence is not new. It was aroused against the motion picture industry in the 1930s: in the 1940s and 1950s private and public attention was given to portrayals of violence in comics, and to-day the concern is directed primarily at the television industry."

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They then went on to say:
"The assumption that media portrayals of violence cause real acts of violence is common to all these concerns. It is easy to be concerned when an expert points to an incident in which an individual shoots someone immediately after he has watched media violence. It is easy because it then seems as though media violence was the single and most direct cause of that individual's violence against others."
The Commission's Report went on:
"We are learning, however, that the problem of effects of media violence is not this simple. Most persons will not kill after seeing a single violent television programme. However, it is possible that many persons learn some of the attitudes and values about violence after years of exposure to television, and that they might be more likely to engage in violence as a direct result of that learning. We need to learn the probable effect of daily exposure to media portrayals of violence from infancy to and through adulthood. Just as the family is not the only factor which shapes the attitudes and behaviour of children, but instead contributes to the moulding of individuals, along with the churches, schools, friends and other sources of learning and socialisation, so the effects of years of exposure to media violence may be more important than the short-run effects of exposure to one or twenty violent media programmes."
My Lords, I believe that there is a lot of sense in that statement. As I say, the generation now going on to the electoral roll is one which to our knowledge has been exposed for about twenty years, and I should have thought that there was a strong case for doing a good deal more research in this country against our own social background, and not relying only on the work being done in the United States.
I should like now to turn for a few minutes to the I.T.V. I think it is generally accepted that commercial television has a role to play in our society. The main danger, it seems to me, is that it may become a political milch cow, constantly squeezed by an impecunious Chancellor—and, so far as I can see, all Chancellors in the future are going to be impecunious. Much has happened to the Road Fund over many years. I think this squeezing of the profits, the squeezing of the revenues, was inevitable because of the vast fortunes which were made in the early days of commercial television; and also, if I may say so, because of Lord Thomson of Fleet's very graphic, very honest, but, for the industry, very unfortunate phrase about "a licence to print money".
To-day, commercial television should surely be regarded as a business, like any other, and ought to be treated accordingly. In fact, it is even more vulnerable than other businesses, in that its licence is subject to renewal, or cancellation, after a period of six years. In addition, it faces a punitive bill for selective employment tax, even though some hold that it could be classed as a manufacturing industry. It now has this massive advertising levy. The object ought to be to encourage a high standard of performance and high capital investment, together with reasonable profits. The business, surely, should be capable of a risk type of return, because it is producing an end product, particularly in the export field, which one is never quite sure one will be able to sell. That is certainly the case with some of these expensive television film series, which, when they are sold, bring a tremendous amount of money into this country, particularly from North America.
I believe that against this background the whole principle of a levy on advertising revenue was the wrong one to adopt. If I may mention my own industry—which is mining—this advertising levy is comparable to levying a fixed percentage on the revenue of the mines without any relation to their profitability. That is the sort of thinking which in the old days, in many parts of the world, drove mines into liquidation. The right answer, surely, should be for the Government to take a share of the profits. In any other business I would suggest that they should take a minority interest in the equity, but there might be an outcry by people who felt that this was the thin edge of the wedge, the thin end of Government control. However, it is surely to profits and not to revenue, that the Government must look. The fact is that companies like A.T.V.—which twice earned the Queen's Award for Exports—are making a substantial contribution to the balance of payments. To do this they need to take risks, and to take risks they need to have a big enough base of operations, a big enough base of profitability to minimise those risks when their efforts do not succeed.
I have no interest to declare in this matter, but, on the face of it, it seems to me that the independent companies; are at the moment not getting a fair deal. In

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the course of my discussions in preparation for this debate I discovered that one of the things which most worries the commercial television companies is a remark which Mr. Short made in the debate in another place on June 28, 1967. He said that nine years onward (that is, from 1967) an opportunity would arise for a fundamental review of the whole system, because I.T.A. and B.B.C. and the relay companies' licences would all terminate at the same time. That has been interpreted, rightly or wrongly, in some quarters as meaning that the companies have only another six years to run, and therefore they have not a hope of indulging in real long-term planning. That could have a deleterious effect on the standard of programmes, which might be sacrificed to the making of quick profits. I do not know that this would in fact happen, but I think it is something which we ought to think about very seriously indeed.
My Lords, I have not dealt with a number of other subjects because I hope that noble Lords will themselves raise them in the course of the debate. I am quite conscious of the fact that my speech is an inadequate survey. I can only plead that I hope it is the right sort of speech to open a wide-ranging debate, as I hope this will be. I have not dealt with the external services of the B.B.C. If I had, I should have stressed their vital importance and, in my view, their worthiness of Government support. I have not dealt with educational, or religious, broadcasting, and I know that other Lords will do so. I have not dealt with Party political broadcasts; if I had, I should have argued that at election times we politicians tend to overdo it, and at the very least we should avoid monopolising all three channels at the same time. Nor have I dealt with the exciting developments of local radio. This, I am pleased to say, will be dealt with by my noble friend Lord Beaumont of Whitley. Finally, I have not said anything about the fourth channel, although I intended to do so. I would only ask the Government whether they have any views as to how this fourth channel could and should be used. I am sure the House will be grateful to hear them. I beg to move for Papers.
3.16 p.m.
THE EARL OF BESSBOROUGH: My Lords, we must all be grateful to the noble Lord, Lord Byers (we always say
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this, but I certainly mean it on this occasion), for having raised this broad question of the future of broadcasting, which I might describe as "instant global" and indeed now "instant spacial" communications. That is a feature of our world to-day. It is indeed some time since we had a full debate on the subject. I need hardly say that I agree with him very much indeed, and especially with his remarks about violence. Of course, that question goes beyond the problems of broadcasting, and matters relating to it have already been discussed lately in your Lordships' House in connection with student unrest and on other occasions. I am, however, glad to note that Independent Television have spent a quarter of a million pounds on research into this subject. The B.B.C. have done excellent jobs in many spheres, but I am not quite certain whether they have conducted the same kind of research as Independent Television has done into this subject.
While, undoubtedly, some programming leaves something to be desired, we are none the less sometimes blessed with superlative, triumphant series, such as one of those mentioned by the noble Lord. I refer to Sir Kenneth Clark's "Civilisation", which, in my view, if there were no other television programmes at all, would make television worth while. It is to the credit of A.T.V.—my old company with which I used to be connected over five years ago—that they started Sir Kenneth on this kind of arts programme, although in a more modest, less elaborate way. But, of course, we all have different tastes, and we must not be intolerant of those who prefer other kinds of programmes. It takes all sorts to make a world. Nor should we, for example, reject out of hand claims that creative "pop" music is "the classical music of now", as it was described only the other night on B.B.C.2. Of course we could go on discussing programming for weeks in your Lordships' House, but I do not propose to do so. No doubt we shall soon be receiving a series with "Snoopy and the Astronauts" from the Moon, if not immediately from Venus, Mars, or that more promising king-sized planet—Jupiter.
My Lords, many questions regarding broadcasting remain to be resolved. I propose to deal with only three of them: the Open University; the levies and taxes

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on Independent Television; and a few words on commercial radio. They all revolve mainly around the allocation of wavelengths. This, we must remember, is not in the hands of the B.B.C. Some people may question whether the Postmaster General is the right person to deal with this matter, especially when one considers the wavelengths which must be allocated for defence purposes. I wonder whether we should not have a Minister for Telecommunications who would be responsible for allocation over the whole field. At all events, the next Postmaster General—and I do not want to be Party political to-day—may be a member of a Government with very different views from the present one.
The Conservative Party are of course already pledged to commercial radio, and it may therefore be unwise for the B.B.C. to pursue its present plans regarding the expansion of local radio. But I will return very briefly to this subject later, and I hope that my noble friend Lord Denham will deal with it in greater detail. Personally, I am more interested in the use of broadcasting for the purposes of education. In this connection I was very interested to read the Report of the Planning Committee on the Open University—I am glad to see that the noble Lord, Lord Ritchie-Calder, is here this afternoon because he is an expert on this subject—and I see that an eminent Vice-Chancellor and a very distinguished staff have already been appointed.
Speaking entirely personally, I am in principle well disposed to this plan, but first of all I would ask: will it be a success; and secondly, can we afford it? Is it really wise to begin national operations without the benefit of experience from the kind of local university experiments which have taken place in the United States? I believe in independent local university television and radio stations which can be run, I would hope, bearing in mind the principle, I think now widely accepted, that universities should become centres of excellence in specific disciplines. It seems to me that a national network, such as the National Educational Television Network in the United States, can logically grow out of such a system of independent stations. We must remember that some universities believe in the use of television and radio, while others do not. Some are a little
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cool, and I am doubtful whether it is wise to impose a national system in one fell swoop over the whole country. However, I should like to see whether this Open University is in fact a success before condemning it before it has even begun.
As was pointed out in a timely feature article in The Times last Saturday, American experiments with degree courses taken by television go back over 13 years, but they remain at a low level, and the lessons for Britain are not encouraging. During its 13 years of operation the Chicago television experiment has, it seems, made little mark on Chicago's 3 million inhabitants and the average Chicagoan, I read in this article, has never heard of Chicago's Junior College of the Air. In the last two or three years, I gather, enrolment has fallen by 10 per cent. despite the fact that television mixing with on-campus courses is becoming more popular. It also appears that neither New York's nor Boston's television degree courses have made much impact. The drop-out rate in New York is reported to be as high as 40 per cent. and in Chicago 20 per cent. I do not doubt that there may be a need for middle-aged housewives in America to take such courses. They, it seems, arc the largest: single group of television students to take them, while 20 per cent. of the students appear to be teachers already. Even in Boston, which has a long experience in this connection, the director of the educational television station says you cannot teach entirely by television although that is what many of the television students would like.
It is true, as I say (and I have seen this myself), that these experiments are conducted most economically, some would say on a shoestring, Chicago having an annual budget of only some 900,000 dollars, and New York 175,000 dollars, compared with a tentative projection for Britain's Open University of around 10 million dollars. But if in the United States they cannot afford to finance adequate degree courses by television, I wonder how in this country we can do so in our truly parlous enonomic situation. None the less, as The Times article says, those committed to degrees by television in the United States look enviously at our proposed University of the Air as maybe a visionary but possibly

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attainable proposition. Certainly in America television has provided some important fringe education, as indeed it has done here. Certainly both the B.B.C. and I.T.V. have made good contributions in their own enrichment programmes. The I.L.E.A.'s closed-circuit television system in London, which now serves 300 to 400 schools, I think, in the London area and is steadily expanding under the direction of my old friend Mr. James Wykes, is performing a very important function. But, operating as it does on a closed-circuit system, the problem of the allocation of wavelengths does not arise.
In America all television students, except I gather State prisoners, pay their own fees, which, again according to the article I have mentioned, vary from as little as 5 dollars to 40 dollars a course. I wonder whether there should not also be a fee-paying element in our own Open University—I believe that there will be to a certain extent—in order to relieve to some extent the burden on the taxpayer. I might add that I do not think that such a principle should be forgotten in university education as a whole. There is now a body of opinion that believes students should be granted loans to cover the cost of their university education and that these loans should be repayable in instalments by students themselves when they enter employment, or by their firms.
In regard to radio, it seems certain that there are sufficient V.H.F. wavelengths to provide at least 100 local radio stations, and while some might be "pop" stations—the "pirate" radio stations certainly showed there was a big demand for them—some of these wavelengths could well be set aside for local university use. This would bring a true and deeper meaning to extra-mural studies. But Vice-Chancellors are not all agreed about this, and that is why I believe in the first place in local experiments at those universities which wish to have their own stations.
I think it is impossible any longer to separate radio and television in this context. Speaking of broadcasting as a whole, I have often wondered—the point I am going to make may be controversial and it is a purely personal thought—whether the system of gathering licence revenue is in fact the right one. The
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noble Lord, Lord Byers, implied that it was. But when I look at it I see that the cost of collecting licence money is considerable, as also is the cost of detecting vans to track down those who default. I sometimes wonder whether it would not be better for the B.B.C. to be financed by Government grant, as is the cost of education and of overseas broadcasting at present. If the B.B.C. were so financed, I see no reason why they should lose their vital independence. Do Judges, noble Lords on the Cross-Benches, lose their independence because they are paid by Government? Personally, I am satisfied that the terms of the B.B.C. Charter adequately protect the B.B.C. from this kind of political interference which has existed in France where no such statutory protection exists; they have not a Charter as the B.B.C. have. But I should say here how glad we must all be that the new interim French President, Monsieur Poher, has now freed French radio and television from such interference.
I am equally unhappy and uncertain about the financing of Independent Television, as I think the noble Lord, Lord Byers, is. What disturbs me most is the levy on turnover which the present Government imposed and which they have now extended. This levy is damaging to all the companies—especially the smaller ones. I see, for example, that Ulster have just had to cancel a £1½ million new studio, and that Yorkshire, which recently came on the air and are more or less breaking even, have none the less to pay a swingeing levy of £2 million. No wonder nothing is left for the shareholders! Perhaps the Government are not interested in them. But I agree with the noble Lord, Lord Byers, that levies on turnover, rather than taxation on profits, have always seemed to be wrong in principle, for under such a system a company can in fact be making losses and still have to pay a substantial levy. Such a levy certainly restricts the production of good programmes and particularly locally originated ones. Do we really want to drive regional companies to depend more and more on nationally produced London based programmes?
This is the very negation of independent television, which was originally set up to encourage more regional and independent programmes. Would to God

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truly competitive independent television had been introduced at the outset, and not only single companies in each region with a virtual monopoly of television advertising in their areas! Even now it would surely be better to abolish the levy altogether and let the Government recoup from a corporation tax on competing companies. I am shocked to learn that as a result of the levy the return on capital from the I.T.V. companies as a whole will be as low as 8 per cent., thereby rendering experimental programming out of the question. From this, one thing is certain: the present levy is damaging Independent Television to the detriment of the viewer.
Then there is the large Exchequer appropriation from the surplus of the Independent Television Authority itself—and I do not think the noble Lord, Lord Byers mentioned this—the Authority which builds and owns the stations. Monies which should go to the building of the new 625-line U.H.F. stations in colour are halved as a result of this appropriation, from, I think, some £12 million to £6 million. Thirdly there is the pernicious selective employment tax. Film studios are relieved of this tax while television companies are not; newspapers are relieved of this tax, yet Independent Television News is not.
What with the levy on companies' turnover, the Exchequer appropriation and the iniquitous S.E.T., the B.B.C., with much greater funds available for new equipment from colour licence revenue, are bound to forge ahead faster than I.T.V., even if the two do start together on November 15. In the long run the I.T.A. simply will not have the money to build U.H.F. colour transmitters as rapidly as the B.B.C. This is taxation gone mad, and I do not wonder that the chairman of the I.T.V. Contractors' Association was forced to say yesterday that the Chancellor had shown a complete lack of understanding of the economics of Independent Television. The so-called "licence to print money" mentioned by the noble Lord—although it was a licence to lose it at the start—hasbecome a purely historical oddity. And in the circumstances, I consider the I.T.V. companies are being most courageous in expanding, as many of them are doing. But all this, coupled with some uncertainty about the renewal of contracts, has a bad effect on recruiting for I.T.V.
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Those who wish to make their careers in broadcasting naturally turn to the B.B.C. as the most solid, long-term bet.
Then, in so far as radio is concerned, what does the B.B.C. propose to ask the Postmaster General to do about those medium wavelengths which are at present allocated to it? The B.B.C. local stations are not, I think, allowed general subvention from rates. Action in this matter of local broadcasting is required now. There is a certain absurdity in the suggested contributions by the B.B.C. to local radio. It seems that the present system of no advertising has failed, and I cannot believe it would be wise for the Postmaster General to announce the extension of the experiment to 40 or 50 B.B.C. stations. Should the B.B.C. now draw a local advertising revenue at the expense of the local Press? From what the noble Lord, Lord Hill of Luton, said yesterday, I gather not. Would it not be preferable for local advertising to flow into local radio stations in which the local Press, including the smaller local weekly newspapers—and I think they should be protected—would participate? These stations need not be purely 'pop" stations but could include. as I remember we said to the Pilkington Committee at the time, a wide range of local public service programmes, too. I think we are fortunate that the noble Lord, Lord Pilkington, is with us to-day to present his arguments in this respect.
THE LORD PRIVY SEAL (LORD SHACKLETON): My Lords, may I interrupt the noble Earl? He said "evidence we presented to the Pilkington Committee". I am just wondering whom the "we" referred to.
THE EARL OF BESSBOROUGH: My Lords, I am sorry; I was speaking away from my brief at that moment. "We", of course, referred—as I was going to say later—to a few friends who registered some companies in the South of England at that time, some six or seven years ago, and we went to see the noble Lord, Lord Pilkington, to present our case. I have no interest now in these matters but I thought I would mention it as I happened to catch the eye of the noble Lord, Lord Pilkington. I am sorry to mislead the noble Lord, Lord Shackleton, by saying "we".
LORD SHACKLETON: My Lords, the noble Earl did not mislead me at all. I merely wished your Lordships to know who "we" were.
THE EARL OF BESSBOROUGH: My Lords, I am delighted to hear the noble Lord say that. He is very friendly and when he says "we" next time I may jump up, too.
The B.B.C., I find, operate no fewer than 293 transmitters in the long, medium and V.H.F. wavebands, purely for their domestic services, apart from 68 short wave for external services. No other single broadcasting corporation in the world comes anywhere near that number. The B.B.C. really are very big. For the life of me, I cannot see why the Postmaster General should not authorise the setting up of a few pilot commercial radio stations, licensed, perhaps, by the Independent Television Authority, which for this purpose might be renamed the "Independent Broadcasting Authority". In particular, I cannot understand why the Prime Minister should be so much against this. Everyone agrees—even those not much in favour of commercial broadcasting—that I.T.V. has had a good effect on the B.B.C, and my own impression is that Labour voters favour commercial radio perhaps more than some Conservatives. The Prime Minister seems to have put his foot a little wrong on this, as he has perhaps on certain other issues, from the point of view of his own Party as well as the country. It is, I suppose, the result of a certain doctrinaire Socialist approach which still emerges from time to time and which shows the Government to be basically against private enterprise, even if, for political expediency, they pay occasional lip service to it.
Presumably in 1972, or thereabouts, a new Committee, not under the chairmanship, perhaps, of the noble Lord, Lord Pilkington, but possibly of another noble Lord—will be set up before the major reorganisation of all radio and television. I only hope that that Committee will arrive at rational conclusions regarding the allocation of wavelengths and other matters which I have raised to-day—conclusions which will be acceptable to the Party which will then, I believe, constitute the Government of the day.
3.39 p.m.
BARONESS LLEWELYN-DAVIES OF HASTOE: My Lords, we are indeed grateful to the noble Lord, Lord Byers, for raising this subject, and perhaps especially for introducing it in such a stimulating way. I cannot, like the noble Lord, deal with all the aspects of such a vast subject, but it is important that your Lordships should consider it, since the impact of broadcasting on our daily lives is now tremendous. These new forms of communication are creating new forms of communities. We are no longer burdened by physical or geographical ties; we can and do identify ourselves with totally different cultures and peoples.
In the past our feeling of belonging depended on whom we were near—first in a village, then in a town, and ultimately in a country. Now, largely because of our closeness through communication by radio and television, we can participate in an almost bewildering variety of experiences. We can have a sense of community with people far beyond our normal point of contact. My Lords, without irreverence I think it is true to say that the whole nation went to Sir Winston Churchill's funeral. Most of the nation watched the Olympic Games in Tokyo and in Mexico City, in colour, live. At this very moment millions of people feel close to the daily lives and domestic details of three men journeying to the moon. This is in a true sense a revolution, and an almost unrecognised revolution which takes place all around us. In the second half of this century man has begun to move from a society which was based on industrial production to a society which is based on knowledge, and on the interchange of knowledge and skills. For instance, in the United States next year more than half the population will be involved in disseminating knowledge or working with or through knowledge, not by their hands.
In this totally new situation broadcasting has made an historic change in the society in which we live; and, of course, because of this, it raises, as noble Lords have said, the whole question of public control. Broadcasting since the beginning has been recognised to have great social significance, and we in this country have therefore accepted that it must not be an instrument of Government. For this reason I welcome heartily what

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the noble Lord, Lord Byers, said about the freedom of our broadcasting authorities from the State, and Her Majesty's Government will always keep it that way. But equally we have accepted that it should not be exploited by the normal forms of commercialism, and I think the creation of the two bodies, first the B.B.C. and later the I.T.A., is a remarkably successful approach to this whole problem.
Perhaps we have to leave this country really to appreciate the quality of our broadcasting services, and particularly, if I may say so, to discover the enormous respect in which the B.B.C, in its news and so on, is held all over the world. People do believe in its truth and its impartiality. It plays an increasingly important part in the developing countries, both inside and outside the Commonwealth, and at the same time it presents an invaluable, true picture of British democracy at work. I do not think that this can be overrated. I have never forgotten the time when I was in Africa and learned that President Kennedy had been assassinated. It was a time of tremendous feeling of shock, somehow a feeling of being alone; and I was tremendously struck by the way in which people of all nationalities tuned in to the B.B.C. international news, not to their local nearer stations, but hour after hour to the B.B.C. That, I think, is a great lesson to us.
As the noble Lord said, if we are to consider the future of broadcasting we must take into account not only the programmes but the impact of technological advance, and I think that in this context it would be useful to consider the decisions already taken by the Government and those about to be taken. The noble Earl referred to the noble Lord, Lord Pilkington, whom we are indeed glad to see and whom we look forward to hearing; and noble Lords will know that the distinguished Committee of which he was Chairman produced the most far-reaching and penetrating Report. All its recommendations, with one very notable exception, were acted upon, and the Government have generally plotted our future in this pattern. The noble Earl wished us to have a Minister of Telecommunications. It is an extremely interesting idea, but I do not think that our Postmasters General have done too badly.
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The Pilkington Report, if I may be technical for a moment, recommended that the line definition standard on which B.B.C.1 and I.T.V. are broadcast should be changed from 405 to 625 lines. If I can explain this, we can get on to the fourth new service. Once the decision was taken to change over it meant that we should have to duplicate B.B.C.1 and I.T.V. for some time. We shall stop duplication as soon as we can, but we must give adequate notice so that people can change their sets and all the rest of it. The total project is enormous: we shall need 60 high-powered transmitting stations, and hundreds of low-powered ones. It is in fact a tremendous achievement. It has been a tremendous technical issue which had to be tackled and has been tackled. It has improved the quality of television. It has made three television colour services possible soon; and, perhaps most important, it has provided a firm base for long-term planning not only of the corporations but of the manufacturing industry, which is in itself just as important.
There is, therefore, an ultimate plan of having six television services, two on V.H.F. and four on U.H.F. The two first are already in use by I.T.A. and B.B.C. 1, and one of the four U.H.F. channels is used by B.B.C. 2. The further two U.H.F. channels will be used by I.T.A. and B.B.C. in the new duplicated transmissions in November. This noble Lords will understand, leaves one free service. I must at once say to the noble Lord that no decision has yet been taken about the fourth channel, and I do not think he would have expected it—indeed, I am sure that noble Lords would have very different views about how it might be used. Claims to it will certainly come from educational broadcasting, from the Open University, and of course claims will probably be made by Independent Television, in order to equalise, as they put it, with the B.B.C. One of the main considerations, of course, will be financial and what the demands on resources will be. In the light of all this, as I said, no decision has yet been taken. But in two or three years, when the duplicated services will have reached most of the country, a decision will have to be taken on the fourth channel, and I am sure that important suggestions made by noble Lords to-day will be considered. Nevertheless, my Lords, at the moment,

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with three television services, this country is as well provided as any in Europe; and, indeed, much better than most.
The noble Lord, Lord Byers, referred to the technical excitement of satellites. It is an almost dazzling prospect for the future. We all remember the initial excitement of Telstar I and Telstar II. But the progress which is now in front of us is almost infinite. The noble Lord described much more clearly than I could exactly how the different satellites work in the different transmitting stations, so I will not go into it deeply. But I should like the House also to remember that computers are of tremendous and increasing importance, not simply on the purely technical side but also on the actual production side. The noble Lord also referred to what is called electronic video recording. I think that many noble Lords may have something to say about that, because not only is it a simply fascinating development but it will also bring in its wake problems of copyright and all the usual kind of things. I am sure we shall hear later from many noble Lords about that subject.
Television perhaps monopolises the glamorous side of broadcasting, but in fact sound broadcasting is equally important. There has recently been a tendency to refer to it, in a rather affectionate, contemptuous manner, as "steam radio". But sound radio is rather like the railways in the United States. These became unfashionable and were allowed to decay; and now it is found that public transport is one of the only solutions to the traffic problem. I believe that sound radio is of enormous importance, particularly in relation to minority groups. I am sure that all noble Lords will have their favourite programmes. Perhaps they may be plays; perhaps they may be music on the Third; perhaps they may be "pop" or serious jazz—and, if I may say so to the noble Earl, Lord Bessborough, I think he got his "pop" and his jazz mixed up. I can explain it to him afterwards.
When we are dealing with favourite programmes I must, if your Lordships will forgive me, and not because I am a female, mention Woman's Hour. It was once described to me as the only programme which was based on compassion. I think that is true, in spite of its great gaiety. In fact we listen to sound radio
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in our motor cars, in the kitchen, in the garden and in bed. It is quite impossible to consider modern life without it.
When we think of sound broadcasting, of course, we come to the most exciting of all new developments, local radio. I do not know whether your Lordships are familiar with the various stations. The Postmaster General set up eight local stations in different places and there is no question that they have been a tremendous success. He is now reviewing the experiment, and, of course, I cannot anticipate the outcome. There is no question, however, that particularly young people are immensely enthusiastic about the experiment. People like the local stations because they are uninhibited, free and easy—you can go in and protest, and in a minute or two, if you are willing, you will find yourself "on the air" explaining your views. People enjoy this, and I think it is extremely good for local democracy, for local group feelings, and indeed for local government. One particularly good feature, as I read in The Times the other day, is that all the local stations have a special service for blind listeners. They point out hazards such as new roadworks and new bus stops. This is of enormous importance. There is also on one station a programme for perhaps the smallest minority of all, 70 handicapped children who can scarcely leave their homes. This is the sort of service which a public service in radio can and does, fulfil.
I do not want to follow the noble Earl on the question of financing commercial radio—my noble friend the Leader of the House is going to deal with that point—but I should like to follow him about the Open University. I thought he took perhaps a slightly too gloomy view of that. Noble Lords will know that this is in fact a unique development. It is a new university for people who have not got the formal educational requirements, and it will lead, through every kind of course—radio, television, correspondence, tutorials, practicals—to a thorough-going degree equivalent to degrees from other universities.
On the question of cost, it will cost less than the cost of the other universities. It will be financed not through the I University Grants Committee but through the Department of Education and Science. If the noble Lord asks: can

