Sitting of 17 March 1970

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  HUNTINGDON AND PETERBOROUGH COUNTY COUNCIL BILL
  Read the Third time and passed.
SOMERSET COUNTY COUNCIL BILL
Read the Third time and passed.
FLINTSHIRE COUNTY COUNCIL BILL
  GOSPORT CORPORATION BILL
    LEICESTERSHIRE COUNTY COUNCIL BILL (CHANGED FROM LEICESTER COUNTY COUNCIL BILL)
    Considered; to be read the Third time.
BASINGSTOKE CORPORATION BILL [Lords]
Read a Second time and committed.
ORAL ANSWERS TO QUESTIONS
  NATIONAL FINANCE

    2½p Coin
    Mr. Joplingasked the Chancellor of the Exchequer whether he will now arrange to make a 2½p new penny coin available after the change over to decimalisation.
    The Financial Secretary to the Treasury (Mr. Dick Taverne): It would be premature to take any decision about minting a 2½p coin before we have the report on the sixpence for which my right
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    hon. Friend has asked the Decimal Currency Board.
    Mr. Jopling: Does not the hon. and learned Gentleman think that it is about time that the Government made up their mind on this matter? Could the reason for all this dither be that they are looking for an excuse to put off decimalisation from February of next year until after the latest possible date for a General Election?
    Mr. Taverne: On the last part of the hon. Gentleman's question, or observation, it has been made clear that there will not be any postponement of Decimal Day. On the first part, of course, there has been as much vacillation on this subject from hon. Members opposite as from others.
    Mr. Higgins: Is the hon. and learned Gentleman aware that this vacillation has not been apparent to anyone in the House? Does he not think that it is just a wee bit bizarre to refer a matter to the Decimal Currency Board when an officer of that Board expressed an opinion many months ago that this matter had gone beyond recall and that there was no question of reopening it?
    Mr. Taverne: On the first part, I recollect the hon. Gentleman's right hon. Friend saying once that it was impossible to retain the 6d. within the £ decimal system. On the other point, the Decimal Currency Board will properly consider this and all the representations which are being made to it.

    Capital Account (Surplus)
    Mr. Sheldonasked the Chancellor of the Exchequer what estimate he has now made of the surplus on current and long-term capital account in the financial year ending March, 1970.
    The Chancellor of the Exchequer (Mr. Roy Jenkins): The balance of payments for 1969 has recently been published and shows an estimated surplus of £451 million between April and December. I do not propose to make any estimates at present for the current quarter, but the indications are that the current account continues to be in substantial surplus.
    Mr. Sheldon: I congratulate my right hon. Friend on the largest surplus which this country has ever had in its history.

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    Would he consider whether it can now be used to provide the increase in manufacturing investment and a reduction of the credit squeeze, in so far as it particularly affects small manufacturing companies?
    Mr. Jenkins: As I have said, I do not think that the surplus can be directly used but should be used as a basis on which to achieve a steady and substantial rate of growth. Clearly, manufacturing investment is an important component in this.
    Sir B. Rhys Williams: Is not this a golden opportunity to introduce a greater degree of flexibility in the sterling exchange rate.
    Mr. Jenkins: I do not know what the hon. Member means by a "golden" opportunity, but my views on this issue are not changed from those which I have expressed before.

    Selective Employment Tax
    Mr. Sheldonasked the Chancellor of the Exchequer if he will make a statement on the report of Professor Reddaway on selective employment tax.
    Mr. Roy Jenkins: Professor Reddaway has provided a valuable report which has I think shown that many of the common criticisms of S.E.T. are misconceived. I am studying the Report and it would be wrong for me to make any further comment at this stage.
    Mr. Sheldon: I wholeheartedly welcome not only this report but the kind of attitude towards taxation which gave rise to its publication. But would my right hon. Friend consider this a time to end some of the anomalies—in particular to bring the self-employed into taxation and perhaps to end the anomaly of the wholesaler versus the manufacturer with wholesale interests?
    Mr. Jenkins: I have no comment to make on these issues at present.
    Sir G. Nabarro: During his study of the Reddaway Report, would the Chancellor bear in mind that his colleagues have already confessed in this House that about £153 million of S.E.T. is attributed to house building and the construction industry, all of which is exceedingly inflationary in present circumstances?
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    Would he study those figures with exceptional care?
    Mr. Jenkins: My colleagues have, I think, studied certain issues, as I have. I am not sure that I regard the use of the word "confessed" as freely as the hon. Member does. Nor am I sure that he understands the economic meaning of the word "inflation".
    Mr. Patrick Jenkin: Will the Chancellor acknowledge that the Reddaway Report deals with a comparatively narrow sector of the impact of selective employment tax? When considering his Budget, will he bear in mind that the report says nothing at all about invisibles, particularly tourism, where the tax has had a most damaging effect?
    Mr. Jenkins: I am certainly aware that the Reddaway Report deals only with part of this field, although a most important part. I am also aware that investment earnings, including tourism, have done remarkably well during the period since S.E.T. was introduced.

    Personal Savings and Disposable Income
    Mr. Blakerasked the Chancellor of the Exchequer what was the ratio between personal savings and personal disposable income in each of the years from 1964 to 1969.
    Mr. Taverne: The ratio of personal saving to personal disposable income in the years 1964 to 1968 was 8·1, 8·5, 8·4, 7·9 and 7·5 per cent. respectively. Figures for the calendar year 1969 are not yet available, but in the first three quarters of 1969 the corresponding percentage was 7·3—seasonally adjusted.
    Mr. Blaker: Is the Financial Secretary aware that for 1967, the latest year for which I have been able to get figures, the ratio of personal savings to personal disposable income in Germany was more than twice as high as it was in this country, and in Japan it was nearly four times as high? May that not have something to do with their greater success in growth?
    Mr. Taverne: There are a large number of factors which may or may not contribute to rate of growth. Among other things, both Germany and Japan have not suffered from heavy overseas

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    military payments, which is something that hon. Members opposite wish to increase.

    Import Deposits
    Mr. Blakerasked the Chancellor of the Exchequer if, in view of the latest trade figures, he will now reduce the rate of import deposits to 30 per cent.
    Mr. Roy Jenkins: I have nothing to add to what I told the hon. Member on 17th February.—[Vol. 796, c. 184.]
    Mr. Blaker: In view of the fact that the Chancellor said in the Letter of Intent last May that it was his policy to abolish the import deposits scheme as soon as the balance of payments permits, and the fact that the E.F.T.A. Council last November expressed concern at its continuation, has not the time now come for at least a start on the process of reduction of the rate?
    Mr. Jenkins: We started on the process of reduction last year. On the whole, the bodies of international opinion have been somewhat more understanding of the value of the scheme than has the hon. Member. I will consider all these factors.
    Mr. John Hall: Will the Chancellor agree that this forced interest-free loan not only has its effect on industrial costs, but, worse than that, it has effects on cash flow and reduces the rate of capital expansion? Does he not regard this as regrettable?
    Mr. Jenkins: I am not quite sure what the hon. Member means by capital expansion. It is an element in growth restriction, and growth restriction has been responsible to some extent for the turn-round in balance of payments, accompanied by a 10 per cent. increase in the rate of fixed investment in the past year.
    Mr. Dickens: In view of the February figures, will my right hon. Friend agree that if we are to have a much higher rate of economic growth this year it may suck in more imports and that is one very good reason for retaining the import deposits scheme at its present level for the foreseeable future?
    Mr. Jenkins: There are a number of factors, as I indicated in my original Answer, to be taken into account although I would not regard the February
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    figures as either unsatisfactory in themselves or as something which would change my view of the overall situation.

    Capital Gains Tax
    Mr. Maurice Macmillanasked the Chancellor of the Exchequer what is his estimate of the cost to the Exchequer of exempting from long—and short-term capital gains tax all gains that have risen by a lesser amount than the decline in the value of money.
    The Chief Secretary to the Treasury (Mr. John Diamond): I regret that the information on which to base an estimate is not available.
    Mr. Macmillan: Would not the Chief Secretary agree that on an investment made in 1965 and realised in 1969 approximately a third of the investors' tax bills on capital gains tax would in fact be due to inflation?
    Mr. Diamond: It may well be that there is an element of price variation in computation of capital gains tax. This applies to all capital gains tax systems, and to take it into account would be both confusing and complex to a degree, and quite unfair to other taxpayers.

    Development Finance
    Mr. Hooleyasked the Chancellor of the Exchequer if he will institute discussions in the appropriate committee of the Organisation for Economic Cooperation and Development on the possibility of using the Special Drawing Rights allocated to Organisation for Economic Co-operation and Development countries for promoting development in developing countries.
    Mr. Taverne: There will be further international discussion of the problem of a link between liquidity creation and development finance. But this is scheduled to take place mainly in the U.N.C.T.A.D. at the present stage.
    Mr. Hooley: Would my hon. and learned Friend not agree that critical in the discussions in U.N.C.T.A.D. is the attitude of O.E.C.D. countries, which contain the major donors and control the major special drawing rights? Would it not be useful to have discussions within O.E.C.D. on this very important point

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    with a view to constructive proposals being put forward at U.N.C.T.A.D. itself?
    Mr. Taverne: I agree with my hon. Friend that discussions in the O.E.C.D. or the Development Assistance Committee may well be desirable at an appropriate stage in due course, but it is U.N.C.T.A.D. to which the recent expert group reported and it is to a further U.N.C.T.A.D. committee that this matter has been referred.

    Overseas Direct Investment
    Mr. Biffenasked the Chancellor of the Exchequer what proposals he has to relax restrictions on overseas direct investment in the light of the recent balance of trade figures.
    Mr. Diamond: I have nothing to add to the Answer I gave on 10th February to a similar Question by the hon. Member for Horsham (Mr. Hordern).—[Vol. 795, c. 303.]
    Mr. Biffen: Is the right hon. Gentleman aware that the recent improvement in the trade figures gives immense satisfaction, particularly to those of us who hope eventually to dismantle exchange control? In view of the undertaking given in the Letter of Intent to the International Monetary Fund, can the right hon. Gentleman say what priority the Government give to a relaxation in present controls over capital movements?
    Mr. Diamond: I do not know that I can answer in precisely those terms. I remind the hon. Member that my right hon. Friend takes the view that priority must be given to repayment of our external debts.

    Motor Vehicle Registration Fees
    Mr. Ogdenasked the Chancellor of the Exchequer if he will state the annual yield to the Treasury from motor vehicle registration fees for each of the past five years, and give his estimate of the annual yield for each of the next five years on the basis that the licence fee was reduced by £2 10s., £5 and £7 10s., respectively.
    Mr. Diamond: With permission, I will circulate the figures for the last five years in the OFFICIAL REPORT. It is not possible to make any accurate forecast five years ahead on the basis of alternative rates of duty.
    Mr. Ogden: Is my right hon. Friend aware that that tells me nothing at this time and therefore I decline to ask a supplementary question?
    Mr. Arthur Lewis: As so many thousands are not paying the fees, would it not be better to drop it altogether? That would be the easiest way out for all concerned.
    Mr. Diamond: I must ask my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) to keep this matter in proportion.
    Following are the figures:

    Current

    1964–65

    prices

    prices

    £m.

    £m.

    1964–65

    …

    187

    187

    1965–66

    …

    245

    235

    1966–67

    …

    262

    243

    1967–68

    …

    283

    254

    1968–69

    …

    401

    351

    1969–70 (estimated)

    …

    422

    355

    Mr. Ogdenasked the Chancellor of the Exchequer what consideration he is giving to proposals to reduce the motor vehicle licence registration fees.
    Mr. Diamond: My right hon. Friend will bear in mind the proposals that have been made when he is considering his Budget statement.
    Mr. Ogden: Is my right hon. Friend aware that I have asked a similar Question to this one for the last four years? Does he not think it time that virtue and diligence were rewarded and that if there were an attempt to reduce the tax on registration fee it would mean that those who use most petrol would pay most in tax?
    Sir G. Nabarro: That is better than putting it up to £35.
    Mr. Diamond: My hon. Friend, who is to be congratulated on his consistency, will remember and recognise the various arguments which apply if one is thinking of changing the tax on petrol as opposed to what is before us now. This is too long a subject to go into in Question and Answer.

    Housing Societies (Borrowing Requirements)
    Mr. Huntasked the Chancellor of the Exchequer whether he will take steps to allow housing societies and housing

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    associations to have access to the Public Works Loan Board for their borrowing requirements.
    Mr. Taverne: The Public Works Loan Board is empowered to lend to housing societies and housing associations, subject to certain conditions; but it does not normally do so, since these bodies can generally borrow from local authorities or from the Housing Corporation, whose lending powers are more flexible and who have greater knowledge of local housing conditions.
    Mr. Hunt: Is it not a question of the rate of interest charged? Is the hon. and learned Gentleman aware that in a recent housing society development in my constituency borrowings of £90,000 will mean repayment of £355,000? Is it not grossly unfair that non-profit-making housing societies of this kind, aiming to provide good homes at reasonable rentals, should be subject to this quite intolerable burden?
    Mr. Taverne: There are two questions. The first is whether one would get a more favourable rate of interest from the Public Works Loan Board. In recent months the rate has been above the rates obtained from the Housing Corporation. Secondly, the Housing Corporation is better fitted to deal with this kind of question because it often involves a close examination of the rentals that can be obained and an estimate of the cost of the housing. The Housing Corporation is in a better position to carry this out.
    Mr. John Fraser: Is my hon. and learned Friend aware that he has been misinformed about this? Housing associations cannot get finance from local authorities for building new houses and they cannot get it from the Housing Corporation because it depends on the building societies putting in two-thirds. Would it not be better to depend on the short-fall in local authority building and give it to the Housing Corporation to finance all its work from Government money?
    Mr. Taverne: I will study the suggestion that I have been misinformed and I will bear in mind the points my hon. Friend has made.

    House Prices
    Mr. Ashtonasked the Chancellor of the Exchequer what is his estimate of
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    the effect on house prices on the basis that selective employment tax is abolished and a value added tax of 10 per cent. introduced in its place.
    Mr. Diamond: If S.E.T. were abolished and a V.A.T. at 10 per cent. were applied to sales of new houses the cost of new houses might be about 6 per cent. or 7 per cent. higher than now.
    Mr. Ashton: Does my right hon. Friend realise that this means that the Tories, who are supposed to be the friends of the owner-occupiers, propose to increase the average price of a house by £300?
    Mr. Diamond: I can only say to my hon. Friend that what the Tories propose to do when they win the General Election is a matter of remote academic interest.
    Mr. Higgins: Will the right hon. Gentleman accept that my right hon. Friend made it clear in his speech at Brighton that it was not our intention, if we were to introduce such a tax, to extend it to housing?
    Mr. Diamond: The only clear message I got was that the Tories would exclude everything from taxation and increase revenue.

    Hovercraft (Hydro-carbon Oils Duty)
    Mr. Woodnuttasked the Chancellor of the Exchequer what plans he has to give the same revenue duty concession on hydro-carbon oils to operators of hovercraft as that enjoyed by operators of hydrofoils, in order to remove the competitive advantage enjoyed by operators of foreign-built hydrofoils over operators of British-built hovercraft.
    Mr. Taverne: The hon. Member will not expect me to anticipate my right hon. Friend's current review of taxation.
    Mr. Woodnutt: When the hon. and learned Gentleman is advising his right hon. Friend on the contents of his Budget will he remind him that because of this lack of a concession for hovercraft it costs 8s. 4d. an hour more to operate a hovercraft than an equivalent-sized hydrofoil? Will he tell the Chancellor that it is penalising British manufacturers? Is he aware that I know of a case where an operator has bought a hydrofoil instead of a hovercraft because of the lower operating costs?
    Mr. Taverne: I am sure that my right hon. Friend has listened most attentively to every word the hon. Gentleman has uttered.

    Purchase Tax (Personal Case)
    Mr. Woodnuttasked the Chancellor of the Exchequer why, in view of the ruling in the High Court given by Mr. Justice Cross, the Commissioners of Customs and Excise refuse to repay purchase tax paid by Mr. R. Herbertson, of Shanklin, Isle of Wight, in respect of toffee apples manufactured and sold during the years 1962 to 1965 in the sum of £715 8s. 1d.
    Mr. Taverne: The Commissioners are advised that the tax paid by Mr. Herbertson is not legally recoverable, and I can see no equitable basis upon which they could depart from the legal position.
    Mr. Woodnutt: Does the hon. and learned Gentleman realise that the Commissioners are hiding behind the fact that there is a mistake in law so as not to pay? Is he telling me that a small retailer has to go through the Chancery Courts—as the big manufacturers did to get £4,000—before he can get back his £700?
    Mr. Taverne: I understand that the position of Mr. Herbertson is different from the case which was the subject of the Chancery Court ruling. Legally we are advised that we are not under any obligation to repay. As to equity, Mr. Herbertson passed on the tax to his customers and there is no way now in which we can give the benefit to the customers.
    Mr. Woodnutt: On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

    Inland Revenue (Estimates Committee's Report)
    Sir E. Erringtonasked the Chancellor of the Exchequer when he expects to publish his reply to the report of the Estimates Committee on the Inland Revenue.
    Mr. Roy Jenkins: I intend to present a White Paper tomorrow.
    Sir E. Errington: May I take it that this lengthy delay in making a reply has resulted in very careful consideration of the report by the Inland Revenue?
    Mr. Jenkins: The hon. Member may so take it.
    Mr. Barnett: Will my right hon. Friend not be quite so gullible as the Committee in accepting as gospel every word presented to it by the Inland Revenue?
    Mr. Jenkins: My hon. Friend put that point to me on the last occasion that I answered a Question from my hon. Friend the Member for Fife, West (Mr. William Hamilton). I can only repeat the answer I gave then—I shall consider all factors but I do not believe that my hon. Friend the Member for Fife, West was gullible.

    United Kingdom Debts
    Mr. Barnettasked the Chancellor of the Exchequer what recent discussions he has had with central banks and other institutions on the phasing of United Kingdom debts; and if he will make a statement.
    Mr. Roy Jenkins: I have had no such discussions.
    Mr. Barnett: What advantage does my right hon. Friend see in reducing central bank debts with short-term money, whether "hot" or only slightly warm? Would it not be preferable to lower Bank Rate and renegotiate the central bank debts?
    Mr. Jenkins: I do not accept what my hon. Friend says. There has been a natural re-flux of money to this country associated with the very strong position of our balance of payments and the return of confidence. I do not see any need to do as my hon. Friend suggests. Of course. Bank Rate was lowered a fortnight ago.
    Mr. Maudling: Is it a fact that our total overseas indebtedness was increased by £356 million through the mishandling of devaluation and the effect on the Exchange Equalisation Fund?
    Mr. Jenkins: I do not agree that there was a mishandling of devaluation.

    Bank Lending
    Mr. Barnettasked the Chancellor of the Exchequer if he will make a statement on the current trend of bank lending.
    Mr. Roy Jenkins: Restricted lending by the London clearing banks rose slightly, after seasonal adjustment, in January and February; this rise followed a considerably larger fall in the preceding two months. Other groups of banks showed little change.
    Mr. Barnett: Is it not time that we at least brought up to date the arbitrary figure fixed in November, 1967? Will my right hen. Friend consider some relaxation for small manufacturing companies?
    Mr. Jenkins: It is very difficult to make selective relaxations. Money supply is growing somewhat owing to the inflow of foreign funds. As I have said, I keep all these matters under review.
    Mr. Alison: Does the right hon. Gentleman appreciate that the substantial depreciation in the value of the currency since November, 1967, has had the effect of reducing the real level of the ceiling he put on bank lending to as little as 90 per cent. of the November, 1967, level and that this is both undesirable and unintentional?
    Mr. Jenkins: The banks are somewhat above their ceiling, about 3¼ per cent. above at present. That is on restricted lending. There is also unrestricted lending which means that bank lending to industry as a whole has increased substantially during this period.

    Domestic Credit
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what is now his estimate of the probable percentage increase in domestic credit over the current financial year.
    Mr. Diamond: I have nothing to add to my right hon. Friend's answer to a similar Question which the hon. Gentleman asked on 20th January last.—[Vol. 794, c. 230–1.]
    Mr. Bruce-Gardyne: Is it not evident, notwithstanding that reply, that the pre-
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    sent severity of the credit squeeze is having the effect of pulling in "hot" money which is expensive to service and just as likely to go out again? Under the circumstances, has not the time come at least to stop fining banks for going over their lending ceiling and to abolish the prior deposits scheme?
    Mr. Diamond: What the hon. Gentleman is referring to has nothing to do with "hot" money.
    Mr. Hordern: Does the right hon. Gentleman intend to place any restriction on the increase in domestic credit in the forthcoming financial year, and if he does will he mention it in his Budget Statement?
    Mr. Diamond: My right hon. Friend has listened carefully to the hon. Gentleman's request.

    Gross Domestic Product
    Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what is now his estimate of the probably percentage increase in gross domestic product at factor cost in the current financial year.
    Mr. Diamond: I would ask the hon. Gentleman to await the detailed economic forecasts to be published with my right hon. Friend's Budget statement.
    Mr. Bruce-Gardyne: Could the right hon. Gentleman possibly do some sums on the back of the Dispatch Box now and tell us whether the shortfall in the rate of growth of the nation's resources over the five years of Labour Government as compared with the rate of growth over the preceding five years is 40 per cent. less, or a greater or lesser amount?
    Mr. Diamond: I do not know what the rules of order are about doing sums on the Dispatch Box but I think that the suggestion I have made is the best one. Let us wait until we have the figures. Then we can base solid argument on them.

    Income Tax
    Mr. Stratton Millsasked the Chancellor of the Exchequer at what weekly wage income tax commences for a single man, married man, married man with one child, and married man with two children, respectively.
    Mr. Taverne: About £6 6s., £9 5s., £12 2s. and £13 respectively, assuming the children are under 11 years of age.
    Mr. Mills: While I recognise what was done in the last Budget, may I ask the hon. and learned Gentleman to bear in mind that these are invariably low starting points for taxation and that the administrative costs of collecting them from the low wage earner must be considerable? Will he look at this sympathetically in the Budget?
    Mr. Taverne: I am sure that the hon. Gentleman would not wish me to say any more than that I will bear this in mind.
    Mr. Ogden: Would my hon. and learned Friend also bear in mind that not only are they very low rates of taxation, but they are very low rates of pay?