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we afford it? I believe we can; that the answer should be, Yes. Expenditure next year will be less than £2 million. Of course that will increase; but when one looks at it in proportion, public spending on education this year is £2,000 million. So £2 million does not seem much for a country like ours to afford for adult education which is desperately needed. The university will also, to a certain extent, pay for itself by the sale of its programme material throughout the world, and already inquiries are coming in for this material.
The noble Lord referred to the article in The Times about American educational broadcasting. In fact, as I think he will agree, the conclusion was that the Americans look towards this experiment with envy. Their own experiments, which were locally based, partly because of the pattern of American education, were not, as he said, wholly successful. But in fact we can use their experience, and I think our method of having a national organisation which works through regional bodies, arranging the practicals, the libraries and the laboratories and so on, is a far better way of dealing with this particular subject. The noble Lord will not expect me to follow him into the tricky realm of loans for students, except to say that I personally am totally opposed to the idea. It is, indeed, not to be looked at in this context at all, although one has to keep an open mind.
The noble Lord, Lord Byers, discussed the question of the independent committee of inquiry. This, of course, is extremely important. The franchise of the B.B.C. and of I.T.A. runs out in 1976. By that time, or indeed long before that time, the Government will have had to decide their major policy. I think the suggestion that a full study of technology should be made beforehand is extremely interesting. I am sure that my right honourable friend will take note of that suggestion, and I personally greatly like the idea of public discussions long before. The Committee of the noble Lord, Lord Pilkington, I think took something under two years to report—and perhaps he may tell us that he could have done with longer time. The broadcasting situation is infinitely more complex now, and there is no doubt that we shall have to get going with this fairly soon. As to the composition of the com
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mittee of inquiry, I would agree of course that it must have among its members technicians, representatives from Scotland, Wales and Northern Ireland, and others—and I hope that there will be plenty of those odd objects, the statutory women. But I am sure that the House will agree with the noble Lord when he says that we must not pull up the plant too often to look at the roots. I am quite sure that any idea of continuing inquiries is a bad idea.
I should like to remind the House of something that my right honourable friend Mr. Short, the Postmaster General, as he then was, said. It is
"My conception of a public corporation in this country is that we should either back it up or sack it, but not muck it about".—[OFFICIAL REPORT, Commons, 28/6/67, col. 450.]
I think that that is quite a good motto with which to consider this particular question.
On the question of violence, I am sure that nearly everybody is deeply worried. I will not go into it in the depth in which the noble Lord did, but I can assure him that Her Majesty's Government are fully alive to this problem. I quite agree that a great deal more research is necessary. But things like the wars in Vietnam and Nigeria, race riots and so on are a reality. There is also violence in drama. Much of the greatest drama involves extreme violence. One can think of all the corpses in Hamlet and in Macbeth and indeed in Romeo and Juliet. This is inevitable. But I chink that what we have to bear in mind here is that television comes straight into the home and that children are persistent viewers. There are, of course, general rules which the B.B.C. and IT.A. observe. The most notable one is what is called the 9 o'clock watershed. This assumes that up till that time children will be in the audience, and that after that the audience will be adult. This is an arbitrary assumption; indeed, those of us in this House who are parents will know only too well the difficulties. Nevertheless, I think it is reasonable.
Both broadcasting authorities have tried to formulate rules to deal with constant brutality and things of that kind. There are from time to time lapses, but I think that is inevitable if we are to have lively and adventurous broadcast

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ing. It is a good thing that criticism such as is voiced in your Lordships' House should be brought to the broadcasting authorities' attention; but again we must emphasise that it is for those two authorities to consider that criticism and to take decisions on it. I do not think that reality on television is a bad thing. I think that McCarthyism would have gone on a lot longer in the United States if the McCarthy Committee had not been televised. When the viewers saw that evil face and watched the sadistic treatment of his victims, then the whole complex of McCarthyism began to collapse. That, I think, was a victory for television.
Communication is possibly the key to a peaceful and a productive world, and broadcasting has the major part to play in this. But whenever there has been a new advance in communication it has always been attacked as dangerous. When the printing press was invented the early authorities regarded it as a most dangerous thing. I remember even in the 1930s Orwell and Huxley thought that the popular Press and broadcasting would be used to indoctrinate and mislead people. In the end, I believe that the opposite has turned out to be the case, although danger always lurks in this respect, but that is why our system of keeping broadcasting independent of Government is so important. Standards are, of course, inevitably variable, but I am sure your Lordships will agree that we have serious and worthwhile television and radio in this country of which we can be proud. I think our technicians and producers, actors and administrators, are among the best in the world, and I think we should be proud of them. I think this debate will show that we are alive to the possible dangers, open to the new developments, and capable of making the best of a marvellous new means of communication.

RHODESIA
4.0 p.m.
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD CHALFONT): My Lords, with leave I should like now to answer the Private Notice Question of the noble Earl, Lord Jellicoe, on Rhodesia, by
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repeating a Statement which my right honourable friend, the Foreign and Commonwealth Secretary, is now making in another place. The Statement is as follows:
"Mr. Smith announced at a political meeting in Rhodesia on the 7th May that the Constitutional proposals which he advocated would sound the death knell of majority rule. Last night's broadcast has not therefore surprised us, though it provided saddening confirmation of the regime's attitude. I have not yet seen the official text of the Constitutional proposals which Mr. Smith was publishing in Salisbury this morning. But it seems clear that they are broadly in line with those which my right honourable friend the Prime Minister described on the 18th February as 'a complete and flat denial of at least five of the Six Principles'.
"If the door is now being slammed it is not by us, but by the régime. We have made repeated efforts to reach an honourable settlement. Mr. Smith said last night a number of things with which I could not agree; but there is one point he made which I accept and which is central to our inability to reach agreement. Mr. Smith said—and I quote: 'Throughout the entire series of discussions the British have been obsessed with the question of majority rule'. I accept that. It is the first of the Principles which we inherited from our predecessors and it is basic to our dispute with the illegal régime.
"I think it was generally recognised, both in the country and in this House, that in the 'Fearless' proposals we made a very fair offer. Some people thought it went too far. My right honourable friend the Prime Minister resisted pressure at the Commonwealth Conference to withdraw these proposals; but Mr. Smith and his colleagues have turned them down.
"We now await the results of the referendum of the minority electorate, which has been arranged for the 20th June. Let us hope that those who are able to vote on that day will choose a wiser course for the whole future of their country than the disastrous counsel urged on them by Mr. Smith."
EARL JELLICOE: My Lords, I am grateful to the noble Lord, Lord Chalfont, for repeating this Statement made by his right honourable friend in another place. It is indeed a very serious Statement. It looks to me, I fear, as if we are now very near the end of a particularly sad and sterile road in our relations with Rhodesia. At this stage I wish to ask the noble Lord only one question. In his broadcast last night Mr. Ian Smith referred to the proposals which he submitted to Her Majesty's Government some little time ago; and there was a reference in the Statement by the noble Lord's right honourable friend in another place to "the constitutional proposals". I am not clear to which proposals he was referring, nor whether we in this House have seen the full text of them. Could the noble Lord assure us in any event, so that we can form our own judgment on these matters, that the full text of any proposals which have not yet been published in this country will be made available to Parliament, together with any correspondence to which they may have given rise? And can he also assure us that we shall see that correspondence before the Whitsun Recess?
LORD WADE: My Lords, I should like to join in thanking the noble Lord for repeating this depressing but not altogether unexpected Statement. It may be necessary to wait until June 30, when the vote of this minority electorate takes place, before a pronouncement is made. But in view of the fact that for a long lime now we have been getting the worst of both worlds—the failure of the talks, on the one hand, and a growing distrust on the part of Rhodesian Africans, on the other—does it not seem that we have reached the stage when the British Government should state clearly and firmly that no further useful purpose can be served in talks with the Smith régime?
LORD CHALFONT: My Lords, in answer to the question of the noble Earl, Lord Jellicoe, I referred to some constitutional proposals which Mr. Smith was publishing in Salisbury this morning, and I said—as is indeed the fact—that we have not yet seen the official text of these proposals. So far as the rest of our exchanges with the régime are concerned, they have all taken place under an agreement with the régime that, subject to notice from either side, they would
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remain confidential. But in the light of Mr. Smith's broadcast we now propose to give notice to the régime and to arrange as soon as possible thereafter for the publication of a White Paper which will give the text of our exchanges with the régime since the Salisbury talks last November.
So far as the point raised by the noble Lord, Lord Wade, is concerned, I cannot undertake on behalf of Her Majesty's Government to slam any doors at all. We have stood on a principle: the principle of unimpeded progress towards majority rule in Rhodesia. If the door is to be slammed, it is to be slammed by the régime and not by Her Majesty's Government.
THE MARQUESS OF SALISBURY: My Lords, I am sure that there cannot be any of us, in whatever part of the House we sit, who will have heard without a sense of deep personal sadness the Statement that has just been made by the noble Lord, Lord Chalfont. I do not want to-day to say anything that is in the least provocative, but I hope that I shall be forgiven if I remind your Lordships that there are some of us who have during the last few years warned the House consistently, in season and out of season, as to the inevitable results of the policy that the Government have persisted in following against a small country which is based on our own traditions and which has come to our aid more than once when we ourselves have been in desperate straits. In spite of what is sometimes said, I do not believe that the Rhodesian Government or the Rhodesian people have ever been disloyal to the Crown. Their dispute throughout has been entirely with the Government—or, it may be said, with Governments—here in London.
I realise that this is not the moment to develop such arguments at length. I would, however, ask the Government to give time for a debate as soon as possible after Whitsun, so that we may examine whether there may be something that can still be saved from this tragic wreck. I say "as soon as possible", in the hope that perhaps this may be done before the end of June, when other events are apparently forecast in Rhodesia.
LORD CHALFONT: My Lords, certainly I, for one, accept the noble Marquess's great distinction in these affairs,

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and his obvious feeling about this matter excused the somewhat lengthy nature of his question. I should simply like to say that there has been no question of intractability on the part of Her Majesty's Government in this affair. We have gone to great lengths with this régime to reach a settlement. We have been ready to be flexible on all the details, on all the forms, and even on the timing; but it is now evident that what is really standing between us is an acceptance of the principle that really matters. What prevented j a settlement, it now seems all too clear, is Mr. Smith's disagreement with the fundamental principle, on which we cannot compromise: that there must be unimpeded progress towards majority rule in Rhodesia. On the point raised by the noble Marquess, about a debate, perhaps I should be wise to leave that to my noble friend the Leader of the House.
LORD SHACKLETON: My Lords, the noble Marquess asked about the possibility of a debate. I am conscious that the noble Marquess has been showing considerable restraint in the matter—and we appreciate this. I would ask him to let me consider this suggestion for a debate a little further. I think it is necessary that we should consult on it with other Members of your Lordships' House; and I must of course consult my friends in the Government. It is quite clear to me that we shall have to have a debate at some stage; and, subject to the considerations I have mentioned, probably the earlier the better. Perhaps he will agree to leave it like that. This is not an attempt to evade an issue but, clearly, delicate issues of timing are also involved.
THE MARQUESS OF SALISBURY: My Lords, I thank the noble Lord very much.
BARONESS GAITSKELL: My Lords, will not the Minister agree that it would be to the eternal shame of the United Kingdom if they were now to come to terms with Mr. Ian Smith after his recent statement, which shows a complete capitulation to apartheid and is an affront to all Afro-Asian countries—that is, half the world? Will he not also agree that Mr. Ian Smith's blinkered and prejudiced view of race can have only a disastrous and far-reaching effect on future events in Africa?
LORD CHALFONT: My Lords, I am in much sympathy with what my noble friend says but, as I have said, I think we must await two things. First of all, we must await the official text of Mr. Smith's constitutional proposals and we must study that before we can take any attitude about this matter. Secondly, we must await the results of the referendum. When those two matters are clear to us, then it will be for Her Majesty's Government to reconsider their position. Bui, certainly at this stage, we are not prepared to be the ones who are slamming the door.
LORD GRIMSTON OF WESTBURY: My Lords, is the noble Lord aware that in the course of a television interview yesterday evening the Prime Minister admitted that he had misjudged the situation three-and-a-half years ago, when he thought that the Rhodesian problem would be settled in a matter of weeks rather than months? Bearing that in mind, is it not now possible that the Government are again misjudging the situation in trying to put all the blame for the breakdown and for the unhappy result of what has happened on to Mr. Ian Smith?
LORD CHALFONT: My Lords, I cannot accept that anything that the Prime Minister said on television last night supports the thesis now put forward by the noble Lord. What he in fact said was that he had misjudged the situation in believing that Mr. Smith was a man with whom one could come to agreements. I think it is now quite clear from the evidence that the reason for the breakdown and the reason for the intransigence and the intractability lies with Mr. Smith, and certainly not with the Prime Minister.
LORD GRIMSTON OF WESTBURY: My Lords, the noble Lord is now treating the matter on an entirely personal basis.
LORD SALTER: My Lords, may I ask the noble Lord the Leader of the House whether, in considering what he is going to think about before we meet again, he will ask himself if it is now to our advantage, or to the advantage of anyone in the world, that sanctions should still be continued in present circumstances? I ask that question bearing in mind the fact that the Government

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declared both Ghana and Nigeria as fit for independent rule but decided that Rhodesia was not; and also bearing in mind the fact that, obviously, from the point of view of the acceptability of the Africans in Ghana and Nigeria and their lot in life, their situation has been worse than the lot in life of the Africans in Southern Rhodesia.
LORD SHACKLETON: My Lords, if the noble Lord, Lord Salter, addressed his question—if it can be called that—to me, it merely suggests the wisdom of the noble Marquess, Lord Salisbury, in asking for a debate; and I should have thought the chance of that was just about "evens" at the moment. But I do not think we can start widening this discussion into a debate about what happened in other African countries. Therefore, unless there are some questions of elucidation, I hope that we may get on with the other debate, although I fear I have a small Statement to make.
THE EARL OF SWINTON: My Lords, may I ask the noble Lord this question? I do not in the least want to discuss this subject now, but is it not extremely important that there should be a debate before any decision is taken by the Government as to what their course of action is to be?
LORD SHACKLETON: My Lords, I am not quite sure what new decision the Government might take in the meanwhile. I will just say that I have noted what the noble Earl has said. Clearly, we have to consider the situation, and it is obvious that the House will want at some stage to debate it. But in everybody's interest I think we must consider what is the best timing for such a debate, and I hope that noble Lords will leave the matter there.
LORD CLIFFORD OF CHUDLEIGH: My Lords, speaking as a person who has recently returned from Rhodesia, may I ask whether the noble Lord is aware that the ordinary people in both countries—and I am talking about the people who vote—are fed up with their politicians for not having reached an agreement? Is the noble Lord further aware—and I was told this by a Rhodesian who was on both "Fearless" and "Tiger"—that the Rhodesians believe that if it had been left to the Prime
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Minister alone, an agreement would already have been reached, but that each time an agreement was near his entourage pulled him aside?
LORD CHALFONT: My Lords, I am not quite sure to whom or to what part of the Rhodesian population the noble Lord is referring. The noble Lord mentioned the voters, but I would point out that there are four million Africans in Rhodesia to whom we also owe consideration, and if we reached any kind of accommodation with the present régime—and I think the noble Lord will agree with this—which compromised the principle of progress towards majority rule, we should be doing the whole of Rhodesia and the whole of its future a disservice.

H.M.S.O. DISPUTE AND PARLIAMENTARY PAPERS
4.17 p.m.
LORD SHACKLETON: My Lords, with permission, I should like to make a Statement parallel with one that is being made in another place—and I must apologise for not giving notice of this, although I have been able to inform certain noble Lords—concerning the supply of Government publications to Parliament and members of the public.
Although we did not ourselves suffer a delay this morning in the supply of papers, another place did. This is not a matter of which we need directly to take cognisance, but it is perhaps important to inform your Lordships that this delay arose from a ban on overtime by engineers working in St. Stephen's Press, and that this is different from the other dispute of which we are aware. A pay claim by employees working in the Press is at present the subject of negotiations, and I am sure your Lordships will understand that the Government are not in a position to say more on that at this particular moment, as the negotiations are going on.
At the same time, I have kept your Lordships informed about the position arising out of the continuing strike at the publications warehouse of Her Majesty's Stationery Office, which has caused some inconvenience, but your Lordships will know the position and in regard to the supply of papers there is no variation

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from what I announced last week. Recently Ministers saw representatives from the chapel and the London Central branch of the union concerned—the Society of Graphical and Allied Trades—to discuss the dispute, which is about a control formula in a pay and productivity agreement. An offer was made to the union representatives that the disputed clause should be the subject of arbitration, but I regret to say that this offer was rejected. As there has been no further progress, the Government have decided to set up an inquiry forthwith to look into this dispute.
LORD SANDFORD: My Lords, the House will be grateful to the noble Lord the Leader of the House for that Statement. Of course, these two affairs do not yet amount to anything like a national emergency, but I submit that together they amount to a great deal more than mere inconvenience. I would ask the noble Lord two questions. First, at what point does he think that the national interest overrides the interests of the people who are party to this dispute? How long does this have to go on? How many documents that have been published have to pile up in the Stationery Office, unissued, before the national interest overrides other considerations? The second question I should like to ask the noble Lord is this. When we have a stoppage, or even a dispute, in an important public service like the Stationery Office, would it not be wiser to set up a court of inquiry much more promptly? In this case a stoppage has occurred and three weeks have elapsed before an inquiry has been set in motion; and until an inquiry has been set in motion and the facts established no further steps can be taken to get things moving.
LORD SHACKLETON: My Lords, I can only say that the noble Lord's remarks scare me a great deal, because he really cannot think about these disputes in these terms, though he can obviously speak in them. Of course a dispute of this kind is serious, but I should not like to say when it becomes a national emergency. The Government—any Government, any employer—do their best in delicate situations to take the right sort of action to try to bring it to an end, but I really do not think I can usefully
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speculate. I would ask that I should not be pressed on this matter beyond my saying that the Government clearly are doing their utmost in a difficult situation. As to the question about the time when one should set up a special inquiry, that again is a matter for the most delicate judgment.
LORD BYERS: My Lords, in view of what the noble Lord, Lord Sandford, has said, will the Leader of the House give an assurance that he will not bring the Army into this.

FUTURE OF BROADCASTING
4.22 p.m.
Debate resumed.
THE LORD BISHOP OF BRISTOL: My Lords, the break in our programme has been concerned with more serious matters, perhaps, than is usually so in the case of breaks in the programmes which form the subject of our debate, which we now resume. I venture to speak in this debate because I have for some years been chairman of an Advisory Committee on Religious Broadcasting and Television. I must first apologise to the noble Lord, Lord Byers, and to your Lordships' House that I shall not be able to stay for the end of this debate; but in these remarks I shall confine myself, in spite of wide-ranging interests in radio and television, only to the religious aspects of broadcasting and television.
I do not know whether all of your Lordships are aware that there is a body called the Central Religious Advisory Committee, which is one of the committees advising the B.B.C. and the Independent Television Authority. It is comparable with the School Broadcasting Council and the Further Education Advisory Council, in that it is a recognition that religious broadcasting is among the specialist fields in which the Corporation and Authority seek advice on policy, though not, of course, on matters of programme detail and production. The body I refer to, of which I am chairman, meets half-yearly; it is comprised of representatives invited by the Corporation and the Authority from the Church of England and the other Anglican Churches in the United Kingdom, the Roman Catholic Church, the Church of Scotland and the Free Churches; and it was

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appointed in 1923, with Archbishop Garbett as its first chairman, to advise the B.B.C. When Independent Television came into existence, with its requirements also to seek religious advice, it was agreed that the same Central Religious Advisory Committee, commonly known as "CRAC", should serve both.
So the first point I wish to make in this context is an expression of gratitude, I am sure on behalf of all the Churches represented on that Committee, for the way in which religious radio and television has had a central role as an element in the reflection of public interest and in the provision of "a whole diet for the whole man." Many of your Lordships will remember that the Pilking-ton Report summarised the definition of religious broadcasting under three aims. The first aim is that it should reflect the worship, thought and action of those Churches which represent the main stream of the Christian tradition in the country. The second is that religious broadcasting should bring before listeners and viewers what is most significant in the relationship between the Christian faith and the modern world. The third aim is that religious broadcasting should seek to reach those on the fringe of the organised life of the Churches, or quite outside it.
This has resulted in a generous provision of programmes. In radio, out of 21,000 hours of broadcasting time, 479 hours have been devoted to religious programmes. In B.B.C. television, out of 6,000 hours, 152 have been devoted to religious programmes; and in the case of the Independent Television companies, something like 5 per cent, of the hours of their production is devoted to religion. What is more, these programmes reach large audiences. There is an estimated audience of some 3½ million for quite serious discussion programmes, such as the "Meeting Point" series, and up to 10 million for the ever popular "Songs of Praise" programme. So there are, in fact, more people watching a programme of that sort than are likely to be in church on any given Sunday. Furthermore, these programmes include a very wide range of types—Church services, simple talks and sophisticated discussions.
The first point I would wish to make as we consider the future of broadcasting is to suggest that experience has vindicated
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the value of this religious ingredient in the total production, and so to express the confidence that it will continue to have a place in the future. It has, I think, shown a sensitive and skilful response to the temper of the times, and is not simply a reflection of church-going or a means of communicating authoritatively the religious beliefs of the speakers but has shown a genuine sensitiveness and openness in understanding those for whom religion is primarily a quest. It is typically English that the most popular programme should be hym-singing; but these programmes have also sought to open men's minds to ultimate questions.
I should like briefly to quote from the conception which the World Council of Churches Report of the Uppsala Assembly gave of the nature of the medium in which religious broadcasting is set:
"Press, radio, film, television, have an important role to play as the agora and town meeting of technological society … They can help people to know and appraise issues which affect them. In so far as they stand over against the legislation they can call attention to injustice, corruption, or bureaucratic neglect. They can contribute to responsible inter-national relationships by providing a more objective critique than that of narrow sectional or national interest.
"But the media can also stultify men's growth. This tends to happen wherever their overriding interest is comercial gain, wherever they are regarded mainly as instruments of propaganda rather than of information and education, or wherever they are content with cheap and unadventurous programmes rather than creative and imaginative entertainment.
"If mass media, particularly radio and T.V., are to be more than merely the means of passing the time; if they are to deal with reality, to move and awaken the imagination, to convict the conscience, to inspire and possibly to ennoble, to help men grow, there must remain a place for serious and adult programmes. On occasion such programmes may offend some listeners or viewers. Media which never offend are themselves offensive. A central problem, therefore, in the open media is how responsibly to exercise the necessary minimum of control of material going into the home without preventing the transmission of creative programmes of integrity and high quality. Flexible guidelines for and continuous discussion of this problem together with education of the audience are preferable to absolute rules".
My Lords, I mention that in order to give the context in which I would make my second point which has to do with what is commonly called "the closed period"; that is to say, the time on Sundays between 6.15 and 7.25 p.m. In origin, this period arose out of an

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approach by my predecessor, both in the See of Bristol and in the chairmanship of CRAC, the late Bishop Cockin, to the Postmaster General of the time presenting the view of the Churches that there might well be a break in programme to avoid conflict with church services. But later this was modified to allow a somewhat odd mixture of religious broadcasting, live outside broadcasts in which the producer had no control over the timing, programmes in the Welsh language and programmes for the deaf. I would emphasise that this closed period is not conceived of as a sort of jealous preserve for religion but is part of a provision for minorities of special value, thus comparable with those other areas in which Advisory committees exist: adult education and schools. It has, I believe, proved a safeguard of quality.
The production of adequate programmes in this or in any other field depends upon competent producers being encouraged to develop their gifts with adequate resources of budget and adequate promise of broadcasting hours. So the provision of some 70 minutes at a good time each Sunday has contributed substantially to ensuring that religious broadcasting attracts and retains trained and qualified producers. I have often heard skilled and professional producers say that good religious broadcasting is the hardest kind of broadcasting; that it makes demands on the integrity, honesty and skill of the producers and others concerned to a greater degree than in any other field. So I should like here to pay tribute to the succession of Heads of Religious Broadcasting at the B.B.C., and their staffs, and to the advisers, both central and regional, of the Independent Television Authority who have done so much to raise and to keep high the standard of broadcasting, not only during the closed period but throughout the religious programmes.
There is evidence of a growing interest in the Corporation and in the Authority in the religious programmes. They are obviously having a resonance in the listening public which is encouraging. The independent companies are spending more. One such company, I was told, recently spent £60,000 on six religious programmes. I believe that the closed
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period has protected a valuable area of the minority experiment from more trivial forms of entertainment. There is no evidence, I think, of any public resentment. Recent discussion in the Religious Advisory Committee showed no inclination to change this provision radically, although some independent advisers and producers might like to consider a greater flexibility, for example, as between Sunday afternoons and evenings. But I would suggest that as a matter of social policy. This closed period has had much to commend it. If broadcasting hours are extended, the B.B.C. is naturally concerned as to how to pay for them; but I believe that protection for such a minority cultural interest should be secured, and I would express the hope that if there is any successor to the Pilkington inquiry it will take the closed period as seriously as the past fifteen years of fruitful experience would seem to warrant.
My Lords, my final point has to do with local radio. I recently read the B.B.C. report on the eight local stations in which radio is being tried out on a local basis. I noted with interest that in every case the religious committee of the local radio council was obviously playing an active part. I should have liked to be able to hear what was described as the local vicar producing a play which he had himself written and produced, with an amateur cast, on local church premises in Stoke-on-Trent local radio. The Leeds Council of Churches sponsors what is obviously a lively and sharp weekly religious magazine known locally as "The Mad Parsons".
The British Council of Churches has recently appointed an Advisory Committee on Local Broadcasting which has endorsed the consideration given by the radio and television department of the Church of England Church Information Office expressing the hope that local radio of this kind will continue and, indeed, be extended. It says in its report that any argument for the desirability of local radio of any description falls to the ground unless the purpose of the local station is to serve the needs of the local community, and unless there exists genuine needs which local radio can help to meet. All the available evidence suggests very powerfully that such needs do indeed

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exist, and that local radio stations covering relatively small areas—for example areas having a diameter of between 10 and 20 miles—provide a channel for the communication of important but purely local news and views; that they can strengthen, and in in some cases recreate, a sense of community and corporate responsiblity; and can advance and stabilise local, cultural, educational, social, industrial and religious activities.
For these reasons coupled with the moderate success of the experiment so far, I would express the hope that the local radio experiment will continue on a basis of finance (admittedly a complex problem which I will not now attempt to analyse) that will ensure that these basic needs are not subordinated to undue commercial or local political pressures; and that in, one would hope, a continued and extended local radio service the local churches will continue to play an active and fruitful part.
LORD ROBERTSON OF OAKRIDGE: My Lords, I wonder whether, before the right reverend Prelate sits down, he will allow one small question about what he said. He will not, I think, disagree if I preface my question by saying that there is frequent criticism of the output of the television authorities, and that the question is asked: Why does the Church not do something about it? The Church is represented by the Committee of which the right reverend Prelate is Chairman and is also represented by the religious affairs advisers to the I.T.A. and the programme companies and to the B.B.C. Does he feel that the Church's voice is strong enough? Does lie think that any purpose would be served by enjoining that the advisers who are taken on by the B.B.C. and the I.T.A. should be men who are aproved in some way by the Church? Or does he think that in any other way some strengthening of the means the Church has for expressing its views is desirable?
THE LORD BISHOP OF BRISTOL: My Lords, I am glad that the noble Lord should raise a question which, indeed, is often raised with me. I think that it is an extremely delicate one. I would reaffirm the quotation from the Uppsala Statement on the Churches' attitude on the whole question of the mass media of
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communication by suggesting that flexible guide lines and continuous discussion of this problem, together with education of the audience, are preferable to absolute rules. I think we all appreciate the difficulty of all questions which raise any form of censorship or control, and I believe that the present pattern whereby those who have been invited to advise are seriously listened to, but are listened to in a situation where no one interest can expect to get it all its own way, is the only system that is compatible with an even more precious freedom which, it seems to me, would be jeopardisèd by any more coercive type of approach.
4.41 p.m.
LORD FERRIER: My Lords, I de not propose to follow the right reverend Prelate the Bishop of Bristol, but later in my speech I hope to make sonic reference to the problem of religious broadcasting. I would begin by repeating the thanks that other speakers have expressed to the noble Lord, Lord Byers, for introducing this extremely important debate in such a thoughtful and thought-provoking speech. I would only seek his confirmation of my assumption that when he referred to "this country" he meant the United Kingdom. In fact, I know that that was what he had in mind. Whether we like it or not, both in radio and television broadcasting is an immensely important factor in the lives of all the people of the world to-day: civilised, semi-civilised and even savage people.
I cannot match the silver tones of the noble Baroness, Lady Llewelyn-Davies of Hastoe, nor indeed, the tenor of her most acceptable speech. But I would, as it were, cap what she said by drawing attention to the "magic box" (as it is called by people in distant places) which brings news and views and propaganda in hundreds of languages to the uttermost ends of the earth. It stretches its tentacles far beyond the reach of the printed word. It informs, it interests, it influences illiterate folk in areas where universal literacy may still be generations away; but the terms of this Motion bring us back to so-called civilised life in this country. Some say that the spread of broadcasting in this country will reduce the extent of literacy, but that, judging by the upward trend in the sale of books seems unlikely. Be that as it may, broadcasting is still in its infancy. I think that

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point has been established by a number of speakers.
Here, my Lords, it has already invaded the realms previously secure to the Press—and I refer to news and views rather than to entertainment. Broadcasting may well have contributed to the decline in the authority of the Press as we know it to-day. It is hard to say whether the concentration of newspaper power into fewer and fewer hands is a cause or an effect of broadcasting. The fact is that while broadcasting has been developing, the Press seems to be becoming, and has become, less and less responsible and more and more concerned with sensation, trivialities, betting and sport. One has only to compare the amount of space given to reports of Parliament in newspapers in the era before broadcasting with the space given to-day to have cause to wonder. The decline of the popular Press is one reason why broadcasting is so important. I think your Lordships will agree that on the whole our broadcasting media are to be congratulated on their enlightened approach to news and opinions. In this respect, as the noble Baroness said so clearly, this country leads the world, thanks to the formulative years of the B.B.C. under the noble Lord, Lord Reith.
As I see it, my Lords, except where piped television is available the major problem is the lack of variety of choice as between programmes and channels. I live in an area of Scotland which is notoriously bad for the reception of both radio and television, on account of the terrain. We are not served so well as the South, and perhaps I may be taking a rather jaundiced view of this question of the availability of alternative channels or programmes. I only wish that the very few channels available did not mean that at some periods of the day, especially peak periods, there is mighty little variety of choice. Too often there seems to be nothing but Westerns or ancient American films to turn to.
For this reason I, for one, welcome the B.B.C. drive to establish more local radio stations, and the speech last night of the noble Lord, Lord Hill of Luton, at the conference in Peebles seems to have been right on the mark. But can this programme of local radio stations
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be pushed forward with urgency on a fee basis? In my view, speed is important because such stations will contribute to the variety of choice for which I appeal. It is not so easy in respect of television, but may we look forward to the day—I believe that we may—when technical developments will make numerous channels available simultaneously and viewers will not be condemned to an excess of football programmes—good as that game may be—or nothing? I have talked with many people on the subject and I find a measure of unanimity in seeking more alternative viewing at peak leisure hours—and leisure, my Lords, is going to be more and more of a problem in the years to come if our dreams come true.
There is another reason for a greater variety of choice. It is the intrusion of violence and "dirt" into the home—and this was referred to by the noble Baroness. It takes a firm father or mother to switch off the set altogether. It would be far easier if there were always a worthwhile alternative programme: travel talks or documentaries, handicrafts, gardening, cartoons, "Blue Peter", puppets, hobbies, boating and so on. This may well be technically possible within a few years. In terms of the public weal—and that is our chief concern—I suggest that research into the latest development towards a multiplicity of channels would be more rewarding than the development of colour, no matter how wonderful that is: and it is wonderful—and costly. Colour could come later. I have no axe to grind: I cannot afford a colour set. In all I say I refer to areas of the country which are out of reach of piped television undertakings, which I believe deserve encouragement. But we must think of the cost.
I, for one, remain a strong supporter of the stand to maintain the fee system for the B.B.C. But more channels would mean more advertising—would it not?—-for the I.T.A. It is, I feel, sad that the Addison Rules prevent the two people who really know about the subject from contributing to this debate: I refer to the noble Lord, Lord Hill of Luton, and the noble Lord, Lord Aylestone. They must be driven quite mad by some of what, in my case, may well be ill-informed "bumbling". But they must forgive us; for the fact is that we can see only a small part of the overall picture with

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which they are so familiar. All the same, my Lords. I wish that the Addison Rules did not apply to a debate of this nature.
Have the broadcasting media sufficient resources to give real encouragement to the technical people to push on in their search for a greater number of channels? Have the independents sufficient security to sit back and plan far ahead? It seems clear from what the noble Lord, Lord Byers, and the noble Earl, Lord Bessborough, said that it may well be the case that they have not sufficient security. What about the programme companies? I should say that they all need a larger measure of assurance. The noble Lord, Lord Byers, and the noble Earl both referred to the now commonplace remark of the noble Lord, Lord Thomson of Fleet, about licences being licences to print money, but that is no longer the case.
And I ask myself why has the Postmaster General breathed out threats of limited tenure to licensees, instead of giving a greater measure of encouragement: because without that encouragement, long-term planning and development (which so many seek, as clearly seen by the speeches already made this afternoon) cannot be achieved. In this respect I support and reinforce the strong case put forward by the noble Lord, Lord Byers, not only in regard to taxation but also in regard to the mystic date of 1976, when it would appear, as present policy indicates, that there might be in contemplation a complete break in our present system.
Speaking again of more channels, your Lordships can hardly expect me to omit a mention of the possibility of the proceedings of both Houses of Parliament being available to the people whenever Parliament is sitting, unedited. This may well he a question of "take it or leave it" and, of course, it would largely be, leave it. "But the fact remains that it is a truly democratic dream, though it must be far away in the future, if it ever comes to pass.
That brings me to another question I ask myself. We all know that we are in a situation where the dissemination of news and views in the printed word is threatened by industrial disputes. We have heard the fringe of it only this afternoon in the Statement from the Despatch Box. Are the Government assured that
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powers exist to prevent any such stranglehold from interfering with the broadcasting of news and opinions through the networks, which are becoming, and have become, the very nerve system of the nation? After all, in television it is oven possible for an unsympathetic technician to interfere with the texture of a broadcast by a public figure with whose opinions the individual might differ. The noble Baroness reaffirmed in her speech that broadcasting should not be an instrument of Government, but I feel that the Government must face the responsibility of establishing that broadcasting cannot be bent by subversive or militant elements.
To turn to Scotland for a few moments and referring back to radio, there is to some extent justifiable criticism about the programmes which come straight to B.B.C. Scotland from London. Broadcasters will talk about "England" when they mean "Britain", and programmes come over which refer to England and Wales and may be quite confusing to listeners in Scotland. I am thinking particularly of a programme on prisons about a fortnight ago, which. excellent as it was, made reference to facts which simply did not apply to conditions in Scotland, which did not apply to Scottish law or to Scottish experiments in the treatment of criminals. Nor did it mention the Carstairs State Hospital when it mentioned three of the special prisons in England. This is the sort of mistake which I think more care should be taken to avoid. And there is the reporting of the doings in Parliament. I believe fiat more could be done in giving a different treatment to material for Scottish listeners. I do not suggest confining the material exclusively to Scottish affairs but rather to tackling national affairs from a Scottish angle.
If I may turn to religious broadcasting, which was dealt with by the right reverend Prelate from the point of view of the Church of England, this is given good coverage in Scotland, both on radio and television, and much thanks for that go to the advisory committees and to the close liaison which exists between the media and the Churches. I could develop the point, but I imagine that we shall hear a good deal more about the place of religious broadcasting in society when the Motion of the noble Lord, Lord Soper, is debated on June 11.

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One last word about Scotland. Apart from the technical need to reach more listeners and viewers, is it possible that Scotland would be better served if they had some measure of pooling in the I.T.A. area, as between S.T.V., Grampian and Border Television? The latter, of course, is in Carlisle, but it is the sole source of independent television for an important area in the South-West of Scotland. I have an open mind about this, but the operations of Grampian and Border, both excellent in their service to their areas and in their enterprise and high ethical standards, must be greatly circumscribed by the tightness of funds in the present circumstances, with these increased items of tax and levy to which the noble Lord, Lord Byers, referred, and because of their limited audiences.
As I have said before, independent television is no longer a gold mine, and it is more than possible that some measure of pooling in Scotland might be of overall benefit. It would not be a one-way traffic: S.T.V. might he able to feed material to the others, but I can assure your Lordships that Grampian and Border could feed the S.T.V. with many a good idea and many an excellent programme. If such a plan were to be recommended, it would only be in the fairly distant future, of course, as existing contracts fall in—and we get on to the mystic date of 1976. I would conclude by echoing in general terms what the noble Lord, Lord Byers, said about the importance of avoiding over-centralisation in the administration of our broadcasting services. Scotland does not like being called a region. It is a country.
4.58 p.m.
LORD SOPER: My Lords, I must first of all apologise to the noble Lord, Lord Byers, because I cannot be here for the whole debate, but I will try to return, if possible. We are grateful to the noble Lord. Lord Byers, for calling attention to what he described as a most important topic and at a critical time in the discussion of the facts about that topic. I believe that with the coming of coloured television, the cassette and the other technological advantages of which we have already heard in this debate, no one should be in any doubt that what has hitherto been a television implosion is likely now to become, territorially and in many other ways, a television ex
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plosion, the results and impacts of which are difficult to calculate.
For the validity of this debate, I think that some sort of attempt ought to be made in the calculation of at least two of the unprecedented characteristics of television—particularly of television but of broadcasting as well. It is the repetitiveness of the signal, the length of time over which people are exposed to a flow of ideas or impressions, without the necessary discipline which reading offers of going back and discussing with oneself what was the impact of the sentence that one has just read. This, I believe, needs to be carefully understood. I do not profess to be an expert in this field, but I should like to add my words to those of the noble Lord, Lord Byers, and say that a great deal of research is demanded to discover what of the unique psychological impacts of television (as I am perfectly satisfied that they are unique) may be deleterious and must be understood.
The second unique quality is the profundity and immediacy of the emotional impact. Perhaps your Lordships will forgive me if I give a personal illustration. I have known all my life—of course, I have; and so have we all—of hunger, the pangs of death and all the horrors of malnutrition. But I am haunted by one picture which I saw on the television screen not so long ago, of a bundle of twitching rags in some Biafran hospital, and the reportage was to the effect that here was a woman probably dying: and. indeed, as we watched, the twitching stopped, the dirty rag was pulled over the head of the woman and she was dead. It is no sentimentality to reflect that unless we have in our personal experience seen this, it is highly unlikely that we should react as in the presentation of it on television we are compelled to react. The uniqueness and intensity of the emotional impact of a great deal of television reportage, in particular, is, I think, a new consideration in the attitudes that a great many people take to issues of which they were academically well aware before; they now have an emotional reaction to them which need not necessarily be the counterpart of intelligent understanding of what they convey.
It is for reasons such as this that I profoundly welcome this debate and hope

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that a variety of contributions will be made on many of the aspects of broadcasting, not least because we need to consider the review, and perhaps to fecundate the arguments within that review, which quite soon will take place. As the noble Lord, Lord Hill of Luton, has reminded us, whatever happens immediately, the proximity of the expiry of the Charter and of the Act will demand of Government, somewhere I suppose round about 1970 or 1971, the setting up of some Commission or some deliberative inquiry.
I will restrict myself to three of the areas in which I believe we can, if we are wise and if we have something to say, help such immediate inquiries and immediate considerations, as well as that more ultimate consideration which sooner or later must take place. To begin with, let me add a little to what the right reverend Prelate has said about religious broadcasting. By now we have learned a certain number of lessons which we might not have learned; but, having learned them, we ought to set them down in our textbooks.
Some of them are the more incidental. We have learned in religious broadcasting of the inefficiency of "The Epilogue". I have suffered considerably under this, particular form of mild torture. You come in late, when the mechanics and the various people in the studio are tired out and are at least trying on their hats and coats; you come in cold, you look at a piece of machinery, and you are invited to say your prayers. It is not at all easy. A fixed glare is very probable on your own face, and the communication of anything of a spiritual nature to those who may be watching or listening is extremely meagre. I do not believe that there is any future for "The Epilogue" and I hope we shall not take advantage of this, so to speak, eleventh hour conversion opportunity day by day, for it is highly unlikely to work, anyhow.
Secondly, we have discovered, surely (and I was for a little while a member of CRAG), that you cannot worship in exactly the same way before a television screen as you can., if you are so disposed, when you are participating in an act of worship. Any Roman Catholic knows that you cannot say Mass; you can only do the Mass. At best, religious services
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on television are for most people a form of a religious concert, a sacred concert, in which active participation, which is a prime requisite of worship, is inevitably absent. I, for one, believe that there is no sufficient reason for a proliferation of church services, apart from "Songs of Praise", in which there may be a fairly heavy ingredient of worship (but, on the other hand there may be just a Methodist desire to make a loud, joyful noise to the Lord). I am sure that what we need to do is to reffect upon the problem that confronts all religious broadcasting, as it confronts religion itself.
Religion is not in the doldrums to-day because we are a malevolent bunch in the Church. Religion is not in difficulty because people do not understand what we have to say. If we could only improve our liturgy, they would understand it, and all would be well. I venture to repeat what I have said before: that Mark Twain is on record as saying that it was not the things that he could not understand in the New Testament that bothered him, but the things that he could understand. That is a very salient point.
What, surely, religious broadcasting has to do is to attach itself to the essential problem that confronts the Church and, indeed, religious information and impacts generally. The real problem is dubiety. Most people to-day, even within the Church, are not so sure of the faith that once they inherited and then made their own. This widespread dubiety will not, I think, be ultimately overcome by the protective uses of a closed session or of a slot. In this regard, I would heartily appeal for a greater ingredient of humanistic or humanist talking and argument within the general framework of religious broadcasting. Let them all come.
The idea that we within the Christian Church have to protect ourselves as a besieged city from an encircling army which is breaching the walls repeatedly, and to rush hither and thither to plug them, is an altogether unworthy and ignoble concept. Indeed, the argument that is demanded, and the kind of satisfaction that alone can be found, is when people's minds to-day are convinced that they are not being invited to believe things for the good of their soul—which, as a matter of fact, can be demonstrated

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to be untrue—but in fact are being invited to look at the world and to see, as we believe, that the Christian faith is the quintessence of that which is best and noblest in other faiths, and the groundwork—page I, so to speak—of the primer of moral living. However, as the noble Lord, Lord Ferrier, suggested, I may advert to this in a forthcoming debate. I will say no more about it now except that I, for one, would heartily vote for a heavier ingredient of humanist thinking as a presentation in religious broadcasting.
The second point to which I should like to refer, quite briefly, is what is called instant reaction. I have never believed that "The World at One" is the true answer to the world at sixes and sevens; but, in fact, the sheer semantic capacity to speak impeccably at an incredible rate conveys with it a sense of authority. What bothers me about "The World at One" is that repeatedly we are bombarded with a number of dogmatic statements on highly contentious issues which have already been pre-digested. I can remember that in the last three weeks I have been asked to make an exhaustive comment in three minutes first on the Baptismal Service in the Church of England, and secondly upon the general principle of the Moral Rearmament Movement, with the advice that about 25 seconds of what I said would finally emerge in the programme. This, of course, is sheer and absolute rubbish. It cannot but have the effect upon people of giving them the idea that life is a placard which can be read if you are suitably near to it. With the multiplicity of issues facing us to-day, particularly in the political field, I for one believe it to be most dangerous that we are now invited to listen to authoritative pre-digested statements, many of which are of not more than a minute in length and all of which, I think, are calculated only to bemuse, and certainly not to inform. I would therefore appeal, even if it were immediately not more popular, for a much more prolonged and leisurely confrontation of political ideals within a framework that can give them substance and significance.
On the questions of violence and vice, I am impressed that Mrs. Mary Whitehouse, of the Viewers' and Listeners'
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Association (for whose activities my feelings fall a little short of idolatory), has now changed her mind; and that, instead of demanding from her enthusiastic organisation that there should be an independent viewers' and listeners' association, she now feels that the advisory committees can do the job better. Well, praise God! because this is exactly what the Advisory Committees such as CRAC and others, are for. Although they do not have a mandatory authority they are, I believe, the wisest and best method at one and the same time of preserving the unity and conformity of a general thesis within the B.B.C. and I.T.V., and also preserving that sense of discipline which cannot be penally expressed but which, as the right reverend Prelate will know, is nevertheless very widely accepted. I have very little objection to the sexual side of the presentations in general. If they are seriously presented, none who wear the cloth, as I do, should be surprised. This is a wicked world, and there is nothing that should deter us from a cool and sensible presentation of those things which are ugly, if they have the sense of significance and if, as Matthew Arnold said in poetry, there is something of a high criticism of life.
I am very much impressed by the fact that, as the right reverend Prelate will know, the British Council of Churches have set up a pilot scheme, within about a hundred different denominational groups, to discover what the reaction is to violence. Your Lordships may be somewhat surprised to know that the advance replies, although they have not yet been fully collated, indicate a general satisfaction with the high standards of the B.B.C.—something which frankly surprised me not a little, but I think it is significant. I would apply the same principle. Violence for the sake of violence is an abomination; violence for the sake of a "giggle" is a curse; violence as something to titillate the occasional viewer is a monstrosity. But violence as part of the world in which we live to-day, and treated as it is treated in, for instance, that exceptionally fine film, Oh What a Lovely War! is different: it is like the distinction to which the noble Baroness very properly referred, between jazz and "pop". My noble

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friend Lady Llewelyn-Davies was well aware that there is about 5 per cent. of "pop" music to-day which has the impact already upon it, and which expresses this sense of the purgative, the traumatic and, at the same time, the good effects of facing realistically a world of such intolerable and dreadful violence as that from which we now suffer.
Therefore, my Lords, I do not join those who howl misery, and who talk as if we were living in a degraded and thoroughly corrupt community. On the other hand, I would appeal for a higher sense of the relationship of this violence and sex to appropriate ends and purposes. These are some of the things which I venture to hope will be taken into account when the proximate review takes place, and when the Charter is renewed, for I believe that what we do to safeguard television and broadcasting will have a creative and, perhaps, a revolutionary impact on the sort of world in which our children live.
5.14 p.m.
LORD PILKINGTON: My Lords, I should like to join wholeheartedly with those who thanked the noble Lord, Lord Byers, for initiating this debate, and also for the way in which he opened it. I cannot follow precisely all the points that I would wish from those that Lord Byers and other noble Lords have made, because to speak until midnight—which would suit me—would, I think, be too great an imposition on the Test of your Lordships.
I am, of course, armed with the most authoritative document, in my view, on the future of broadcasting, as a least it seemed a few years ago—that of the Committee which I was honoured and fortunate enough to be Chairman. The Committee's remit covered, as is seen to-day, an enormous range of topics. In fact, there is no important relevant point yet mentioned to-day that we did not consider. The Committee were composed of people of widely different backgrounds, approaches to life and tastes, and yet on the whole range of topics they arrived at unanimous conclusions. This is partly a tribute to the Committee themselves, who were never willing to be dominated by any one or two members; but it was a unanimity to which facts rather than argument, or preconceptions, eventually drove us on all
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aspects of the subject. On the whole, these facts remain, and therefore the importance of the unanimity of that Committee should not be underestimated.
As has been said, the independence of broadcasting authorities from daily, or even occasional, direct Government pressure can now be taken for granted. Indeed they ought to be—independence is cardinal. But with that must go responsibility and answerability. The Government exercise their control over broadcasting, as indeed they must, through the appointment of the Chairman of each of the two bodies, and the Governors or members. I think it is here that the Government have their most important responsibility. The Director-Generals of the two Authorities must never become too powerful; the public interest is delegated by Government to the Governors and members whom they appoint from time to time and for specified periods. These Governors and members cannot rid themselves of responsibility, should not wish to, and must not be allowed to. It is they who must constantly interpret the public interest, and they must not be undermined by having too many other bodies intervening too frequently. I hope, therefore, that the standing and prestige of Boards will be built up to the maximum; and if this means more people giving more time and, therefore, needing more reward for this extra service, then it will unhesitatingly be forthcoming. Of course, everything I say about the importance of Governors and members applies with redoubled force to the two Chairmen. I share the regret that has already been expressed that the rules prevent them from contributing to this debate to-day.
There is one way in which Parliament could undermine this very form of authority and answerability that it has constructed. It can do it by too frequent reviews from bodies such as the Committee of which I was Chairman. Within the Charters, policy and action inevitably falls to the Boards of the Authorities. In the first forty years o so of public broadcasting there were so many fundamental changes so frequently the t it was necessary to have rather short Charters and fairly frequent reviews. When my Committee were appointed, Independent Television had been going for about five or six years. It had gone through

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its growing pains; it had succeeded and become a great and powerful force. At the time when my predecessor Lord Beveridge was appointed, public service television of any kind was still in its infancy. These two reviews, then, had to look at very fundamental changes, and so did the two earlier Committees to which reference has already been made.
When a committee are appointed it inevitably takes about five years before they can have met, mastered the scope of their subject, taken evidence, worked out their many recommendations, drafted and redrafted and again redrafted their report, had it printed and presented to Parliament, had it discussed in Parliament, and before any necessary legislation is passed into law. In fact in our case it was only about four years, but it was not quite enough; we could well have done with more time. The stage when we were sitting was merely two of the four years, and three would have been very much more appropriate for a subject of this nature. Five years may seem a long time, but from my experience with this and with other committees it is not too much for the job and its sequels. But it is too much for the good of broadcasting if a committee is going to be appointed every 12 years. There is, in such a case, only a period of seven or eight years when there is no complication of another body whose recommendations will inevitably impinge very considerably on what the Directors themselves have to do. So, as the noble Lord, Lord Byers, said, I hope that we will not keep on pulling up the plant to examine the roots. And, as the noble Baroness said, "back or sack" —and I say "back".
In recent years we have often been waiting for someone. Eight years ago everything in broadcasting was waiting for Pilkington. Since then we have been waiting for Maud; waiting for Hunt; waiting for Donovan and others, all necessary. But committees usually, and I think inevitably, lead to a stagnation of policy, to indecision and to excessive caution while they are sitting. The innovation and pioneering for which the noble Lord, Lord Byers, was asking go into cold storage during the time that committees are sitting. The two Charters—and with them, I think, the licences of the rental companies—come to an end
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in 1976, seven years from now. If therefore there is to be a new committee with wide terms of reference it will have to be appointed within two years. I have tried to think, what are the circumstances similar to those that we faced, and which my predecessors faced, that have changed sufficiently in the last decade to bring that about?
Of course there are changes. We have colour; we have B.B.C.2; we are accustomed to the use of U.H.F., which was uncertain when we were sitting. We have experimental local sound broadcasting. But these are not changes that affect the principles about the future conduct of broadcasting. Every one of these was in fact foreseen and discussed at the time my Committee met. And I do not see a case for covering the whole of the same ground again, because of the unsettlement it will introduce into the Corporation. Technological changes, as has been said, are the most likely new factors. Nor is there, so far as I can see, any need for the date of the termination of a review always to be linked to the end of a Charter period.
It seems to me that it would be well worth considering an automatic renewal seven years from now to both the Charters for a further 12 years without alteration, both for the B.B.C. and for I.T.V. The opportunity may or may not be taken in the light of changes in the Post Office organisation to amend the conditions of rental authorities, but I think that that is quite a secondary matter that does not need the complete paraphernalia of a broadcasting committee. The interests of broadcasting will be much better served if the next review, whenever it may be, is based on important structural or technical changes which may arise at any time but which always throw long shadows ahead. That review should be in the context of those changes and their effects upon broadcasting. For example, if, as has been suggested, seven years from now broadcasting from satellite direct into homes on a nationwide scale is really likely, then this would he a new factor, assessable much closer to the time and justifying the appointment of a committee with perhaps fairly wide, but more likely much narrower, terms of reference. But such a change really will have nothing to do with the date of the expiration of a charter and it can usually be foreseen quite a time ahead.