    Selective Employment Tax
    Mr. Stratton Millsasked the Chancellor of the Exchequer if he will estimate the proportion of the total revenue received from the selective employment tax paid by families with an income of under £20 a week.
    Mr. Taverne: The selective employment tax is paid by employers and its effect on consumers depends on how far it is passed on in prices. Households with incomes under £20 a week would bear on average a relatively smaller share of any increase in consumer prices due to S.E.T. than those with higher incomes.
    Mr. Mills: Despite that, is it not a fact that S.E.T., which is passed on, hits hardest at housing and the retail trade which, for the poorer members of the community, represents a greater proportion of their average weekly income? Will the hon. and learned Gentleman look at this matter sympathetically?
    Mr. Taverne: As for the retail trade, we have just had the Reddaway Report, which I commend to the hon. Gentleman. As for the general effect of S.E.T., it is undoubtedly much less regressive than an equivalent amount imposed by way of purchase tax.
    Mr. McNamara: Has my hon. and learned Friend made any estimate of what
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    would be the effect of a value added tax on similar income groups?
    Mr. Taverne: V.A.T. would certainly be more regressive than S.E.T.

    Balance of Payments
    Mr. Ridsdaleasked the Chancellor of the Exchequer how the balance of payments for 1969 compares to the balance of payments of West Germany and Japan for that year, from information available to him from international sources.
    Mr. Taverne: Our surplus on current and long-term capital accounts was £387 million. West Germany had a deficit of nearly £1,700 million. Japan had a surplus of £830 million.
    Mr. Ridsdale: In view of the serious industrial strife which at present exists in this country and the effect this will have on the balance of payments, will the hon. and learned Gentleman advise the Prime Minister to introduce an industrial relations Bill forthwith to protect the balance of payments?
    Mr. Taverne: To answer the hon. Gentleman in question form, how would he deal with industrial relations?
    Mr. Orme: Can my hon. and learned Friend tell us of the incidence of industrial disputes in Japan and say whether or not they are higher than in this country?
    Mr. Taverne: Not without notice.

    Inland Revenue Form P3G
    Mr. Ridsdaleasked the Chancellor of the Exchequer if he will issue an amended Inland Revnue form P3G on Tax Rates of Pay and Overtime, to include comparable tax rates in West Germany, France and Japan, from information available from international sources.
    Mr. Taverne: No, Sir.
    Mr. Ridsdale: Was this form issued by a public relations officer seconded from Transport House or by a Treasury public relations officer on the advice of Transport House?
    Mr. Taverne: This form was issued by the Inland Revenue and was concerned to state the facts, which it did.
    Mr. Patrick Jenkin: Is it not a fact that the form is bound to be misleading in a great many cases because it depends on the nature of the deductions from an individual's income according to the level at which he is taxed on the tax scale?
    Mr. Taverne: The form is strictly accurate and I should have thought that every hon. Member, with the exception of those who are concerned to make party political propaganda, would welcome a form which made clear to people what rates of tax they should pay.

    Domestic Credit Expansion and Money Supply
    Mr. Hordernasked the Chancellor of the Exchequer if he will arrange to publish figures for domestic credit expansion and for the money supply at monthly intervals.
    Mr. Diamond: No, Sir.
    Mr. Hordern: Would the right hon. Gentleman explain how it is possible for the United States to give figures for the money supply at monthly intervals and for the preceding month while we do not have more recent figures than for last December?
    An hon. Member: Ask President Nixon.
    Mr. Diamond: The answer is not to ask President Nixon but to ask the Chief Secretary.
    Mr. Hordern: Well, what is the answer?
    Mr. Diamond: The answer is simply that the American banking system is subject to many more statutory controls than ours. They already have to make returns of a vast number of details, and the additional information required in their case is small. In our case it would be enormous and it would not be worth while; and, in the meantime, in the light of that, the figures would be inaccurate.

    Purchase Tax
    Sir G. Nabarroasked the Chancellor of the Exchequer, whereas furniture, ladies tights and stockings are Purchase-Taxed at 13¾ per cent., soft drinks at 22 per cent, motor cars at 36⅔ per cent., and greetings cards, cameras and cosmetics at
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    Mr. Taverne: The duties on whisky, beer, tobacco products and motor spirit are equivalent to Purchase Tax rates of the order of 800 per cent., 130 per cent., between 300 and 600 per cent., depending on type, and 300 per cent. respectively. My right hon. Friend will be considering all rates of indirect taxation in the context of his forthcoming Budget.
    Sir G. Nabarro: Why do we have this rag-bag of variegated inconsistencies ranging from 800 per cent. on whisky and 55 per cent. on greetings cards to 13¾ per cent. on a Savile Row suit? Cannot we have some reform, with a low-level, widely-based tax on the V.A.T. type on all consumer goods in order to get equitable and reduced prices?
    Mr. Taverne: We in the Treasury would welcome the actual proposals of the Opposition for direct taxation. At least, I understand that the hon. Gentleman is in favour of a general sales tax; but, of course, that would hit much harder those on much lower incomes.

    Selective Employment Tax
    Sir G. Nabarroasked the Chancellor of the Exchequer what part, and the sum, of the £615 million retained selective employment tax during 1969–70, enters into the prices of food, drinks, confectionery and everything edible for human consumption; and whether he will reduce food and drinks' prices by abolishing such selective employment tax on all employment entering into prices for all food and drink for human consumption.
    Mr. Taverne: The evidence we have indicates that S.E.T. has had very little effect on the price of food. The answer to the second part of the Question is that I cannot anticipate my right hon. Friend's Budget proposals.
    Sir G. Nabarro: How is it that the Chancellor can estimate the amount of S.E.T. which afflicts housing and the construction industries but cannot estimate

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    the amount of S.E.T. which afflicts food distribution? Why is the hon. and learned Gentleman so incompetent in his inquiries in this matter? Would he explain why last summer the Chancellor accused the Tories, in his speech at Aberystwyth, of being the first party in history to tax food when S.E.T. bears directly as a tax on all food distribution?
    Mr. Taverne: I find that question totally incomprehensible. [HON. MEMBERS: "Resign".] The hon. Gentleman has clearly not read the Reddaway Report, which makes it clear that the effect of S.E.T. on distribution is absorbed in increased productivity or reduced profits. [Interruption.]
    Mr. Maudling: If the hon. and learned Gentleman finds the question incomprehensible, I will repeat it. It has two parts. First, why is it possible to calculate the effect of S.E.T. on housing and not on food? Secondly, why did the Chancellor say that the Tory Party was the first party to put a tax on food when S.E.T., by his own statement, has an effect on the price of food?
    Mr. Taverne: I did not say it had that effect on the price of food. [HON. MEMBERS: "Oh!"] I found it incomprehensible perhaps because I had overestimated the hon. Gentleman's intelligence, which is not always an easy thing to do. I thought that he would have read the Reddaway Report. The Question relates to food, and it is clear that, in respect of food, according to the Reddaway Report, there has not been an effect on prices.
    Hon. Members: Disgraceful.
    Mr. Maudling: Instead of being rude, would the hon. and learned Gentleman answer the question?
    Mr. Taverne: The right hon. Gentleman does not like the answer because he does not like the fact that the Reddaway Report—[Interruption.]
    Several Hon. Members——
    Mr. Speaker: Order. Mr. Howell, Question No. 27.

    Price Inflation
    Mr. David Howellasked the Chancellor of the Exchequer what is now his estimate of the rate of price inflation for the current financial year.
    Mr. Diamond: It is not customary to give quantitative forecasts of the general movement of prices.
    Mr. Howell: Whether or not it is the custom, how is it that Ministers, and particularly the Prime Minister, are prepared to go around making unfounded accusations about likely inflation under the imminent Tory Government when prices have risen by 25 per cent. since 1966 under the Socialists?
    Mr. Diamond: The hon. Gentleman did not in the Question raise any of those points. If he wants to challenge points made by any speaker he should put down a Question, whereupon he will receive an Answer.
    Mr. William Hamilton: Is my right hon. Friend aware that the hon. Member for Worcestershire, South (Sir G. Nabarro) has continually applied pressure to increase the price of apples to the housewife, that the hon. Member for Westmorland (Mr. Jopling) has consistently—indeed only last week—asked for the highest prices possible for meat, and that existing Tory policy on agriculture would put up the prices of foodstuffs all along the line for housewives?
    Mr. Diamond: My experience is that I cannot spend a whole day in this House without at least one hon. Gentleman opposite suggesting something which would inevitably involve increases in public expenditure.

    Agricultural Premises (Derating)
    Mr. Dalyellasked Mr. Chancellor of the Exchequer if he will calculate the cost to the Exchequer of the total derating of all agricultural premises and units.
    Mr. Diamond: No, Sir. The cost would fall on the rating authorities.
    Mr. Dalyell: What would be the cost to local authorities of derating factory farms which, among other things, the Conservatives seem to have promised they would do?
    Mr. Diamond: My hon. Friend will know that the situation in respect of the derating of factory farms is different in Scotland compared with England and Wales. In Scotland there is already a measure of derating of industrial buildings, of 50 per cent., which it is proposed

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    should continue. There is no such de-rating in England, where there is no proposal to change the law.

    Chancellor of the Exchequer (Visit to Scotland)
    Mr. Dalyellasked Mr. Chancellor of the Exchequer if he will make an official visit to Scotland.
    Mr. Roy Jenkins: I hope to visit Scotland again before long, but I have no firm plans at present.
    Mr. Dalyell: Has my right hon. Friend had it brought to his attention that the Shadow Chancellor of the Exchequer—that is, in the Scottish Nationalist Party —has said that certain industries are not good for Scotland; namely, British Leyland, the strip mill and the smelter? Does not that seem rather weird in the context of a South Ayrshire situation?
    Mr. Jenkins: We seem to have rather a lot of Shadow Chancellors of the Exchequer at the present time. I have had this particular statement drawn to my attention and it appears to me that it would involve a policy of insulating Scotland from a great part of modern industrial development, which could not fail to have the effect of making a very substantial reduction indeed in Scottish standards of living.

    Investment (Interest Rates)
    Mr. David Howellasked the Chancellor of the Exchequer whether, in the light of the most recent Confederation of British Industry assessment of investment pospects, he will now take steps to reduce interest rates.
    Mr. Eadieasked the Chancellor of the Exchequer whether he has considered the publication, Industrial Trends, Survey No. 37, February, 1970, published by the Confederation of British Industry, a copy of which is in his possession; and if he will make a statement.
    Mr. Roy Jenkins: I give careful consideration to the C.B.I. Survey of Industrial Trends, as I do to other indicators of the development of the economy. The most recent official inquiry into investment intentions revealed a continuing upward trend in manufacturing investment, and it would certainly be premature to conclude from the C.B.I. survey that
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    there has been a significant worsening in investment prospects. As to the level of interest rates, this is affected by external as well as domestic factors. I am not prepared to make statements on interest rate policies and prospects for the future.
    Mr. Howell: Although I appreciate that Bank Rate has been reduced by ½ per cent. since my Question was tabled, will the Chancellor recognise that in many industries the overwhelming view is that new processes and equipment are not going in at an adequate rate to ensure high exports and intensive competition in the coming years? Will he watch this situation with the most careful attention, be cause it is not yet satisfactory?
    Mr. Jenkins: I do watch this situation with the most careful attention. It is perhaps, of all the major factors in our economic situation, the one on which one gets the most conflicting evidence at the present time. As the hon. Gentleman and the House will be aware, what appears to be the case is that 1969 showed a good rate of increase, and I hope to see a good rate of increase in 1970 too, but I will certainly keep it under review.
    Mr. Henig: Is my right hon. Friend aware that there is great public mystification why, after the recent reduction of Bank Rate and thereby interest rates, the building societies, which were quick to increase mortgage rates when Bank Rate went up, immediately announced that they would not reduce mortgage rates? Will he explain why this is so, so that the public may be informed of these important matters?
    Mr. Jenkins: This is a quite separate question. As far as I am aware, only one building society has made a statement bearing upon this. I think my hon. Friend should put down a Question on this, rather than raise it on a quite different Question.

    Members' Pensions
    Dr. Winstanleyasked the Chancellor of the Exchequer if he will seek to ensure that back-bench Members are effectively represented in any discussions which take place on the effects of the Government pension scheme on Members' pensions.
    Mr. Diamond: The Government are always ready to receive representations from hon. and right hon. Gentlemen on matters affecting them.
    Dr. Winstanley: The right hon. Gentleman's previous reply suggested that this matter was to be decided by the Whips. Is he aware that many back benchers are anxious about the possible fate of their pensions under the new arrangements, and that they may not be disposed to accept an agreement about their pensions reached in secret through the so-called usual channels?
    Mr. Diamond: I said nothing about "in secret" or "the usual channels". I said that the Government are always prepared to accept representations from hon. and right hon. Gentlemen on matters affecting them.
    Mr. Arthur Lewis: Is my right hon. Friend not aware that the Whips select the hon. Members they want, the committees meet and come to decisions without hon. Members having the opportunity to put their points of view, and those decisions are imposed on hon. Members, as has been done recently on other matters?
    Mr. Diamond: I am not aware of the Whips imposing anything. I am sure that my hon. Friend shares with me the joy of coming to the House regularly to do our duty voluntarily.
    Sir R. Cary: Is the right hon. Gentleman aware that the trustees of the Members' Fund, of which I am privileged to be chairman, keep these matters under constant review, and that the trustees represent all hon. Members?
    Mr. Diamond: I am most grateful to the hon. Gentleman, and I should like to take this opportunity, on behalf of the Government, to pay a tribute to the great work which he and his colleagues do.

    Banks (Lending Policy)
    Mr. J. H. Osbornasked the Chancellor of the Exchequer what direction he will now give to the banks on their lending policy.
    Mr. Roy Jenkins: I would refer the hon. Member to the reply which I gave to the hon. Member for Acton (Mr.
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    Kenneth Baker) on 17th February.—[Vol. 796, c. 195–6.]
    Mr. Osborn: Is not the right hon. Gentleman aware of the bankruptcies amongst smaller firms and the lack of credit affecting larger firms and, in view of the more reasonable conditions, will he now give a direction to the Bank of England and the banks to be more lenient in their policy?
    Mr. Jenkins: I have nothing to add to what I said in reply to a similar Question earlier.

    6d. Piece
    Mr. J. H. Osbornasked the Chancellor of the Exchequer whether he has now received advice from the Decimal Currency Board about retaining the 6d. or 2·5 new pence piece.
    Mr. Taverne: No, Sir. the Decimal Currency Board is still considering the matter.
    Mr. Osborn: The arguments for retaining the 6d. piece or having the 2·5p piece have been discussed in this Chamber, and there is now need for a firm decision. Will the Chancellor of the Exchequer bear this in mind and give a firm decision quickly?
    Mr. Taverne: Yes, of course my right hon. Friend will bear this in mind. We appreciate the need for a quick decision.

    Inland Revenue (Repayments of Tax)
    Mr. Lubbockasked the Chancellor of the Exchequer if, in view of the Annual Report of the Parliamentary Commissioner for 1969 in which it is pointed out that no authority exists for the Inland Revenue to pay interest on sums owed to taxpayers, he will make provision in the Finance Bill this year for allowing such payments.
    Mr. Taverne: I have noted the hon. Member's suggestion, but I cannot anticipate my right hon. Friend's Budget statement.
    Mr. Lubbock: The hon. Gentleman must have seen the report of the Parliamentary Commissioner, which instanced no fewer than 26 examples of delays in the offices of the Inland Revenue. Why should the taxpayer be compelled to lend money free of interest to the Government in this way?
    Mr. Taverne: In reply to the second part of the supplementary question, a change in the law would be required, and this is a matter which will be considered in the Budget. I am aware of the criticisms which were made in the Parliamentary Commissioner's report and also of the fact that he attributed the defects which he criticised to pressure of work and not to weaknesses in procedure. In any event, there has been a review, and a number of changes have been introduced since the report.

  GIBRALTAR
  Mr. Martenasked the Prime Minister what plans he now has to visit Gibraltar.
  The Prime Minister (Mr. Harold Wilson): I have no plans to do so at present, Sir.
  Mr. Marten: When the Prime Minister next sees the Prime Minister of Gibraltar, will he discuss with him how it was that, when Gibraltar's sovereignty vis-à-vis Spain was under discussion at the United Nations, the British Government, supported by the Opposition, suggested that a referendum should be held, yet when much the same situation arose here over the Common Market the Government refused a referendum? How it is that Her Majesty's subjects in the United Kingdom are treated less favourably than those in Gibraltar?
  The Prime Minister: I must say that I scratched my head to think what supplementary question the hon. Gentleman had in mind, and I failed to anticipate that one. We have here a sovereign Parliament which is capable of debating these things, and of voting on them too. It was felt right that the people of Gibraltar, not having a Parliament of our kind, should have the right to express their views on adherence to Spain. The results were decisive.
  Mr. Roy Hughes: Does my right hon. Friend appreciate that the people of Gibraltar are deeply grateful for the support given to them by the Government against the aggression of their Fascist neighbour? Will he give the House an assurance that this will continue to be the policy of Her Majesty's Government?
  The Prime Minister: Our policy has been clearly stated; I said it again in Gibraltar the last time I was there, and there will be no deviation from it. I think the people of Gibraltar recognise that when the Spanish Government made their claim for Gibraltar we did not, as our predecessors did, immediately fall over ourselves to offer frigates to Spain.

  GOVERNMENT DEPARTMENTS (CO-ORDINATION)
  Mr. Hugh Jenkinsasked the Prime Minister whether he will devolve upon the Minister without Portfolio the duty of the co-ordination of Government Departments; and if he will make a statement.
  The Prime Minister: I would refer my hon. Friend to my reply to a Question by my hon. Friend the Member for Stockport, North (Mr. Gregory) on 4th November, 1969.—[Vol. 790, c. 92.]
  Mr. Jenkins: Will my right hon. Friend reconsider the position? Is he not aware that in the last month his right hon. Friend the Chancellor of the Exchequer has stated that the average amount of assistance given to council house tenants is about the same as the average relief received by mortgagors, whereas the Minister of Housing and Local Government has said that mortgagors receive half as much again as council house tenants? Does not this demonstrate the need for co-ordination between Government Departments?
  The Prime Minister: I shall make a study of this question. What I am concerned with is that the amount of relief given to council house tenants will be cut to a very small fraction if the Opposition carry out their policy.
  Mr. Montgomery: Would my right hon. Friend care to comment on the co-ordination between his right hon. Friends the Chancellor of the Exchequer and the Secretary of State for Social Services, who are perfectly prepared to sacrifice him unless he agrees to come to a compromise with the trade unions?
  The Prime Minister: The hon. Gentleman is capable of believing almost anything. That story is completely without foundation. The hon. Gentleman may believe it, but no one who was present on the alleged occasion does.

  HOUSING
  Mrs. Renée Shortasked the Prime Minister if he will now assume personal responsibility for increasing the housing output.
  Mr. Huntasked the Prime Minister whether he will now assume direct responsibility for the housing drive.
  The Prime Minister: No, Sir.
  Mrs. Short: Could my right hon. Friend say how much longer he is prepared to allow Tory councils to deny to thousands of families a year the right to a decent home, since this is what is happening? Does he not think that he ought now to put the Ministry of Housing and the Ministry of Public Building and Works together to make one Ministry of Construction, to set up a house-building organisation and to get the houses built? Will my right hon. Friend please take action on this matter now?
  The Prime Minister: The proposal put forward by my hon. Friend I have replied to on a number of occasions——
  Mrs. Short: But they have all been bad replies.
  The Prime Minister: But it would not deal with the abysmal performance of certain Tory local councils. When one considers how these Tory local councils are cutting back on council housing, despite the fact that they are getting from this Government the most generous subsidies in history, one can only imagine what they would do if there were a Government carrying out the subsidy policy of the party opposite.
  Mr. Hunt: But has the Prime Minister calculated that, with housing completions running at a rate of 365,000 a year, 135,000 families a year are being deprived of homes categorically promised to them by the right hon. Gentleman at the last election, when he made his pledge of 500,000 homes a year? Has he not got those people on his conscience?
  The Prime Minister: Having dealt with this matter on a number of occasions, I would remind the hon. Gentleman that over 2 million houses have been built by this Government in five years——
  An Hon. Member: Answer the question.
  The Prime Minister: I did answer the Question—if hon. Gentlemen opposite had stopped barracking they would have heard it—over 2 million houses, more than a quarter better than in the last five years of the Conservative Government, a Government who had already had eight years to gear themselves to the situation.
  Mr. Frank Allaun: The Prime Minister has referred to those councils which, despite the great need, are slashing their house building programmes. Will the Government now use the available compulsory powers to refuse permission to councils to cut their lists in this way? If it involves local public inquiries so much the better, because it will spotlight the guilty councils.
  The Prime Minister: This will be a matter for the electors in those areas who will no doubt take into account not only the cutting of the housing programme, but also increased council house rents, which would have been even higher if it had not been for legislation by this Government restraining increases, legislation which was voted against by the party opposite.
  Mr. Peyton: Is it not unreasonably optimistic to hope that the Prime Minister will now try to deal with the point about the pledge which he made? He will recall that he distinguished it from "promise". It was a pledge to be carried out in all circumstances, no matter what the difficulties. [Interruption.] Instead of electioneering, or answering questions which have not been asked, will he deal with that point?
  The Prime Minister: I have dealt with the point on a number of occasions in this House, and I did so when the Government had to take decisions following devaluation. I do not remember right hon. Gentlemen opposite coming to the House when they broke their pledge on the Rent Act.
  Mr. Heath: The Prime Minister this afternoon has succeeded in producing a greater string of inaccuracies, to use a polite word, than even he has been able to produce before. [HON. MEMBERS: "Oh!"] Will he kindly give the reference in the alleged Conservative manifesto