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Broadcasting in this country, the United Kingdom, is based on scarcity; on there not being enough wavelengths available to allow anybody freely to set up a broadcasting station. We may not yet have enough material for good broadcasting for more than three, or at the most four, programmes of national coverage. The resourcefulness, however, is greater than is usually allowed for, and there is a response to an opportunity when it is presented. Because we started on 405 lines and now are moving to 625 lines, we have to duplicate for B.B.C.1 and for I.T.V.1 on 405 and 625. This must last for some years, but there will come a time when all sets in use will be able to receive 625 lines excepting those of a very few indeed for whom progress cannot any longer be held back, and at that time broadcasting on the two V.H.F. channels will cease and re-engineering will start. We have no right to make the scarce resources scarcer. At the present time we can have four national programmes, and it will be six once those channels have been re-engineered. In the lifetime of my Committee we envisaged, rather roughly, that 15 years from the time when makers began to make all sets on both line standards would be necessary to allow almost all viewers to become equipped with 625-lines receivers—that is to say, about 1977 or 1978—after which two more years would be needed for re-engineering the 405 channels to the new standards.
I think now that with enough warning this can be slightly speeded up. A very large number of sets are already in use, a preponderance I am sure, that are equipped for both 405 and 625; and I hope that the Government will very shortly be able to name a time—let us say 1975 or even 1976—when phase by phase throughout the country broadcasting on 405 lines will cease. If that happens, and if therefore by 1978 we have channels available for six television programmes, then the opportunity becomes greater but the problems become at the same time more insistent. There must then be complementary broadcasting; that is to say, several programmes always at any given moment catering for different tastes.
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The need to offer viewers a choice of type of programme was stressed very strongly in our Report, and many of our recommendations were designed to ensure it. The B.B.C. and Independent Television, in competition with each other, frequently put on the same type of programme on many occasions. The) did, and they do, and they are quite right to do so. That degree of competition between the two rival organisations for the same audience may well be really stimulating. But the strength of having B.B.C.2 and perhaps one day I.T.V.2, which is my preferred solution for the fourth channel, and then later, at least ten years from now, one day, B.B.C.3 and even I.T.V.3, will lie in having two systems each undertaking simultaneously to satisfy several kinds of taste whenever they are broadcasting. Nothing can be more important to those who care for small or for large minorities than to ensure that these channels shall be used to give viewers a genuine choice and not to give alternative presentations of almost identical material.
I very much enjoyed watching the Cup Final three weeks ago on B.B.C.2 in colour, but even then I felt a little guilty. The B.B.C. and Independent Television should both have access to the Cup Final, as to all major events. That was long ago established. But the privilege of having a second programme, which the B.B.C. enjoy, ought not to be wasted by offering the same fare, the only difference being that it is in colour. There were said to be 250 million people who watched the Cup Final all over the world. I do not know how that figure was arrived at, but I am sure that there were in this country alone hundreds of thousands of people—if not millions—who wanted something else. Not everybody is interested in sport; and, of those who are, not everybody wants to watch the Cup Final. The B.B.C. have two programmes: they should never use them simultaneously for the same event. Fortunately the temptation will become much less when B.E.C.1 is also available in colour. Colour adds a marvellous new dimension, but it does not constitute a real alternative programme.
My Lords, I want now to turn to a different problem on which the noble Lord, Lord Byers, touched at the beginning of this debate. I refer to the news.

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In our Broadcasting Committee's Report we referred to the danger of bias being created not merely by treatment of events but by their selection. No newspaper, no Broadcasting Corporation, can possibly report everything: the day is just not long enough. In the space of a few minutes all the news that is to be reported must be presented, and this means drastic selection. It was for this reason that we said that all communications in any one area must never be in one pair of hands. But recently dangers, openly foreseen eight years ago by the Committee, and by the B.B.C. and I.T.N., have become real. This is what I might call the preselection of news by its deliberate creation. This can happen in two ways.
The first is a natural temptation for broadcasters to seek out news which is startling and striking, and to present it in a startling and striking way but without keeping a true balance. This is controllable by both authorities, and each of them slips up, if at all, only occasionally. The second, which is the obverse, is that when groups of determined people know that some event may be televised they themselves set out to make that event sensational, in order to draw attention to themselves and the institution they represent. Student troubles in universities, troubles in Northern Ireland and disturbances of many kinds are examples of this. It is easy to unbalance news, to ensure selection and thereby to ensure that extreme points of view, unrepresentative points of view, minority points of view, receive quite disproportionate coverage, to the exclusion of the quieter, less sensational activities of the vast majority.
No one, I am sure, wants to keep out of the news all these minority activities—on the contrary. But they must be kept to some extent in balance. How often does the news start with pictures of some marching or demonstrating? And how often are we assured later by other people that those concerned in the demonstrations have merely the tiniest following; that they are not representative; that they do not matter, and that everybody else wants to get on with his or her work? But broadcasting is their most powerful means of growing significant. One well-known broadcaster has told me that when he is known to be on the air some exhibitionists will collect;
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and where they used merely to dance and wave their hands, in order to be seen at home, now they will deliberately shout out obscenities in order to be heard. Not long ago many of us, probably, saw someone being interviewed at a university and being grossly heckled in a way that I am sure would not have happened if it had not been known that the programme was to be broadcast. So the preselection of news can be done by those who are determined to hit the headlines, and can be done by live intervention in programmes that are not part of news bulletins. In my view, this is something which needs further thought by the broadcasting authorities themselves. As with piracy, dangerous developments will not be dangerous if they are tackled early enough.
I must now say a few words about local sound broadcasting. I have looked again at my Committee's Report, and I was surprised to find that this one issue involved five paragraphs and four recommendations. It was just about the biggest single issue of them all, and it took a great deal of time. We were not certain—we could not be—about the demand for local services, nor of the quantity of genuine local material. Hence we recommended a sustained and broadly based trial, and we put local sound broadcasting lower in priority than the completion of three national sound services on V.H.F. Everything we said on this subject still seems to me to be right. But I do not believe, even to-day, that intrinsically it is of top priority. We examined exhaustively all the proposed methods and we had no doubt that if there is to be a service it should be carried out by the B.B.C. and should not be paid for by advertising.
We had no doubt that the word "local" must be interpreted as meaning of particular interest to the localities served by that station rather than to other localities. The area covered must be small enough for the community really to have a distinctive common interest and for the service to serve as a focus of interest. In fact the typical radius was considered to be five miles, and not much more. It seems to me that, broadly, our recommendations have been faithfully followed; nothing has happened to change them. My doubt still is as to demand. I live within the Merseyside

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sound broadcasting area and I have participated. I am sure that those who listen report favourably on the method, but I do not know whether enough listen sufficiently purposefully to justify an extended service. I do not know, but I hope so. I also think that this service has not yet acquired the professionalism of the B.B.C.'s national services. This is a high standard to set for whoever runs the service; it is not easy for small stations to reach that standard, but no lower standard than the national service should be our aim.
Those are my only doubts, but if, as I hope, they are resolved I have no doubts as to how and by whom the service should be provided. I stand absolutely on the twelve pages in our Report. But local sound broadcasting must not, of course, be at the expense either of existing national services or of the regional structure on which those national services absolutely depend. The national services are the models for the world: so it will cost money. But I believe that it will be worth it, so long as they are strictly local and focused on the interests of identifiable communities. It is worth mentioning that this is of special importance to old-age pensioners and others who are less mobile than they used to be, who live partly on their memories and have long contacts and connections in particular places with many people and many events, so that this service can bring to life for them once more the whole of that community.
My Lords, I have spoken for rather a long time, and I should like to close by referring briefly to the more general practical philosophies of broadcasting that affect us all. We are, I think, rightly proud of both the B.B.C. and the I.T.V. It is a splendid system, and for better or worse broadcasting is a powerful tool that influences our lives and our civilisation. We cannot be passive about it. Permissiveness is not enough, and is not a policy worthy of us. In these last few years permissiveness has spread wildly and rapidly through our society, a society threatened in any case by profligacy that causes our world-wide creditors to look askance at us. We cannot shirk these issues. Broadcasting must be more than a mirror, and its influence must be balanced, or even deliberately tilted, I
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think, on the side of good. I want to conclude by quoting from paragraph 1055 in our Report. The whole paragraph is vital, but it would take too long to read it all. In paragraph 1055 we said:
"There should be presented for listeners and viewers to choose from the widest possible range of subject matter treating as much as possible of the whole scope and variety of human awareness and experience. To do so the broadcasters must not only reflect society; they must pick out and focus attention on that which is significant—the best, because it is the best; the worst, so that we can know it for what it is; the new and the challenging, because individual listeners and viewers should not be denied the opportunity of responding to them and of judging them. At the same time the broadcasters must care about public tastes and attitudes in all their variety in all kinds of programmes—in those designed to amuse and relax no less than those that are demanding; they must be aware of them as they now are and of their capacity to change and develop."
That, my Lords, is true to-day, and yet more urgent than it was eight years ago, and that is why I chose first to stress that the choice of Governors and of members, and above all of Chairmen of the two Authorities is quite paramount.
THE EARL OF BESSBOROUGH: My Lords, I wonder whether, before the noble Lord fits down—we are fortunate to have him in the House—I could ask him a brief question on commercial radio. I understand that he is in favour of having two independent television channels, as well as the B.B.C. Is he totally against all forms of commercial radio, or only against the local commercial radio stations? Would he accept possibly a national commercial radio service?
LORD PILKINGTON: My Lords, I am in favour of the B.B.C. having all sound broadcasting.
5.45 p.m.
LORD BEAUMONT OF WHITLEY: My Lords, it is indeed a daunting task to follow the noble Lord, Lord Pilkington, in this debate, with his unique knowledge of the subject. I hope he will forgive me if I do not immediately follow him, because I wish to take up one or two points the noble Earl, Lord Bessborough, made on the question of education and the University of the Air. It seems to me that the great argument in favour of the University of the Air is that in a period when there is going to be tremendous pressure to expand higher education and

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tremendous pressure on the money available for educational expansion, it can provide a safety net, an opportunity whereby those people to whom we cannot give higher education can, through their own efforts, obtain it. And for this reason I believe that expenditure on the University of the Air is really a priority; it should come first before other expansion in higher education, so that we may have this permanent and particularly wide safety net.
I would argue that the noble Earl, Lord Bessborough, was possibly slightly wrong when he said in this connection that America could not afford sufficiently well-endowed educational broadcasting. Surely it is not that they cannot afford it; it is that because of various reasons, which are social and ideological as well as financial, they do not choose to do this, just as, for instance, they do not choose to have a National Health Service. I personally am grateful that we can have this choice of the University of the Air, because I think it is an important one.
Now I would turn to the question of local sound broadcasting. As we know, an important decision must be made on this matter in the very near future. I think that the local sound broadcasting experiment so far has been a success. I consider it is a high priority in terms of social engineering or whatever you like to call it—the kind of thing we are going to discuss under Lord Soper's Motion on June 11. It is a high priority in building communities, bringing back the sense of community from whose loss we are possibly suffering to-day. I think that the listening public will expand for it. The noble Lord, Lord Pilkington, may possibly have miscalculated on this subject, because one of the reasons it is not listened to so much is that there is at the moment a shortage of available wireless sets which can receive V.H.F., and one hears, I do not know with what truth, that there will be a large gap between supply and demand over the course of the coming year.
I agree that the standard must be kept very high, but it must be a completely different one from that of national broadcasting. It can afford to be much freer, much easier, much more "swinging", if you like, much more open. I think that on the whole it is clear that we ought to
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go forward with local sound broadcasting in rather a big way. The problem I before us, therefore, is basically whether local broadcasting should be commercial or should be run by the B.B.C. Compromises and mixtures are possible, but it seems to me that on the whole any compromise will tend to be based on one or other of these two solutions.
The basic reasons for commercial radio, apart from the desire, not in any way unwholesome in itself, of a large number of people to make money out of it, are that commercial radio can be more responsive to people's needs than can the B.B.C. and it will cost people less. It is true that commercial radio has a very good reason to be as responsive as possible to people's needs: it can charge in advertising according to the number of listeners it gets. This means that while it may respond to the needs of the majority, it may often be tempted not to respond adequately to the needs of the minority, and where the needs of the latter are catered for they may tend to be catered for at rather odd hours, such as, I understand, happens on many stations in the United States. I am concerned that minority needs should be catered for as well as majority needs. The social and cultural implications of broadcasting are too far-reaching to allow the principle of maximising revenue and minimising costs to operate too freely; and there is, of course, nothing particularly local, except the addition of a few names and addresses, in adding a lot of "pop" radio to local broadcasting. That is already provided by B.B.C.1, which everyone can receive. Local broadcasting should be concerned with things much more local than that.
The second argument in favour of commercial radio is that people will not have to pay for it. I must confess to not believing this. I agree with Phil Sidey of Radio Leeds, who said recently:
"Even a disc jockey knows that radio has to be paid for and that 'free' radio is financed by shoppers rather than ratepayers or radio licence holders.
"Widows with six children find either method a burden. The issues for and against commercial radio lie elsewhere."
But even if the arguments which are advanced in favour of advertising—that radio does not cost so much because it is balanced by savings which are caused by advertising, thus allowing production on a larger scale, and so on—are true, I

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want to go on in a moment to have a look at whether the cost is going to be so much that we have to decide not to have the advantages which I think we should get from non-commercial radio.
So, to turn to the other side, I want to look for a moment at what these advantages are. In my view, one of the great advantages of non-commercial radio is, purely and simply, that it does not have advertisements. It is, in fact, a straightforward æsthetic argument. I think that in this society we are all agreed that there are places and times when we should not have advertisements. If your Lordships arrived at this House one evening and found a big neon light across the front of the Palace of Westminster saying "Smithers beers for healthy Peers" your Lordships would almost certainly object, even if it was an absolutely true statement in its way and even if the neon lighting was rather attractive. There is nothing like neon lighting in another language: Neon lighting in Chinese looks absolutely wonderful.
We in this country have also rejected—and I am quite certain that the majority of your Lordships would agree that it is right—the kind of billboard advertising that one finds along the highways and in the countryside in certain other countries. On the other hand, a dull journey by Tube can surely be nothing but enlivened by some of the advertisements of films and plays, let alone pictures of pretty girls that one sees. So there is a use for advertising, and a place where we do not want it. From a personal point of view (I hope that it will not be thought to be highbrow or too patronising) I always feel that on television and radio spot advertising between programmes and during breaks in programmes is unaesthetic and that it is better if it can be done without. That is what I consider would be the first value of noncommercial radio.
That does not mean that I think there should be a complete ban on advertising in local radio. There is a place for periods of time given over to advertisements for local goods and to announce what is happening in local shops, which may well be brought in in a twenty-minute advertising programme in the morning which would catch the housewives and to which housewives would listen because they wanted to listen to
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it. That seems to be a good idea. But even if there is that kind of advertising, I think that its financing should not be tied up with the putting on of programmes. We all know that pressures exist at all levels in radio and television, and it is right that they should. That is how a democratic society decides what it wants to be broadcast. But I think we should all agree that it is totally wrong that an overlarge influence should be exercised by either a small number of commercial interests in an area, or indeed by local government, as has also been mentioned. Perhaps the answer is an independent corporation which would sell advertising time but which would have nothing to do with the main broadcasting system—as was suggested, I believe, for I.T.A. in the Pilkington Report.
While we are on this subject, perhaps this is a moment to say something about the involvement of local government in local radio. It is right that occasionally the local councillor should serve on the local advisory or governing body, but it must be remembered that it is important that local radio should be seen to stand apart from government and be open to those who wish to criticise what is happening in local government. For those reasons, I should like to see local radio in the hands of some independent body not entirely dependent on commercial advertising. The risk of pressures in a local situation is too great, and I do not think the fact that I.T.A. is able brilliantly to resist these pressures in the independent television sector is particularly evidence to the contrary, because there is a large difference between these vast television bodies and the kind of small local radio concern that we are talking about. I believe that, with the help maybe of a little local advertising of the kind that I have mentioned, the B.B.C., experimenting possibly in partnership with the local university or other local bodies could produce exciting local radio in a great many different places.
It is estimated that to run a local broadcasting station in the near future will probably cost about £80,000 a year. It is also estimated that between 50 and 100 local radio stations would probably cover most of the country, with areas small enough to be properly local. If my arithmetic is right, I say that not

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even counting revenue from advertising of the kind I have mentioned, an addition to the licence fee of 10s. would much more than cover the whole cost of local radio in this country. I think this is worth paying for. The building up of the local community spirit and the local community interest which has appeared to be disappearing in so many places is in itself worth it.
I cannot myself think of any body which is better fitted to undertake this job than the B.B.C. If we look at the mass media in this country and in other countries, we can give great praise to I.T.A., to our Press and to most of the mass media. I think we are lucky. But if we look round the world and talk to people in different parts of the world, it is clear that we are outstandingly lucky in having a shining example in the British Broadcasting Corporation of how to run mass media. Although it may be good to prod it often because it is apt to get stuffy, and although it needs competition to keep it on its toes, I should like to see its influence expanded rather than reduced.
5.58 p.m.
VISCOUNT ADDISON: My Lords, I should like first to add my thanks to those of your Lordships to the noble Lord, Lord Byers, for his speech. To say that he made a good speech is an understatement, because he always makes a good speech. I think that in half an hour he covered the ground of this immense subject in a remarkable way. His introduction of the matter was an object lesson in how to set off a debate of this kind and character. I should also like to say that I agree with the noble Lord, Lord Ferrier, who expressed regret that we should not be able to hear from the noble Lords, Lord Hill of Luton, and Lord Aylestone, who are associated with these undertakings. Of course, I agree with him, and I feel that I should perhaps in some way offer a personal apology, seeing that the rules which preclude them from speaking were named after my father. I hope that the noble Lords concerned will forgive me if I make any criticism.
Going back a little, I think that my earliest recollection of the broadcasting service was in 1922, in London, when at the age of 18 I had a crystal set. I
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remember at that time being impressed with the high standards which seemed to be aimed at. I think that for these aims we probably owe a good deal to the noble Lord, Lord Reith, who, in spite of the imposition of a perhaps rather authoritarian régime, set the foundation stone for what really, in spite of all its critics, had to come—the most honest, the most independent, the most efficient and the most reliable broadcasting service in the whole world. Some people may not be willing to admit this to be true, but I am sure that in their hearts they know it to be so.
It was perhaps not to be expected, in the years after Lord Reith's retirement, that other men to equal him would be available to take his place. But I think it is true to say that none of his successors did anything to detract from the very high standards which he had set. And in recent years it has been reassuring—at any rate I have thought so—that the same degree of sturdy independence has been displayed by Sir Hugh Carleton-Greene, who must have been subjected to very heavy pressure (I think this was mentioned by the noble Lord, Lord Byers, in his speech) from a good many directions during his long and important period as Director-General. I believe that on vacating his appointment Sir Hugh has left the public more greatly in his debt than perhaps they recognise, and I am very pleased to think that he has retained a seat on the Board of Governors of the B.B.C. where his wide experience and judgment will continue to be available to the service.
My own experience of the B.B.C. has been a very limited one, but I had one complaint to make when I was Chairman of a Regional Hospital Board, in that when we gave facilities in our hospitals for broadcasting and television they seemed to edit the programmes in such a way as to give great publicity to the bad bits and to leave out good bits. My staff up and down the region formed the impression that we received no credit for all the thousands of satisfied customers, but that we were publicly pilloried for the few dissatisfied ones, some of whom, in any case, were cranks. We got the impression, perhaps wrongly—I hope wrongly—that they were out to "knock" the hospital services; and the nurses and doctors, and the staff

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generally, began to feel that they could not do right, whereas they were in fact among the most loyal and devoted workers that one could find up and down the land. I did not complain to the B.B.C. at the time, but in the end we would not do programmes other than live. And it seemed to me that from that time we were not asked very often to do a programme. Perhaps the situation is better now; at any rate I hope so.
I have always been an opponent of commercial television and broadcasting—I think that is generally known. I believe that it was a retrograde step to introduce it into this country. In the first place, it seems to me to be wasteful: it leads to duplication; and it seems to me to have tried to achieve a large mass appeal so as to provide a wide circulation for advertisers at the expense of the quality of programmes. A good deal of American influence has been introduced, and I have been asked by a number of Americans why we have allowed so much of what they call their "rubbish" to enter into our service. Of course, one cannot say what effect would have resulted to the B.B.C. if commercial TV had not come; whether the services were reduced in quality by the competitive striving to attract an ever-increasing audience, or whether it has been a healthy competition which has improved the service all round. I am afraid that I think it was the former. I remember the speech of the noble Viscount, Lord Hailsham (as he then was), in this House when the debate took place, all those years ago. The noble Viscount warned of the consequences of the introduction of commercial television, I and in my view he has been proved right.
I believe that something has been done by the Independent Television Authority to try to restrain the exaggerated claims of some advertisers for their products: even the soap and detergent ones are now a little less ridiculous. But I wonder why the commentators seem to address their audience as if it were composed exclusively and entirely of children of about eight years old, and often in an American accent. Do the manufacturers of one washing agent really expect people to believe that it washes "biologically", and actually "digests" dirt and stains? Is this magic substance really equipped
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with a duodenum, a liver and a pancreas? Are they deliberately trying to mislead the public, or are they trying to be funny? Unfortunately, some people get taken in; and this, I think, is a continual danger.
Does a certain leading oil company really believe that any driver of a car would attempt to drive his car across a narrow isthmus, with the tide coming in, with so little petrol in the tank that he could not reach the other side, even without the so-called much vaunted "mileage ingredient"? What is petrol if it is not a mileage ingredient? The motorist puts petrol in the car to go along; he therefore puts some mileage ingredient into the car. To my mind the whole thing is nonsense, and this is a matter that needs entirely looking at again. I can assure these people that they greatly underestimate the intelligence of the British public.
Once on the Report stage of a Bill in your Lordships' House I remarked on the exaggerated claims of advertisers on T.V. I said that I did not think anything could be "whiter than white". I still have the same view. On that occasion (it was on an Amendment on the Report stage of a Bill; I do not remember the exact occasion) my speech did not last more than one minute, but within 48 hours I was honoured to receive a two-page letter from the noble Lord, Lord Aylestone, in a remonstrative tone. In fairness to the noble Lord, I must admit that at the time he had been Chairman of the I.T.A. for only about two weeks.
But what was much more significant was that the young managing director of a small documentary film company, of which I was at the time chairman, received complaints about the views I expressed in your Lordships' House, and he saw that his business might be in jeopardy. Out of consideration for him, and at his plea, I did not pursue the matter, though I felt very much inclined to do so. I am not now associated with this company, so he has nothing to fear this time. Even if he had, I can assure all the washing powder manufacturers—or, for that matter, the oil companies, be they British or American—that Members of your Lordships' House are unlikely to be intimidated, and that in bringing the sort of pressure which I have described they are much more likely to

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do harm to their image than to improve it.
I have now made some criticisms, and what I should really like to offer are some congratulations and thanks to the B.B.C., particularly for some of their programmes. The commentaries on the American moon journeys; the arrangements that were made, and the perfection of the programmes describing the Daily Mail transatlantic air race a week or two ago; to say nothing of regular features such as "Panorama", "24 Hours", and so on. Many of their play and serial productions are quite superb. It has always been a source of wonder to me where they find the people who act all the parts, particularly perhaps the small parts. I have never seen anything on the stage or on the cinema to equal some of these performances. How actors and actresses find time to learn their parts, often while they are working in other parts, and still perform the beautiful jobs that they do, quite passes comprehension. If I could make one request it would be for more time to be given to "selling" our country and our products overseas. There is one very good and interesting programme—I think it is called "Made in Britain"—and I feel that more programmes of this kind could be successfully shown. I hope that this idea may be taken up.
I cannot sit down without paying a special tribute to the B.B.C. weathermen and staff who have turned what I think used to be a commonplace subject into a most interesting one. They have also opened our eyes to the potentiality of the weather services for industries such as building, as well as for holidays and travel. Finally, I would add my good wishes to the noble Lord, Lord Hill of Luton, in his efforts to retain and improve the image and high standards of the B.B.C., and to the noble Lord, Lord Aylestone, who I am sure has a very difficult task. I think he may need some more teeth. At any rate, very good luck to them both!
6.11 p.m.
LORD FRASER OF LONSDALE: My Lords, I apologise deeply to the noble Lord, Lord Byers, for not having given myself the advantage and pleasure of listening to his speech. I also apologise to your Lordships, and to the winder-up
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since I cannot stay to the end as I am going overseas almost immediately. I am very sorry about this. I will be exceedingly brief, but I feel that I must make one observation, following the last speaker, which I would not have made if I had not had the pleasure of hearing him. I think he is grossly unfair, is quite wrong and is misjudging the situation, when he criticises the British for having introduced the I.T.V. programmes. I also think he is quite wrong in suggesting that its introduction has done broadcasting harm. On the contrary, I think it has done broadcasting a power of good, and that B.B.C. television is infinitely better than it would have been without that competition. I think that the viewer is extremely lucky to have two or even three programmes to look at, instead of only two or one. So I entirely disagree with the noble Viscount, Lord Addison. I also entirely disagree with him about advertisements. The woman in the home likes the exaggerated talk of the washing machine man and the washing powder man. It is one of her greatest enjoyments. She likes to be told what is available and to use her own judgment as to how far she believes it. But she is not such a fool as the noble Viscount thinks, nor is she eight years old.
I said that I would be very brief. On July 16 last year I asked an Unstarred Question and made a fairly long speech about broadcasting. If I may say so, I made a very powerful and almost unanswerable plea for financing a large part of it by advertisements. I do not intend to go over that ground again. If anyone will do me the honour of looking at the Report of that debate, he will see that, had I been in another place a week or two ago, I would clearly have supported the G.L.C. in their Bill which so very nearly came to this House. I should not be surprised, if circumstances alter and I am spared for a year or two, if I myself introduced the Bill in this House. The licence fee has now been raised to £6, as I forecast last July, but still the B.B.C. does not have enough money, nor will it ever get enough money to do the job as well as it could be done unless it takes to advertisements. As I said, I shall not go over the ground that was covered earlier, though I still think that a most suitable place to introduce advertisements is the "pop" programme, the

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No. 1 job, which would be infinitely more interesting if there were some advertisements in it. As my noble friend says, it could not do worse.
But it is the local stations that I want to talk about. I think they have been a considerable success. It is true that nobody knows how many or how few listeners there are, and there are various reasons for this. As has been said, one reason is that some of the available sets do not have the right frequency on them. Another reason is that there is so little material to put in the programmes to make them interesting. How much more interesting they would be if there were some advertisements. The audience would then grow and the civic attention and the civic sentiment, for which some noble Lords have pleaded, would grow accordingly.
The right honourable gentleman the Prime Minister quite recently said in answer to a question—I do not know whether it was in another place or in the open air—that one of the principal reasons for not allowing local stations to be financed by advertisements was to save the local papers from extinction. I am bound to ask myself how much he had studied this matter, or how much he was thinking, "Here is one way of getting some part of the Press, which is at present not unfriendly to me—in fact, it hardly notices that I am there at all—to think better of me." I want to answer this question, because it might have carried a great deal of weight with Members of Parliament and with Members of your Lordships' House; and in this matter I venture to think that a little bit of experience may be worth quite a lot of theory.
As long as 40 and 45 years ago I was a member of the first of the committees to which the noble Lord, Lord Pilkington, and other speakers have referred—the Crawford Committee. I took a very great interest in the development of broadcasting in those very early days. Being a member of that committee, friends of mine came to me and spoke about their interests and hopes, and I was guided by what I heard, as I think one should be. Lord Riddell will be remembered by men of my age, and he was a considerable newspaper man of the day. He said that his papers, which included the News of the World and the
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Newnes and Pearson periodical house, were going to be ruined if advertisements were taken by the B.B.C., and even by the progress of the B.B.C. He hoped very much that there would be no very real progress on the part of the B.B.C., and that we would not recommend this, that or the other substantial development. Lord Iliffe had the same fears about the Birmingham Post and about other matters.
In my constituency then, of North St. Pancras, there were up to fifty small men who, in little factories, made piano pieces—I mean pedals, rods, corners, angles, keys and one thing and another—which they supplied to the big piano manufacturers to put in their pianos. These chaps came to me and said, "If broadcasting flourishes in Britain it is going to ruin our trade. Nobody who can hear something played so beautifully for nothing, or for 10s. a year"—as it was then—"is going to buy a piano." The same applies in regard to gramophone records. An old friend of mine, Sir Louis Stirling, who was Chairman of the Columbia Company and later of E.M.I., said, "You know, this churning out of records by the B.B.C. is going to ruin the record business. You have no idea what a wonderful business we have."
How wrong they were, my Lords! How wrong they were! If millions of people listen to a piano for the first time, a very small percentage of those millions start wondering what the noise is, because they have not heard it before. They get interested, they begin to whistle what they hear, and they begin to inquire about it. And, perhaps because they are musical and did not know it before or because they want a status symbol, they buy a piano. In fact, more pianos have been bought since broadcasting than before it. More gramophone records have been sold, too. If you broadcast gramophone records to millions, you sell millions of gramophone records, even though your object is not to sell records at all. How wrong they were!
Nor has the periodical Press of Britain suffered. It may be that there have been takeovers, it may be that aggregations have arisen, but not particularly for the reason that the advertisements were taken away by the television companies. The periodical Press has prospered. It may be that some newspapers are in a bad

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way, but there always have been some newspapers in a bad way, and there are one or two which perhaps deserve to be. It is quite untrue to say that things die because of competition. Very often they are spurred to new life. I think, therefore, that the Prime Minister's argument, which seems to have impressed so many people, that the local papers would be lost and that the towns would thereby lose their best friend and the most important element in keeping them together, and all the rest of it, is wrong. That is the main point I wanted to make, and I hope, now that we are reaching the stage at which consideration is being given to this matter, the Government will not make up their minds in advance that we are not going to have any advertising, particularly on the local stations.
Finally, I would say that I should like the B.B.C. to manage the advertising. It may horrify some of them, but it is extraordinary how people change over the years. All kinds of things in which I used to believe thirty or forty years ago have changed in my own mind, and I am sure any mind that is not ossified changes as the circumstances of the time change. A great many of your Lordships would have said, as some did, that television with advertising was going to ruin Britain, was going to be a horrible thing which would lower tastes and standards, and all the rest of it. A great many of your Lordships will have changed your minds; and I do not put it past the B.B.C. to change its mind. Although I served on its Board so long ago, I still think it must have an open mind; and it must know that it cannot get as much money any other way. They have the tradition of sensible management, and I am quite sure that the right thing to do is to give them the power to take advertisements and to leave it to them to see how they do it—and I am quite sure they will do it with grace.
6.24 p.m.
VISCOUNT SAMUEL: My Lords, the subject of the debate to-day is the future of broadcasting. In other words, where are we going? It has already been stressed that this is an age of great technological change. But the world has always been changing. As Adam said to Eve as they were being chased out of the Garden of Eden, "My dear, we
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live in an age of transition". But as the noble Lord, Lord Byers, said in opening this debate, the trouble with change is that it is getting faster and faster. It used to be in millennia, then in centuries and then in decades. Now, each year we are faced with some new invention which revolutionises our lives, especially in the field of communications. Look at what has happened since the beginning of the last century. The railways came, and they killed the canals. Now road transport is killing the railways. At one time one crossed the Atlantic on big passenger ships. Now they are being killed by air transport and they are making their money through cruises. Telegrams have been replaced by telephones.
Since World War 2 there has been a great speed-up in the technological change of mass communications. We find television overtaking the cinema, and redundant halls being used for bingo or as bowling alleys. In the United States, television is taking so much advertising from the Press that the remaining newspapers are fighting for survival. Even in this country television is overtaking sound radio; but I share the view of my noble friend Lady Llewelyn-Davies that, although television is with us, there is certainly room for sound radio, which for some forms of broadcasting is much more subtle—music, poetry and even drama. It leaves a great deal to the imagination, which television very rarely does.
This leads me to the question of advertising, especially on sound radio. I am opposed to any existing B.B.C. sound transmission accepting commercial advertising. I am equally opposed to the introduction of commercial advertising on the existing or planned local radio. But I think there is a future for commercial advertising by sound, and in this I agree with the noble Earl, Lord Bess-borough. It should not be beyond the wit of man to devise parallel systems, either central or local or both, for commercial and non-commercial sound radio, as has been done for television. None of us likes the television commercial, but is it any worse than the advertising that we see in the newspapers or the magazines? The only difficulty is that it is harder to disregard something that you hear or see on television than it is if

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you are reading a newspaper. The eye skips more easily than the ear.
But it is not the interruption by commercials that is the main issue. I agree with my noble friend Lord Addison that there is always a danger, when you get commercial radio, of the lowering of the intellectual content of the programmes. They must be geared to suit the great mass audience to whom advertisements for detergents are addressed. I agree also with the noble Lord, Lord Beaumont, about the need to provide for the minority audience. That is very difficult with commercial radio. On the other hand, the technical brilliance of commercial television is, I think, important. Commercial television has money coming in from advertising to such a large degree that it can hire the best talent, and so you get the glossy floor shows on the American model which it is very hard for the B.B.C. to match. This technical brillance of commercial television is a great challenge to the B.B.C.
I agree with previous speakers that the B.B.C. is still the envy of the world, for three reasons. The first is its broad spectrum. It has something for everyone. Secondly, there is the very high level of production. The B.B.C. obviously takes great trouble with its programmes, unlike those in the United States, where many of them are very slapdash. Thirdly, there is no Government control—as for example, until quite recently, in France. The problem is how to maintain B.B.C. television against the competition of commercial television, and non-commercial sound broadcasting against commercial sound broadcasting if it comes.
The clue, I think, is that somehow the B.B.C. must get enough money to enable it to compete. Licence fees have recently been increased; but there is a limit to increases and the time comes when a further rise is impossible. It would be a great pity if fees were so high as to deprive many people, the not-so-rich, of the right of access to information. Secondly, the higher the fees become, the more evasion there is in payment. I agree with the noble Earl, Lord Bessborough, that one cannot have Government subsidies for programmes—it would introduce Government influence—but I think that the Government could
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at least take over some of the burden of research and some of the burden of capital expenditure. If that can be assured for non-commercial sound broadcasting, I should be in favour of allowing room for commercial sound broadcasting, even if, as I am afraid it may, it damages further the provincial Press—although I feel that my noble friend Lord Leatherland, who follows me, will not agree. We owe a great deal to advertising and I think it is about time that somebody pointed out that it has kept the Press independent for over 70 years. The Press does not need the open subsidies by political Parties that is common in many countries, or the secret subsidies by pressure groups—for example, the Italian subsidies to the French Press before the Second World War.
The trouble is that there is an enormous amount of advertising money available. Mass production needs, and can afford, mass advertising. The products are all competing for the rising hoard of purchasing power of the great middle class—which now includes almost everybody in this country. This advertising money goes wherever it produces the best commercial results. If advertising deserts the newspapers and magazines for television, they fold—and this is very widespread, as I have said, in the United States. That may be bad, but there are remedies. With the decline of the Press, it is all the more important to allow freer access to the microphone. There are strong reasons for a multiplicity of channels, both public and commercial.
Lastly, I should like to say a few words about the future of broadcasting in relation to education. Britain has a long experience in schools broadcasting and adult education and is now starting with broadcasting at university level—the Open University to which the noble Earl, Lord Bessborough, referred. I do not think we yet fully realise its potentiality. I agree with my noble friend Lady Llewelyn-Davies that it is a brilliant conception, and I hope that it will establish itself rapidly before it is strangled—perhaps by my noble friends on the opposite side of the House. Other countries have used broadcasting at university level, and the noble Earl, Lord Bessborough, mentioned some of them. He mentioned university stations. I happen

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to have been recently in the University of Alabama where I was speaking on the university radio station; but it has not the means really to become a real broadcasting station. It is largely used for teaching university students the techniques of mass communication.
THE EARL OF BESSBOROUGH: My Lords, while we are on this point, I feel I must just say that there is no intention on our side to strangle this experiment, this plan. I said that we should very much like to see how it works before condemning it or criticising it. But I am grateful to the noble Viscount for some of the other remarks he made which agreed with mine.
VISCOUNT SAMUEL: My Lords, I am glad for that assurance. Broadcasting has been done, as the noble Earl said, in Chicago and Boston, in Russia and in Germany; and the noble Lord, Lord Beaumont, also mentioned these experiments. But nowhere has there been a comprehensive scheme as in Britain. These experiments abroad have all failed, largely because they were not geared to produce a degree course. As your Lordships know, in Britain it is to be a combination of broadcasting, correspondence courses and residential summer courses, all decentralised. Secondly, it will have its own academic faculty, its own degree and its own central campus.
I would end by saying that tens of thousands of men and women need it. Some could never afford to go to the university in their youth. They had to go to work immediately after leaving school; or they could have gone to university but did not and now they bitterly regret it; or they want to better themselves but they cannot get to night classes—for example, women who have baby-sitting troubles. Now, at last, we have this great vision of what I can only call rehabilitation. There is one country in Scandinavia—Sweden—which makes use of every man and woman. If they are redundant in a factory, they are moved to where they are needed, they are retrained and re-housed. The aim is to cut down the flight from Sweden, the emigration from a country with barren soil and a hard climate to the United States. We here in this country can do the same. We can rope in every one who needs it
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wherever they are tucked away and rebuild them mentally and put them to better use. Britain has already pioneered with university extensions and W.E.A. Now we go on to the Open University, where Britain can lead again.
6.38 p.m.
LORD LEATHERLAND: My Lords, the noble Lord, Lord Byers, has given us the opportunity for a very thoughtful and enlightening debate, a non-Party debate, with no Divisions, no Whips, so that we can all let our hair down (those of us who still have any) and say what we like. I want to talk about the local sound broadcasting proposals and particularly of the effect that these will have upon our local newspapers; because this is a very serious problem that must be faced.
Before I deal with that I should like to mutter to myself for a few moments about the present state of the broadcasting services and programmes. I think that we have to agree that for millions of people in this country broadcasting and television have become the biggest things in their lives. Naturally there are many complaints, many criticisms. We have not only the very worthy—and I say it very respectfully—Mrs. Whitehouse; we have criticisms from people who are as far apart as Puritans on the one hand, and politicians, on the other. Some people say that there is too much sex on television; others say that there is not enough. Some people are saying that there is too much sport on television; others that there is not enough. I suppose that these complaints will never he ended; they will go on and on, like "The Continuing Story of Peyton Place".
But when we have gathered together all these complaints and criticisms, surely we have to balance them against the undoubted merits of the services and programmes which are provided by our two broadcasting institutions. Of course, there are complaints to be made; there are complaints that can be sustained. I am not a nagger; but I have a few complaints of my own. First of all, I think there is far too much "slush" on television programmes. There are hints of homosexuality; parades of promiscuity. I know that it may be said—I have heard it said—that these things happen in real life, and of course a

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modicum of it is therefore acceptable if television is to reflect real life. But we do not want too much of this rammed down our throats when we are by the family fireside.
Then, my Lords, there is the question of violence. Having had red hair in my youth, I suppose that I was brought up in an atmosphere of violence. A little violence does not do anybody any harm. I can stand for much of the violence seen on television. And it is the fact that usually in these television stories virtue does triumph, after all; so there is a moral lesson in the story. But what I do object to is the really vicious, unnecessary violence that we get in some programmes. I know that psychologists will tell us that this is good for us, that it enables us to get all ideas of violence out of our systems. But even after taking that into account I am still left with the feeling that the more unnecessary, vicious violence that we see on the screen, the more of it we get in our normal daily life. And, my Lords, we are getting more violence in our normal daily life—shooting, thuggery, student "punch-ups", vandalism, assaults on the police, football hooliganism, gang battles, the smashing up of railway carriages—all of it "just for the hell of it".
I have heard one more complaint, one with which originally I agreed, and I listened with great interest to what was said on this point by the noble Lord, Lord Pilkington. It is that television gives too much publicity to marches and demonstrations. It has been said that if TV gave less publicity to these incidents the promoters and the participants would be less enthusiastic. I happen to know something about the background of some of these marches and demonstrations. I happen to know how television promoters have touted for scenes where violence will be involved, but it would not be discreet of me to give evidence about this because it might cause even more trouble.
There is a good deal in the argument that many of these demonstrations, violent demonstrations (I am not against ordinary peaceful demonstrations) are encouraged because of the certainty which the promoters feel that they will be seen on television and their cause will benefit thereby. But, my Lords,
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there is another side to this story. While some of the demonstrators are screaming out for peace, others of their number are kicking policemen in the face. So we do see both sides of the question. we do get a balanced view, and some of us probably come to the conclusion that some of these so-called pacifists are not quite so pacific after all.
My major complaint, however, is about the way some of the interviewers in the public affairs programmes go about their job. They ask poisonous, loaded questions, and. when they do not get the answer they want, they add a distorting punch line of their own. It is the distorting punch line that leaves its impression upon the mind of the viewer or the listener. I am not naïve. I know that it is not possible to have complete, tame objectivity in a controversial public programme. But if we are to have controversy, let it be fair, not only in what is said but also in who is chosen to say it. Some of the people chosen to make comments in television programmes, particularly political programmes, are very peculiar people indeed. I have another small complaint. It is that in the news presentation there is sometimes an attempt at editorialising; not in any thunderous way but by the introduction of some poisonous word, or a semi-chuckling inflectien in the voice when the announcer has to say something bad about the Government or the British nation. I know that this sin is not often committed, but it ought never to be committed. That brings my nagging to an end, my Lords.
If one takes a broad view of the two Corporations, and all the difficulties with which they have to contend, and if one remembers the high-speed work which they have to undertake in order to meet their deadlines (I speak as an old newspaper man), I. think that very great credit is due to both Corporations. We have a more balanced programme than almost any other nation. We get the kind of variety that suits the taste of most people. Our children's programmes are excellent—I have an expert panel of four grandchildren who assure me that what I say about that is true. But I would ask the two noble Lords who are not here—evidently they have gone to deliver the 6 o'clock news—whether we may have a

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few more animals in the children's programmes.
The presentation of news, both voice and vision, is usually very good. So also is the background supplementation and explanation. But I do not like some of the "snap" interviews which some of our producers are so fond of screening. The opinion they seek is sometimes thought-lessly expressed; perhaps it is one on which the interviewee is not capable of pronouncing at all. I think that our educational programmes are of a high standard. The British people are, I believe, much better informed than they were before these influences burst into our homes. Our standard of literacy has risen. Even I can understand all about the virtues of thiamin.
I have little to say about the way the Corporations are run. The noble Lord, Lord Hill of Luton, and the noble Lord, Lord Aylestone, have proved good Chairmen of their respective organisations and have given a general feeling of confidence to the country, despite the fact that, as I say, there are a few blemishes. I do feel, however, that there is a good deal of financial extravagance on the part of both Corporations. Some salaries that are paid are quite fanciful: entertainers fees are really fantastic. There seems to be a tendency for people in the entertainment world to think that they live on an entirely different planet from the rest of us going about our ordinary vocations. I think that there a "long knife" is needed. Probably there will be some spare "long knives" along the other end of the corridor if there is any shortage in other quarters. I have a little doubt about the constitution of the Corporations. I have the highest admiration for every member of the Boards, but I feel that they include too many people of the academic and intellecutal class. These people have their very valuable uses, but we could do with a few more ordinary people to create a link between the boardroom table and the world outside.
My Lords, I wish now to come to the question of local sound broadcasting. Here we have to heed the lesson of the late King Canute and appreciate that you cannot keep back the flowing tide—even some election agents have learnt that recently. It is certainly the case
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with local radio. There are indications that it is coming to stay. We all know—we have heard this afternoon—about the eight experimental local stations set up by the B.B.C. We have heard that the result of those experiments is to be assessed this year. We shall probably hear that they have been a huge success, and we shall probably be told that we are now to think in terms of a fairly wide, and perhaps rapid expansion in local sound broadcasting. These eight experimental stations seem to have been very competently staffed. They have certainly produced very useful localised programmes. They have combined a good news service with entertainment, and with appropriate cultural and educational elements. They have given a good service to schools, and they have been particularly valuable when some local disaster, like a flood, or a train smash, or something of that kind, has occurred in a particular district. Of course, the B.B.C. will not be the final arbiter here. The ultimate decision will have to be taken by the Government. I hope that (as I assume will be the case) very soon we shall be having what I will call another Pilkington Committee.
There are many aspects of this question which have to be considered, and one of them is the powerful lobbying that is taking place just now on behalf of commercial and financial interests who want to run local sound broadcasting companies financed by revenue from advertising. I am against these commercial local broadcasting companies. If there is to be an extension of local sound radio, then I want the B.B.C. to run it, in collaboration with local bodies like those which are now operating in connection with the eight experimental stations, local radio councils consisting of local citizens.
My main reason is, quite unashamedly, that I do not want to see hundreds of local newspapers ruined. I do not mean ruined in the journalistic sense because the radio may steal some of their "scoops". A good news editor is always capable of carrying a radio announcement three or four stages further. In a sense the radio announcement becomes an aperitif for the local newspaper a few days later, when people want to "read all about it" So I do not think that newspapers have much to fear from local radio on the journalistic ground—in fact, they may gain.

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Where the loss comes is in respect of advertisements, which would be lured away from the local newspapers by local commercial radio services. This would be a really crippling blow to many local newspapers. Many are 75 per cent. dependent on their advertising revenue. If advertising were seduced away from them by radio, they would be in the bankruptcy court straight away. Local newspapers are having a bad time, and have been having a bad time for many years. I think that it would be a grave loss to the nation if we were to lose many more of these local papers.
There is no need for any guesswork in trying to assess how these local newspapers would be hit. Last year the Newspaper Society engaged an independent firm of accountants to survey 108 of the provincial newspaper companies. They found that six of them were already making losses before tax; 14 others would make losses if they were to lose 10 per cent. of their advertising revenue to local radio—and the experts regard 10 per cent. loss as being quite conservative (I use the word in its decent sense). So that in the first round one in five papers would be doomed to extinction.
Let me give your Lordships a few examples. There is one provincial morning paper that is making a profit of £41,000. If it lost 10 per cent. of its advertisements, it would lose £65,000—that is to say, £24,000 more than the profit it is now making. A small weekly newspaper, now making £37,000, would lose £46,000, leaving it £9,000 worse off. A weekly paper, now making £4,000 profit, would have £7,000 taken away from it. A slightly larger weekly now making £14,000 would have £19,000 taken away from it. In the bigger areas, the accountants found a paper, now making £13,000, which would lose £22,000. They found another making £6,000 which would lose £12,000; another making £14,000 profit which would lose £19,000 and a bigger paper, now making £51,000 before tax, which would lose £57,000 if 10 per cent. of its advertising revenue was taken away from it.
We are not dealing here with peanuts. Three years ago—and it might be worse to-day—the Incorporated Society of British Advertisers estimated that the potential revenue from a local radio service was £30 million a year. There are
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many other examples that might be quoted but they all tell the same story. Local commercial radio financed by advertisements would kill many of our local newspapers stone dead. That is not my view only. My noble friend Lord Hill of Luton has said this on several occasions and said it again as recently as yesterday. When my noble friend and I both say it, it is probably true. The Beveridge Report said it in 1948 and the Pilkington Report said it in 1962. They both favoured local radio but both were against financing it by local advertisements.
It may be said: what do these experts know about it? What does the ordinary man in the street think about it? Fortunately, we have an answer. A Gallup Poll was taken in 1966. The question put was: would you like to see commercial radio or to leave it to the B.B.C.? Fifty-seven per cent. said, "Leave it to the B.B.C."; 31 per cent. said, "Commercial radio" and, as usual, 12 per cent. said "Don't know". But even if we add together the "commercial radios" and "don't knows", they are still substantially below the percentage of people who want local sound radio left with the B.B.C. So my plea is that in any local service let the B.B.C. rut it, working with some kind of local radio council representing the citizens, on a basis similar to that now operating for the eight experimental stations.
If we dismiss advertising revenue horn the running of these local stations, we inevitably must ask: how is it to be financed? At present, in many cases the B.B.C. is providing about half the money and local municipal councils and other interests are providing the remainder. I hate the idea of municipal councils and county councils being burdened with expenditure of this kind. I speak as one who has been chairman of a county council finance committee for many years and who understands the yearly wrestling with statistics in order to prevent the rates going up unduly. I know that they are going up all over the country and will continue to go up. I know also that local councils are under pressure from Ministers to curb as much of their expenditure as possible, and because of the necessity for this curb, local councils find that deserving and sometimes urgent branches of their expenditure are having to be postponed.