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  which said that no legislation about rents would be introduced and which he has so often quoted? Will he also give a reference to the question which the late Mr. Bevan was supposed to have asked? Secondly, it is true that the House is being unfair in blaming the Prime Minister—[HON. MEMBERS: "Too long."]—for not carrying through his solemn election pledge of 500,000 houses, because he broke that pledge, as he says, after devaluation, when he announced that the Government would build 483,500 houses. Will he now explain why——
  Hon. Members: Too long. Sit down.
  Mr. Speaker: Order. Noise does not help at all.
  Mr. Heath: Will he now explain why the Government have not succeeded in building 483,500 houses but only 365,000 since he gave his last pledge?
  The Prime Minister: On the first question, it was not in the Tory manifesto [HON. MEMBERS: "Oh."] I did not say that it was in the Tory manifesto. [HON. MEMBERS: "You did."] I said that it was a statement in the election and that it was in answer to a question by Aneurin Bevan. I do not know whether the right hon. Gentleman wants to deny that. It was a question by Aneurin Bevan and it was officially denied by the Tory Party at the time. [HON. MEMBERS: "Who by?"] If hon. Gentlemen opposite—[Interruption.]
  Mr. Speaker: Order. Again, noise does not help.
  The Prime Minister: If the right hon. Gentleman wants to deny it, the records can be searched on this matter. [Interruption.] With regard to the second question, I stated the position after devaluation. I did not say how many houses would be built as a result. Nevertheless, the right hon. Gentleman will recognise that at that time we could not have foreseen what the Tory councils would do—[HON. MEMBERS: "Oh."]—nor could we have foreseen that a Tory housing spokesman would chide Tory councils for building too many. But with regard to the figures he has quoted, the Tories in 13 years—[HON. MEMBERS: "Not again."] —exceed it in only one year, when they were setting the stage for the election and for an £800 million deficit.
  Mr. Crawshaw: Would my right hon. Friend not agree that, despite generous Government help, the building of council houses imposes a tremendous burden on local rates and therefore the housing programme becomes a party political cockpit? Has not the time now arrived when this should be a rate imposed across the country so that the houses can be built with the rate burden being shared equally with those areas which do not have the burden of building these houses?
  The Prime Minister: My hon. Friend is on a good point. That is why I have given priority to those areas where these problems are greatest. But when right hon. Gentlemen opposite say they will cut the housing subsidy by £100 million, that must mean a substantial reduction in the number of houses built by local authorities.
  Mr. Heath: Is the Prime Minister aware that his own Minister of Housing —[HON. MEMBERS: "Sit down."]—has never been able to deny that the record of such Labour councils as still exist is far worse than that of Conservative councils in this period? The reason is plain enough. It is difficult for local authorities with high interest rates—[Interruption.]
  Mr. Speaker: Order. Some Members on both sides of the House do not like to hear what they disagree with.
  Mr. Joseph Slater: On a point of order. During my 20 years as a Member of this House, I have never known so much latitude granted to a Leader of the Opposition—[HON. MEMBERS: "Oh."]—in asking a question and being given permission by the Chair to do so at such length. Is it not time that this was stopped?
  Mr. Speaker: Order. The Chair gives both latitude and longitude to the Prime Minister and to the Leader of the Opposition.
  Mr. William Hamilton: On a point of order.
  Dame Irene Ward: On a point of order.
  Mr. Speaker: Order. With all the good will in the world, I can only take

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  one point of order at a time. Mr. William Hamilton, point of order.
  Mr. William Hamilton: Further to the point of order raised by my hon. Friend the Member for Sedgefield (Mr. Joseph Slater). I have previously made the same point but, having listened to the right hon. Member for Bexley (Mr. Heath), may I withdraw my opposition and encourage you, Mr. Speaker, to call the right hon. Gentleman more often?
  Mr. Speaker: Order. That, indeed, is a left-handed compliment.
  Mr. Heath——
  Dame Irene Ward: On a point of order, Mr. Speaker. In all the time that I have been in the House of Commons I have never heard a Prime Minister take so long answering his rotten—[Interruption.]—giving such rotten replies to questions.
  Mr. Speaker: Order. It is clear that the two points of order cancel each other out.
  Mr. Heath——
  Mr. Lubbock: On a point of order. Mr. Speaker. On one or two other occasions you have deprecated the raising of points of order during the Prime Minister's Question time, because it prevents other hon. Members who have later Questions from getting them answered. I raise this point with you only because the hour of 3.30 is past. Will not you remind hon. Members once again that, by doing this, right hon. and hon. Members who have not got Questions of their own on the Order Paper are being extremely selfish in depriving their colleagues of their opportunity?
  Mr. Speaker: Order. The hon. Gentleman has put eloquently what I have said on previous occasions, that raising points of order during Question Time costs someone a Question which he had reason to expect that he would ask.
  Mr. Heath: On the question of subsidies, will the Prime Minister recognise that what this side of the House has urged is that the subsidies should be renegotiated so that local authority housing is concentrated on those in need, namely, the elderly, the disabled, and those who are not able to pay a fair
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  rent, that those who can pay a fair rent should do so, and that those who cannot should have rent rebates? That is the policy of the right hon. Gentleman's own Secretary of State for Social Security. When will he recognise that and stop misrepresenting the facts?
  The Prime Minister: The right hon. Gentleman has put some four or five questions to me in the last few minutes. The answer to the first one is, "No, Sir". The answer to his point about subsidies is this. While I notice his hysterical comment—and it is very easy to get him hysterical these days, I have noticed—that we increased interest rates to penalise Tory councils, the right hon. Gentleman, apart from his presumed knowledge of world interest rates, should recognise that in subsidies to the large local authorities we are now producing something like double what his Government did when they went out of office. Against their £67 million in their last year, which was a peak for them, we have now been providing £131 million.
  With regard to the questions which show the right hon. Gentleman's sensitivity about Tory housing policy, the right hon. Gentleman no doubt will have seen——
  Mr. Biggs-Davison: Too long, and too many election speeches.
  The Prime Minister: I am replying to some at the moment. The right hon. Gentleman no doubt will have seen the answers given a week last Friday showing for each major city what it would mean for council house rents if the policy that he is currently touting round the country were carried out. There would be inordinate increases in his housing policy.
  With regard to his question about those in special need, we have done more for each of the categories that he mentioned than his Government ever did. It is clear from what he and his hon. Friend the Shadow Minister have said that they would provide no subsidies for general housing need, that they are committed to reducing our £130 million—[HON. MEMBERS: "Speech."] I am replying to a speech in the form of about a hundred supplementaries asked by the Leader of the Opposition. Having pledged themselves to reduce housing subsidies from

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  £130 million to £30 million, right hon. and hon. Gentlemen opposite can only be proposing inordinate increases in council house rents which we shall resist.
  Mr. Wyatt: On a point of order, Mr. Speaker. In order that Questions to my right hon. Friend the Prime Minister may be dealt with more expeditiously, could not we have a quarter of an hour on Mondays and Wednesdays for electioneering, and could not we have injury time for points of order during Questions to my right hon. Friend?
  Mr. Speaker: The hon. Gentleman's first point is a political one. His second point about injury time has already been suggested to the Chair. I have no power to arrange for injury time. Knowing the House as I do, I think that, if the House arranged for injury time, there would be more injuries.

  QUESTIONS TO MINISTERS
  Mr. Farr: On a point of order, Mr. Speaker. I wonder whether you can help me with a difficulty relating to today's Questions to the Chancellor of the Exchequer. On Tuesday, 24th February, I tabled a Question to him about a rating matter. I was prompted to do so in the normal way as a Member's logical action following an exchange of correspondence with Treasury Ministers which had an unsatisfactory outcome. In view of that correspondence and believing that a Minister should, if required, be prepared to explain his position and his statements at Question Time in the House, I was more than surprised to have a note informing me that the Chancellor had had my Question transferred to the Minister of Housing and Local Government.
  My point is to ask whether the Chancellor of the Exchequer is accountable in this House for what he has written in correspondence with an hon. Member, and, if he is, how he can be stopped from sheltering behind the Minister of Housing and Local Government.
  Mr. Speaker: The hon. Gentleman made representations to me that he would raise this point in the House. In a nutshell, his case is that he raised a certain matter with the Treasury, had an amount of correspondence with the Treasury, and then found to his surprise that the Question that he put down at the end of his
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  correspondence was transferred from the Treasury to another Minister so that he lost his favourable place on the Order Paper.
  This is a matter which the hon. Gentleman should take up with the Minister concerned. I have no power to comment on the transferring of Questions from Minister to Minister. All that I have said previously is that if a Question is transferred the Member whose Question is transferred should be notified as soon as possible. In this case, he was notified as soon as possible. The hon. Gentleman must take up the matter with the Minister concerned.
  Mr. Maudling: Further to that point of order, Mr. Speaker. Is there not an important point of principle here in the sense that the Parliamentary Question is the sanction upon which correspondence with Ministers rests? If the two are not bound together, there is a break in what is the normal chain of responsibility to this House. Quite apart from this instance, I think that there is an important point of principle which should be considered.
  Mr. Speaker: The right hon. Gentleman will realise that I replied sympathetically to the question raised by the hon. Member for Harborough (Mr. Farr). The matter of transfer, however, is not one for the Chair. The Chair cannot do anything about it. But the hon. Gentleman's point was serious, and I took it seriously.

REORGANISATION OF LOCAL GOVERNMENT IN GLAMORGAN AND MONMOUTHSHIRE AND HEALTH SERVICE IN WALES
The Secretary of State for Wales (Mr. George Thomas): With permission, I wish to make a statement about the reorganisation of local government in the counties of Glamorgan and Monmouthshire and about my proposals for the reorganisation of the Health Service in Wales.
Following the statement on local government reorganisation in Wales by my right hon. Friend the Prime Minister on 28th October last, I have reviewed the situation in Glamorgan and Monmouth-shire with a view particularly to eliminating the arbitrary divisions between towns and country.

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This review included a socio-geographic study of the area by the Welsh Office, and it examined a wide range of possible patterns for reorganisation of local government in the area. I am now satisfied that the needs of this area would best be met through a system of unitary authorities. I accordingly propose that in Glamorgan and Monmouthshire local government should be reorganised on the basis of three main authorities each responsible for all the major functions in its area, one containing Cardiff, which will, of course, remain the capital of Wales, one Newport, and the third Swansea. A White Paper setting out the details is published today.
I am writing to each county borough and district council in the two counties and to their associations inviting them to send me their comments on the White Paper, and I shall then arrange full consultation with them.
These proposals relate solely to the geographical counties of Glamorgan and Monmouthshire. In the rest of Wales the previous proposal that local government should be reorganised on the basis of four counties and 20 districts will stand.
I am also publishing today a Green Paper with proposals for the reorganisation of the Health Service in Wales. As in England, the Health Service will be administered by area health boards outside, but closely associated with, local government. The boundary between the Health Service and the local authority public health and personal social services will be drawn in the same way. There will be area health boards coterminous with the four new counties of Clwyd, Gwynedd, Powys and Dyfed and with the three unitary areas which I now propose for the counties of Glamorgan and Monmouthshire. These are firm decisions, but the other proposals in the Green Paper are for general discussion. I shall be consulting the interested parties in Wales and I shall be associated with the consultations which my right hon. Friend the Secretary of State for Social Services will be having on those proposals which will be common to England and Wales.
Mr. Gibson-Watt: The right hon. Gentleman appears as a reluctant midwife producing twin children of rather doubtful parentage. It is clear that he
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has been subject to great pressures within his own party on this subject.
May I ask the Secretary of State, first, whether he intends to introduce legislation in this Parliament?
Secondly, as this statement will not be universally popular with everyone in Monmouthshire and Glamorgan, may I ask whether he will take full account of the representations which will be made by the interested authorities within these two counties?
Mr. Thomas: Far from being under pressure, these proposals are my own. I am satisfied that they are in the best interests of both Glamorgan and Monmouthshire.
Concerning legislation, I am inviting local authorities to send me their comments by June. I hope then to have consultations with their associations and maybe with the authorities themselves. I hope to move at a good pace, but I cannot forecast the date of legislation.
On the last part of the hon. Gentleman's question, no local government proposals, whoever brings them forward, can be expected to be popular in all quarters. I am not aiming at popularity; I am aiming at efficient local government.
Mr. Michael Foot: Will the Secretary of State accept that the situation in Wales is entirely different from that in England in that we had an investigation and a report on the situation in Wales, and, indeed, specific proposals were made, before the Redcliffe-Maud Report came forward? Therefore, when my right hon. Friend says that he is prepared to have consultations still with the local authorities, if he finds that it is the general wish of the local authorities that they should have the earlier scheme which was devised in the interests of Wales generally, will he be prepared to revert to that scheme? Does he accept that it would be good for local government that there should be one form of development in Wales which could be contrasted with the kind of development which might take place in England?
Mr. Thomas: My hon. Friend does not seem to appreciate that a different system is now proposed for Wales. There are no metropolitan areas in Wales. We have a two-tier system for 25 per cent.

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of the population and unitary authorities for three-quarters of our population centred in Glamorgan and in Monmouthshire. While I want full consultations, I should not like anyone to be misled into believing that we are likely to move from the proposal of three unitary authorities.
Mr. Hooson: I welcome the proposals about area health boards, but may I ask the right hon. Gentleman what degree of autonomy these area health boards are likely to have, what the financial arrangements will be, and what their association with local government will be?
Mr. Thomas: The area health boards will be coterminous with the local government areas. They will be very strong boards and they will deal directly with me without any intervening body, and the main planning powers will be kept in the Welsh Office. I shall deal with only seven area health boards in Wales, whereas in England there are over 90 area health boards. We can have a different structure for our service.
Mr. Probert: Whilst further study of the White Paper will be needed to come to any real conclusions, may I ask my right hon. Friend what criteria he used to come to these conclusions? Secondly, will he tell us a little more about the effect on the existing second tier authorities?
Mr. Thomas: We used a professional and technical study of patterns of travel to work, shopping interests, and the like. It became clear that the valleys, in which my hon. Friend is interested, have greater links down towards the coastal belt than with each other.
Concerning the second part of my hon. Friend's question, it means that all powers will be exercised in the unitary area by the one authority.
Mr. Ifor Davies: My right hon. Friend has stated that the basis of this reform is efficiency. May I mention that I do not know of any charge against Glamorgan on the basis of inefficiency. Indeed, there was a great deal of unanimity on the proposals in the previous White Paper.
Mr. Thomas: My hon. Friend was my colleague in the Welsh Office, and I
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listen to what he says with great respect. It is true that the Glamorgan County Council has been a good authority. But these proposals aim at strengthening the structure of local government for the whole of Monmouthshire and Glamorgan. They in no way cast any blemish on the local authorities which have been doing a good job, but they need strengthening in their resources if they are to serve the community.
Mr. Gower: Is it not unfortunate that the Secretary of State, after a long history of looking into this matter, has now come forward with proposals which mean joining together municipal areas like Cardiff, Swansea and Newport, respectively, and rural areas like the Vale of Glamorgan and the county of Monmouthshire and the Heads of the Valleys and the mining areas, which hardly have anything in common? Is it not absurd and does it not make a mockery of local government?
Mr. Thomas: I do not want to be unkind to the hon. Gentleman, but he obviously has not understood the proposal and he needs further time to look at it. I am not proposing to link Newport, Cardiff and Swansea. [Interruption.] That is what he has just said. I suggest to the hon. Gentleman that he studies these proposals in depth, when he will realise that the valleys have strong links with the areas with which they are now proposed to be associated.
Mr. Roy Hughes: Will my right hon. Friend appreciate that his proposals will cause endless disagreement and much procrastination right through Glamorgan-shire and Monmouthshire? Why does my right hon. Friend not concentrate his proposals on reorganising those innumerable tiny local authorities in South Wales which are unable to provide proper services and unify them into proper local government units?
Mr. Thomas: My hon. Friend is probably quite right; there will be much public discussion on these proposals. There are 51 housing authorities within the counties of Monmouthshire and Glamorganshire and clearly they have not the resources to give the services to the community which are required. Similarly, with regard to roads, there are 17 road authorities in the counties

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of Glamorganshire and Monmouthshire and we are determined——
Mr. Roy Hughes: Reorganise them.
Mr. Thomas: —that local government which was last reorganised in the 1880's shall be brought up to date to meet the needs of the 1980's.
Mr. S. O. Davies: Will my right hon. Friend tell the House what experience, if any, those in his office who have advised him have had as elected representative of local government? Is he not absolutely aware by now that the opposition to this scheme of his is the opposition of the overwhelming majority of the electors in South Wales? May I ask him to consider whether now is the time for him to indulge in such superficial heroics?
Mr. Thomas: My hon. Friend, not for the first time, is given to gross exaggeration. [HON. MEMBERS: "Oh."] I believe that he is out of touch with public opinion.
Mr. Anderson: The proposed merger between the borough of Newport and the county of Monmouthshire is consistent with Maud and will at least be welcomed by the county councils. Will my right hon. Friend answer one question which will colour the attitude of many of us to his proposals? What form of political representation, if any, will be below the unitary level? Will it be any more than a sounding board of local opinion?
Mr. Thomas: The unitary authority will, I trust, be as representative of opinion within the area as local government is now, and I can only assure my hon. Friend that I am satisfied that the people of Newport and Monmouthshire will gain by these proposals.
Mr. Abse: Would the Secretary of State accept that the people of Wales will recognise his political courage even if they notice his political recklessness in putting forward these proposals? It is understood that a higher level of efficiency is possible even beyond the high standard existing in Glamorganshire and Monmouthshire now. Could the Secretary of State say what is the nature of the discussions he intends to have with the authorities now he has made it clear that this is a final decision?
Mr. Thomas: My hon. Friend will be aware that across the Severn Bridge there is proposed an authority consisting of Bristol and Bath of more than 1 million population and in North Gloucestershire a unitary authority of more than 400,000. I believe that Wales would suffer if we had smaller units of local government where talent and ability was being sucked away to bigger authorities elsewhere.
Mr. Birch: Is it not rather odd that the right hon. Gentleman is rejecting the scheme for local government in Wales which was more likely to gain general approval than any other previously proposed and is going over to the English system against which opposition is rising steadily in the country because nobody likes unitary authorities? Nobody says "My unitary authority, right or wrong."
Mr. Thomas: The proposals that I am submitting to the House are, I believe, in the interests of stronger local government and, as a Welsh Member of Parliament, I obviously want to see that the people of Wales are served just as well through strong units of local government as they are in England.
Mr. Gower: On a point of order, Mr. Speaker. In view of the nature of the statement and the very unsatisfactory nature of the replies, I beg to give notice that I shall seek leave to raise this matter on the Adjournment.

REORGANISATION OF LOCAL GOVERNMENT IN GLAMORGAN AND MONMOUTHSHIRE AND HEALTH SERVICE IN WALES
  NEW MEMBER SWORN
  Thomas Jeremy King, Esquire, Member for Bridgwater, was sworn.

DOCK STRIKES
Mr. Edward M. Taylor: With your permission, Mr. Speaker, 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 urgent matter of public importance, namely,
"The occurrence today of a docks strike designed to influence Parliament and Parliament's consideration in Committee of Amendments to Clause No. 41 of the Ports Bill at 4 p.m. this afternoon."
The facts are specific and beyond question. We have had reports during the morning that up to 29,000 dockers have taken strike action today in London, Hull,

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Mersey and elsewhere. The objects of the strike are also undeniable, because they have been declared to be, first, the acceptance of more nationalisation of ports and, second, and more important, a greater degree of workers' control of the docks.
This was explained at a meeting at lunchtime at Tower Hill, when it was stated, "We shall not finish until final victory is ours and we own the ports." The facts are clear and delegates are descending upon a Committee which will be meeting in one minute's time to put forward their point of view and influence our deliberations. It is also undeniable that at 4 p.m. precisely we shall be discussing an Amendment to introduce more workers' control into the ports under this Bill.
The second question of importance is also undeniable. This is the first major occasion since the general strike when we have had a specific industrial action brought forward to influence one of our specific discussions in the House of Commons. I suggest that the constitutional importance is also clear, in that this morning we saw a clear indication that these tactics of intimidation have already succeeded. The Standing Committee, on a very controversial Bill, has dealt with 40 Clauses in less than 20 sittings, which is faster progress than on any other major nationalisation Bill. Despite that, today, the day of this strike, the Minister of Transport, just at 1 p.m., moved the closure on an Amendment, so that we could not——
Mr. Speaker: Order. The hon. Gentleman cannot make the speech that he will make if a debate is granted under Standing Order No. 9.
Mr. Taylor: I shall not do so, Mr. Speaker. After 20 sittings of the Standing Committee, we have had the first indication today, which happens to be the day of the strike, of the use of the closure and also the specific threat of an all-night sitting. This is a clear indication that the matter I have referred to has succeeded and appears to be an almost catastrophic cave-in to anarchy. The purpose is clear. The Standing Committee is now meeting at 4 p.m. to discuss a specific Amendment relating to a specific matter on which the strike has been specifically called, and I suggest that, if there ever was a case justifying a debate
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on the Adjournment of the House under Standing Order No. 9, this is it.
Mr. Speaker: The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) was kind enough to give me notice earlier that he would seek to apply for a debate under Standing Order No. 9. He asks leave to move the Adjournment of the House for the purpose of discussing a specific matter of public importance that he thinks should have urgent consideration, namely,
"The occurrence today of a docks strike designed to influence Parliament and Parliament's consideration in Committee of Amendments to Clause No. 41 of the Ports Bill at 4 p.m. this afternoon."
As the House knows, under Standing Order No. 9, I am directed to take into account the several factors set out in the Order but to give no reasons for my decision. I have listened most carefully to the submission which the hon. Gentleman has made, but I have to rule that his submission does not fall within the provisions of the Standing Order and that therefore I cannot submit his application to the House.
Mr. Winnick: Further to that point of order, Mr. Speaker.
Mr. Speaker: Order. When Mr. Speaker has ruled on a submission relating to Standing Order No. 9, it is not usual for an hon. Member to continue the matter.
Mr. Winnick: I submit that there is a point of order here, Mr. Speaker. Since I have had the privilege of being a Member of this House, many constituents have lobbied me on Bills going through the House. A few minutes ago, I was seen by a constituent who was lobbying me on the Ports Bill, on which he has strong feelings. Whether or not he was right to take strike action, in what way was he intimidating me or Parliament in putting his point of view?
Mr. Speaker: Order. All this would have been in order if I had granted the submission under Standing Order No. 9 and we were having the debate which I refused to the hon. Member for Glasgow, Cathcart.
Mr. Winnick: Further to that point of order, Mr. Speaker. [Interruption.] I have no intention of being intimidated by the Opposition. [Interruption.] When the

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Tories learn to respect law and order, I will continue.
Mr. Speaker: Order. The hon. Gentleman must not interrupt himself.
Mr. Winnick: The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) submitted under Standing Order No. 9——
Mr. Speaker: Order. We cannot debate the submission of the hon. Member for Glasgow, Cathcart. We listened to it, I ruled on it and that is the end of it.
Mr. Winnick: On a point of order, Mr. Speaker. Can you not rule on one matter—that a lobby which takes place is in no case an intimidation of Parliament?
Mr. Speaker: This is neither the time nor the place for me to say. It is most unusual, when a Standing Order No. 9 debate has been either granted or refused, for the House to continue on points of order about it, and it is certainly most unusual to comment, as the hon. Member for Croydon, South (Mr. Winnick) is doing, on the submission which another hon. Member has made.
Mr. Peyton Mr. Peyton rose——
Mr. Winnick: On a point of order——
Mr. Speaker: Order. Mr. Peyton.
Mr. Peyton: On a point of order, Mr. Speaker. I do not challenge or question your Ruling, but I would suggest that it is evident that Parliament is under a threat of some dictation at the moment,
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whatever may be the wisdom or otherwise of Government policy. I ask you now formally whether you would be willing tomorrow to receive another such suggestion as was just made by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) in the light of any events which may have taken place between now and then.
Mr. Speaker: I cannot rule hypothetically on applications for Standing Order No. 9 debates which will be made in future as a result of circumstances none of which we know at the moment.
Mr. Winnick: On a point of order, Mr. Speaker. With respect, I did ask you if a Ruling could be given by you—and I hope this is a genuine point of order—that a lobby of people who are obviously constituents of ours who have strong feelings on a certain Bill is in no way an intimidation of Parliament.
Mr. Speaker: It is not a question of ruling at all. It was set out by the Minister in our debate yesterday and was set out during discussions which took place on the Private Notice Question yesterday. The hon. Gentleman knows that Members of Parliament may be lobbied by citizens in a free country.
Mr. Winnick: So it is not intimidation.