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I think that the straightforward thing to do is to increase by 5s. or 10s. a year the radio licence duty in areas where local services are established. If that proves troublesome to old age pensioners, they could be given supplementary grants to cover the cost, because radio means a great deal to old people. But 2d. or 2½d. a week does not mean much to most people in these affluent days. When we sec people of 17 and 18 picking up their wage packets and going straight to local music shops and buying two or three records, costing a pound or more, we realise that 2d. or 2½d.a week is not a great deal to pay for establishing a sound radio service on a proper public basis.
I have tried to make clear that I am against any advertisement-financed local radio run by private companies. I am also against any local B.B.C. service being financed by advertisements. That would be worse than ever, because probably the B.B.C. might have an element of subsidy in it, and that would make competition for newspapers even more difficult than if they were having to compete with purely capitalist local enterprises. I want to see the local newspaper preserved. I spent some years on a local newspaper some fifty years ago and so have a sentimental attachment. I think these papers are the heart and soul of many of our communities. But if it should ultimately be decided that the local sound radio is to be on a commercial basis. I feel that the licence to provide this local service should be granted to the newspapers if they wish to have it: they should have the first claim. Their staffs are experienced in newsgathering they understand the traditions of their locality; they are in constant touch with the leading people in industrial, social, political and sporting life; they are in touch with all schools of thought. They could easily recruit extra staff to look after the entertainment side.
I feel that the editorship of the local paper and the editorship of the local radio service should be quite separate. There would have to be a separate editor for each in order that competition might be encouraged. If the ultimate settlement came along the lines that I have suggested—namely, that the newspaper should have the first chance of the licence
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—then I think the newspapers would profit in two ways. They would be compensated for the losses that they would otherwise suffer to the local commercial radio and they would be able to underpin their own finances on a more stable basis and thus make more assured their continued publication. I am sure that if we allowed our local newspapers to disappear many of our localities would lose their soul and it would be a very bad day for Britain.
7.2 p.m.
LORD DENHAM: My Lords, if I speak from this Dispatch Box at this stage during the debate it cannot really be called a winding-up speech for the Opposition: inasmuch as it is, it is the sort of winding up that you used to have to do to an old-fashioned gramophone halfway through the record lest the turntable should slow down and the sound get slower and slower and deeper and deeper. If you were lucky the operation was successful and the sound-track went on revitalised until the end; but if you should jog the needle by mistake the whole thing juddered to a halt. So, my Lords, I shall try to wind up with care.
It would probably be impossible and certainly undesirable for any one speaker to cover more than a few points in this debate and I shall speak on very few. I should like to say a word about commercial radio. My noble friend Lord Bessborough has touched on local radio. In July the Postmaster General is to make a statement on the whole future of local broadcasting. He will no doubt announce an increase in numbers from the original eight experimental stations. He will also no doubt set his face against any commercial element in them. My noble friends and I feel very strongly that B.B.C. radio needs the advantage and the stimulus of commercial opposition in the same way that B.B.C. television has had it from Independent Television. I cannot quite understand how the noble Lord. Lord Pilkington, can support commercial television but not support commercial radio. That seems to me to be slightly inconsistent.
I would say here how much I agree with almost everything that was said on this subject by the noble Viscount. Lord Samuel. We are committed as a Party to introducing local commercial sound radio when we are returned to power. We think that the advantages of this would

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considerably outweigh any disadvantages. One fear that has been expressed—and it has been expressed very forcibly by the noble Lord, Lord Leatherland—is that commercial radio, by draining-off all local advertising revenue, might lead to the demise of local newspapers, especially the smaller ones. These local newspapers give an important service to local communities and it would be a great pity if anything happened to their prejudice. It is with that in mind that my honourable friend Mr. Paul Bryan, who is spokesman on these matters in another place, has said this:
"Local newspapers should be allowed to take a financial interest, but not a controlling financial interest, in local radio. This would not only compensate for the advertising revenue they may lose, but their newsgathering facilities would be a great help to the radio station."
I think the noble Lord, Lord Leatherland, in his speech was asking for the local stations to be in the complete control of the newspapers, but no doubt he would welcome this as the next best thing.
I should like to say a word or two now about commercial television. There is definitely a sense of instability felt by commercial television companies as they have qualms about what may happen when present contracts come to an end in 1976. This has not been helped by a former Postmaster General talking in July, 1967, about the whole of television "going back into the melting pot". If the companies fear that the independent television structure may disappear altogether, there is a very real danger that they may be tempted to spend less on programmes and concentrate on profit-making while the sun shines. Would it be possible for the noble Lord, Lord Shackleton, when he comes to wind up the debate, to say something to reassure the companies that independent television will have a future of some sort?
I now want to say a little about the B.B.C. One complaint that I share with the noble Lord, Lord Pilkington, about the B.B.C. is that on the radio there does not seem to be enough liaison between the various B.B.C. programmes to provide a choice for the listener. It is very common to find either music on every programme, when the listener may want to listen to something else, or talk on every programme when he feels the need of music. On television the B.B.C.
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and the independent companies are inclined to compete with each other for audience ratings by running the same type of programme in competition at the same time. One can see the point of each channel running a programme on sport on a Saturday afternoon. But at other times you may be faced with the choice of "The Avengers" on one channel and "The Man from Uncle" on the other. Either you like that sort of programme or you do not. If you do not like it you want to watch neither; if you do like it you want to watch both. The unfortunate viewer loses either way.
Having said that about the B.B.C., I should like to pay a tribute to them. When the pirate radios came to an end nearly two years ago the B.B.C. were left with the monumental task of trying to fill the void. Their job was not made any easier by the number of handicaps with which they had to start. They had only one programme with which to replace four or five. They could run this one separate programme only for part of the day. They had to divide this again between "pop" and what is technically called "sweet" music. They were strictly rationed as to needle time. Their disc jockeys had no help from advertisements to spin out and set the theme for their patter between records. They had to be scrupulously fair between records so as not to plug one more than another. They had to overcome the gap between the formality of B.B.C. announcing and the infinitely more free-and-easy atmosphere of the pirate radio.
Allowing for these limitations they have done a really remarkable job. They have taken on many of the best pirate disc jockeys. They have adopted a lot of the jingles and format of the pirates and evolved them into a new style of their own. While some of the limitations they have not been able to overcome, such as shortage of needle time, lack of complete coverage of the country and the fact that neither personnel nor music can be all things to all men at the same time, they have made a very good try.
My Lords, perhaps the most important thing to get right in considering the future of broadcasting is the basic purpose behind it all. Politicians are inclined to show more paternalism over broadcasting than in any other field. The

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prime purpose, they say, should be to educate rather than to entertain. But there is a fallacy in this approach. It is not a question of there being a choice between entertaining and educating: the two are in a sense indivisible. In the words of Jack Point:
"He who'd make his fellow, fellow, fellow creatures wise
Must always gild the philosophic pill."
A television or radio audience is not a captive one, like a classroom of schoolboys. You cannot educate them unless, at the same time, you entertain them.
This is certainly true of the sort of programme that has lately come to be covered by that much overworked, and frequently wrongly applied, term satire. The object of satire must be to reform. If it has not that object, there can be no excuse for using such a cruel weapon. It can reform in one of two ways: preferrably, by laughing at a particular practice or affectation it can persuade the person satirised to mend his way; but if that fails, it can dissuade people, who would otherwise be so, from being under the influence of that person. But satire must be fair, and it must be funny. If it is not fair, it will not be funny. Even if it is fair, if it is not funny it is not satire; it is just plain rudeness. The unkinder you are, the funnier you must be to get away with it. Satire without wit has the opposite effect to that which is intended. Far from reforming, it makes a person satirised more determined to carry on in his ways, and rallies those under his influence to his support.
In its early days, "That Was the Week That Was" was often a joy to listen to—sometimes even for its victims. Towards the end, the B.B.C. programmes on Saturday nights reached a very low ebb indeed. Much of the material, far from being funny, was just gratuitously rude. A member of the cast had only to mention the name of a member of the Royal Family, an eminent politician or someone else in the public eye, for the studio audience, dredged from God knows where, to titter appreciatively, much in the same way that a fourth rate comedian can raise a snigger by casually dropping a four-letter word. Thank goodness that phase is past!
As with satire, which is one form of education, so with other forms, they must
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rely on their entertainment value. By education I do not mean the University of the Air, referred to by my noble friend, Lord Bessborough; nor even classical music compared to "pop"; good theatre compared to slap-stick; or "Panorama" compared to "Coronation Street", but to the effects of good broadcasting rather than bad. The paternalistic approach to broadcasting, the attitude that the listening public must have what is good for them rather than what they want, has this very real danger: it could lead to the reaction of the audience not being taken into account when assessing whether a programme is a good one or not. Professional critics may give it a very good write up, but a programme is not put on for the benefit of the critics; it is put on for the benefit of the public, and if it does not get through to the public, it has failed. If for instance a radio or television play is not appreciated by its audience, the fault lies not with the audience but with the producer, the director or the actors, or simply with the fact that it is a bad play.
In the same way that education must rely on entertainment, the converse is also true. Entertainment will be improved by a certain amount of education. "The Archers", for instance, which, rightly, has a very great following on the wireless, does a great deal in telling people who live in towns what goes on in the country. If the authors did not go to so much trouble to make sure that they were meticulously correct in every detail, it would not be nearly such a good programme. A man who has had a hard day's work behind him may prefer to watch a Western on television. rather than a play by Ibsen or Chekov, but he does not want to watch a bad Western; he wants one which is well produced, well directed and well acted. After that he may well switch over to something more serious. If the philosophy behind broadcasting is not, "Give the public what is good for them rather than what they want", but "Give them a choice, and make sure everything is good", education and entertainment will both be achieved.
LORD PILKINGTON: My Lords, before the noble Lord sits down, may I ask him one question on local sound broadcasting? I was not clear whether it is the intention to have two local

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sound broadcasting channels for each locality, or whether you are going to have only one available for each listener.
LORD DENHAM: My Lords, this is a slightly difficult question, in that, as the noble Lord knows well, there are only a certain number of wavelengths available. Unfortunately, we do not yet know at what time the Prime Minister may go to the country. We do not yet know how many of the wavelengths may be allotted before the General Election to other B.B.C. local radio stations. Therefore, we do not know what will be available. It will, I am afraid, be a question of waiting to see what is available, and then making up one's mind.
7.16 p.m.
VISCOUNT MASSEREENE AND FERRARD: My Lords, I should like to apologise to the noble Lord, Lord Byers, for arriving inadvertently late for his debate, but I was unable to avoid that lapse. I am going to speak about commercial television: I hope that I shall not annoy some of my noble friends on these Benches, but I am afraid I may do so. The particular aspect I am going to talk about is the trusteeship of the Independent Television Authority; that is to say, as I see it, the trusteeship of the Authortiy to keep a watchful eye on the standard of programmes of the companies to whom they have granted a licence. Of course, my Lords, it is a monopoly licence to exploit the air channels of the country.
Before I go any further I should like to quote, very briefly, certain parts of the 1964 Television Act, which I remember so well going through this House. I should like to quote Section 1, subsection (3):
"The function of the Authority shall be to provide, in accordance with the provisions of this Act, and until 31st July 1976, television broadcasting services, additional to those of the British Broadcasting Corporation and of high quality…"
May I now turn to subsection (4) where paragraph (a) refers to the Authority's duty:
"to provide the television broadcasting services as a public service for disseminating information, education and entertainment;"
and then paragraph (b):
"to ensure that the programmes broadcast by the Authority in each area maintain a high general standard in all respects, and in
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particular in respect of their content and quality, and a proper balance and a wide range in their subject-matter…".
My Lords, in my opinion, and I am very sorry to have to say it, the Independent Television Authority have not carried out the conditions laid down in this Act.
Let us take, for example, the case of London Weekend Television. I take L.W.T. because they are a big company—one of the bigger companies—the company to which the I.T.A. granted the "plum" London area licence. I think it was the noble Lord, Lord Byers, who described these licences as "a licence to print money"; and of course to a certain extent he is right. If we study the 80-page application of the London Weekend Television Company when they were applying for this licence, we find some very attractive bait in this application. No doubt it was the bait that enabled them to get the licence. I have read through the application, and I should like to quote just one very short paragraph, on page 29 or this application. It says:
"The first principle of the group's programme philosophy is therefore a respect for the creative talents of those who within sound and decent commercial disciplines will conceive and make the programmes."
In their application, the applicants, L.W.T., held out various programmes that they were going to produce through their current affairs, public affairs, department. They were going to have a new Sunday programme, to be called "Seven Days", devoted to "making the news make sense". And there was to be another regular current affairs programme, "What Went Wrong?" One might have asked what has gone wrong, but that is nothing to do with that programme, of course. This programme, "What Went Wrong?" was to be of an educational and investigatory nature, illustrating, among other things, how Government works. There was also a promise of two other series, "The Need to Know" and "The History Makers".
So far as I can ascertain, none of these programmes has been produced. In fact, in the 42 weeks from last August to May inclusive, in the public affairs department of L.W.T. only nine minutes a week programming has been done. That is only 1 per cent. of the company's air time; and most of it has been after 11.30 at night. One can hardly say that the

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company have stuck to the promises they made in their original application. I am not including "The Frost Programme" which is on for only four months and is produced by a separate unit, quite apart from the public affairs unit. I think "The Frost Programme" accounted for 18 hours of the whole year—that is 18 hours out of the four months but in actual fact it is out of a whole year.
We have all read in the papers—at any rate, I have read it—that the public affairs department of L.W.T. have now all been disbanded. There are, I think, two staff who have been kept on in a rather minor capacity. What I wish to know is this. Why do I.T.A. not make the company (this does not apply only to L.W.T., but I think it applies probably more to L.W.T. than to the other companies) adhere to their promises and obligations? We have the astounding statement in the Sunday Times of May 4 from Mr. Preston, the Press Officer of L.W.T., in which he said:
"Regardless of what a company says in its application, once it is in operation the company has no obligation whatsoever to make a single programme. We could in theory buy all our programmes from other companies and do nothing ourselves. This the I.T.A. later confirmed."
If the I.T.A. confirmed that, I think it is really disgraceful that the I.T.A. are not acting according to the Act and for the reasons for which Parliament set them up. I have always believed that if one makes undertakings one should carry them out.
Of course we have excuses. I heard my noble friend Lord Bessborough say—and certainly he had a point here—that the taxation on the levy basis is extremely severe on the commercial broadcasting companies, and there may be some slight excuse for their having the most paying programmes, like old films and light entertainment. But the people I am "gunning for" are the I.T.A., for not doing their duty. Why will they not use their "teeth"? They have "teeth" under the Act. I have quite a long nose. It really does not smell too good to me.
I understand that one of the excuses of I.T.A. for not interfering is that they say, "Ah! It is an internal company
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matter. We would not presume to interfere". But that is nonsense; it is pious nonsense. It is no doubt sweet music, very sweet, to the ears of the Philistines, but I consider it nonsense, and rather disgraceful nonsense. L.W.T. are in the news at the moment, so I have singled them out; but there are other companies that I do not think are all in the clear. Perhaps Harlech Television ought to pull its socks up as regards programmes. if we take Anglia and Southern Television, they are small companies. Southern and Anglia Television have done excellent work, but they are in a very difficult position because their programme is controlled by "The Three Musketeers"—that is to say, the three Grade brothers. They practically control the programming of the other commercial companies so I do not blame Anglia Television or Southern Television. There may be others, too.
I repeat that I am not at all happy regarding the situation because there is no doubt that under the Charter by which the I.T.A. were set up by Parliament they are bound to keep a watchful eye on the quality and the content of commerical T.V. If they do not do that, I personally consider that a deception has been practised on the public—indeed one could also say on Parliament. I suppose the I.T.A. can say that if a company has not adhered to its promises, then after their seven years are up they will not have their licence renewed. But in that time people can make a vast fortune.
THE EARL OF BESSBOROUGH: Not with existing taxation.
VISCOUNT MASSEREENE AND FERRARD: My Lords, my noble friend says that it cannot be done with the present level of taxation. I have referred to the question of taxation and I agree that the levy system is unfair. It would be far better if the companies were taxed on profits. I am sorry to have to say this, because it is rather against my own side. I am all for free enterprise and I am in favour of commercial broadcasting, provided it adheres to certain standards, but I am afraid that the I.T.A. have not made commercial broadcasting adhere to those standards in every case. I wish to add only one thing and then I will sit down, greatly to the relief of my own Party, I am sure. All I am asking is

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that the Government—I do not know how, but somehow—should make the I.T.A. carry out the responsibilities put upon them by Parliament.
7.34 p.m.
LORD RITCHIE-CALDER: My Lords, just before I came to your Lordships' House I received the following, which is a description of something that is called, "Intelligence signal sending device". It is described in these terms: "This is a system of sending and receiving of morse code through miniature radio transmitters and receivers incorporated in the bridge work or individual teeth." We have reached the stage to-day where this is not a joke. This is not, "The Man from Uncle"; this is true. One can in fact produce a miniaturised transistor set which can be incorporated in either dentures or teeth. I may say that many people may he in asylums today who never knew this. The fact is that over the years we have had people who have said, quite properly judging by what has happened to-day, that they have been listening to programmes on the air. They might have been right, because in point of fact we know now from the nature of solid state physics and the whole development involved in transistors, that a filling in a tooth will give one the reception of a transmission. That is a statement of fact.
For the purposes of this debate I want to declare an interest on three grounds. First, that as a member of the British delegation to UNESCO I am interested, and indeed deeply concerned, with a point that was raised by the noble Lord, Lord Byers, in his introductory speech with regard to direct satellite broadcasting. I am also very deeply concerned as the President of the Mental Health Film Council with the problem of televised violence. Thirdly, I am extremely interested, as a member of the Planning Committee of the Open University, in the questions which were raised by the noble Earl, Lord Bessborough.
Dealing with the first point, I regard the direct broadcasting satellite as one of the most serious problems of our age. I say that quite advisedly, because I have recently been in Canada, talking to the Canadian Association of Broadcasters—who, incidentally. are the independent broadcasters of Canada and not the
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C.B.C., which corresponds to the B.B.C. They are, and indeed everyone in Canada must be, deeply concerned about the possibilities of direct broadcasting satellites. A direct broadcasting satellite is not the Telstar, it is not Early Bird, it is not the things which bring us broadcasts by reflection—the kind of thing which has to be picked up by a radio transmitter in this country and rebroadcast at the discretion of the noble Lord, Lord Hill of Luton, or any other responsible body. It can go straight into the home. It is a take-over bid. In UNESCO the general conference was deeply concerned about this, because it means that over any area of the world if you once get a direct broadcasting satellite into position you are able, not just political-wise but culture-wise to dominate an entire region.
This arose because in UNESCO we have agreed, as we should agree, that UNESCO is involved in the proposal for a reflector satellite over India, by which we would be able to increase the capacity of distribution of educational programmes, development programmes, even family planning programmes, over a very large area. But this is at the discretion of the Indians. The local people can pick this up and they can redistribute it. Let us assume—and this is very important—that it is a direct broadcasting satellite. Any country, any Power, anyone with the facilities and the capacity to do it, could put over India, Latin America or Britain, and most of all in relevance to Canada, over Canada, a direct transmitter which would beam directly into people's homes, and the national and cultural considerations would all disappear. This is important because, as your Lordships will realise, the spillover of American culture directly into Canada is now making it almost impossible for the Canadians to decide what in fact is in their own cultural interest.
At this moment the only thing that is saving Canada, in an ironical way, is the fact that they have two languages. If indeed the Quebec French-speaking Canadians did not exist the spillover would be complete. All created Canadian production would disappear, because nine out of eleven transmissions are beamed from the United States, television-wise, into Canada. Assume that you have a direct broadcasting transmitter. You are

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in a position then to take over the culture of whole vast areas in the world, with no protection, unless you go round and do a Gestapo search of every receiver. This is a question which concerns us not only as British people but as people concerned about the future of cultures in the world. Away back in 1946 the leader of the British delegation to UNESCO said:
" The white light of universal enlightenment includes in its spectrum the colours of all the cultures of the world."
My Lords, if that is not true then we are going to settle completely for a sodium street-lamp culture, a monochrome culture in which every hue and everything else will disappear; and nothing is more horrible by any conception than this idea.
This direct broadcasting transmission may have many advantages in terms or national broadcasting—indeed, Canada is thinking of a direct broadcasting transmitter. And this, remember, is a transmitter in the sky. The idea has enormous advantages, but unless we prevent this from becoming universalised, unless we prevent the take-over hid, we shall be doing a great disservice not only to our own concern about our own culture but to our concern, I hope, with other cultures as well. We have in a sense to establish now not a national standard but international standards of what can or cannot be done by direct broadcasting. It is no good once the transmitter is in the sky; once it is in space, that is the end. It is exactly the situation which occurred in the 'thirties, when we failed to secure international conventions on short-wave broadcasting—and, indeed, enabled people like myself, as Director of Political Warfare to pervert this into propaganda during the war. This is something we have to consider.
The second matter that I want to emphasise is the question of violence. Again, this is not just a question of what we feel as fathers of families or mothers of families, or indeed as British people. This is a total question; a question of how far the dissemination of violence throughout the world is now becoming epidemic. This is not a reproach against any particular programme, and it is not a reproach against people who in fact encourage, by drama or otherwise, the
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scenes of violence. This is something different. This is now a question of how in this year, 1969, we have instantaneous violence which we cannot escape. This is one of the contradictions on which I want to put before your Lordships as a very serious dilemma.
I happen to believe that in this pushbutton war, or whatever is happening, in Vietnam or elsewhere, where some remote V-bomber presses a button and that is that, where people are able now by remote control to destroy people half a world away by inter-continental ballistic missiles, we should be aware, and continuously aware, of the receiving end of violence. Therefore the job of television is to show us the truth. This is a world of violence, and we are entitled to say that the mass media should reflect the world of violence.
At this point we have a very serious dilemma. in the process of disclosing what in fact we should be continuously reminded of—that is, the effect of what we tolerate, almost to the point of disinterest, in terms of violence—if we cannot be reminded of what we are doing we shall not make judgment about what we are doing. The dilemma arises from the fact that in doing this we are exposing hundreds of millions of people to instant reproduction; that is to say, live broadcasting, with pictures of Bobby Kennedy actually being shot, or of happenings which people would go a mile to avoid seeing, and exposing them, without any warning, to something which is a traumatic experience. This is the price we pay for instant transmission.
I say this advisedly, my Lords, because when we were editing film of what was happening in the Congo somebody could appear and say "Don't let the children see this" or, "Don't let your wife see this". We could prepare people. To-day we have no warning. This is a problem to which we have no answers. I have no answers. I cannot make a judgment. I do not even know how to measure what people think. I am desperately afraid that what this situation is doing is producing an anæsthesia to violence: we are beginning to tolerate and accept it, and at the same time we cannot escape it. All I say, in my official capacity as President of the Mental Health Film Council, is that for any support anyone

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can give to an international inquiry, through the World Health Organisation, to ascertain what is the total result of this situation I shall be very grateful.
The third point is the one on which I want to answer the noble Earl, Lord Bessborough. I refer to the Open University. This is the first opportunity we have had of raising this subject. The Open University is not something your Lordships can ignore or decry; it is in fact the sublimation of what we are talking about to-day; it is using the media in the way in which they ultimately should be used. I will not go into details. I have been involved in the project since October, 1967, as a member of the planning committee. I will say this. If you in fact realise what the Open University means, then you realise that all our anxieties are ultimately resolved if we use this kind of medium in the way we propose to use it.
It is quite true, as the noble Earl, Lord Bessborough said, that in America we had the trial runs which were quite unsatisfactory. I do not know whether the noble Earl has got up at 5.30 in the morning to listen to a talking face describing what he would have been describing anyway in his laboratory. In point of fact, there is a "drop-out"; it is a bad teaching "drop-out", and has nothing whatever to do with the case. And, anyway, the Open University is not radio and it is not television; it is an amalgam of both, with a recognition, which is important, that in this teaching medium the "steam radio" we have been talking about is in fact in many ways more important than television itself.
We are not bewildered or deceived by the speciousness or the attractiveness of the particular medium. We have got down to a very thorough analysis and presentation of how the modern medium can be used. We shall be using radio, we shall be using television, in a way they have not been used before in education, except in closed circuit; that is, to give the people of this country who have not had advanced education the experience of actually going out with an experimenter into his own experience. We have never before been able to share, as we are now totally sharing with the astronauts, the possibility of seeing the world from outside, or the molecule. This is something that can be done with television
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and radio. This is the way to use these media educationally.
We are not using television and radio exclusively, because this is not the way to do it. We are using them in combination with first-class education courses, with correspondence courses which we are running. We are using radio and television in combination with radio cassettes, which are sound textbooks. We are, or shall be, using radio and television in conjunction with E.V.R.—that is, electronic visual recording—the visual equivalent of the long-playing record. We are now, in 1969, in a position to offer a second chance to hundreds of thousands of people who have been denied a higher education. We are talking now about part-time students; about the people in work who are trying to get their education and their second chance. And we are in a position to provide this.
The noble Earl, Lord Bessborough, asked whether we are going to consider fee paying. Of course we are considering fee paying. This is a test of good intention. This is not something that we, the planning committee—and in this instance the Government—at this stage can define, because this is something that must be left, with due regard, to the general council of the University and, indeed, in regard to what is offered. Therefore, we are not in a position—no one is in a position—at this moment to say what the fees should be. We have got to make fees for entries, fees for the courses. That will be taken care of; but they will be more than repaid in the experience.
The experience in regard to the "dropout" in America is fantastic. 'The "drop-outs" are the result of a bad technique. In America, they have resulted from the failure there to do what we are going to do, by using the modern techniques of 1969 in and through the Open University. We reckon that when we take in our first entrants, in October, 1970, we shall have over 100,000 registered in that year to go through for a degree. That is the sense of commitment. You can charge them what you like at that time because they want it. I think that in fairness to the Open University we should wait and see what it produces in terms of the fulfilment of our intentions, not just as a planning committee, but as a fulfilment of the

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intentions of higher education in this country for the hundreds of thousands —indeed, the millions—who have been deprived.
7.53
LORD BETHELL: My Lords, I too must say how grateful I am to the noble Lord, Lord Byers, for initiating this interesting debate, at a time when the future of broadcasting is going through many fascinating changes and when many attractive, exciting vistas are opened out for broadcasting, particularly, as the noble Lord, Lord Ritchie-Calder, and other noble Lords have suggested, in the field of technologe; in the possibilities which may soon become available for expanding broadcasting; for giving to broadcasting a completely new breadth and scope in our country. Important decisions are to be taken in the next few months with regard to our own domestic services. In July, the Postmaster General is expected to give his ideas about the future of local broadcasting and, shortly after that, I believe the McKinsey Study Group will also decide upon and announce recommendations about the B.B.C.'s line and where they think the B.B.C. ought to move in the future.
I should like, however, to introduce a note more of caution and of concern about the future of broadcasting. There are exciting prospects, but there are also worries, and it is a few of these that I should like to mention. The first aspect that concerns me is one that has little direct bearing on the inhabitants of this country. I refer to the external services. These are not receivable in this country. Many noble Lords may have heard them when they have been abroad, but they cannot normally be heard here and I have a feeling that they are sometimes forgotten. The fact is that these services are financed by a direct grant-in-aid from the Treasury. This has gone up but little in recent years. It has gone up about 7 per cent. in the last five years. One can imagine that this small rise has been more than offset by the rise in costs, by inflation and by things like selective employment tax, which has been increased more than once. This has made the work of the external services more difficult and has necessitated cuts.
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I would mention three important, and I think damaging, cuts that have been made. There has been the abolition of the Albanian service, to save a paltry £15,000. If this is not cheeseparing, I do not know what is. Then there has been the abolition of the Hebrew service and the reduction in the Arabic service. But, more important I would suggest, is the failure to extend our external services to countries where censorship is strict and where the population rely largely on the B.B.C., on its reputation for credibility, to provide them with reliable news which they know to be true.
During the invasion of Czechoslovakia it is the fact that the underground radio station, which played such a noble and heroic role in those days, based their news bulletins on the B.B.C.'s external services. I know that we did what we could to provide them with an improvement in the service. At that time we were broadcasting for 17 hours a week to Czechoslovakia. We were able to "up" this by about three-quarters of an hour a day; and we are now, I believe, broadcasting to Czechoslovakia for 22½ hours a week, about three hours a day. It is difficult to justify such a small output in broadcasting to this important country which is going through such a difficult phase.
Likewise, I should like to mention Greece, which in April, 1967, went through an appalling trauma, when a Government took power and imposed a most severe censorship which still holds good and where true news is almost unobtainable. At the beginning of April, 1967, we were broadcasting for 8 hours a week to Greece, and we are now broadcasting for 9½ hours a week. I recently spoke to some people who had quite shortly before come from that country. They told me that the broadcasts from the B.B.C. are listened to avidly by all educated Greeks and by an enormous proportion of the population. Because of pressure on transmitters, the broadcasts often take place at the most extraordinary hours. There might be a quarter of an hour period, for example, at 4 o'clock in the morning, then a half an hour period at 7 o'clock in the morning. It is difficult to work out a scheme of broadcasts which does not cause inconvenience to the listener. Nevertheless, the Greeks go to great pains to listen to the B.B.C. broadcasts, and they rely On

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them more, I would suggest, than most people in this country realise.
I should like now to mention the Russian service, which is of particular importance, if only for the fact that the Soviet Union is a super-Power. It is also a country where censorship is most strict. I have not met a single educated Russian who is not a regular listener to the B.B.C., and I have met many hundreds of them. I am not exaggerating when I say that in Russia the B.B.C. has the position of The Times in this country. More than once I have heard a Russian say, in conversation about something he had heard, some item of news: "I heard it on the B.B.C., so it must be true" The B.B.C. has a reputation for credibility which has no parallel anywhere in the broadcasting world.
I remember a few months ago explaining to a group of Russians how the B.B.C. Russian section works. I told them that it is run with a staff of 18. They did not believe me. I said that it had a budget for freelance contributors. I do not know the exact figure, because it is not available; but I am told that it is something in the region of £100 a week—this to a listenership put, at a conservative estimate, at 20 million. It is very difficult for the Russian section of the B.B.C. to recruit broadcasters because of competition from emigré stations, mostly in Germany—the Voice of America and Radio Liberty—which are committed to a militant anti-Communist line and which can afford very high salaries and recruit Soviet citizens, recently out of Russia and who therefore have a lot to contribute. The B.B.C. gets such contributors, such staff, purely on the basis of its reputation, and it misses many very good men because of its lack of money.
This unique credibility which the B.B.C. possesses dates hack to the war years in Europe, when the countries under Nazi occupation relied very much on B.B.C. broadcasts to tell them what was happening. Happily, this credibility is unchanged; but the quantity and versatility of the programmes have been reduced purely through rising costs, lack of money and, I feel, a miserly attitude on the part of the Treasury. In 1950 we held the leading position in overseas broadcasts. Since then our output has been static, but other important coun
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tries have increased their broadcasts immensely, correctly believing that this is a unique way of presenting a case. We are now fifth in our output of broadcasts, coming after the United States, the Soviet Union, China and West Germany, and we are being rivalled in output by such countries as Egypt, Albania, and North Korea.
To speak on more general aspects of our country's broadcasting, I should like to express my concern about the decisions which I believe may be taken in future months in Broadcasting House about the future of our domestic radio services. Our country's broadcasting is like a sprinter ready to leap forward or the lines suggested by many noble Lords during this debate, but weighed down by the leaden problem of finance. I have connections in the B.B.C., more with the programme staff than with the administration, and I can assure your Lordships that morale among the people who actually produce programmes is not high. The study group has had to operate and deliberate in the shadow of the Sword of Damocles. They would like to reorganise and improve, but they are so cramped by their financial straitjacket that they are being forced to curb their best ideas and their most imaginative projects.
Rumours are flying about. We heard that there will be an overall reduction in radio broadcasting that the Third Programme is to be abolished or absorbed into Radio 4; that Radios 1 and 2 are to be given over entirely to recorded "pop" music so that broadcasting in future will be worked out on the basis of some formula concerned with the cost per minute per listener. The feeling is growing among broadcasters that in times like these, when the aim of life is supposed to be increased productivity, efficiency and economy, this rule should be applied to the product of broadcasting; and the fear is that the minority interest programmes will be the ones to suffer and that the basic output will be tailored to a middlebrow, middle-of-the-road, Mr. Average image, which probably does not even exist.
These are my points of concern, and I hope that the noble Lord in his summing-up will be able to give me some reassurance. 'Noble Lords have said correctly during this debate that we have the best broadcasting system in the world,

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but there is the danger of its deterioration through lack of financial support. I would make one or two suggestions about how this might be looked into. The question of licence evasion was tackled and the position was certainly improved. but I am told that there are still estimated to be 1½ million evaders who are costing the B.B.C. about £6 million or ­7 million. I feel that the Government should try to think of new ways of financing broadcasting. There is the possibility of a system which I believe is used in Canada, where the manufacturers of sets contribute to the cost of the programmes their sets put out. I submit that this is only just, since if there is no broadcasting the receiving set is useless. The manufacturer of a set is therefore capitalising on the output of the B.B.C. and the independent companies.
Another plea I would make is that some way should be found to make colour sets cheaper. I feel that there was a bit of rather dubious planning in the whole colour enterprise. The B.B.C. was given the go-ahead to develop colour, which it did, and those of us who have seen colour television recently will, I am sure. agree that our colour system is very good and pure, and in certain programmes it provides a wonderful service. But is this much good when a colour television set costs £250 and very few people can afford a set? This situation will be remedied only when the masses of the people are able to buy sets and when those sets can be mass produced. That is the situation in the United States where colour sets are a good deal cheaper. But we find ourselves in a vicious circle where people will not buy colour sets and therefore they cannot be produced more cheaply.
I wonder whether the Government would consider relaxing the restrictions on the hire purchase and the hire of colour sets. It is now the rule that one cannot buy on hire purchase or hire a set without putting down a deposit of something like £80, which, of course, is the cost of a black-and-white set. The effect of this rule is that it sticks in a purchaser's throat to pay as a deposit the same amount of money that he would pay outright for a black-and-white set. If it were possible to get the colour set in the home for a more reasonable deposit, I feel sure that this barrier would be
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breached. Perhaps the Government will consider whether this can be done.
The main plea I make in my speech is that the external services should be financed up to a level commensurate with their importance to our country. The noble Lord, Lord Byers, at the end of his speech quoted from an article in the Christian Science Monitor. I recently came across an article written by the London correspondent of that paper on April 15, in which he said that the B.B.C. broadcasts are
"… the most potent. continuous source of British influence in the world today."
I have a feeling that this idea may strike many noble Lords as strange, but it does not strike me as strange, and I hope that many people will ponder it. The same journalist went on to say:
"All the world knows this except the British themselves."
That, of course, proves my point.
8.9 p m
LORD WILLIS: My Lords, I should like to thank the noble Lord, Lord Byers, for putting down this Motion and giving us an opportunity to discuss it. May I say how much I endorse what the noble Lord, Lord Bethell, has just said about radio? I can confirm from my own experience that there is considerable uncertainty, doubt and even fear among many people in radio about their future. It is time it was settled and that they understood that the radio services of this country were going to continue, and on what basis they were going to continue. I think it is unfair that there should be this continuing uncertainty.
I should also very strongly like to endorse what the noble Lord said about the Overseas Service of the B.B.C., which really lives at the bottom of the barrel, unhonoured and unsung, but which does a tremendous job. They are the last people to be thought of, because no one in this country hears of them. They do not win votes, they do not win popularity, they do not really bring very much credit in a direct sense. But they bring enormous world credit, and it is time that we stopped these stupid economies in regard to the Overseas Service, and gave them more money to get on with what is, in many ways, a much more fundamental job than that which is being done by many other sections of the B.B.C.

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I want to speak mainly to-day about independent television, and some of the problems that I see opening up in the next few years for independent television itself. We all know that when it was first introduced into this country 15 or 16 years ago, it was met with great hostility by certain sections of Parliament and the public. There is a streak of perverse and narrow-minded Puritanism in the British people, which was very much in evidence in the attitude towards I.T.V., and in some circumstances it is still very much in evidence. There was a feeling that to introduce advertising on television would corrupt and deprave and lower the moral standards of the British nation. In the event, as we know, Parliament was able to work out a sensible working method for I.T.V. We avoided the worst mistakes of American television, where sponsorship has reduced television to what has become known as the "videot box", and the fears of our Puritans have not really been realised. I.T.V., after a rather indifferent and muddled beginning, which was natural, has grown in stature and has achieved what I think we would all agree is a very high consistent level of quality.
One of the chief horrors which was held up to frighten us off commercial television was that it would play to the lowest common denominator in the audience and debase public taste. In fact, I.T.V. now produces—in proportion to the total output—as many serious and good programmes as the B.B.C. Last week, just to take one week at random, there were two tremendously effective documentary programmes on commercial television; and on Monday evening of this week there was a play which would not have disgraced a distinguished theatre in the West End. A measure of the quality of I.T.V. programmes is shown in the fact that they are now sold all over the world, and are in great demand. As a side benefit, we ought to remember, as the noble Earl, Lord Bessborough, said, that some companies have made a very significant contribution to the export drive, earning millions of pounds in dollars and other foreign exchange.
Before moving on, I should like at this stage to pay a tribute to a man who may be leaving I.T.V. within the next year, a man who to some extent was
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its early architect, who has been with it since the beginning, and who has been a very wise and statesmanlike leader under various Chairmen—Sir Robert Fraser.
SEVERAL NOBLE LORDS: Hear, hear!
LORD WILLIS: He has done a very distinguished job in very difficult circumstances, and I think that the British people and Parliament owe him a great debt of gratitude for what he has done. So I think we can draw the conclusion that I.T.V. has made mistakes but on the whole, has worked well. That is not to say that it could not work better.
I do not want to speak too much about the programmes, but about what I feel are certain weaknesses in the actual structure of the I.T.A. and its associated companies. At the beginning, I.T.V. was established on a regional basis. There have been minor changes, but this concept remains. It is a worthy idea, but in my view it has remained more or less an idea. Regionalism is not really very much in evidence with regard to the I.T.V. companies. The geographic dispersal of the various companies is not—with odd exceptions—reflected in the programmes we see. You would have to look a very long time at Thames Television to realise that this is particularl a London company; and Noll would have to look a very long tine at many of the other programmes that are put out to realise that they are in fact based on a particular region.
It was quite obvious at the very beginning that the individual companies could not undertake all the production required to fill the time in their areas. They had to get together and form the national I.T.V. network where, by a kind of shopping between each of the companies, programmes are exchanged and we have, in fact, a national service. But inevitably that network has come to be dominated by four or five major companies, and that remains true to-day. Five big companies command the network to-day and can call the tune. The medium-sized companies rarely get a lock in; they try to, but they rarely succeed in doing so. The smaller companies are little more than relay stations for the network. They put out local news and magazine programmes, cheaply produced, and occasionally the odd quiz or sports programme, but by and large they take

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what is given to them by the Big Five, or purchase and put on cheap repeats.
We can see now that this was inevitable. The smaller companies do not have the audience and, therefore, do not get the revenue or resources to compete. I think that the next review of independent television should face up candidly and boldly to this fact. There is no real reason for the existence of the small satellite companies. Their independence is a myth, and their contribution is negligible. Also, the present arrangement creates bad feeling in the medium-sized companies, who feel that their throats are being cut by the Big Five, and that they cannot get time on the network.
It would be better, in my view, to create a new national structure and to divide the country into eight or nine big companies, all of them with guaranteed access to the network, supervised by the Independent Television Authority. I think that this alone will give us some guarantee of more regionalism. This is more than just a simple reorganisation. It would mean that I.T.V., instead of having only five major sources for programmes, would have more. It would force more ideas into the network; it would help to Five greater opportunities to more people; and it would end what, after all, is a fairly narrow domination.
The other point for which I should like to plead in any reorganisation or review of I.T.V. is that of longer contracts. At the moment, contracts are issued for six years to various I.T.V. companies. This may be all right from the Government's point of view, and it gives us an opportunity to debate the matter every six years. But have your Lordships any idea of the terrible uncertainty that this gives to the staff, the creative people in television, who have to make the programmes? By the time a company has been on the air for a year or so, in the first honeymoon of its contract, it is already beginning to think, "We may lose it in a few years' time". And what do they do? Some of them try to improve their programmes and put up a worthy image, in the hope that they are going to have their contract renewed. But others, as we well know, took millions of pounds out of television and diversified into other forms of business, instead of improving the quality of the medium and of their programmes, as a hedge
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against what might happen when their licence came up for renewal. Therefore, in the interests of the staff and the creative people who really make the programmes, I think we ought to consider abolishing this kind of six-year interval and go in for something like ten years with greater guarantees for the companies.
At the same time, I also think that the I.T.A. might look more closely at the nature of the companies which make the applications. In tie past, the need for some kind of regional character has led to some pretty cynical window-dressing. We have had boards stuffed and groaning with local big-wigs who know nothing about T.V., have no real interest in it, but who have been recruited quite deliberately by the companies and consortiums to give a veneer of truth to the claim of regionalism. But as soon as the companies have their contracts these people are put on the main board, and an executive board moves in and does the real work. We have far too many passengers of this kind in television, and the I.T.A. should not encourage it. They should not allow themselves to be bedazzled by consortiums which boast the support of world-famous film stars and others, people who have neither the time nor the inclination, nor the interest, to do anything substantial or worthwhile for British television. We had examples of that in the last reshuffle, and we ought to be warned for the future. The important thing, my Lords, surely is to insist that the Boards be better balanced; that there may be some laymen on these Boards and some people from the regions; but that the people who run T.V. and make the programmes should also have proper representation.
While we are at it, may I beg the Government to consider that both the B.B.C. and the I.T.A. should make room on their Boards of Governors for one or two professionals? It seems to me quite extraordinary that when consideration is given to appointing a Governor for the B.B.C. or a Governor on the I.T.A., almost the last person who is thought of is somebody in television who knows something about the business. 'This is "an extraordinary way to run a railway". I am all for the cool and unbiased advice of laymen, and I understand why they are necessary on these, Boards, but I cannot

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understand why the professionals are so wholly excluded.
My Lords, I should like now to turn to the question of the levy which the Government have imposed on the advertising revenue of the I.T.V. companies. There was, perhaps, some justification for the earlier levy, in view of the large profits which were then being made, but think it is wrong in principle to tax on income and not on profits; and the most recent addition of a further £3 million is a body-blow which can have disastrous long-term consequences to I.T.V.—and I mean disastrous. We are all floating around in the euphoric atmosphere which was created by that sad and unfortunate remark by Lord Thomson of Fleet some years ago, in which he indicated that to get a licence to run I.T.V. was to get a licence to print money. My Lords, it is time that that was buried. It is not true any longer. The fact is that I.T.V. is now reaching a reasonable and normal profit level in comparison with other forms of industry, when it is borne in mind that it is a risk industry, where one can spend £750,000 on a television film series and lose every penny—because there is not a showman in the world who can make a television programme or a television series or film and guarantee that it will "go", whereas with his commodity a sausage-maker can. So in a risk industry one is entitled to have some compensation for the great margin of losses that one may make. Therefore, let us end, once and for all, this talk about a licence to print money, and let us look at it from a new point of view, the realistic point of view of to-day.
I find this new imposition of £3 million, and in particular the timing, incredible. The Government are now asking the companies to invest millions of pounds in equipment which will be necessary to put out the new colour programmes, and at this particular moment they hit them with this. If I was right when I spoke at the beginning about the Puritan conscience of the nation attacking the idea of commercial television, let me say now that that Puritan conscience has exacted a terrible revenge on I.T.V. and is tearing it to pieces with a kind of Freudian savagery. I can tell your Lordships what the effect of this latest £3 million swingeing cut is going to be. There
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will be a cutback in the costs of production, with a consequent loss of quality. As somebody working inside television, I saw it happen the last time such a levy was imposed. It was not the shareholders who suffered: it was the directors, it was the writers, it was the actors, and in the ultimate it was the viewers—and it will happen again.
Secondly, there will be more and more repeats of old programmes. Thirdly, I.T.V. will be penalised in relation to the B.B.C. At the very beginning of I.T.V. the consideration in the mind of the Government—and it was accepted by all sides—was that I.T.V. would develop in parallel with the B.B.C. That is no longer happening, and it will not happen, because I.T.A. will not have the resources to keep pace with the B.B.C. in the development of colour. Let me give your Lordships one simple example. Quite apart from the levy, each year the Government exact from the I.T.A., the main Board, some of what they are pleased to call its surplus revenue. At least two or three years ago I.T.A. told the Government that if it was to develop all the transmitters that it needed for colour, and all the resources, it would need £12 million to keep pace with the B.E.C., and that it was keeping that £12 million. My Lords, the Exchequer has taken money year by year from I.T.A., so hat at the moment I.T.A. are faced with a situation where they have only £6 million with which to try to compete—and I tell your Lordships, they cannot de it.
The result will be that the B.B.C. will forge ahead in colour, and will have all the political advantage of so doing. It will cat into the audience, which means a further decline in I.T.V. revenue; and I.T.V. will be endeavouring to catch up. If that is intended, well and good: let the Government tell us that it is intended. But the fact is that we shall have a situation next year and the year after in which I.T.V. will be in very considerable difficulty—and I should like to tell the Government that now. A few years ago, when the profits were growing so rapidly, the audience was also growing rapidly. The audience throughout the country had still not been covered. But now there is no possibility, or very little, of an increase in audience. It might be increased by 1 per cent. which would

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have no perceptible effect on the revenue. Therefore, what is happening in effect is that I.T.V. now has to run in order to stand still; and that is a rather serious situation. Because we are here supposed to be running a company in the interests of the nation and in the interests of the viewers, and we have as much responsibility to I.T.V., whatever we may think of the advertisements, as we have to the B.B.C.
LORD SHACKLETON: My Lords, I am sorry to interrupt my noble friend, but he used the word "we", though I imagine not quite in the sense that the noble Earl, Lord Bessborough, used it when he said. "We are running a company". I am not sure whether my noble friend is talking about a particular contractor or "across the board"; and I am also rather interested to know what the actual figures behind his statements are—what he regards as the level below which the profits are falling, which makes it impossible to do the necessary development work.
LORD WILLIS: My Lords, the figures that I gave about the amount of capital that was needed referred directly to I.T.A., and I was generally speaking "across the board". They need £12 million to develop: they have £6 million. The rest has been taken by the Exchequer. So far as the profitability of companies is concerned, it is estimated that the profitability will fall to a return of about 8 per cent. next year and the Year after, which, in commercial terms, in a risk business like the entertainment business and television, is a very low return. Therefore you will not have people willing to put money in: you will have people wanting to pull their money out. That is rather a serious situation, and I think the Government should be aware that if they continue to milk commercial television as they are doing at the moment, it can have very serious consequences on the livelihood of a large number of people employed in the business, which is what I am primarily concerned with, and also a great effect on the quality of the programmes that are being put out.
I would suggest that the Government should consider urgently two steps. First, they should consider a variation in the levy in the following way: they should
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agree with each of the companies, through the I.T.A., on a certain level of production costs, and the levy should not operate until those production costs had been paid, so that in fact the quality of programmes did not suffer. The levy, it may be, could operate after. Otherwise, with this new, additional levy, programme costs will be cut back and we shall suffer. I think that what I have suggested would be a way of putting quality back on to the screens.
My Lords, I should like to say just one quick word about commercial radio. Here again, I am afraid, the same Puritan attitude exists, and it is to some extent fostered, I am afraid, by the B.B.C., who of course have a vested interest in retaining their monopoly of sound radio. There is no evidence that, properly controlled, commercial radio would be a threat to the community. Of course we must insist on adequate safeguards. We do not want stations which provide only audible wallpaper. We want stations which will be civic stations, which will play a role in neighbourhood situations. But advertising can and ought to be used to develop and pay for stations of this kind; and if we have the same controls on these commercial radio stations as we have at present on commercial television stations there is no reason why local commercial radio stations could not play a vital part in the life of the local communities, without the necessity of putting a penny on rates or a penny on national taxes.
We have heard a great deal about the problems of local newspapers. Admittedly, some of them might be in difficulties with the development of commercial radio, but I think that a solution could be found. For the rest, there are some newspapers, local newspapers, which enjoy a monopoly situation and are "doing very nicely, thank you"; and it would not hurt if they had a little competition on their doorstep from commercial radio. We ought to bear that in mind, too. By and large. I believe that commercial radio would, if properly controlled, provide an adequate competition to the B.B.C. and be rather important in stimulating the B.B.C. to take a greater interest in the development of sound.
The final comment that I want to make—and a number of noble Lords referred

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to it—is on the subject of violence. I want to say, as somebody who has written and been involved in television and films for many years, that I am concerned very much more than I was a few years ago about the influence of television on our national life in relation to violence. It is not the individual acts of violence as shown but the cumulative effects of the continued showing of such violent acts—the sort of thing to which my noble friend Lord Ritchie-Calder referred. I am a little tired of people saying that more research is needed; that we do not know how it operates, and so on. We have been talking about research into this ever since television was introduced: and every time that we have a debate of this kind someone says that we need more research.
I can tell your Lordships without any research one thing that I am absolutely positive about—and I agree with my noble friend Lord Ritchie-Calder on this. We are creating a climate in which violence may become a norm of human behaviour: where children accept it, not as something exceptional but as part of everyday life. I believe that to be true, and I do not think that you need any learned body of researchers to work that out. It is not part of everyday life for one man to "put the boot" into another, for two men to beat each other to pulp, for men and women to use the karate chop on each other. That does not happen every day. But when this is seen day after day and night after night and above all—and this is the important point—when it is seen to be done by the hero, the hero-figure that the viewer is supposed to admire, then I think it becomes dangerous.
LORD BYERS: My Lords, the noble Lord is giving the impression that he is against any further research on this matter. I hope that this is not the impression he means to give. I am with him on the rest.
LORD WILLIS: My Lords, I apologise; I did not mean to give that impression. We need further research; but I think that even before that research happens we ought to recognise that we are running into a dangerous situation. I am not talking in particular about such programmes as the one called "Big Breadwinner Hog with its particular violence which was shown on our net
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work the other day; that was, is my view, an act of criminal irresponsibility and t cannot understand why it was not stopped earlier. I am not talking about that, but the continued idea you see in programme after programme that it is quite a reasonable thing to knock a man out, to "put the boot in" or to beat him up.
We are creating an atmosphere in which, when serious social problems arise—it is all right when the community is peaceful and there are no serious social problems—violence is then seen, because you are conditioned to it, as an acceptable way of solving those problems.
We ought to look in this connection at the lessons of America. For twenty years in America. television has fed its people on a diet of pap. trivia and violence on an ascending scale. It may be, I believe it is, that the social problems of America have been the root cause of the terrible and violent eruptions in their society. But can American television, as an example, wash its hands and say that it has done nothing towards it, that it has no responsibility? I do not think so. At best, it has done nothing to influence people away from violence; at worst it has taught them how to use violence and it has taught them that violence is par of everyday life and that it is a manly and herioc thing to shoot, maim, punch and kick your enemy. The decent people in America—and, thank God, they are still in the vast majority—are appalled by what has happened and is happening. and there is a great move to drain: he violence out of television programmes and films.
But although we are infinitely better off than they are, we should not he smug about it. It could happen here. It could happen, if our social problems take on a more violent turn, that we shall see a new kind of violence in this country that we have not realised before. In my view we have seen the beginnings of it in the last year, the idea that you will solve problems not by talking but by "putting the boot in". I do not think the answer lies in censorship or in the creation of more watchdogs. I think it lies basically in the philosophy of the broadcasters, in the attitude of the professionals. We have to ask of them, as a Parliament and as a Government, that