BUSINESS OF THE HOUSE (SUPPLY)
Ordered,
That this day Business other than the Business of Supply may be taken before Ten o'clock.—[Mr. McBride.]

SELECTIVE EMPLOYMENT TAX AMENDMENT
4.7 p.m.
Mr. Stanley R. McMaster: I beg to move,
That leave be given to bring in a Bill to provide for the amendment of selective employment tax in regions of high unemployment; and for purposes connected therewith.
The selective employment tax, introduced in 1966, is a thoroughly bad tax. It was set out in the Budget speech by the then Chancellor of the Exchequer, now the Home Secretary, that men should pay the tax at the rate of 25s. and women and boys at half that rate. The rate was increased in 1968 by some 50 per cent. and was further increased in the 1969 Budget to a rate almost double that of the original imposition, becoming for men 48s., for women and boys 24s., and for girls 16s.
The tax now yields a substantial revenue to the Treasury. The gross yield for the year 1968–69 was some £1,363 million, which, after repayments, gave a net yield of some £430 million. It is estimated that during the current year, 1969–70, the gross yield will have increased to £1,920 million, giving a net yield of £606 million. This is a substantial contribution to the Treasury.
But the main purpose of the tax, as set out in the original White Paper and stated in this House, was that of encouraging a shift of employment from service to manufacturing industries and thus to encourage exports and to stimulate economic growth. It is clear that the tax is biased against the service industries, and, indeed, reflects a bias originally found in Adam Smith and which occurs amongst others in the theories and ideas of Professor Kaldor. However, the effect of the tax on our economy, as is made clear in the report just published by Professor Reddaway, is apparently very marginal. He says that it has perhaps accelerated the changeover to self-service in the retail trade and he remarks, on page 211, that this transfer to self-service and greater productivity in the retail trade was taking place anyway and that all that has happened—and he underlined the qualification—is that this has been speeded up a little. It has led to a reduction in the numbers of certain part-time
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employees who would have been subject to the tax, but otherwise this long and carefully documented report, which is supported by many tables of statistics, seems to show that it is clearly undesirable that such a tax as S.E.T. should apply in areas of high unemployment.
I should like to mention particular reasons why this Bill has been framed in order to exempt development areas and Northern Ireland from the effects of the tax. First of all, in these areas unempolyment over the past five or six years, has remained alarmingly high. Economic growth has been seriously retarded and, as a result, social reforms, improvements in housing conditions, slum clearance and other welfare work which is long overdue in these areas has been impeded. In Northern Ireland, the tax yielded last year some £37 million and in the coming year it is estimated it will yield some £41 million. Speaking for my own part of the United Kingdom, this economic depression has contributed substantially to the political disturbances and the civil disorder which have filled the headlines of the national Press since last August. This has led to a joint communiqué being issued by the Northern Ireland and United Kingdom Governments, and to statements in this House, whereby the United Kingdom Government pledged themselves to help Northern Ierland meet these social problems which, I submit, are the background which have contributed to the current unrest in Ulster.
I would submit that this tax is unnecessary in such an area. If the tax is still designed, as was stated originally, to assist manufacturing industries by leading to a transfer of employment from service industries, then clearly it is not necessary in an area where already there is heavy unemployment and there is no shortage of labour. The tax, in effect, is counterproductive in that by leading to a reduction of employment in service industries and general stagnation of the economy it increases unemployment in this area. Indeed, S.E.T. bears particularly heavily on remote areas of the United Kingdom because these areas are very dependent on the transport of goods. A tax which falls not only on service but also on transport industries bears more heavily on areas where one would expect it to bear less.

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I wish to submit, therefore, that S.E.T. might be made truly selective, not perhaps in the sense originally stated by the Government, but in the sense that as between regions of this country the tax should be remitted in order to encourage those areas to develop and share in the general prosperity throughout the country. It is for these reasons that I submit this Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Stanley McMaster, Mr. Henry Clark, Sir Knox Cunningham, Mr. George Currie, Lord Hamilton, Mr. Patrick Jenkin, Mr. John E. Maginnis, Mr. Stratton Mills, Mr. Edward M. Taylor, Mrs. Jill Knight, and Mr. Rafton Pounder.

SELECTIVE EMPLOYMENT TAX AMENDMENT
  SELECTIVE EMPLOYMENT TAX (AMENDMENT)
  Bill to provide for the amendment of selective employment tax in regions of high unemployment; and for purposes connected therewith, presented accordingly, and read the First time; to be read a Second time upon Friday, 15th May and to be printed. [Bill 128.]
ORDERS OF THE DAY
  SUPPLY
  [19TH ALLOTTED DAY],—considered.

  DEFENCE ESTIMATE, 1970–71 (VOTE ON ACCOUNT)
  Motion made, and Question proposed,
  That a sum, not exceeding £823,500,100, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Defence for the year ending on 31st March 1971, as set out in House of Commons Paper 110.—[Mr. Taverne.]
  Mr. Speaker Mr. Speaker: I understand that the Opposition has in mind that we should first debate Procurement, references to which are made in the Statement on Defence Estimates, paragraphs 38, 39 and 40, then the Navy, then the Army and then the Royal Air Force; but there is only one debate.
  4.15 p.m.
  Mr. Peter Emery: Mr. Speaker, this is, as you have already indicated, a new procedure for dealing with the Vote on Account. We on the Opposition side had hoped that it was for the convenience of the House to try to take one major item which we hoped might be the basis of a debate which would cover all of the Votes, and then, perhaps, proceed to specific items under the three Services afterwards. This is, of course, a matter which rests entirely with you, Mr. Speaker, and hon. Members can speak on any item. But it was hoped that we might be able to make better progress and better sense if we limited the discussion into set debates.
  Secondly, since previously, this had been a day when back bench Members had specifically been able to raise items on more than one occasion on the different Votes which were open for debate, we had hoped that it was for the convenience of the House that hon. Members might be able to obtain permission to raise a matter which would be discussed at a later time, rather than trying to put it all into one specific debate.
  Mr. Speaker: I am the protector of the back benchers, but not, I am afraid, to the extent of allowing a back bencher to speak three or four times in one debate.

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  There is one debate. If the hon. Gentleman wishes to refer to something else under this debate which is on the Vote on the Order Paper, he will have to do so when he speaks. He cannot speak again except with leave of the House.
  Mr. James Scott-Hopkins: On a point of order, Mr. Speaker, An undertaking was given by the right hon. Gentleman the Leader of the House that in no circumstances would the rights of back benchers be diminished by the new procedure. It would seem from your Ruling that this will not be so; because under the old procedure on the fourth day of the Estimates debate back bench Members were allowed to raise as many matters as they liked as each Vote was taken. In a debate some nine or ten years ago, I myself spoke 15 times, for a minute or two, on each of the various Votes. I understand that, even with the permission of the House this will not be allowed. I submit to you, Mr. Speaker, that our rights have been gravely diminished and that the new form of debate is quite definitely a curtailment of the rights of back benchers to fulfil their duty to put questions to Ministers on the various items of expenditure on the various Votes for the Army, Navy and Royal Air Force.
  Could you look into the matter, Mr. Speaker, because I do not believe that this was the intention of the Leader of the House or of the Committee which examined the matter, and certainly it is not the wish of the House in general?
  Mr. Speaker: Whether the hon. Gentleman can speak 15 times in a debate is a most attractive idea, but the House has to decide. This is not a matter for Mr. Speaker. The usual channels have put down the Motion in this way. In the old debates, which I remember very well and in which I myself took part as a back bencher, there were a number of Votes; and on those Votes we raised such matters as we wished, and if necessary spoke more than once. But the Question before the House is this: "That a sum not exceeding £823,500,100 be granted for defence this year." If an hon. Gentleman wishes to raise various aspects of the various subjects the Opposition have put down, he will be wise to do it while he is on his feet the one time.
  Mr. James Ramsden: Further to the point of order, Mr. Speaker. I hope that I do not correctly understand your Ruling to imply that as the debate goes on it will be out of the question for more than one Minister to reply to a particular section of the debate, and that it will be quite impossible in any circumstances for an hon. Gentleman to try, with the leave of the House, to make more than one point if he has points to make that fall into completely disparate categories of the debate as the day proceeds.
  Mr. Speaker: Order. I could never prevent two Ministers from intervening in a debate, in spite of what the right hon. Gentleman's hon. Friend the Member for Derbyshire, West (Mr. Scott-Hopkins) said about this being a back benchers' day. The right hon. Gentleman's second point is a matter for the House. I think that an hon. Gentleman who takes part in the debate would be wise if, when he was called, he made the points he wished to make, in case he were not to get leave of the House to speak again.
  Mr. Scott-Hopkins: Further to that point of order. Am I right in understanding, Mr. Speaker, that you are saying that we shall not be dividing the debate into the subjects suggested, but that it will range over all the Estimates covered by the £800 million, and that therefore when hon. Gentlemen are fortunate enough to catch the eye of the Chair it is their duty, if they wish to cover all the subjects, to do so then rather than making separate speeches?
  Mr. Speaker: Order. I imagine that what will happen is that hon. Members will be interested in more than one of the topics. I am suggesting that it would be cautious of an hon. Member who was called if he made a speech covering them. This is a new procedure entirely. I can only apply the rules of the House, and Erskine May tells us that:
  "A second speech has been allowed to an unofficial Member under special circumstances, on an explanation from the Speaker, the pleasure of the House having been signified;…"
  Therefore it is a matter for the House ultimately to decide.
  Mr. Ramsden: Further to the point of order. The House would not be in this

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  difficulty had the Government decided to put each Defence Vote down separately on the Order Paper, thus producing eight or nine separate Questions to which hon. Members could have spoken more than once in the usual way. I understand that the House finds itself in this difficulty because only one Question appears on the Order Paper, and so there is only one debate. As this is a new procedure, perhaps I might submit that point for your consideration, and perhaps for the further consideration of the usual channels and authorities of the House on a later occasion, if the difficulties which appear to have indicated themselves become real as the day proceeds.
  Mr. Speaker: Order. I can make no comment on why the Order Paper appears in the form it does. I have no control over the Order Paper. Once it is before me, I must see that it is followed.
  Mr. Cranley Onslow Mr. Cranley Onslow (Woking) rose——
  Mr. Speaker: Order. May I with respect advise the hon. Gentleman that the debate must end at ten o'clock. Points of order cut out the debate.
  Mr. Onslow: I am as aware of that as any hon. Member who has not yet spoken in the defence debate this year, Mr. Speaker. But may I say how unfortunate it is that the Leader of the House has not been here to hear this exchange. May I have your confirmation that, whatever the chances of any hon. Member obtaining the leave of the House to speak again may be, it is probable that the Chair will continue to allow his eye to be caught by Members who have not yet intervened in the debate? Therefore, the debate is capable of being prolonged, whatever the good intentions of hon. Members may be to keep their original interventions brief.
  Mr. Speaker: Order. That is a matter for each individual hon. Member on what has been called back benchers' day. I hope that we can get on with the debate now.
  Mr. Emery: You will understand, Mr. Speaker, why I mentioned this point at the beginning. I thought that it was to the convenience of the House to be as clear as possible. I hoped very much that we could limit the initial debate to
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  procurement. I felt that the feeling of the House is that if a Government or Opposition Member had a genuine point to raise the House might well be generous enough to give him leave to speak a second time.
  We turn to procurement, to purchasing, to buying, to materials management, or to supplies. All are words or titles covering a host of matters within the Vote on Account, matters on which the Opposition wants to try to pull back the curtain a little today, to shine an inquiring spotlight.
  Much of this short debate will, perforce, consist of the asking of questions and the seeking of information. Much will be a demand for details which are not readily or not always available to the public. We have a right to know how our hard-earned money, regretfully handed over in taxation, yet so easily absorbed in the insatiable appetite of government, is spent.
  The importance of purchasing and the amount of money the Ministry of Defence spends is easily seen and analysed in the Studies of Official Statistics, No. 16 published within the past few days. In Table 9 of that document we find an analysis of military defence expenditure. It contains the figures of £287 million spent on aircraft; £110 million on construction; and £139 million on shipbuilding. Apart from those widely accepted major figures, we can see a breakdown of much of the other Ministry of Defence expenditure. This includes fuel and oil, nearly £12 million; chemical and allied industries, £20 million. Tools, metals and engines. £9 million; plant and mechanical handling equipment, £5·4 million; non-electrical machinery, £10 million; scientific instruments, £27 million; mechanical engineering, £49 million; electrical machines and goods, £29 million; wires and cables, £9 million; textiles, £7 million; radio and telecommunications, £174 million; motor vehicles, £28 million; the distributive trades, nearly £14 million; and clothing and footwear, about £5 million.
  The reason why I have read out all those figures is that they are an important way of analysing where our money is going and whether we can obtain a real cost-effectiveness on that expenditure. That information should be easily and rapidly available to the management of

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  any sort of organisation. Will the Minister ensure that that happens?
  The figures I have read out might well have referred to what years—1968, perhaps 1967, or, even if they were far behind, 1966? But those figures, published during the past 10 days, refer to 1963. A copy of The Times, the Financial Times or the Daily Telegraph of March, 1963 might be a very pleasant historical document, but I do not believe that it would be of any practical use in decision-making and management techniques in 1970. Therefore, there is something very strange in the fact that it has not been possible to obtain these figures of later years. I cannot believe that there is anything secret or highly confidential in these figures. Therefore, would the Minister ensure that the House and the country can have that same Table 9 brought up to date regularly, so that it is never more than 24 months behind?
  Procurement should take more and more of the time and thought of Government Departments. Today's most successful companies are paying particular attention to it. The chairman of Ford started his life in the purchasing department, as did the managing director of Rover. The senior directors of Procter and Gamble, Reed, Lucas and Marks and Spencer's, all of them the most successful companies in the country, are paying specific attention to a good management response to procurement.
  I am therefore concerned that the Government do not appear to be doing this. The breakdown of the supply Estimates which I have given, shows that the over-all figures of Government spending which has to be dealt with by procurement are made up by Votes 5, 7, 9 and 8. If one totals these and adds in the non-defence Vote of the purchasing for defence of the Ministry of Technology, and the Ministry of Public Building and Works, one sees a gross figure of about £1,564 millions of our money. It is essential that the House should investigate more and more the way that it is being spent and should be certain that the techniques and the management structure is as good as in any management organisation in the private sector.
  I have carried these statistics a stage further. While one would expect that some of my figures, such as the buying
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  of transportation, moving across the world by aircraft, are not specifically consumables in the general purchasing nature, it is certainly fair to claim that at least £1,100 million of the figure I gave is direct funds spent annually by the supplies, contracts and transportation departments of the Ministry of Defence.
  Let us analyse the existing organisation. Since 1964, there has been a move towards a unified Ministry of Defence. Paragraph 49 of the Defence Statement would have one believe that everything is quite all right, that things are proceeding nicely:
  "Changes have been made of two kinds: areas of work of the Department have been organised on a more unified basis … In the first category are the abolition of the separate Ministers of State … for the three Services and the establishment in their place of two Ministers of State and two Second Permanent Under-Secretaries of State responsible for Administration (mainly personnel and logistics) and Equipment; the creation of single organisations for civilian management, management services, contracts, accounts, statistics and finance …"
  This would lead one to believe that we have a unified contracts and supplies department in the Ministry of Defence. But anyone who knows anything about it knows that that is not true. In fact, only in the last three months have we even had a single Director of Contracts for all three Services.
  But there is no unified contracts, specification and supplies department, as so ably exists in the Navy, in the other two Services. One had hoped that, in six years, the careers structure of purchasing and supplies in the Navy, which had brought into the senior Service the most efficient public service buying structure, would be used as an example for the R.A.F. and the Army. It has not happened. I am particularly concerned that, when it is not happening, we are not obtaining the same efficiency and management viability which one would expect in a structure spending this type of money.
  I know that the Minister can say that there has been a Committee of Inquiry into this. There has been the Report known as the Wilson Smith Report, which at the moment is confidential. Its reference, I think, is C.E.C.20/67. It is a restricted internal document. Cannot that document be placed in the Library?

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  There is surely nothing against its being made available to hon. Members. I understand that the Committee was specifically military biased and came out with recommendations which suggested only that there should be no change from the purchasing functions controlled by the uniformed men.
  The Minister of Defence for Equipment (Mr. John Morris): I want to respond as helpfully as possible to the hon. Member's interesting and important remarks, but I want to be absolutely sure what report he is referring to. There is the Wilson Smith Committee which reported in November, 1967, on the Employment of Civilians in support of the Armed Forces. I take it that that is the Committee to which he is referring.
  Mr. Emery: That is correct. I know the problem, but that is the report to which I am referring. In this, there was considered the general "civilianisation" of the rest of the purchasing departments in the Army and the Air Force. The departmental structure in the Navy of stores, transport, contracts and Navy accounts, has, under some very able Directors-General of Supply and Transport, been fused into a single functional management team.
  I would be the first to pay a considerable tribute to the high calibre of management of the people who have had to run that structure. If there is no unified entity, one does not get the best out of purchasing and materials managing, nor if the provisioning is not in a unified control with the contracts branch. This is the problem one sees in the raising of the demand itself with the Quartermaster and Ordnance Branches of the Army and the Equipment Branch of the R.A.F. So there are major problems here, which I should have hoped that the Government would solve in six years.
  I must be critical. I am even now hearing rumours that, even after the recommendations of Fulton, the strength of the uniformed branch is now turning towards a break-up of the Navy structure under the pressure of the Army and the Air Force. If this is so, it would be very unfortunate. I believe it is being
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  presented in the form of dealing, as the new framework for the future attempts to deal, with the two classifications, economic and financial, and social.
  I ask two questions of the Minister concerning the part played by the Ministry of Technology in procurement. I am a little bemused by some of the figures given in the break down. On page 3 of the Defence Estimates we see the gross amount of £216 million and lower on the page the gross figure of £310 million both applying to 1970–71. I do not see how the difference has arisen. This has nothing to do with the repayment structure, the £140 million which we find elsewhere. Nor do I see it analysed in Vote 9. I have had a number of questions put to me on this and I would be glad if the Minister would clear it up.
  Mr. Ramsden: Will my hon. Friend say it again?
  Mr. Emery: My right hon. Friend will see on page XII-3 a gross figure for 1970–71 of £216 million in the statement of comparisons and £310 million in the next table, but higher up the page the figure concerning the Ministry of Technology is £216 million. That is not covered by repayment of £140 million so we have two Ministry of Technology figures and I am unable to follow them. I am sure that there must be an easy explanation which the Minister can give to clear this up. However, if I cannot follow it I am certain that many others cannot.
  There are problems overall in dealing with unification of purchasing. In paragraph 43 of the Statement on Defence Estimates there are examples of the centralisation of store capacity. This again is spread over five years. Paragraph 43 gives the impression that everything is going very well, but in my judgment double that progress ought to have been achieved, certainly a 50 per cent. better figure. I hope that from now on that type of efficiency will be obtained. If everything is going so well, will the Minister tell me the total value at purchase prices at any convenient date, or a stock-taking date, of stocks of consumables held by the Department of Defence? I allow him to interpret consumables and I do not suggest that I

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  should do so. I should like to know what percentage of that stock is one, two, or three years old. In any ordinary business operation a stock analysis is available at least quarterly, and often weekly. The only way to carry through a proper stock analysis and to see the cost effectiveness of a concern is by having that information.
  The Chancellor of the Exchequer is unable to give those figures for the country as a whole. Perhaps the Ministry of Defence is in a better position. If the Minister is unable to give the figures it shows that in the actual control the amount of stores normally consumed over a period is not known. Only by knowing these figures can one know the efficiency of the stores management and how much should be written off. That is a piece of management information we have never received.
  Times have changed. Four or five hundred years ago procurement in the Armed Forces could normally be summed up by the words "Blunder, Rape and Pillage". That is not acceptable in the 20th century as a way of staffing our Armed Forces. It is interesting to note that in 1282 a knight rated 1s. a day, a captain of 20 6d. a day, a crossbowman at 4d., and 2d., and a longbowman at 2d. a day. Those rates included subsistence of the individuals, with the possible exception of knights. As a comparison with prices of commodities and consumables, wheat was 1s. 6d. a bushel, sheep 1s. each and a goose 3½d.
  Mr. John Morris: I hope the hon. Member is not expecting me in my reply to give details of the consumables available in the days he is quoting.
  Mr. Emery: The hon. Gentleman need not be afraid for that is not what I am wanting, but I ask what are the totals of stock levels of consumables and how old are they in a three-year break-down?
  Turning to the procurement position, I do not wish to go into the very large sums of money being spent, but I should like some assurance about the actual trials of weaponry and their time-scale. There used to be a development trial, a user trial which was the troop trial or soldier-proofing of the equipment, and then an acceptance trial. Modifications of each of these were required by the military
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  to be put in before the next trial commenced. If Fords used that method we would never have a new Ford motor car on the roads at any time. Delays of three or four years in delivery of equipment have arisen because of the amount of time used on trials. If the hon. Gentleman cannot give an assurance at the moment, will he at least see that, as we manage in private industry today, two trials—if a third is necessary, three trials—should run simultaneously. Then specifications can be dealt with on a committee basis so that everyone can see what they are. Then we could get the equipment ordered, specified, procured and delivered to the troops.
  The worries I have been putting forward are worries about restriction of management, of procurement allocation of central stores, central allocation of manpower control over the stores and storage itself not being on the same basis as that dealing with supplies and contracts. There is the problem of the Ministry of Defence, not so much in the Navy but still in the Army and R.A.F., sticking to the concept of competitive tendering as the only method of obtaining the lowest price. I would go along with that, but the lowest price is probably the worst value and the Minister should wish to obtain the best quality, the best reliability, the best servicing and the best delivery time and all that in relation to the price to be paid.
  With the competitive tendering technique a problem occurs towards the end of contractual periods because quality is inclined to slip, contractors knowing that there is little chance of them having their contracts renewed. There is, therefore, a need to turn, as has been done to some extent in the Navy, to negotiated contracts, which set out to obtain the best cost effectiveness of the materials that must be bought.
  This becomes difficult when the raising of the requisition cannot be discussed in a proper interface between the provisioning and contracting departments. One of the problems of the high level of stocks and then the need to sell large quantities of useless stock arises because those concerned with the provisioning of items to be bought attempt to safeguard their position in the knowledge that they can never be thwarted in other words, that at all times demands must be met.

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  The Minister should realise that, with negotiated contracts, one can have a call-off period for delivery. This can extend from 10 to 60 days. By this means one is able to reduce stock levels by the amount of the call-off period. Such an arrangement would be more than adequate for buffer stocks in many sections of the Ministry of Defence. It is imperative that modern techniques of reordering levels are applied by the supply departments.
  I am worried lest we will not get the best management, because in most instances the supply and procurement side of the Ministry is within the executive section of the Civil Service. It is to be hoped that, with the new Fulton recommendations, this position will be corrected. In the most recent Civil Service Whitley Report published in March, 1970, entitled "A Framework for the Future" we are told on page 15;
  "Briefly, the Committee found that many administrators lacked the fully developed professionalism that their work demands, because they failed to develop adequate knowledge in depth."
  It is interesting to note the analysis dealing with senior staff, who are responsible for spending well over £1,100 million, I estimate that not more than 20 of the 280 people concerned with this matter are dealt with in the administrative and executive class of the first categorisation.
  One sees that those who are dealing with supply are in the lower financial categories. It is impossible to attain the sort of business management and know-how about which I have been speaking if such low rates of pay are given. Only the loyalty of the men has enabled us to do as well as we have been doing. It is clear from the pay of the most highly paid men on the list—£11,000 for General Executive, Dockyards, and not £9,800 for Permanent Under-Secretaries—that the Government have accepted that to obtain superlative management one must pay a substantial amount to get the right men.
  In the same way, the Government must consider functional training. While action from Fulton is setting up a high degree of specialist training, much of which is in management techniques on a general basis, I am concerned that next to nothing
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  has been done on specific functional management. This is available from the Consultative Council of Professional Management Organisations and, being the Chairman of the Executive of that body, I can say that if the Ministry of Defence wishes to use the educational facilities of cost works accountants, chartered accountants, office management or purchasing and supply, that body and the bodies associated with it would consider altering or adding to their educational syllabuses to help the Ministry. I trust that the Minister will accept this offer.
  There is major concern over procurement problems and we are especially worried about how things will develop in future. There is no real cost-effectiveness of the way in which the taxpayers' money is spent, mainly because there is either not enough management or insufficient authority is given to those in management to carry out their tasks.
  There is a limitation in the rapid application of some of the more modern and technical pieces of equipment because of the outmoded and outdated purchasing techniques that are used. The trouble is that, in the fight for perfection, there is delay, which results in extra cost, so that usually we get neither perfection nor many of the objects that are initially set out to be obtained.
  This is, therefore, not a matter for party politics but a desire to ensure that the taxpayers' money is better spent so that the nation gets better value for its money in the sphere of defence.
  4.57 p.m.
  Mr. Thomas Steele (Dumbartonshire, West): All hon. Members will agree with the latter remarks of the hon. Member for Honiton (Mr. Emery), in which he said that the country should get value for money.
  The hon. Gentleman spoke with great knowledge of the subject and I am sure that the Minister has made enough notes to enable him to reply to the debate now, without the discussion continuing. Nevertheless, many hon. Members have matters they wish to raise. The hon. Member for Honiton spoke effectively and dealt in depth with many issues. As he said, our task is to ensure that the money spent on defence, particularly on the procurement side, is well spent.

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  I wish at the outset to refer to a speech made by the hon. Member for Haltemprice (Mr. Wall) earlier this month when in an Adjournment, he quoted an article by Mr. Chapman Pincher and said:
  "His article said that the £50 million project had collapsed, that the Navy had been warned two years ago that the factory at Alexandria, in Dumbartonshire, would be incapable of handling so complicated a design …".— (OFFICIAL REPORT, 9th March, 1970; Vol. 797, c. 1081.]
  I draw attention to this because Mr. Chapman Pincher is wrong and I am glad that the Minister made this clear. It is the boffins who make the errors, not my constituents in the factory at Alexandria. This kind of insinuation and criticism is not easy to pin down. After all the denials have taken place, the fact that the hon. Member had to mention it in this way is an indication of how difficult things are. We in the west of Scotland have suffered too long from this difficulty.
  It falls to all of us at some time or another to say "I told you so." The failure of the Mark 24 is an occasion when I can say this. A number of years ago I took an all-party delegation to the Ministry of Defence. One of the members of the delegation was the late Walter Elliot. The delegation was to do with the taking away of the research and development department from Greenock, down to Portland. The argument used was that we should not divorce research and development on these weapons from production. This is exactly what happened and our worst fears were realised. What is happening now, certainly with the Mark 24, is that research and development is being carried on at the same place as production.
  We now have 1,300 people in the torpedo factory at Alexandria being told that their services are no longer required. This is a tragedy for the area. It was a place which gave excellent apprenticeship training. A lot of money has been spent upon it; it has one of the best clean-air shops in the United Kingdom. A great deal of money has been spent on tools and other equipment and it would be a pity if the factory was used for any purpose other than engineering.
  I know that the Ministry of Technology is concerned about this and I have been in touch with it on a number of
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  occasions and understand that certain things have been happening. I hope that my hon. Friend can give us some information and tell us whether some of the firms with which he has been in contact have reached any conclusions.
  Alexandria is in a special development area and the Ministry of Defence must take this into account when placing orders. This is not in line with the arguments used by the hon. Member for Honiton. I thought that his Tory upbringing came out during his speech when he expressed a certain amount of nostalgia for what happened in the 12th and 13th centuries. The Government now have a regional policy. Certain economists are toying with the idea of a tax on those areas where there is too great a concentration of industry and where local authorities face problems with services and other things. I would be grateful if my hon. Friend could tell us what his policy is to be in this respect.
  We have the Polaris base in my constituency. The main base is at Faslane and the difficulties are in taking equipment by road to the base. The road on the east side of the Gare Loch is being considerably improved and there was a general understanding when the base at Coulport was being built—for the storage of Polaris missiles—that all the heavy equipment would go by sea. My constituents now complain that this is not being done. The access road on the east side of the Gare Loch is a small "B" road. Heavy equipment coming along this road is causing a great deal of inconvenience. There seems to be no reason why it should not come in by sea, as was arranged. Perhaps my hon. Friend can give me a reply to this at some stage.
  The "B" road on the west side of the Gare Loch must be improved. The Ministry has been helpful in making a contribution to the local authority for the improvement of the road from the Gare Loch on the east side. I hope that the Government can find a little more money to improve the road on the west side of the Gare Loch.
  5.10 p.m.
  Mr. Hugh Fraser: I am unable to follow the hon. Member for Dumbartonshire, West (Mr. Steele) who has such great knowledge of the Navy and naval affairs and of naval dockyards. My hon. Friend the Member

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  for Honiton (Mr. Emery) has introduced this debate about procurement, and it is clear that what the House suffers from is a total absence of accurate information less than six years old. One wonders whether the instruments of control inside the Government are as accurate as they should be.
  Stocks and procurement are the key to the defence of this country. Royal ordnance factories cover the whole board, and I remind hon. Gentlemen opposite that they were first set up as shadow factories with great prescience by the then Government in 1938 and 1939 so as to enable a long war to be fought. Had it not been for the shadow factories and men like Mitchell, who designed the Spitfire, we might have been in a much worse situation than we were. All this changed with Hiroshima and the introduction of the atomic weapon, and one questions whether the most effective way to proceed is by the organisation of ordnance factories. Yet this year no less than £1¼million more will be spent on them.
  I agree with the hon. Member for Dunbartonshire, West when he said that on the whole it is better for development and production to be under the same hat. This brings me to my second general point on the Royal Ordnance factories, which is that the people who can best carry out the most advanced forms of technology are those who are already employed in the most advanced forms of technology. It is staggering to see the contract for a most advanced form of close proximity fuse removed from E.M.I. and Ferranti and handed over to the ordnance factory in Blackburn which, I am told, is of importance to hon. Gentlemen opposite. This is a strange way in which to run effectively the procurement of supplies.
  To turn to the more immediate question of why we are spending £1¼ million more on Ordnance factories this year, when I was a junior Minister in the War Office, we started a run-down from what is called the 90-day war on paper to the 30-day war on paper. This was the conception of the length of time wars would last——
  Mr. John Tilney: On a point of order. I apologise for this interruption but, as
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  a Member of Standing Committee D which is dealing with the Ports Bill, I have to report that it is impossible to hear either the Chairman or those participating in the debate because of the noise which strikers on unofficial strike are making in the corridors immediately outside. I know that every hon. Member has the right to see his constituents, but would it be possible for you, Mr. Deputy Speaker, to lay down an instruction whereby those Members of the Committee who have to see constituents could see them in the Central Lobby or elsewhere, so that we can continue our business in Committee Room 10?
  Mr. Deputy Speaker (Mr. Harry Gourlay): I am obliged to the hon. Gentleman for drawing attention to this circumstance upstairs. I am sure that the Serjeant at Arms will have taken note of what the hon. Gentleman has said and deal with the matter accordingly.
  Mr. Tilney: I am very grateful, Mr. Deputy Speaker.
  Mr. Fraser: May I resume my argument which was broken off by my hon. Friend who rightly gave this information to the House. I was referring to the efficiency of the organisation of the Royal Ordnance factory and the wider question of whether or not stocks have fallen too low. We have on many occasions tried to probe the Government on this subject, without success. The Foreign Secretary told the House that there was no shortage of Chieftain tanks in the Rhine Army. Everyone sees quite clearly now that there is a shortage of tanks for the reserves, and it has been decided not to build up the reserves to the top level. I know that one can take risks with reserves, as I did when I was a Minister in allowing a valuable deal in Lightning aircraft for Saudi Arabia to go through. Nevertheless, the House should be told the true facts. We were not told about this. At the time of the debate on the supply of Chieftain tanks to Libya, it was entirely denied by the Foreign Secretary. This proved to be one of the many examples of the misguidance of the House for which the hon. Gentleman has become renowned.
  Another point that has been pressed from both sides of the House, particularly by the hon. Member for Ebbw Vale (Mr. Michael Foot), is how much of the

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  totality of arms we sent to Federal Nigeria in the recent civil war. Here again the House seems to have been constantly misled. We talked about 15 per cent. of the totality, but it is clear from an article which appeared in the Sunday Times, and which drew only on the Nigerian trade figures, that this is nothing like the correct figure. Just to take small arms, I have reason to believe that about 40 million rounds of ammunition for small arms were sent and that about 60 million were on order. I am extremely worried about this situation from a military and a moral point of view. The Government, who have branded others as merchants of death, have refused to admit the quantity of their own mortiferous merchandise. May we be assured that there has not been an excessive run-down of small arms ammunition? The House has heard stories about this; no wonder that the Foreign Secretary has been branded on many occasions with misleading the House on this issue. The Government seem to be over-sensitive on the subject.
  I hope when the Minister replies that he will tell us first about stocks, secondly about the supply of arms to Nigeria and, thirdly, about the availability of tanks for the reserves in B.A.O.R. Lastly, will he consider the question of the production of Chieftain tanks, which is split between the Vickers factory and the Royal Ordnance factory in Leeds. I believe this to be wrong and that it should be concentrated entirely with one firm, Vickers, because there is no longer much use for the ordnance factory in Leeds.
  My hon. Friend the Member for Honiton quite properly mentioned the way in which the House has been denied military information of importance; for example, on Nigerian arms, on tanks and on organisation. The figures which are given are seven years old. The Government talk about the advancement of the knowledge of the House since they have been in office, but they have done everything in their power to deprive the House of this knowledge.
  5.20 p.m.
  Mr. Cranley Onslow: I should like to endorse the concluding point made by my right hon. Friend the Member for Stafford and Stone (Mr. Hugh Fraser). One of the real purposes
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  Parliament can still hope to achieve is that of trying to ensure that we get value for money on defence expenditure, that we get it now and will go on getting it in the future. I am slightly sceptical about the way in which the experimental form of today's debate will advance us towards that objective. I wish to touch on two matters, and I will try to be brief. The first is the question of procurement of buildings for the Services. The second point refers to the Royal Air Force and relates to the procurement of the M.R.C.A. and the amount of information made available to the House about it.
  I am glad to say that in my constituency a great deal of military building is taking place. In the neighbouring constituency of Aldershot there has also been, and still is, a good deal of building for the Army. What strikes me as surprising is that not all these buildings remain in a state of completion. Two officers' messes have fallen down, fortunately before they were occupied. In Blackdown the staircase of a new sergeants' mess collapsed, again fortunately before the building had been handed over. In our area and in other parts of the country there have been continuous reports of poor design and bad layout of barrack blocks.
  I was lucky enough to be in Cyprus last year and one matter brought to our notice involved a new hangar, which had been constructed in such a way, that with the heat, expansion and contraction caused the nuts to fall off the bolts in the roof, and there was a danger that jet aircraft would ingest these into their engines.
  Then there is the extraordinary saga of the new cookery school in Aldershot. It was so constructed that when hot water went down the pipes all the pipes melted and when the cookers were turned on in the kitchen all the cooks fainted. The additional expenditure incurred to the taxpayer as a result has been estimated to be something over £500,000, and I do not believe the story is finished yet.
  When people commit idiocies of this kind, what happens to them? The staff of the Ministry of Public Works is large enough to spare a few by way of sackings. When cases of gross incompetence come to light—and when buildings fall down they are bound to come to light—is anything ever done to prosecute guilty parties? The House would be grateful if

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  the Minister could say something about this matter.
  I turn to my second point concerning the strange story of the multi-rôle combat aircraft. The House will recall that the Minister of Defence came to the House and made a statement on this subject on 14th May last year. On that same day he held a briefing which was attended by a considerable number of journalists, and it was noticeable that on the following day the leading national dailies carried reports about the aircraft which contained figures as to its cost which had not been given to the House. This matter was first pursued—and the hon. Gentleman at present on the Front Bench, the Minister of Defence for Equipment, will recall this point because he too has had to answer Questions on the subject—by the hon. Member for Salford, East (Mr. Frank Allaun) who asked the Minister of Defence on 15th October last year for an explanation of the appearance of costs in the Press which had not been given to the House. He received the following Answer:
  "If my hon. Friend will look carefully at those reports, he will see that a great deal of background information, including an estimate of cost, has been added by the air correspondents to my personal announcement in the House. No doubt air correspondents have many sources of background information of this sort. They do not quote their sources, and it is not for me to attempt to do so."—[OFFICIAL REPORT, 15th October, 1969; Vol. 788, c. 376–7.]
  That might have thought to be satisfactory if it had not been well known that the source of the information about cost was the Minister of Defence himself.
  Subsequently the managing director of Panavia, the international consortium which is building this aircraft, held a Press conference in Rome and again gave some figures of costs. When the Minister of Defence was pressed on this subject in the House of Commons in February this year he remained conspicuously evasive. When my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) finally said:
  "The managing director is responsible to the Governments which have participated, and if he can give information, surely the Secretary of State can give the information to the House? "—[OFFICIAL REPORT, 4th February, 1970; Vol. 795, c. 400.]
  the Minister of Defence refused to answer.
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  This is a most extraordinary situation. I would ask the House to consider the implications of the system of non-attributable Press briefings which has brought it about. What are these Press briefings and who gets asked? I do not think invitations go out to the greenery —yallery leader writers who are far too brilliant to get elected to this House and are thus doomed to spend their time looking down on people stupider but luckier than themselves. I do not think Mr. Andrew Aguecheek gets an invitation, nor does Mr. Lunchtime O'Booze, since this kind of briefing would hardly be an occasion to lure him away from the slopes of El Vino's.
  These are sober, sensible, knowledgeable and responsible journalists and they are being taken for a ride. What happens on these occasions? They go along to the Ministry of Defence, having been invited there by civil servants at the Ministry and they are given passes to get in. About 50 of them go into a room together and the Minister and his advisers appear and tell them a whole lot of facts, which are given on the basis that they may be used and quoted, but may not be attributed to the Minister.
  This is an operation whose basis is a lie. It is quite distinct from the system of guidance where civil servants may give information to the press on request and may not necessarily be identified as having done so. It is different from the system of off-the-record briefings, at which information is given but may never be used. This is not a leak but a plant, in which information is made available to the press to be used on the understanding that its source will not be revealed. It is wide open to abuse and it is being abused.
  The system does have its funny moments. There was an occasion when the Minister of Defence gave a press conference and made his celebrated and ill-judged remark about the aircraft manufacturers of this country being "mentally retarded children". This was picked up by a correspondent who had not been at the non-attributable briefing, and so was not bound by the code, and who printed it in his paper. It served the Secretary of State right.
  What happened on 14th May last is that the Minister gave the press information which he subsequently refused to

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  give to this House. He also refused to admit to the House that he had given this information to the press. Why do we put up with this astonishing situation? We know that this sort of thing happens, but we seem powerless to stop it.
  When we question the Minister, he answers, through the mouth of his hon. Friend the Minister of Defence for Equipment, that it must be remembered that it is not customary to give cost figures of this kind to Parliament and that it is not for him as Minister to identify sources used by journalists. This is cloud-cuckoo land. I have no doubt I shall be told that all the 175 defence ministers there have ever been have done precisely the same thing. That does not console me one little bit. It is time it was stopped.
  We should take this opportunity to think seriously about the implications of that system, and ask ourselves whether it has any continuing validity. Is there some security reason for resorting to this device? Is it thought important that information should appear in newspapers of this country without the people who read them knowing that the information comes from the Minister himself? Are we to assume that if this happened and it were known that the Minister were the source of the information, it would be of value to some enemy? I dare say that the information in question has not yet reached the Chinese, but probably that is only because of translation difficulties. I expect that it reached the Russians some time ago.
  We know how many aircraft have been ordered. Why should not we know how much each is likely to cost? Because Government back benchers would never stand for it? That may be the reason, but it is one for the Government Whips to take into account, rather than something the whole security machine must be geared to overcome. We know that it will all be revealed to the Estimates Committee one day, but that is six or seven years away. Why should not we be able, if we wish, to shut the stable door while the horse is still inside? It is extraordinary that we handicap ourselves in this way, and appear to be prepared to going on doing so indefinitely.
  There is one other very serious effect which we ought to understand. The system makes it possible for Ministers
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  to embark upon programmes of this kind —they may be good programmes, and I hope that the M.R.C.A. is a good one —without taking the House into their confidence about the sums of money involved. It is a system which allows Ministers to cultivate the illusion that we can have defence on the cheap. It is very much in the country's interest that we should know not merely that we want to be and can be defended adequately, but that we must steel ourselves to putting up the necessary money. Today's debate seems to be an occasion when we should insist upon that.
  5.32 p.m.
  Mr. James Scott-Hopkins: I wish to concentrate on a few brief points, and the first of them concerns a visit which I paid not long ago to an R.A.F. station in Norfolk where the Victor bombers are stationed for the refuelling of fighter aircraft. On being taken round the station, I examined the flight simulators there, and I noticed how old they were. I asked the age of them and was told that they had been there since the introduction of the Victor. They were kept going by two very devoted Servicemen, a flight sergeant and an aircraftman but when those two left the station, the simulators would probably fall to pieces. I understand that they form an important part of the training of pilots and keeping up their efficiency. From what I saw, it looked a dog's breakfast.
  According to Vote 7, the expenditure on electrical equipment, electronic equipment and flight simulators is £130½ million. In that sum there must be a fair provision to improve existing equipment and to procure up to date versions.
  My next point concerns submarine batteries called Kathanode 74.20, they are manufactured by the E.P.S. Company at a factory at Bakewell in my constituency. For commercial reasons which do not concern the House, the company is ceasing its manufacture in my constituency, throwing 300 or 400 men out of work and dispersing highly trained personnel. The manufacture of these batteries will be transferred to the company's other facilities at Clifton Junction in Manchester.
  As I understand it, the Minister does not like concentrating the manufacture of