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they must take a more positive responsibility not to the ratings but to the public. They must reflect life, yes—but they must also contribute to its improvement. It is not enough to be a piece of blotting-paper, to spread yourself over life and merely take a pattern from it. You must select what you show and you must so organise what you show that you behave as a responsible corporation which is aware of the country's social problems and needs. Looked at in that light, Granada would never have produced, or even thought of producing, "Big Breadwinner Hog" with its great thuggish young hero (whom I am sure was worshipped by every young man who looked into the programme) who taught us that you get your way by the open razor and the bottle of acid.
I do not think the broadcasters or the Boards could have a better philosophy than that given by Sir Kenneth Clark at the conclusion of his marvellous series on civilisation which so many noble Lords have mentioned tonight. He said last week—it is my philosophy; and I think it ought to be printed up large in the office of every executive, every writer, every director and every producer in television—
"I believe that order is better than chaos, creating better than destruction. I prefer gentleness to violence. On the whole, I think that knowledge is preferable to ignorance: and I am sure that human sympathy is more valuable than ideology."
8.39 p.m.
LORD GRIMSTON OF WESTBURY: My Lords, in adding my tribute to those already paid to the noble Lord, Lord Byers, I must confess that I had not originally intended to intervene in this debate. I shall be very brief. I was tempted to intervene when the noble Baroness, Lady Llewelyn-Davies, said that the points brought out in this debate would be useful when the future of broadcasting came to he considered. There is one point only to which I wish to draw attention: that is the future use of the fourth channel in relation to monopoly.
My mind goes back to the 1950s when I and a number of others were engaged in the struggle then taking place to break the monopoly of the B.B.C. We felt strongly at that time that this medium
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could not be left in the hands of a State monopoly. But it was a tremendous struggle and I must confess that it took place chiefly within the Conservative Party. When the decision was at last taken to break the monopoly on television. I remember the late Walter Elliot making the comment that the Government had been pushed, kicking and squealing, into breaking the monopoly. I think that was quite a fair description of what actually happened. Anyway, my Lords, it was done. But at that time of course there were only two channels, one for the B.B.C. and one for I.T.V. The result was that on the I.T.V. side a monopoly condition was set up; the companies who got the licences virtually enjoyed a monopoly. Perhaps that had something to do with the coining of the phrase that it was "a licence to print money."
At that time many of us said that, the big log having been split, the next thing to do when a further channel became available was to break the monopoly on the commercial side. But that was not done. As a result of the Report of the Pilkington Committee the decision was taken that the extra channel then available should be devoted to B.B.C.2. Now a fourth channel has become available, and my only plea on this occasion is that when a decision comes to be taken about what is to be done with this fourth channel (I know that Lord Pilkington has already suggested that it should go to the I.T.V.) the question of dealing with the monopoly situation on the I.T.V. side should play a large part in the consideration of the future use of that channel. That, my Lords, is the only point I wish to make.
8.41 p.m.
LORD DONOVAN: My Lords, I know that it is somewhat unusual for a Law Lord to intervene in a debate of this character, but this is an opportunity which I cannot lose to protest as strongly as I can against the re-trial of criminal cases on television. I have in mind a programme dealing with the case of The Queen v. Hanratty, broadcast not so long ago. This suggested that his conviction and execution were a miscarriage of justice, and the suggestion was based largely upon the assertion of a newsvendor that he had seen Hanratty at the time in a Welsh town, which would have made it

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impossible for him to have been at the scene of the murder when it was committed. The newsvendor in question later retracted what he had said to the B.B.C. investigator, saying, in effect, that the words had been put into his mouth.
My Lords, I recollect no sort of apology or amende being, made by the B.B.C. If one knows, as any judge does, the immense care which is taken to sift and evaluate the evidence given in any criminal case as a step in pronouncing a just verdict, it is shameful and a public disservice that a national institution like the B.B.C. should seek, on the basis of a shallow investigation of the facts, to lead the public to believe that an innocent man has been convicted and executed. It is not merely shameful but downright dishonest, when the principal witness for this implied assertion goes back on his evidence, to remain dumb about his recantation.
8.44 p.m.
LORD SHACKLETON: My Lords, first I would echo the remarks of other noble Lords in congratulating the noble Lord, Lord Byers, upon introducing a Motion giving rise to such an interesting debate, and one that has crossed Party boundaries. We found some strange bedfellows. There were my noble friend Lord Willis and the noble Lord, Lord Grimston of Westbury, both well-known liberals in these matters, in the same Lobby; and I rather suspect that the noble Viscount, Lord Massereene and Ferrard, and I are closer together than usual. I may say that I too get some satisfaction from that fact.
Perhaps one of the most striking aspects of this debate is that it has been one of those rare occasions when we have carried out a debate on a subject of major importance in front of the two people most concerned. They were listening and, having regard to what we had to say, no doubt suffering great frustration at not being able to give us the benefit of their advice. I should like to pay my tributes to the noble Lord, Lord Hill of Luton, and the noble Lord, Lord Aylestone, not only for their self-control on this occasion but for the unquestionably great public services they render. The noble Lord, Lord Aylestone, has been a friend of mine for many years.
I must say to the noble Lord, Lord Hill of Luton (he may not recall it) that I
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was critical of his original appointment as Chairman of the I.T.A. Although I am critical of the I.T.A. and the B B.C., I must confess that at that time my judgment was wrong. I think that the B B.C., as was the I.T.A., are fortunate enough to have him as their Chairman; but on this occasion he cannot even stand up and say, "Thank you". Well, my Lords, he could do that, but I think that here I must say a word about the Addison Rules. I heard several noble Lords say, "Hear, hear!" when an expression of regret was uttered and some implication made that we were wrong; and some of them looked rather reproachfully at me, as the Leader of the House, as if I were responsible for the Addison Rules. Since I discovered, when discussing the matter recently with some of my colleagues, that they had never heard of the Addison Rules, I should like to refer them to pages 63 and 64 of the Companion where the reasons for the restraint are set out clearly.
My Lords, we have discussed this question at length in the past, and I think that it could have been difficult for the two noble Lords concerned had they taken part in this debate, especially in the light of some of the things which have been said. It would have been tempting for them to criticise, and to defend their position. But if they are to retain the independence which Parliament has seen fit to grant to the I.T.A. and the B.B.C., I think it essential that they should keep out of the day-to-day controversy within Parliament itself.
I ask again that noble Lords should look up the discussions we had on this subject, many years before I came to the House. There are difficult borderline cases. It so happens that recently, with a number of noble Lords, I have had occasion to discuss this very issue through the usual channels. Since questions of interest are also beginning to arise in another place it may be that we must look at the Rules again. But every time I look at the Addison Rules I find it very difficult to think how one could be more precise or give clearer guidance. Since it appears that we may once again be approaching the season of controversy in this area I am quite sure that noble Lords—and I make absolutely clear that there I make no imputations—would be well advised to declare their interest when

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we come to discussing these matters. Let me say that I am in no way getting at my noble friend Lord Willis. We all know that he works impartially for all the radio programmes and he gives us a great deal of pleasure through his work.
My Lords, many interesting matters were raised and, as always, one takes copious notes. But I must apologise to certain noble Lords whose speeches I did not hear. Unfortunately, I had to be away from the Chamber for an hour, which is a thing I have never done before during a debate. But my noble friend Lady Llewelyn-Davies of Hastoe, and my other colleagues, kept very full notes and I will try to answer the points that were raised. The only other thing I wish to do in this preface to my speech (which will not be long) is something with which noble Lords will agree. It is to congratulate my noble friend Lady Llewelyn-Davies of Hastoe. This was her first main speech from the Front Bench and she discharged it with brilliance, with charm and with knowledge.
So much that is controversial has been said that I slightly regret to-night that I am a member of the Government and that it would be inappropriate for me to join in on the side of the B.B.C. or on the side of the I.T.A. The noble Lord, Lord Grimston of Westbury, and other noble Lords reminded us of the controversies of the past, and I shall have something to say about local sound broadcasting. We heard a number of interesting paints. The right reverend Prelate the Bishop of Bristol gave us some wise advice. The noble Lord, Lord Ferrier, made a number of interesting points, but I am afraid that, in the interests of time, I shall not be able to answer them beyond saying that it is possible that anyone could be threatened by a strike. I see no very obvious solution to this at the moment, but when we come to debate industrial relations this is clearly an issue at which we shall have to look.
I think that enough has been said about the Open University. It has been extremely interesting to hear the views of noble Lords, like my noble friend Lord Ritchie-Calder, who have studied this subject. The noble Earl, Lord Bessborough, intervened, unfortunately
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while I was not in the Chamber, to correct the position with regard to his own Party in this matter; and we have of course taken careful note of this. The Open University strikes me as something of an act of faith. It is difficult to say with any certainty that it will achieve the results we hope for it, but if it does the prospects and the widening opportunities that it gives are so splendid, even though some people may regard it as speculative and say that the money could more conveniently and sensibly be invested in something else, that I believe that it is an exciting venture. I hope very much that this Government, and any Government which may or may not succeed us, will give it a run, will give it time to experiment and learn what it is seeking to do in this new and important field, and will not curtail it too early, just because it is inconvenient to a particular Chancellor of the Exchequer at a particular time.
My only regret is that the talk about the Open University has tended to mask the important work that is being done in educational broadcasting. The noble Earl, Lord Bessborough, referred to the work on I.T.A., and I am sure he will acknowledge, though there is a little touch of competition here—after all, that is what the I.T.A. was meant to achieve—the work of the B.B.C. With my well-known prejudice, I give my preference to the B.B.C. Perhaps I should declare an interest here, because I was at one time a radio producer and worked on the overseas services and home services of the B.B.C.
I would say to the noble Lord, Lord Bethell, that I listened carefully to what he said. It is a fact that more money than ever before is being provided for the external services of the B.B.C. and there are more hours of broadcasting than ever before, and particularly since last year, hours of broadcasting to Eastern Europe. But, having said what seems to me a good straight-forward piece and an entirely truthful one, I may add that that does not alter the fact that one is bound to feel a great deal of concern about this matter. It is a very important area, and once again we are back in this agonising position of having to choose between one urgent demand and another. But the noble Lord need not assume that his remarks

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will pass unnoticed. It may well be that in this area circumstances may demand further increases. I am sure that noble Lords like my noble friend Lord Soper, who are interested in peace, recognise that this is an important contribution to peace-keeping, this preservation of the standards of tolerance and truthfulness in reporting, in which we believe the British have a special contribution to make and for which the B.B.C. have created such a tremendous reputation.
Conscious as I am all the time of (I was going to say) the baleful presence of my noble friend the Chief Whip, who always seeks that winding-up speeches will not be too long, I am going to throw away most of my remarks, but there are certain things that call for an answer. The noble Lord, Lord Denham, and other noble Lords, asked that I should say something to reassure the independent television companies. My noble friend Lord Willis suggested, on important grounds which I acknowledge, that contracts should be for longer periods. I think that here it is inevitable that we cannot arrive easily at a perfect answer. It is a fact that the Television Act, passed in the time of the previous Government, expires in July, 1976. After exhaustive debate, Parliament set a term to the certain life which the companies can expect. No one can guarantee them a longer time and no Government can commit their successors.
I think that there will be a Committee of Inquiry. I confess to being an irreconcilable Pilkingtonian in my approach, and therefore I listened carefully to what the noble Lord, Lord Pilkington, said, but I think we are bound to follow the pattern of the past. It is disturbing to pull up the roots to look at them, and perhaps every institution is getting a surfeit of examination. Of course, some of them, on second examination, do flourish rather more None the less, it can be a burden, and I know that the B.B.C. has suffered in this respect. Perhaps it is for this reason that I think Parliament has to exercise a certain amount of self-control, so that the amount of scrutiny carried out by Select Committees and other bodies is kept within bounds, for fear that those who are trying to get on with the job are hindered from doing so.
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I have not been able to give the noble Lord, Lord Denham, a clear-cut assurance, but I can say that I know of no reason to suppose that the existing pattern is likely to be changed by the present Government. What may emerge from the subsequent inquiry it is impossible to say; but if I may hazard a personal opinion (and I imagine that most noble Lords will agree with this) I think it very unlikely that there will be any major change in the television pattern. Critical as I have been of the I.T.A., and opposed as I have been to the whole concept in which the noble Lord, Lord Grimston, and others have been so interested, I have always preferred wider choice to wider competition.
But the fact is that we have moved on. The I.T.A. has been set up, and it would be absurd to think that it has not become a major and an established part of our national institutions. Therefore, I think my own attitude of mind, speaking as a Member of the Government, should give some comfort to the noble Lord, Lord Denham. It is a fact that everybody gets anxious at one time or another. People are always afraid that somebody is going to do something to them—and lightning does sometimes strike some people. However, I should be surprised if it struck in the way that the noble Lord, Lord Denham, fears.
I should like to touch, quite briefly, on the question of the levy. Let me, in fairness, first of all point out that the B.B.C. have to pay S.E.T.; and they are liable to tax on their investments and on the profits of their trading activities. For a long time, of course, they even used to pay income tax on any surplus in respect of broadcasting activities. It was not until the Court of Appeal decided in their favour that the enormous sums of money that previous Governments had taken, really unknown to the licence payer, not merely in terms of the particular segment of the licence that was allowed to them but the bits of the licence due to the B.B.C. which the B.B.C. at that time were unable to spend, were made available.
I have listened carefully to what noble Lords have said about the levy. It is true that this was charged on advertising receipts, and this was decided by the previous Government. Indeed, the then

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Chancellor of the Exchequer, Mr. Maudling, and the Postmaster General, Mr. Bevins, rejected the idea that it should be charged on profits. I will not give reasons for this, but to me they were unanswerable. They were quite decisive, and since we have debated this matter at some length in the past, and there may be further opportunities in the future, I do not think I need say more than that I believe the levy is right.
I am concerned, however, if my noble friend Lord Willis's contentions (I am sure he is convinced they are factually correct) should prove to be the true position. I would agree that 8 per cent. in this particular field is not a satisfactory figure. But this, of course, is not the information that I have. In each of the last three years the overall rate of return on capital for the companies has been 40 per cent.; and in the period since the imposition of the levy, it is now 20 per cent., which is considerably more than the agreed rate of return allowed to Government contractors, dealing with the Government in other areas.
LORD WILLIS: My Lords, I should like to get this point clear. Is my noble friend saying that in fact, with the additional £3 million that is being taken, there would still be a return on capital of 5 per cent.?
LORD SHACKLETON: Yes; that is what I am saying.
LORD WILLIS: That just is not so.
LORD BYERS: My Lords, can the noble Lord say whether this is before tax or after tax? If it is before tax, you can get better than that by going to a local government and lending your money to them.
LORD SHACKLETON: These are the gross profit figures.
THE EARL OF BESSBOROUGH: My Lords, would the noble Lord—
LORD SHACKLETON: I think this is fascinating, but I will not give way, otherwise I may be asked a really awkward question. Very well, I will give way.
THE EARL OF BESSBOROUGH: I merely want to ask a question. Am I not right in thinking that when the new levy is paid the return will be only about
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8 per cent.? I think that might be the case.
LORD BYERS: Before tax?
THE EARL OF BESSBOROUGH: That I should not like to answer.
LORD BYERS: It makes a lot of difference.
LORD SHACKLETON: I think the noble Earl has done enough, and he is getting into a dangerous situation. I can only say that we will examine these figures. I know that my noble friend Lord Willis is an experienced businessman, as well as a creative writer. But from my information, my heart does not at this moment need to bleed for the contractors, or indeed for the I.T.A. But obviously we shall study what noble Lords have said. I do not doubt that they have not been slow to make representations to the Chancellor; but I am certain that if there is one thing a Chancellor is anxious to avoid it is killing the goose that lays the golden egg. If this is really happening, I think it would be a most dangerous situation which I am sure the Chancellor would want to think about.
I do not doubt the sincerity of my noble friend in this matter, but I am not convinced on my information that the situation is as bad as he fears. I said 20 per cent. but I think perhaps I ought to correct this. I have a later note which says 18 per cent. It is of the same order. As I say, I am sorry that this "licence to print money" is unable to produce pound notes and can produce only a few shillings at a time.
I should like to say something, quite briefly, about the restructuring of the B.B.C. sound services. It is interesting to note just how popular sound radio still is, and how many people listen to radio every day. This is one of the great areas of choice; this is where the real range of choice is achieved. There is concern about the possible existence of some proposal—and I know of none—to curtail some services. The B.B.C. will be considering what is right in regard to future music programmes and others. But I am bound to say that if a small proportion of those who evade paying their licences were to pay up, there would be no problem. The B.B.C. would have another £7½ million a year to play with.

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This particular form of dishonesty, which is so widely practised, is something that I believe we ought very actively to condemn. The individuals who are doing it are depriving themselves, and their fellow citizens, of the better services that they could have for, compared with other countries, an extraordinarily moderate fee.
I should like to make just one other point with regard to the B.B.C. There has also been some discussion as to whether the B.B.C. might finance its radio programmes anyway by taking advertising. Although the noble Lord, Lord Hill of Luton, is denied the opportunity to say this in this House, he has made a notable speech quite recently on the subject of local radio—and I shall say a little bit more about that in a minute, all but briefly. I notice that the B.B.C. have again firmly rejected the idea of advertising as a means of financing itself. As the noble Lord, Lord Hill of Luton said:
"I see no reason today why the B.B.C. should change its mind. The country needs an independent public service, and I venture to say that the B.B.C. is one of the highest quality which should be retained undiluted by advertising".
Let me say, for those noble Lords who are advertisers (and I know there are some: and some of my best friends are advertisers), that my remarks relate to sound radio.
I would conclude on one main point. I find it disturbing to see once again the growth of a commercial lobby determined to extend this whole business of advertising and commerce into the sound broadcasting field. Even if we grant what has been achieved by I.T.A., I feel that the arguments against this remain overwhelming. I must say to noble Lords opposite that I do not know what Conservative Party policy is in this matter, and I do not know whether or not Mr. Bryan's speech to the Monday Club represents Conservative Party policy. I can only say to noble Lords, if we are to be confronted with a fight on this, that those who are opposed to the extension of advertising into this field resent the accusation of being Puritans as much as the noble Lord, Lord Willis, would resent any suggestion that what he is advocating he is doing for personal profit. I think we might avoid in the discussions we shall have on this some of
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the rather sillier sort of slanging that went on. The noble Earl, Lord Bessborough, if I may say so, was notably free from it in his speech. The noble Lord, Lord Willis, repeatedly used two phrases: "put the boot in" and "Puritan"; he used both those phrases about four or five times. I also have a feeling that he used the word Freudian, and there may be some connection there, also.
I would just draw attention to the main arguments on this. I do not believe that the commercial radio lobby are going to be interested in creating the sort of local sound broadcasting that the B.B.C. are producing. There is nut the money in it for them. There is not going to be a "licence to print money", and that is what some of them want. We know some did, in fact, successfully print money. I acknowledge that the noble Lord, Lord Grimston, took a view on this on principle. I happen not to agree with his principle, but this was not the view of all those who were advocating this. The technical arguments which have been put forward—and they were put forward particularly by the noble Lord, Lord Pilkington—are overwhelming. The "needle time" they would want would not be available; local commercial radio stations would not genuinely be able to provide the sort of service that the B.B.C. can do. It is worth noting also, that it would be a good deal more expensive—and this is in terms of national resources. The ratio of administrative to programme costs in commercial services is five to one, whereas on the public service networks, for about the same volume of expenditure, the ratio is two to one.
My Lords, I could go on, but noble Lords will not wish me to go or any longer. There is a large body of opinion which would be critical of local commercial radio stations, not only within the Labour party but within the Conservative party also. There are many quotations, based on publications sponsored by the C.B.I., and there is also an article in to-day's Financial Times, all of which I commend to your attention. May I say one thing on the intervention of the noble and learned Lord, Lord Donovan? Anything that he says is something that we shall take note of. There are powerful arguments behind what he has to say, and I would echo

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his criticism of the particular programme to which he has referred. I have had occasion to be critical of both the B.B.C. and the I.T.A., and more recently of the B.B.C. on the presentation of news programmes on occasion. But this is one of the prices, regretfully, that we have to pay for the independence and freedom which we believe is necessary. It carries grave disadvantages, and some of the disadvantages can themselves appear to be somewhat threatening to our democratic institutions. We hope that there will be again the sense of responsibility among broadcasters and others that will keep it with in bounds.
The noble Lord, Lord Byers, has done us all a service. Television and radio, we all agree, are vital to our lives. I think that this has been a timely debate, and I do not doubt that many of the controversial aspects will come up again in the future. But I would end by expressing our appreciation to the broadcasters for the dedication that many of them, particularly producers, as well as all the others, including the technicians who put on the programmes, show. I think we can agree, my Lords, that, for all the faults of the services, there is no country better served by its broadcasting than this.
9.15 p.m.
LORD BYERS: My Lords, I should like fully to endorse those last remarks of the noble Lord the Leader of the House. It only remains for me to express my gratitude very sincerely indeed to all noble Lords who have taken part in this debate. The content of this debate has done full justice to the importance of the subject, and it has been enhanced by the very eloquent and graceful speech of the noble Baroness, Lady Llewelyn-Davies of Hastoe, on her first occasion at the Dispatch Box. She has one up on me there, but no doubt there will be an occasion when I shall be able to emulate her position by speaking from the Dispatch Box.
This debate has provided a forum for the noble Lord, Lord Pilkington, to make what I think will be regarded as a very important speech at the present stage in our deliberations on the future of broadcasting. As the noble Lord the Leader of the House has said, it was
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a speech which has underlined the irony of the way in which the Addison Rules are now being interpreted. We can hear the rapporteur but we are not allowed to hear the views of the chief of operations of the B.B.C. and the I.T.V. If I may say so, I should like to thank very much indeed the noble Lord, Lord Hill of Luton, and the noble Lord, Lord Aylestone, for the patience with which they have sat through this debate, because it has been a very great encouragement to us to know that we are not really making these speeches at second hand but that they are listening and taking note. What they do with the notes is their business, but it is very nice of them indeed to have been here for practically the whole of this debate.
I think that the Addison Rules are now being interpreted far too restrictively. I agree with the noble Lord the Leader of the House that we have had discussions on this matter, and it is a fantastic thing that the first thing you do to a person who has been put in charge of a very important public corporation is to make him a Member of this House, and as soon as he gets in here he is inhibited from speaking on his own subject. I think we ought to have a debate on the Addison Rules themselves, in which we should hear the noble Lord, Lord Robens of Woldingham, the noble Lord, Lord Wigg, and others giving their views. And let us give our views as to what we feel. I think it might make a very good debate. We might even take a vote at the end of it to see whether we cannot change the Rules.
LORD SHACKLETON: My Lords, I must say that it makes me rather doubtful about discussions through the usual channels when the noble Lord, Lord Byers, makes a statement so contrary to what he said in the usual channels.
LORD BYERS: My Lords, I hope I have not misinterpreted. I certainly was not trying to breach any confidentiality. I was only saying that we had discussed this matter. I did not say that we had come to any conclusion on it.
I should, if I may, like to conclude by apologising to our Hansard team of Official Reporters, for whom we all have so much respect, because in opening this

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debate I referred to the statement by the Chairman of Committees concerning the shorthand writers' union and suggested that if they went on strike we probably should not have any reports of our debate. But of course the Official Shorthand Writer deals only with Select Committees and other such matters, and should not be confused with the Hansard staff and the Official Reporters. I am therefore very sorry, my Lords, if a jocular remark on my part should have caused any offence, but I have the consolation that if anybody can put right the official Record it will be our Hansard reporters and our official staff. My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

TRANSPORT (LONDON) BILL
Brought from the Commons, read 1a, to be printed, and referred to the Examiners.
CARDIFF CORPORATION BILL CITY OF LONDON (VARIOUS POWERS) BILL LONDON TRANSPORT BILL
Brought from the Commons, read 1a, and referred to the Examiners
LANDS IMPROVEMENT COMPANY'S AMENDMENT BILL [H.L.] TWEED FISHERIES BILL [H.L.]
Returned from the Commons agreed to.
BRITISH TRANSPORT DOCKS BILL [H.L.]
Returned from the Commons agreed to, with Amendments; the said Amendments considered and agreed to.
  AIRCRAFT IN THE ARMED SERVICES
  AIRCRAFT IN THE ARMED SERVICES