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  vital equipment solely in one factory. The reasons are obvious. Should there be industrial trouble, anarchy or whatever it is called in today's context, that article of equipment is extremely vulnerable when there is no alternative means of supply.
  Should not the Minister look again at whether alternative sources of supply of submarine batteries should not be ensured? I will not suggest what should be done. Obviously a grant in aid could be made to keep going the establishment in my constituency, which has a good reputation for working conditions and trade union relations. That might be one solution, but it is for the Minister to look into the matter. It is important that the manufacture of vital pieces of equipment should not be concentrated in one sole plant.
  My final point concerns a different matter. We are engaged in a new form of debate which is not quite as satisfactory as it might be, and I would like briefly to refer to the B.A.O.R. offset agreements. The figure for 1970–71 is given as £113 million. According to Annexe H on page 100 of Statement on Defence Estimates, that is the cost of B.A.O.R. in Germany. This figure does not take into account the fact that 6th Brigade is going back to Germany.
  The statements which have been made by Ministers about offsetting 80 to 88 per cent. of B.A.O.R.'s costs in Germany for 1969–71 is untrue. The House has been misled by the right hon. Gentleman in the past, and it is being misled now. The situation is clear. The present Minister of Transport announced on 29th July last year that the offset agreements had been concluded with the West German Government—Cmnd. 4199—and that the exchange costs to our balance of payments were £189 million. In fact, that also was not so. The cost in 1969 was £98 million. The estimated cost for the coming year is £113 million plus the extra cost of 6 Brigade. That comes to £211 million, without adding the cost of 6th Brigade going to Germany in the near future.
  The offset agreements of West German purchases were meant to have been £47 million on defence equipment, £36 million on goods purchased by German public authorities, and £23 million on
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  civil and private sales. That comes to a total of £106 million. That is only 53 per cent. of the total exchange costs of B.A.O.R. in Germany already agreed and set out in Question and Answer in the House.
  To get to the 80 per cent. figure, the right hon. Gentleman has included a loan to this country from the German Government of 500 million Deutche Marks or £52 million. It is at the small rate of interest of 3½ per cent., but it is repayable by us in 1979. That is an exact equivalent of what happened in 1968, when there was a similar arrangement. Then, there was a loan to this country of 200 million Deutsche Marks, or roughly £21 million, repayable in 1972 at a rate of interest of about 5½ per cent. costing £5 million in interest payments. The present loan is 500 million Deutsche Marks or £52 million. It was made to this country in December, 1969, and is repayable in 1979, not by this Government but a future Government.
  To get the figure up to an offset of 80 per cent. and make the country and the House believe in the negotiations for offsetting the cost of B.A.O.R. in Germany, the right hon. Gentleman has included in his figure this loan which is accruing interest and has to be repaid, just as the other loan has which was made in 1968 and is repayable in 1972.
  This is a monstrous deception, because it is not offset, it is not purchases, and the Government have no right to say that they are offsetting our costs by purchases or other means in this country, because that is not so.
  Another small amount which has been used by the Government to bring their total up concerns the United States Air Force units being transferred into this country from Germany. By some extraordinary means of logic and deduction, which I do not understand, they are saying that the £17 million thereby being spent in this country rather than in Germany is part of the offset agreement. This is astonishing logic. By this means they have got the figure up sufficient to make it 88 per cent., but it still does not include the fact of 6 Brigade going back to Germany some time this year.
  So we have got to £176 million, off which is nothing like the total offset that should be taken. There is an offset of

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  only 53 per cent. There is a further increase in B.A.O.R.'s costs following revaluation of the Deutsch Mark which was not included in any agreement last year. This means a rise in B.A.O.R.'s costs of about 8 per cent. Whatever agreements the Government can negotiate in the coming weeks and months with the West German Government to offset these increased costs, not only of the 8 per cent. rise because of revaluation, or the increased costs because of 6 Brigade going back to Germany, I hope we shall have a genuine offset which would not include any future loan.
  I draw this matter to the attention of the House because it has recurred frequently in previous debates and in Answer and Question on the Floor of the House. We should be clear that the Government are not offsetting B.A.O.R.'s costs to 80 or 88 per cent., as they are saying, but to approximately 53 per cent. If we include the United States Air Force units to be stationed here, it may be 62 per cent., but no more. As long as it is clear that this is the true situation, then we will have cleared away this deception behind which Ministers have been hiding. I hope that the Minister will be able to deal with these points in his reply.
  5.43 p.m.
  Sir Harry Legge-Bourke: As this is the first time that we have adopted this extraordinary procedure in dealing with the various detailed matters raised by the Defence Estimates, it might be helpful to have on record what we are really doing today. It is important to remember, from the taxpayer's point of view—and we are supposed to be here to protect the taxpayer—that we are being asked to vote on account for defence £823,500,100 towards a total of £1,912,124,000. If we vote what we are asked to vote today, there will still be a further £1,088,623,900 to find later.
  So far we have been dealing in the main with the procurement of equipment. Bearing in mind those appalling totals, it may seem that equipment is but a very small part of what we have been talking about. For example, on page 87 of the Supply Estimates, 1970–71, we see that the defence expenditure of the Ministry of Technology comes to £187,018,000. Going back to page 23, "Defence Equipment and Related Stores", we get a total of £624,853,000.
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  It could be argued that what we are being asked to vote today just about covers those two matters. But I do not think that it is the Government's intention to use the money we vote today purely for the purchasing of equipment. It is a vote on account, and all the things that can be paid for out of this vote on account are listed on the back page, and cover pay, allowances, retired pay, defence administrative services, stores and supplies, Ministry of Defence pay, etc., of civilians, defence equipment and related stores, Royal Ordnance factories and defence purchasing (repayments) services.
  I can understand the infuriation at the beginning of the debate at the failure of the Leader of the House to be present when this new procedure was brought in after an assurance had been given by the Government that it would be open to hon. Members to make just as detailed an examination as hitherto, despite the new procedure.
  We all know that the Chair is bound by the rules of the House, which are that when there is only one Vote before the House on one day hon. Members may speak only once, unless there is some special privilege reason why they should speak again. Therefore, there is no doubt that, by the procedure they have followed today, the Government have deprived many hon. Members, who might otherwise be here, from coming because they know that if there has been an understanding that the debate was to be largely centred on procurement to begin with, they would not be allowed to speak on more than one subject, and this might not be the one on which they want to speak——
  Mr. John Morris Mr. John Morris rose——
  Sir H. Legge-Bourke: I will give way in a moment.
  I think that the Leader of the House should have been sent for the moment that points of order were raised. It was an insult to the House that he should not be present. The right hon. Gentleman is so polite when he comes. He does not always give the answers that we want, but he is very polite and we are always delighted to see him. But, of all the occasions when he should have been here, I think this was one. I hope that, whatever else happens, the Minister will

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  make sure that the Leader of the House is fully informed about the protests which have been made and the severe inroad which has been made in the rights of hon. Members as a result of the Government not putting on the Order Paper what would have given hon. Members the chance of using the assurance, given by the Government before the new procedure was adopted, that they would be able to speak on more than one subject.
  Mr. John Morris: The hon. Gentleman and I and others here have taken part from time to time in many debates over many years under the old procedure. I have some sympathy with the points that he has made. But, in fairness to the Leader of the House, there were discussions, through the usual channels, about this new procedure. However, I will convey to the Leader of the House the remarks that have been made.
  Sir H. Legge-Bourke: On behalf of hon. Members on the back benches, may I say that this "usual channel" procedure, on a day which is essentially a back-benchers' day, is not good enough. It is all very fine for the Whips on either side to agree to these matters. However, we on the back benches were hoping that there would be an opportunity of speaking more than once. We all heard Mr. Speaker's very proper Ruling, but he is bound by the rules of the House. It was slightly discourteous, to put it mildly, of the Leader of the House not to be here knowing that this kind of issue might be raised. If he has any intelligence, he must have thought that it might be raised.
  I now turn to the ordering of defence equipment and related stores. In years past I have referred to the note which appears at the top of page 25 of the Supply Estimates dealing with bulk settlement. I think that it is now worded as it is partly as a result of protests which I made some years ago and following upon the Third Report of the Public Accounts Committee. But it is still hard for any hon. Member to make the calculation which would give him the true figure of what has been spent.
  The note states:
  "Payments made to the Ministry of Technology and to the Defence Purchasing (Repay-
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  ment) Services Vote from this Vote and Class XII, 5 and 9 arc, with certain exceptions, made under the bulk settlement arrangements set out in Treasury Minute of 27th February 1950.… Under these arrangements, a provisional settlement is made towards the end of the financial year, based on the latest information about actual deliveries in the first nine months of the financial year and an estimate of the value of likely deliveries in the remaining three months. Any adjustment is made in the following financial year when the value of actual deliveries during the year is known."
  In other words, all the figures which we have here include an estimate for the last third of the year, and if they are wrong we shall not know until next year what the right figure was. Embodied also in this is the correction of the last three months of the previous year. Therefore, it is very hard out of this to extract what is being spent on equipment delivered this year.
  I have never liked this procedure, and again it is another case for endorsing the plea that has been made by so many hon. Members both in the defence debate in general and again yesterday for a Select Committee on Defence to be set up in every Session. We could then get at these details. Some of the details presumably ought to be placed under some sort of restriction so far as publication is concerned, but it would enable the House to be better informed than it ever can be by merely reading these Estimates and the Vote on Account.
  I do not wish to go into great detail about the various items mentioned. One hon. Member has mentioned the M.24 torpedo. I am fairly well aware of what has been happening about that, and the only point which I wish to re-emphasise is the one which I made on the second day of the main defence debate earlier this month. That is that I think we have to recognise the appalling term of years involved in the development of highly sophisticated equipment. What we are confronted with all too often is periods in excess of ten years, and if we make a mistake in this year, or the Government, under pressures for other than scientific and service reasons, decide to come to a policy decision which results in cutting research and development, we are in trouble. It is not only us and the armed Services today who are in trouble but those 10 years hence who may be denied a weapon which otherwise they could have had and which they would feel essential.

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  I only hope that the M.24 torpedo troubles are overcome, and I certainly know that there has been a considerable re-gearing of the industrial effort behind it. I do not want to discuss the Report of the Select Committee on Science and Technology which reported on defence research in depth today, but I think that the decision which has been taken over the M.24 torpedo is consistent with the major recommendations which we made in that report. That is my personal opinion, and I have not consulted my colleagues on the Select Committee. Having asked for a certain amount of details about this, I am grateful for the rapidity with which the details have been produced, and I think that what is being done is consistent with the recommendations of the Select Committee's Report.
  I turn to a slightly different matter—the question of operational analysis. I touched on this matter on the second day of the defence debate, and I accompanied the hon. Member for Bristol, Central (Mr. Palmer), the Chairman of the Select Committee on Science and Technology, to the United States in 1968 in order to study what was going on in America defence research. I came away with one thing very clearly in mind, and that is that, although we in this country were the original conceivers of operational analysis, starting with the Army, the Americans have "gone to town" on this whereas we are now limping slowly along with a grossly inadequate establishment at West Byfleet. That is not in anyway to criticise the quality of the work being done at West Byfleet; I have every admiration for it. But we must recognise now that the United States is in a superior position in operational analysis.
  This really dates from Skybolt. I think I am right in saying that in those days when the Americans suddenly decided they had better call in somebody like the Rand Corporation, the first question they asked the Corporation was whether Skybolt was the right weapon for the United States Air Force. The answer came back pretty quickly. It was: "Before asking such a question you had better tell us what sort of Air Force you want and what you want your Air Force to do." That started off a "think-tank" process in the United States and I coined an irregular verb in the United States which went "I think,
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  U Thant, He Tank, We in-house, You out-house, and goodness knows what They do!"
  The Americans have really gone "think-tank" minded. They have overdone it a bit, but we are under-doing it or having a shortfall on it. Of that I have no doubt whatever.
  I hope—and this is the part of the report I wish to refer to—that the Government have carefully studied what we were told at West Byfleet on 15th October 1968, in particular so far as co-operation with N.A.T.O. is concerned. One of the questions I asked while we were down there was to what extent there was contact with the N.A.T.O. advisory group, and we were told that there was no contact. It was assumed that it would involve two sets of people—the Ministry of Technology and the project group working for Sir William Cook.
  I went on to discuss the question of whether it would be a good or a bad thing if N.A.T.O. were to have an organisation comparable to the Defence Operational Analysis Establishment. I said that I gathered that at the moment there was no comparable organisation, and asked the witness if he would like to see one. The witness replied:
  "I would like to see one and I hope that the new approach being taken by the S.H.A.P.E. Technical Centre will give that group that sort of capability. It is not yet in a parallel position."
  I ask the hon. Gentleman, who I know has this question in mind, to give us a little news as to whether any further steps have been taken on this and what progress has been made.
  I turn to another subject. I am afraid that my speech must be rather a rag-bag. It concerns commuting of pensions. My hon. Friend the Member for Stratford-on-Avon (Mr. Maude) on 25th March last year during the debate on the Consolidated Fund Bill raised this question on the individual basis of one of his constituents, whom he did not name, very properly. He raised the question with the then Under-Secretary of State for Defence for the Army, the hon. Member for Bishop Auckland (Mr. Boyden). In his speech the hon. Member for Bishop Auckland said:
  "I agree at once that there is something of a paternalistic attitude here, and it is very difficult to weigh the balance between overcautious and being rash. This is the heart

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  of the problem, plus the relative ease with which an officer can commute compared with the difficulty for other ranks."—[OFFICIAL REPORT, 25th March, 1969; Vol. 780, c. 1353.]
  I have written to the Secretary of State about this because I recently had a warrant officer who had just come out of the Royal Air Force, come to see me. I shall not mention his name for the same reason as the hon. Member for Stratford-on-Avon did not mention his constituent's name—because it would be inappropriate. This warrant officer has a very great need to commute his pension, to a greater degree than he has been allowed to do. I think I am right in saying that a year ago the limit to which a warrant officer could commute his pension was about £600. I believe it has now gone up to £1,000; there have been some new regulations which, I think, were published on 12th February last year.
  The point I wish to make is that it is about time that the Treasury in particular—I suppose that the Treasury is behind it, for it always is in this kind of thing—was made to wake up to the fact that a warrant officer in the Armed Forces with, say, 35 years' service is quite as qualified as a commissioned officer who has just reached an age at which he can draw pension to be allowed to commute at least half his pension, just as an officer can. It seems to me preposterous to suppose that there is less capacity in a warrant officer who has had very considerable experience and has held down responsible jobs in the Service. It is ridiculous to suppose that such a man is not capable of so managing his affairs that he can be trusted to have half his pension commuted instead of being restricted to a limit of £1,000. It is insufferable that there should be this sort of governessy hoity-toity attitude by whoever is responsible for making the Ministry of Defence take this line.
  When we get to the question of finance of this kind, especially where pensions are concerned, I always recognise that usually the Ministry does its best for the three Services but that the Treasury usually tries to protect the civil servants, who have not been in the Armed Forces, and therefore prevents the Armed Forces from getting what they should have. It is an old story with which we are all familiar. But in
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  this case it is utterly preposterous. It has always been held that commuting a pension is a privilege and not a right.
  In the Supply Estimates for 1970–71 there is the heading
  "Armed Forces retired pay, pensions, &c."
  Item (3) under sub-heading B is £5,680,000 for commutation of retired pay, pensions, etc. There is a note on the next page which reads:
  "Includes provision for repayment to the National Debt Commissioners of sums advanced by them for commutation of officers' retired pay under the Pensions Commutation Acts 1871 to 1882. Sums so advanced in any year are repaid, with interest, by equal instalments over a period of 10 years."
  Presumably that sum has been calculated year by year and is probably a little in arrears of what has to be paid out this year when, I suppose, some new commutting takes place. Presumably the current commuting is embodied in the Supplementary Estimates each year.
  This system can cause hardship to a man who, like my constituent has come out of the Service after 34½ years at the age of 55. My constituent has a mortgage on a house and wants a further £1,500 from his pension above the £1,000 he has the right to take at the moment. If he could get the extra money instead of having to repay his mortgage at the rate of £33 a month, he could reduce the repayments to £8 15s. a month. Why should he not be allowed to do this?
  It is this sort of human problem which arises all too often and which the Treasury in particular overlooks. I suppose that the Treasury would try to justify its attitude on the grounds that some people are more irresponsible than others and that if it allowed all to commute pension rights to any extent, they might suddenly find themselves on their beam ends or be unfairly exploited. But my constituent has had 35 years in the Service and it is preposterous to treat him like this when an officer can commute his pension up to 50 per cent. This must be wrong. We often hear about these being democratic days. This is a funny way to express them. I hope that this time the Ministry of Defence will put its foot down with the Treasury and make it be humane just for once.
  6.5 p.m.
  Mr. Arthur Lewis: I am pleased to follow the hon. Member

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  for the Isle of Ely (Sir H. Legge-Bourke) because, as a Member of long experience, he knows that one of the duties which Members of Parliament have to perform on occasions is to visit the troops overseas. We go out there to see how the taxpayers' money is being spent and to what extent the procurement of the Forces and their equipment is being properly allocated and used. If hon. Members are interested, they put their names on a list, and if the Whips like them enough—I emphasise that aspect first—they might, after perhaps 20 years or more, get the opportunity of going out to see the troops in their overseas stations.
  You, Mr. Deputy Speaker, will no doubt be as surprised as I was to hear that I have been selected to go on one of these visits. I expect to go in April, and only this week I attended a briefing on the trip. I was told that we would be going in an aircraft of R.A.F. Transport Command to Germany to see the troops and that we would obviously be under the control and command of the commanding officer in the field, and so on. That all went down very well. But the most amazing thing I have ever heard of was that the Ministry of Defence would issue a deliberately false statement to the Press about the trip. The statement was to read as follows:
  "A party of Peers and M.P.s led by Mr. Neil McBride, comprising two Peers, five Labour Members and three Conservative Members, will be visiting British Forces, Germany, in a private capacity in order to inform themselves of the activities of the Services in the area."
  You know, Mr. Deputy Speaker, that I am one of those who like to have things correct. I suggested to my noble Friend the Under-Secretary of State that I could not be travelling in an R.A.F. aircraft with an R.A.F. escort officer, going to messes and mixing with the troops if I were going in a private capacity. You must believe this, Mr. Deputy Speaker. It is like Comic Cuts. My noble Friend said that he would have to ask the Secretary of State for Defence whether he could drop the four words "in a private capacity".
  One would have thought that an Under-Secretary of State would have enough power and authority to delete these four words; but no. There was a high Min-
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  isterial power conference and subsequently I got a letter, as did other members of the delegation, saying that the Secretary of State has insisted that the Press notice with the words, "in a private capacity" must go out. I want to know, in considering the procurement of the forces and their equipment, what right the Secretary of State has to say that Members of Parliament who, of course, are not representing Parliament—no one has said that they are—and who are not representing the Government— no one has said that they are—are going out in a private capacity.
  If they go in a private capacity will they be allowed to say, as private individuals are, "I am going here and there, and I am going to fix my own arrangements and say who I am going to see and what I am going to see"? Probably the Minister of Defence might object to that, and probably he would be right. Probably he would say, "We cannot pay for a Transport Command aeroplane to take you and a group of Members of Parliament overseas on a trip like this".
  I had better quote this letter in full because I see that the Parliamentary Secretary has brought up a copy. It says:
  "Lord Winterbottom is away from the office this evening undertaking a political engagement."—
  and that, by the way, is the Under-Secretary of State for Defence for the Royal Air Force. [Interruption.] I wish the right hon. Gentleman opposite would keep quiet, because this is a very serious and important and he will miss the titles and names if he does not.
  In case my hon. Friend did not know, Lord Winterbottom is, as I have said, Under-Secretary of State for the Royal Air Force. I went to the Ministry of Defence at 4 o'clock, and they said they did not know him and had never heard of him. I am not joking. I went and asked to see this gentleman and they said that they had never heard of him.
  The letter continues:
  "He has asked me to write to tell you that the Secretary of State has decided that it should be made clear that the visiting party are not acting on behalf of either Parliament or the Ministry of Defence and that consequently the wording of the notice should be as follows—".

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  To the best of my knowledge and belief no one has suggested that the delegation or group of M.Ps were acting on behalf of the Ministry of Defence or on behalf of Parliament. We have not suggested we were. What we have suggested is that it is deliberately untrue, and the Minister must know this, to issue to the press a statement saying that a group of Members of Parliament and Peers are to visit troops in Germany and to examine the equipment and discuss with them their service equipment, whether they are satisfied with their recent wage and salary award, whether they are satisfied with their billeting and out-allowances and with the general administration, and are to discuss all this with them as private individuals.
  As the Minister of Defence is represented here I am, therefore, giving him notice that I shall take my wife with me and shall suggest that other hon. Members take their wives. If any have not got a wife perhaps they can find one for the engagement, because I can tell them that this is a private visit. The point of this is to raise the question: how stupid can we get in having Ministers and Deputy Ministers acting in this way? By the way, a whole host of officers were there to brief us on this. Goodness knows how much it cost just for the one day, to enable us to go on a private visit.
  I am going to tell the Minister of Defence that I am not having him make a false statement to my local Press or to the Press at all saying that I am going on a private junketing when I am not; and I tell him frankly, here and now, that if he does not alter the statement I am not going. No doubt there will be hundreds of others who will take the place.
  No doubt the Whips will clap their hands and the Ministry of Defence will say, "Thank God, that was why we put it in, because we know this chap is an awkward one and this has now got rid of him". I hope the Ministry of Defence will look into this to see what is said when hon. Members go on a job. It is not the best type of job, not like some of the trips that could be mentioned.
  Mr. Patrick Wall Mr. Patrick Wall (Haltemprice) indicated assent.
  Mr. Lewis: I see the hon. Member for Haltemprice (Mr. Wall) shaking his head. He knows, of course; he has experience of the actual activities of the troops in the field, their messing and sleeping arrangements and all the rest of it. If it is cold and wet and things are not too good as far as weather is concerned, it is not the best type of activity one can take in April, hence it is not like the kind of summer trips one normally can take.
  I have done this deliberately because I wanted to show up the absolute stupidity on the part of the Ministry of Defence insisting on this. As I could not get any sense from them in discussing it privately, I thought the best place to do it was here where people might knock some sense into them.
  6.24 p.m.
  Mr. Tom Boardman: In the delightful interlude from the hon. Member for West Ham, North (Mr. Arthur Lewis), the part which intrigued me most was his ready acceptance of the fact that he would come under the control and command, as he said, of the commanding officer in the field. I feel sure that the secret of the commanding officer's discipline over the hon. Member is one for which his hon. and right hon. Friend's would pay dearly, to know how it operates.
  To return to the more mundane matter of this defence debate and, in particular, the procurement side of it, I would like to concentrate on the purchase of the rather more domestic products. There have been contributions by my hon. and right hon. Friends about more sophisticated weapons. I would like to get down to what I might call the boots and braces of the Service Estimates, because these amount to many scores of millions of pounds. As I see from paragraph 15 on page 34 of the White Paper, there are certainly over 600,000 items, and as far as one can extract the figures from the Estimates, the amounts involved are very large. Perhaps I ought to declare an interest in that companies of which I am a director have been and may still be suppliers of some of this type of equipment.
  There are three main defects which arise in the method of purchase which applies to this type of goods. The first is that the specifications which are used

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  by the Ministry in making its requirements known are out-dated. I suggest that probably 50 per cent. of these specifications are pre-last war and many go back to pre-1914. The specifications are designed in a way which sets the standard of what goes into the product rather than relates to the use to which the product is to be put. This has been noted many times, and I am sure the Minister is aware of it, and he will, I hope, be able to say that something is being done to improve it.
  An example is that for things like webbings, and fabrics of one kind or another such as braces, instead of seeing what is the commercial specification and whether the commercial product would do the job, the specification is something drawn up by the Defence Department, with certain counts of yarn, number of ends and so on, which does not fit in with any other product in general use; so that each is a "one-off" job, far more expensive to make. This adds nothing to the efficiency of industry in that it does not enable unit costs to be brought down.
  There is a great deal of waste of money in this method. The Government brought in those famous buyers, Marks and Spencer, to give them advice, but I cannot feel that that advice has yet been followed. As I read the White Paper, particularly page 34, I am dismayed at the complacent way in which, after having referred to 600,000 items, there is later a reference to the fact that:
  "Since 1966,… over 36,700 items have been classified as non-standard and will therefore eventually be eliminated from the Services inventories".
  Later it is said that
  "Studies are continuing … We are introducing standardised terminology … It may be possible …".
  This is an exercise that has been going on for far too long. There has been a vast amount of waste. My first criticism therefore relates to the specifications.
  I move from the specifications to the list of approved suppliers. I suggest that we ought to have another look at the system of selection of the firms to which the product specifications are put out for tender. They really are quite out-dated. I have seen some of the lists of well-known firms and the products for which they are listed as being approved suppliers. They bear no relation to modern
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  conditions or to the current production of such firms.
  My third criticism is about the method of buying. The system employed almost universally is that there is an inventory and stock list, and when the stock drops below a certain level, then an indent goes in for replenishment. It goes to the purchasing officer, who replenishes it with the identical product. There is never an opportunity for the supplier to see what is required. The thing that is ordered is what is on the list. There is never the opportunity for the user of the product to say, "I want something that will do this job. Have you got anything?" That is not the approach at all; it is the approach instead of "Have you got this particular specification of web or shackle for towing tanks?"
  There is a remoteness between the person who knows what is required of the product and the supplier. The whole trend is to keep the supplier away from the person who knows what is wanted. I recognise that this developed from the time when there was corruption in these matters, and in those circumstances checks and safeguards were instituted so that people were not able to meet as closely as they did and do in commercial circles. This must be avoided.
  As the hon. Member for Honiton (Mr. Emery) said, if we can get the right quality of purchasing officer, and that means paying the right rate, then let us see that the supplier and the person who knows what is needed get together to discover whether there is a commercial specification which will do the job. If this were done, then I am satisfied that procurement could be effected more cheaply than is the case at the moment.
  I am not unconscious of the fact that progress has been made towards this end, but it has been too slow. Not nearly enough has been done. Years have been wasted, and with them millions of pounds. A proper purchasing system must be installed so that this "boots and braces" operation can be dealt with as it would be in the best type of commercial organisation. If this is done, we shall not be asking where the money will come from for all the things that we would like to do because there will be scores of millions of pounds available, merely by applying good commercial techniques.
  6.23 p.m.
  Mr. Patrick Wall: My hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) said that he would discuss the procurement of mundane matters in the Services. I want to discuss two specific items of procurement, one concerned with weapons and the other with aircraft. The Minister will not be surprised to hear that the first is to do with tactical nuclear weapons and the second with heavy-lift helicopters.
  Before doing so I would refer to the speech by the hon. Member for West Ham, North (Mr. Arthur Lewis). I accompanied him to B.A.O.R. two years ago and would support him in the general complaint he made in his amusing speech. I agree that the phrase "in a private capacity" leads to difficulties in a constituency. Sometimes one is not warned of these visits very far ahead and has to cancel engagements. It is embarrassing if one is regarded as being on a private "swan" round the Army at the taxpayers' expense. It is hard work, but I agree with the hon. Member that it is worth while. I know that it is worth while for hon. Members, and I hope that it is equally worth while for the Services.
  I would like to apologise to the hon. Member for Dunbartonshire, West (Mr. Steele) and his constituents for mentioning the town of Alexandria in a newspaper article which I quoted during an Adjournment debate. In that Adjournment debate I informed the Minister that I did not propose to raise anything to do with the factory in the hon. Gentleman's constituency, which is nothing to do with me. In the quotation this was added inadvertently and I apologise to the hon. Member and his constituents. I recognise that the factory was closed for other reasons, as explained by the Minister.
  I turn now to the procurement of tactical nuclear weapons under Vote 7. These are weapons of great importance. No one who heard the Secretary of State in the opening and winding-up speeches during the defence debate can help but realise that he attaches great importance to these weapons, because the whole strategy of flexible response depends upon their availability or use. I understand, and I have done a certain amount of research, that we have only once manufactured a tactical nuclear weapon, and that was
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  Blue Water, which was British-built and had a British warhead.
  All the tactical nuclear weapons available in B.A.O.R. or the other armies in Germany today are American built, and the Americans have the electronic key to the missiles. Therefore, it is important that we should, where possible, build our own weapons, as we have for the strategic rôle. Blue Water was built under a Conservative Government, and I am sorry to say cancelled by a Conservative Government to save £60 million or £70 million. I complained bitterly at the time, and I repeat that complaint now.
  My question is what the Government intend to do about the procurement of tactical nuclear weapons for B.A.O.R. in future. As the Minister said, the Army has the eight-inch howitzer, virtually a conventional weapon with a nuclear shell, which cannot be regarded as a special tactical nuclear weapon. The only true one tactical nuclear weapon that we have is Honest John, which is an American weapon, and its warhead is under American electronic control.
  It is an obsolete weapon by modern standards. It is a free-flight rocket with a 15-mile range, completed in about 1953. It has a six-man crew, which takes a considerable time to get into action and is, therefore, not particularly mobile. It is in operation in a number of allied forces. The House has to ask: Are there other means of procurement? Are there other tactical nuclear weapons, American or otherwise, that the British Army should acquire if it is not to build its own? I recognise that to try at this stage to build our own tactical nuclear weapons would be far too expensive. The Sergeant is another tactical nuclear weapon, built in 1959–60 with a 100-mile range. Unlike Honest John, it is a guided missile. Shillelagh is another close support weapon. Lance is a small, light and manoeuvrable weapon which is replacing Honest John in the United States Army. Then there are cruise missiles such as Mace and Matador.
  Some of these weapons are in operation in allied forces in Germany. The Minister knows that on the other side of the Iron Curtain the Soviet Army is equipped with a larger number of more powerful and more mobile tactical nuclear weapons. In B.A.O.R. we have obsolete weapons confronting the more advanced

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  weapons in the Soviet Army. What are the Government's plans for replacing Honest John? I asked the Minister this when we returned from our B.A.O.R. visit in 1968. He said then:
  "We plan to replace our current capability in the 1970s."—[OFFICIAL REPORT, 12th June, 1968; Vol. 766, c. 210.]
  I asked the same question on 4th March this year and then he said:
  "When there is an available weapon we shall, of course, consider the matter, but there is no decision at the moment because there is no alternative available weapon, as the hon. Member fully knows."—[OFFICIAL REPORT, 4th March, 1970; Vol. 797, c. 395.]
  I dispute that. I have named some other weapons. I am not necessarily suggesting we should purchase them, but I know there are other weapons available if we are to procure off the shelf from another country; for example, the United States.
  In the defence debate, when he dealt with this in a little more detail, the Minister said:
  "The replacement for Honest John may be Lance … Lance is not yet fully developed and it may be some time before it is.… At the appropriate time … we shall take a decision …"—[OFFICIAL REPORT, 4th March, 1970; Vol. 797, c. 551.]
  and order the appropriate weapon.
  I suggest to the House that that is not quite the true picture. The development on Lance started in 1960. The initial procurement for the American Army started in 1965. The weapon is now about to go into service in the American forces, unless it has hit some very severe snags recently which I have not heard about. I am not suggesting it should be bought today. if a decision is made to replace Honest John, it will take one or more years before the actual decision is carried out. What I am asking at the moment is: when do the Government intend to take a decision to replace Honest John? This decision will take two or three years to implement. I am suggesting to the House that now is the time to make this decision, and to see that the British Army of the Rhine is armed with a modern tactical nuclear weapon for the '70s, not one that is nearly l7 years old.
  I turn to my second point, the procurement of helicopters. The Minister of State dealt with this to some extent in his winding-up speech on the first day of the defence debate, when he said that, as far as the Anglo-French helicopter
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  programme was concerned, there were three helicopters. The first was the Puma, which is an R.A.F. support helicopter coming into operation in 1970. I understand that 40 to 50 have been ordered for the R.A.F., and the French have ordered 130. There is a clear discrepancy in the relative size of these orders. I also understand that this helicopter is only slightly larger than the Wessex, which is significant from the point of view of troop carrying.
  Then there is the Gazelle, which is ordered for all three Services. I understand that the original price for this helicopter was £40,000, and it has now gone up to £90,000. The Minister probably cannot confirm the figures, although they have been published in the Press. Would the Minister say whether it is true that there has been a considerable appreciation in cost, of some 100 per cent., and that this has led to a reduction in the British order by some 50 per cent.?
  Finally there is the WG13, which is the only helicopter on which the British lead in this particular Anglo-French programme, and that is to replace the Scout in 1974. Could the Minister tell the House whether the French have now made a firm order for the WG13? We have made firm orders for the other two helicopters I have mentioned. Have the French made firm orders for this one? They had not done so until recently, but I hope that the Minister can tell us that they now have. On helicopters, I suggest that all three Services, certainly the Army and the R.A.F., need helicopters that can land or move a reasonable body of troops. They also need helicopters that can lift, in an emergency, heavy supplies, light artillery, even light armoured vehicles and supply Harrier Squadrons. I do not believe that these exist in sufficient size or quantity in the British Forces today.
  For troop-carrying, we have the Wessex, going into operation about 1961. It carries sixteen troops. That means that one squadron of Wessex can lift approximately one company. Then there is the Belvedere which came into operation about the same year, 1961, and lifts eighteen to twenty-five troops. Both are very successful helicopters, but they are now getting old. What have the Government in mind for a troop-lifting helicopter for the future?

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  The Sea King. I believe, could lift twenty-four troops or a 6,0001b. load. Are the Government thinking of using the Sea King, which is initially required for naval anti-submarine purposes, possibly in a troop-carrying capacity, for the R.A.F. and Army?
  Perhaps more important is the question of heavy lift. Here we had CH47, the American Chinook, built first in 1965, of which fifteen were ordered, and I understand forty were needed, but then the order was cancelled by the Government in November, 1967, as an economy move. This helicopter lifts thirty-three to forty-four troops, with a pay-load of over 10,0001b. This would have been a very useful helicopter to have in the British forces.
  But an even more important requirement is something like the Sikorsky Sky Crane. The Sky Crane lifts various pods. One can have a pod fitted for troop-carrying, for 67 troops; one can have a pod fitted as an ambulance; pods can be pallatised for lifting stores; one can lift vehicles, and so on. One merely uses the helicopter itself to pick up the pod required for different purposes. Therefore, it is a very flexible helicopter. At the moment it lifts 23,0001b.—the Sea King or Belvedere figure was 6,0001b.—so the Sky Crane can lift very much greater loads than any other comparable helicopter in the British forces. I understand that the latest Sky Crane being developed in the United States will be able to lift up to 36,000lb.
  I bring this matter before the House because I think it is important, particularly in view of the fact that the German Army has now just ordered 135 CH63Ds, which are heavy-lift helicopters, from the United States. I understand that the Minister confirmed, in winding up the Air Estimates debate the other day, that the Chinook order is definitely off. What, then, are we going to use for the British Forces for lifting troops or heavy equipment?
  I conclude by quoting an editorial from the Daily Telegraph of 22nd January, because this points the issue very closely indeed:
  "The R.A.F.'s shortage of large troop—and supply-carrying helicopters is rapidly being shown by our allies to have reached the status of a scandal."
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  It goes on to point out that the two squadrons of Wessex that are available to B.A.O.R., could lift one company out of a total strength of 48,500 men. It says that we shall have to borrow both from the Americans and from the Germans. It concludes by saying, "What a disgrace!"
  I suggest to the House that, in procurement, these are two issues which are of great importance to our forces. I suggest that the Government must have some idea in their mind as to future policy. I am not suggesting that they will buy either new heavy-lift helicopters today or new tactical nuclear weapons. I do hope, however, that the Minister will be able to tell us what the Government have in mind for the future. I am not thinking of the 'eighties; I am thinking of 1972, 1973 and 1974. There are gaps here which must be closed, and closed quickly, and I hope the Minister will be able to tell us how he intends to do it.
  6.39 p.m.
  The Minister of Defence for Equipment (Mr. John Morris): This has been a most interesting debate. It is unusual that we have the opportunity to discuss matters of procurement in such detail and with more leisure than we normally have in debates including a number of other topics.
  I am sure that the House is grateful to the hon. Member for Honiton (Mr. Emery) for the way in which he opened the debate, set its tone, and gave to the House of his experience in this field, which I know is considerable. I am sure that no one will take it amiss if I also compliment the hon. Member for Leicester, South-West (Mr. Tom Boardman) on his speech. I hope that, after the debate, I shall hear more from him of his own practical experience in this field.
  This is a very valuable opportunity for hon. Members to give to the House of their own experience on matters on which we do not throw sufficient light when we introduce large Estimates. We spend a great deal of time on the periphery but dismiss, perhaps, far too lightly issues of substantial importance, and allow expenditure on a very large scale.
  I share the concern expressed about procurement, that we should get the best value for money. This is what I think my job is about—to make, to buy and, in due course, to sell. The pyramid which

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  I head, the advisers that I have, both civil and military, have this as their function—to ensure that, major decisions of principle having been taken, British Forces get value for money. So I greatly welcome the very serious speeches made today, and, although I have enough "ammunition" here to keep the House going for a long time, I will not deal with the non-equipment matters, because I do not want to be unduly long, since other hon. Members wish to raise matters on the three Services in turn.
  It is a very important function to keep a close watch on operational requirements. This is where the cycle starts. In my two years, as a layman, I have been taking a great interest in the operational requirements of each of the Services, and I have kept a close watch on the finances, to make sure that once those requirements are agreed, they fit into the finances. The gestation period is very long, so it is very important that the decision should be fitted into the finances available for the long cycle of perhaps 10 years or more from the earliest conception of the weapons system to the time that it is actually in the field.
  So I regard it as my second role to ensure that the finances are available over a long period and to try to match the individual requirements to what is available globally and then to deliver the goods, to marry the production side and the needs of the consumer, to keep a close watch on what the consumer requires, and to supervise the diverse technical problems which arise from the earliest stage of all, of research and development, right down to production. Anyone concerned with the production or research of even the simplest article will know the many problems which can arise. With the complexity and sophistication of the weapons systems which I and my advisers have to deal with, how much greater is the chance of major technical problems from time to time? An example is the Mark 24 torpedo, which I will deal with later.
  I will not weary the House by mentioning the machinery at our disposal —the Operational Requirements Committee, the Weapon Development Committee, the Defence Research Committee. All these are very important tools to mesh in the military requirements, to marry the needs of each of the
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  Services in turn and to see what is feasible scientifically and technologically.
  One of the pertinent points made by the hon. Member for Leicester, South-West about industry was this disparity—he conceded that there had been an improvement over the years—between what the Services say they require and what commerce says it can produce. I am very conscious of the great importance of trying to ensure that this gap which has existed, and which does exist up to a point, is closed as best we can. We have taken very important steps in this direction. At the highest level—perhaps the level of the stratosphere—the Defence Industries Council has been set up, with the leaders of industry assembled to talk, under the chairmanship of the Secretary of State, with the heads of department of the Ministry of Defence and the Ministry of Technology, so that industry knows as early as possible what we have in mind.
  I mentioned in the defence debate the two-day presentation which I had the privilege to open to explain to leaders of industry concerned with the procurement of weapons and goods for the Army what the Army required, and to take them into our confidence as early as possible. Last week, likewise, I met all the major ship builders who build warships, and we discussed our future requirements, their capacity to produce, and the problems which arise from our needs and their capacity. That is perhaps at a higher level than the hon. Member was talking about, but this is the philosophy which we have tried to instil into the Ministry of Defence.
  I have taken great personal interest in this, because I am deeply conscious that if our Services are to get the equipment they require we must ensure that we do not over-specify, that we do not up-date our specifications, that we do not change half-way through the provision of particular weapons systems or add things to them, so that eventually we do get the weapon which we require. Perhaps the danger of up-dating too much in our specifications is to be set beside what the hon. Member said about specifications which were out-dated. Both problems exist. I am deeply conscious of this, as are my advisers. Given the constraints on expenditure, it is in the interests of each of the Services to try

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  to ensure that they get the maximum return for the money available.
  The hon. Member for Honiton mentioned the difficulty of purchasing. He quoted figures, from documents which I did not catch, dated many years ago. I do not think that the position is quite as he said. The figures for expenditure on equipment are broken down in detail and are given in these 1970–71 Supply Estimates. They are set out in their classes and will be published in the Appropriation Account, which is generally available, so far as disbursement is concerned, about a year after the end of the financial year. In particular classes, whether clothing or ships' hulls—name it, it is here—there are up-dated figures right to the present Estimates of expenditure proposed in the current year in this document.
  I am not sure what the hon. Member was criticising, but the figures which are so necessary for managerial purposes which he mentioned are the ones which we are now discussing.
  Mr. Emery: I know that the hon. Gentleman does not want to mislead the House, and nor do I. Of course we see large global sums in the breakdown alphabetically in the Vote. No one suggests otherwise. But what was necessary to my analysis both on the procurement and on the stores side was the analysis of public authorities' current expenditure. This is only broken down—I quoted the document—in the input—output tables, and the last figures we can get are for 1963. They should be available up-dated to today: that is not difficult to do.
  Mr. Morris: I take the point made by the hon. Member. Fortunately that document is not my responsibility. I will convey the hon. Member's remarks to whoever is responsible. I want to ensure that the hon. Member does not mislead the House, as I am sure he has no intention of doing. The figures are available in the current Estimates, which are fully up-dated, and for disbursement they will be up-dated in the Appropriation Account.
  I draw attention to one of a series of Questions which were asked by the right hon. Member for Wallasey (Mr. Marples) on 25th July, 1969. He asked a large number of questions. One related to
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  "the total annual value of contracts placed"
  by my Department
  "from 1964 until the latest year for which figures are available, in total and by industry order; and what percentage of the total, and of each industry order, was placed as a result of competitive tendering in each year."
  We set out a large number of classifications. Perhaps the document which the hon. Member for Honiton has may be out of date; I do not know, but I have not to answer for that. The combination of the figures in the Estimates we are discussing and the information obtained by the right hon. Member for Wallasey should ensure that the House is not in doubt as to what the figures are.
  The hon. Member for Honiton raised the issue of the unified supply and contract department and was concerned about its efficiency and structure. This was one of the first questions which I as a layman asked when I went to the Ministry of Defence. I can assure the hon. Member that very important steps have been taken in this direction. The three single Service contract directorates were brought together under a Director General of Defence Contracts three months ago. The hon. Member paid tribute to the work of the contract division of the Navy. The present Director General of Defence Contracts came from this division, of which he used to be the head. The unified organisation includes two purchasing directorates, an accountancy directorate and a management directorate on general administration matters.
  Rationalisation of purchasing, to which the hon. Member referred, had already been carried out so far as practicable before the unification. With one or two exceptions justified by technical or administration functions, there is a single purchasing point for any class of item. This has been matched by rationalisation in supplying. For example, the Navy Department is responsible for all food supplies and water transport, the Army Department for all vehicles, clothing, textiles, small arms and ammunition, and the Air Force Department for petrol, oil, lubricants, electricity, gas and water.
  The hon. Member raised the issue of the Fulton Committee. This is something to which I am sure the whole House attaches importance. The importance which the Fulton Committee attached to work in the Civil Service, I can assure the

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  hon. Member, will be taken into account in future civilian management policies. A high degree of professionalism is however already brought to bear in carrying out responsibilities. The former Navy contract department was staffed exclusively on a career basis. The organisation as a whole has made a not inconsiderable contribution over the years to the development of contracting techniques and relationships in the public sector.
  Particular regard is paid to relevant experience and business acumen when appointing people to the top posts For example, at present three of them are fellows of the Institute of Purchasing and Supply, and others are members of the Institute. The grading of the top posts recognises the responsibility which they bear. Thirteen carry salaries in excess of £5,000 per year. I should be in difficulty with some of my hon. Friends if I commented more on the salaries. I take the point made by the hon. Member for Honiton that there is always a problem in the Civil Service and publicly-owned industries when attention is focused on them to ensure that we get the best men and are able to pay them the rate for the job. I am deeply aware of that.
  As to purchasing as a whole, I will not delay the House unduly, and I do not intend to go into all the points that have been raised. I pray in aid the improvements which have taken place in purchasing. The Director of Standardisation is endeavouring to identify areas where the number of specifications can be reduced and a common item used by all three Services. Discussions are also being held with other Government Departments, and, as recently announced, with nationalised industries and local authorities, to discover to what extent the benefits of standardisation can be extended further. He has tried to take full advantage of commercial products where these will meet Service requirements, but perhaps we should do more.
  I am very conscious of the fact that we should re-examine this matter on every possible occasion to see whether we can further improve it. It frequently happens, however, that the standards of defence equipment are necessarily higher than those of the private sector. Consequently, the defence requirement has to be laid down fairly rigidly in a specification. Even then contractors are invited to offer
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  their own products if these can be readily adapted to meet the specification.
  The hon. Member also mentioned the Marks and Spencer experiment. This scheme has been in operation for only six months. It is too early to try to draw firm conclusions as to the effectiveness of the new approach, but the experience of the Ministry is that the new procedures for obtaining food and clothing requirements have been welcomed by industry and are working well.
  The hon. Member asked about the Wilson-Smith Committee. I am not sure whether the terms of reference of that committee were as pertinent to all the observations made by the hon. Member as might have been implied. They were: "to examine the employment of civilians in support of the Armed Forces and to recommend whether any changes are desirable in the balance between military and civilian personnel in the interests of greater economy and efficiency, and if so, how they should be achieved". Purchasing is already an entirely civilian operation, but the hon. Member may be equally interested to know that the Army store holders are largely military. At his request I have looked at this problem and I shall be delighted to place the committee's report in the Library so that he and others who are interested may examine it.
  Mr. Emery: I thank the Minister.
  Mr. Morris: I am most grateful to the hon. Member. He also raised a point about certain differences between figures in the Min. Tech. Vote and Min. Tech. expenditure. I will not weary the House by going into that. I have the explanation here. There is no tie-up between the figures the hon. Member referred to; they have no connection. I will write to the hon. Member about them as I do not wish to weary the House by going line by line over the figures, although I could do so if I were tempted.
  My hon. Friend the Member for Dunbartonshire, West (Mr. Steele) raised the question of Alexandria. I am sure the House welcomed the generous comment made by the hon. Member for Haltemprice (Mr. Wall) in referring to the Mark 24 torpedo. I told the House on 4th March that every effort was being made to bring to the notice of every possible industrial user details of the

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  facilities and skilled labour force that will be available at Alexandria when torpedo production there comes to an end. We have had specific approaches made from two companies. I am glad to be able to tell the House that as a result we are now embarking on a formal negotiation with one of them, the Plessey Company, for the sale of the factory on terms to be agreed.
  If, as I sincerely hope, detailed agreement is reached, the Plessey Company will wish to begin to take over part of the factory in the very near future. I cannot, of course, yet give detailed figures for future civilian employment, but Plessey hopes to employ up to 500 people by the end of this year and to increase thereafter. I assure the House that this aspect of the matter—employment of the highly skilled labour force who have been very loyal for many years to the Ministry of Defence—has carried great weight with the Government.
  Mr. Steele: On behalf of my constituents in Alexandria, I thank my hon. Friend for that good news.
  Mr. Morris: My hon. Friend has kept an eye on this matter from the earliest possible moment, even before the factory unfortunately faced trouble, through no fault of its own.
  In coming to the issue of development areas, which he also raised, I should perhaps declare an interest in that I represent one and am biased in favour of them. As one of the largest producers of sheet steel, I presume that in the ordinary course of events my constituency is a major supplier of the British forces.
  I would remind the House that there are two Government preference schemes for development areas in operation. First, there is a general preference scheme under which steps are taken to ensure that firms in those areas are invited to tender on all suitable occasions and, price, quality and delivery considerations being equal, defence contracts are awarded to such firms in preference to those elsewhere.
  Secondly, a special preference scheme is operated in those cases where it is practicable to split a requirement whereby if, as a result of competitive tendering and the application of the general preference scheme, at least 25 per cent. of the con-
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  tract is not placed with development area firms, the Ministry of Defence may invite the development area firm submitting the lowest unsuccessful tender to make up to 25 per cent. of the contract at a price entailing no additional cost to the Department. In other words, they get a second bite of the cherry, provided that the Ministry of Defence does not suffer as a result.
  In addition, I have taken the view that the way to increase the number of development area firms included in the Department's purchasing lists is to try to encourage those firms in development areas that already produce for us to produce more. Further, a vast range of defence expenditure is in the electronics sphere, where often there is no purchasing from developing areas. In some development areas it is possible that many more articles, some of a humdrum nature, could be produced, and while, of course, the figures are less spectacular from a financial point of view, this is an important aspect.
  I have asked my contracts people to carry out a crash programme to identify firms in this context which have not hitherto supplied us with goods. I have asked them to examine this matter on a nationwide basis to locate these firms. The results are so far encouraging, but it will obviously take some time to witness a major increase in work of this sort. In any event, it is quite marginal for the development areas. I have taken every possible step to publicise the possibility of a bigger purchase being made from development area firms by the Ministry of Defence.
  The right hon. Member for Stafford and Stone (Mr. Hugh Fraser) asked a number of questions, and particularly about the proximity-point detonating fuse. I was not sure of the implications of his remarks when he mentioned Blackburn, but I will ignore any innuendo that he might have vented by briefly giving the reasons for the decision that the Army's new P.P.D. fuse should be developed and produced by the Ministry of Defence rather than by Ferrantis.
  Mr. Ramsden: At R.O.F. Blackburn?
  Mr. Morris: Yes, at Blackburn.
  I welcome the opportunity to set the record straight because publicity has been

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  given to some inaccurate information, with a strong bias against the capabilities of the Ministry of Defence design team and the fuse factory at Blackburn.
  In the last few years work has been going on at the Ministry's Royal Armament Research and Development Establishment on the design of a new fuse. Ferranti is one of two companies given a development contract for an important electronic component of this fuse, but there is no question at all of the design rights in the fuse belonging to the company. At most, if it is decided to use the electronic component that it has developed, the company has design rights in that component.
  Since 1957—the right hon. Member for Harrogate (Mr. Ramsden) was at the War Office at that time—there has been in existence what is known as the "preferred source policy", which means, briefly, that the Royal ordnance factories should be regarded as a preferred source for orders for products in their customary field unless special considerations, such as price or delivery dates or the need for an alternative source of supply, exist.
  The fuse requirements for our forces in the 1970's will be considerably reduced and if the contract for this new fuse were to be placed elsewhere, the future level of production at R.O.F. Blackburn would be highly uneconomic; and that factory has very modern equipment and a highly skilled work force with an excellent record of delivery dates and prices.
  It was against this background that we had to consider the design and production of the P.P.D. fuse. The argument has been advanced that to split design and production is wrong, and a good deal has been made of the advantages of a private firm having design, production and sales under unified control. I appreciate this, but the same is, of course, true of the Ministry of Defence.
  The whole project will have a single project manager to ensure that all aspects of design and production are fully coordinated. Export sales prospects will be looked after by the Ministry of Defence sales organisation, whose worldwide contacts at government level are far beyond those available to any private firm in this field.
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  I naturally regret the effect that this decision may have on the people who work at the Ferranti fuse factory at Oldham and I hope that the firm will find other work for the factory. But redeployment from defence to civil work is an unavoidable effect of the reduction in defence expenditure, which is the Government's stated policy.
  Mr. Hugh Fraser: In connection with the question whether the preferred source policy is becoming out of date in the 'seventies, one must consider that the cost of producing this fuse by the R.O.F. will he nearly £30, while Ferranti could produce it for about £12.
  Mr. Morris: I cannot accept the right hon. Gentleman's figures. As regards the preferred source policy, it has been in existence for a number of years and until it is the declared policy of the Conservative Party to dispose of all the Royal Ordnance factories—I would like to hear if that is the policy of hon. Gentlemen opposite—then, if we are maintaining a smaller number of them than we maintained in the past, we must ensure that the production of Royal Ordnance factories is economic; and providing that they can produce the goods we need and deliver them when we want them, there is every argument for the preferred source policy.
  Mr. Ramsden: I do not think that the Minister is looking at this problem with the depth it deserves. The question is one of total capacity for defence production at Royal Ordnance factories and such other units of production as there are, the whole matter being looked at in the round. Because the preferred source policy, and the available capacity going with it, was relevant to the size of the requirement in 1957, it does not necessarily mean that it is relevant to the much reduced requirement today as a result of the operations of hon. Gentlemen opposite. Thus, the matter must be looked at from time to time in relation to the capacity required as a whole. There is nothing sacrosanct about the preferred source policy.
  Mr. Morris: I am sure that when the right hon. Gentleman was at the War Office he looked, at first hand, at each of the Royal Ordnance factories. I doubt, given the number of Royal Ordnance

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  factories that we have now and the different rôles that they play—the right hon. Gentleman will be aware that they do not produce the same articles—if he would wish to significantly reduce the present number of them. If he wants to tell the people of Blackburn that under Conservative policy the Royal Ordnance factories would all go, he is at liberty to do so. But if it is believed that a certain number of Royal Ordnance factories are necessary, then one must ensure that their production is viable and economic.
  If sufficient fuses were required to enable more organisations to produce them, nobody would be more delighted than I. However, when one examines this matter in a commercial and businesslike way, as the hon. Member for Honiton urged us to do, one must agree that the decision we have taken is the right one. I looked at this matter with great care and fairness, with the best advice possible, and took this decision, which is in accordance with the policy which even hon. Gentlemen opposite advocated in the past in connection with the preferred source policy, and I was conscious of the real problem which might have existed at Blackburn.
  The right hon. Member for Stafford and Stone raised the issue of war reserve stocks and the sales of small arms munitions to Nigeria. I am glad to assure him that at no time did we have to draw on our war reserve stocks to make small arms munitions available for sale to Nigeria. He also raised the question of the reserves of the Chieftain tanks and the—I cannot read the writing on my brief, an experience that I am sure the right hon. Member has known.
  Mr. Hugh Fraser: It is the same writing.
  Mr. Morris: I can assure the right hon. Gentleman, in fairness to whoever wrote this, that the writing is better than mine. The re-equipment of the Royal Armoured Corps with Chieftains is already two-thirds complete and of course the regiments already re-equipped already have this appropriate backing of reserve tanks. We are expecting the full re-equipment of B.A.O.R. with Chieftains to be substantially completed by 1972. I agree with the point made by
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  the right hon. Gentleman when he asserted that it was sensible that the production of these tanks should be concentrated at one factory. It already has been concentrated at Leeds. The decision was taken in the light of a comparison of the costs at the two potential sources of production about two years ago.
  The right hon. Member asked why provision for the R.O.F. was going up by£1½ million. The output of the R.O.F.s has increased, and is planned to increase further in 1970–71. This reflects their ability to offer value for money not only to the Services but to overseas customers. In part the increased provision for 1970–71 reflects the increasing output. In part it represents the increases in salaries and the like, expenditure which will not be recovered until complete items of manufacture are delivered after 1970–71.
  The hon. Member for the Isle of Ely (Sir H. Legge-Bourke) mentioned the work of the Select Committee of which he was a member. I have already paid tribute to its work and expressed the gratitude of the Secretary of State for its pertinent observations. We have already published our reply. We have differed from the Select Committee on the part that operational analysis should play. I hope that this will not be interpreted as a sign that we do not attach importance to such studies. The reverse is the case. The output of studies from Byfleet—and I have been down there myself to see what they do—is making an increasing contribution to the formulation of policy. Closer links have been established between the study staff in M.o.D. and the operational requirements staff.
  The essential point about operational analysis is that it should continue to be advisory. In the words of the Government reply, it is a tool, not an end in itself. It must therefore be integrated with the decision-making machinery and not given an over-riding position. In their reply to the Select Committee the Government undertook to develop the use of operational analysis as far as resources would permit. I can assure the hon. Gentleman that matters are improving. We attach great importance to the work being done at West Byfleet. These staffs are highly technical and in

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  great demand in industry as well as Government establishments, but the chronic shortage has been overcome and all posts in the D.O.A.E. scientific complement have now been filled. Secondly, contract work is expanding. For example, purchase of computer time is now about double the figure mentioned in paragraph 115 of the Committee's Report.
  Thirdly, re-building plans for the D.O.A.E. are making good progress. As to the point the hon. Gentleman made about N.A.T.O., he will be aware that it is not our responsibility alone. We will play a part in encouraging the development of S.H.A.P.E.'s technical centre. I hope that that will reassure the hon Gentleman as to the importance we attach to this part of the organisation.
  The hon. Member for Derbyshire, West (Mr. Scott-Hopkins) raised the issue of flight simulators and referred to what he described as rather aged simulators for the Victors. We are at present buying a number of new simulators, primarily for the new aircraft entering service. I recently saw two of these being installed at R.A.F. Kinloss in Scotland for training Nimrod crews and also at R.A.F. Coningsby for the Phantom. I am not aware of any plans for buying new simulators for the Victor, but I will look into this and let my hon. Friend know.
  He also raised a point about submarine batteries. I am afraid that I have not been able to trace anything on this point yet.
  The hon. Member for Haltemprice raised, as he has done on a number of occasions, the issue of the replacement for our present tactical nuclear weapon, Honest. John. It is rather an unfortunate name, reminding one of a bookmaker. The position has been made clear by me when answering questions in the course of the debate in the House. When I said that there is no replacement now, which, as the hon. Gentleman knows, were the words I used in the course of a reply to a second or third supplementary, I had in mind from what he had raised previously that he was mentioning Lance. I knew of the existence of Serjeant and the other weapons to which he referred. As I said in the defence debate, Serjeant is not the replacement we would envisage, introduced
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  on the time-scale he mentioned. I cannot add anything further on Lance. When the time is right we will have to take a decision. I am not fudging the issue in any way, but the time is not yet opportune. When there is a weapon available, at the appropriate stage in the cycle, we will certainly look at this matter and take a decision then.
  I do not know what the position is with the American forces. When I was over there, in the autumn, Lance was still at a fairly early stage of production. Obviously development had been going on for some years. I am not able to deal with the point about helicopters, raised by the hon. Gentleman shortly before I rose to speak. He asked about the increased costs of the Gazelle. Speaking off the cuff, I know that there have been increased costs, but we do not normally give figures of these costs. I do not think that we normally give figures except in exceptional circumstances.
  He also asked about the position of the French with the WG13 and whether they had placed an order. I will look into this and find out what is the position. He knows that the French cancelled part of their requirements but the other part is still going ahead. I ran into difficulties with the hon. Member for Beckenham (Mr. Goodhart) when I said—about the Gazelle—that a certain stage in the procurement and order cycle had been reached. He asked a specific question, whether a contract had been entered into. I was not able to go further than that, but I have searched further, and I find that a contract has been entered into.
  Sir H. Legge-Bourke: I am grateful to the Minister for what he has said about D.O.A.E. Will he say whether he or one of the other Ministers will answer the point I raised about commuting pensions?
  Mr. Morris: I said earlier that I would confine my remarks to replying to questions about procurement, which is my responsibility. Whichever one of my colleagues catches your eye, Mr. Speaker, will deal with the pension point made with some feeling by the hon. and gallant Gentleman, together with other points which have been raised.
  We have had a most interesting and helpful debate. As one who labours in a rather solitary state in dealing with

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  equipment, and, apart from Question Time, not having the opportunity to canvass the real problems which exercise the minds of myself and my advisers, I am grateful for the opportunity of answering at greater length than is normal at Question Time some of the useful contributions which have been made in the debate. It would not be a platitude to say that this is the House of Commons in one of its better moments, of which we are proud, where people have been drawing on their own experience and relating it to Estimates which far too frequently go untouched by the detailed comment which we have had tonight. I am grateful to all hon. and right hon. Members who have taken part.
  7.21 p.m.
  Rear-Admiral Morgan-Giles: At nearly three bells in the last dog watch we come to the Royal Navy. At the end of defence debates which have lasted for about two weeks, one might think that almost everything that had to be said from a partisan viewpoint had already been said. There has been horrifyingly little agreement between the two sides of the House in the debates until today, except that both sides renewed the plea for a Select Committee on Defence. There is much to be said for this. The House of Commons has today been asked to give to the Government more than £800 million on account. If the debate continues until ten o'clock tonight we shall have been handing out about £2 million per minute to the Government. For a House that is so sparsely attended as this, that is a fairly good rate for handing out money.
  I want to abandon the competitive insult system and try to examine the various Navy Votes objectively, as one might hope they would be looked at by a responsible Select Committee. I believe that we are discussing the Supply Estimates (Class XII: Defence), affecting the Navy Votes 1, 4, 5, 6 and 7. I hope if I confine myself to those Votes I shall be in order. I also hope that the Minister will answer the specific points which I shall put to him in the same way as he would have to answer if he were appearing before a Select Committee.
  Mr. Ramsden: I believe my hon. Friend will be in order, subject to your
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  correction, Mr. Speaker, whatever Votes he happens to mention.
  Mr. Speaker: It would be a dangerous thing for Mr. Speaker not to ask hon. Members to confine themselves.
  Rear-Admiral Morgan-Giles: I should be very grateful for any tolerance which you may allow, Mr. Speaker. I hope also that the Minister has a sharp pencil, as there are specific points which I wish to put to him. In the previous procedure where Votes were dealt with one at a time it was easier for the Minister to cover the points raised by hon. Members.
  The total estimate in the White Paper on Vote 1, pay and allowances, is £110 million, which is increased by the military salary subsequently announced. Will the Minister tell the House what will be the total net increase for the Royal Navy from the gross £135½ million which the Secretary of State said was involved in the military salary scheme?
  Descending from that global figure to a small point of detail, will the Minister elucidate the point which occurs on page 32 of the National Board for Prices and Incomes Report on the Pay of the Armed Forces to the effect that neither food nor accommodation will be charged while men are at sea or in the field for two nights or more? There is confusion in the Fleet whether a person has to be at sea for two nights or for only one night to be absolved from food and accommodation charges.
  The Select Committee that I have spoken of would see the increases in pay now being given to the forces not only as a means of bringing Servicemen's pay up to date but also as a way to attract recruits to improve the current recruitment figures as well as making up leeway. Although the report speaks of two-yearly reviews, I think a Select Committee would wish to be assured that, if the result of the pay increase is not as good as is hoped for, the Government will scale pay up again without waiting for two years to elapse. Will the Minister give a specific answer on that?
  Still under Vote 1 is redundancy. The White Paper says that 19 officers and 794 Fleet Air Arm ratings will be made redundant but almost all will be volunteers. What will be the redundancy terms of these officers and ratings, and

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  will the Minister publish the total cost to public funds? A Select Committee would surely wish to be told why any redundancies were being effected when there is such an overall shortage of officers and ratings in the Royal Navy. The basic training and experience of Fleet Air Arm personnel could be of great value to the Navy, and those men could be transferred to other branches with relatively little retraining being necessary. I know that the Minister mentioned this in the debate on the Navy Estimates, but I was not satisfied with his explanation that difficulties of structure within the various branches would be caused by this relatively small number of men. My suspicions were reinforced when I read a letter which appeared in the Daily Telegraph this morning written by Mrs. Parsons of Horndean, Hampshire. She says:
  "My husband, a chief petty officer with 17 years' service, at present serving on H.M.S. "Eagle", would like to be offered another job in the Royal Navy or Royal Air Force, but no such luck.… Dr. Owen, lamenting lack of recruits on the one hand and busily retiring good men on the other."
  Perhaps the Minister will say why these redundancies are needed.
  What are the future figures of redundancies in the Fleet Air Arm? Figures have appeared in the Press which suggest that between 2,000 and 2,500 ratings will have gone in 1972 and that within three years 700 highly-trained Fleet Air Arm officers will have gone. I do not think we have been given the future figures for redundancies and I hope that the Minister will be able to fill in the details. Would he also explain the use in the White Paper of the term "volunteers". Does it refer to those who wished to leave the Fleet Air Arm before the cuts were announced, or are the "volunteers" those who have accepted the terms offered, in other words, decided to make the best of a bad job?
  How many short-service officers on the Supplementary List, who comprise about 60 per cent. of the Fleet Air Arm pilots and observers, have expressed a wish to stay on for further service at the end of their current engagement, if they are allowed to do so? These Supplementary List officers have done a splendid job in the Navy and it seems a pity to lose them if it is possible to retain their services.
  I come on to Vote 4, which deals with retired pay and pensions. Many Service-
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  men believe that it is extremely important from a recruiting point of view to improve retirement pay and pensions. The Minister assured me that pari passu with the statement on the military salary scheme we would have a statement about the whole matter of pensions and retired pay. When may we expect this statement? There are at present inconsistencies in the proportion of serving pay given to various ranks as retirement pay. Other inconsistencies affect service widows. A widow's pension is only a third of the husband's retired pay in the Services instead of one half as is applicable in the majority of pension schemes outside the Service. I hope that this anomaly will be eliminated when the statement on pensions is made.
  A similar point may be made about pensions of widows of personnel who marry after retirement. This matter is important since there is now some encouragement to have unmarried men in the Services and the pay scales will be better fitted to them. Therefore, a larger proportion of people will wish to get married and settle down after they have left the Service. Furthermore, it is most important that the very old pension codes applying to officers and men, who still somehow manage to live or exist on them, should be brought up to date so that these people do not fall further behind all the time. Some of the cases that one meets in one's constituency are pathetic and the situation is quite disgraceful.
  A Select Committee on Defence would understand that the father-and-son connection runs like a golden thread through the Royal Navy and Royal Marines, as it does in many regiments in the Army. If the older generation does not feel that it is getting a square deal, then it cannot be expected to encourage young men to join that Service. If the hon. Gentleman cannot answer all these points today, will he assure us that these points will be included in the expected statement on pensions and retired pay?
  I should like to turn to Vote 5, which deals with administrative stores and supplies. Why in Vote 5.F is there an increase of £50 million in victualling allowances in lieu of provisions? I do not understand this point, but presumably it is an accounting matter. Last year's

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  figure on Vote 5.F for victualling was £58 million whereas this year's figure totals £109 million. There must be a different accounting method, but I cannot see how an extra £50 million has arisen. Perhaps the hon. Gentleman will clear up that mystery.
  I welcome from this side of the House the increased expenditure in Vote 5. J on publicity and recruiting services. There has been some excellent publicity which we have seen in a Standing Committee of which I am a member, and there was also an excellent "Know your Navy" display put on in the Grand Committee Room at the end of last year, though unfortunately very few people saw it. Perhaps the Minister could say whether he thinks that this relatively small increase in advertising is sufficient. I have done a sum on the back of an envelope and calculate that it is costing £36 per recruit to get a man in the forces. In view of what it costs to train him and to pay him during his Service a larger number of recruits might be attracted if we spend more than £35 per head.
  Vote 5 contains Grant-in-Aid W.1 relating to the North Atlantic Treaty Organisation. There is an item of £7,300,000 as to share of common expenses, etc. Does that item include any contribution to the making of the Tyne-Tees film on N.A.T.O. or any compensation for the expenses to which that company was put when it was not allowed to show the film? The film, which I have seen, contains a valuable explanation of the purposes of N.A.T.O. and the need for it and gives details about the naval surveillance effort in N.A.T.O. I believe that a Select Committee on Defence would wish to know why that film was banned and whether the Ministry will pay compensation since the company went to considerable expense in making the film and obeyed every security requirement at every stage. The film was cleared by three British generals, by the Chief of Staff to C. in C. North, by SACEUR's own Assistant Chief of Staff (Intelligence), who is the Chief Security Officer for the whole of Allied Command Europe, and by the Commander-in-Chief Allied Forces, North—and presumably an officer holding that position is not
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  devoid of discretion under the Ministry's orders.
  The Secretary of State has said of the film that there is no political objection, and there could be no security objection because material in the film has already been published in the Continental press. I believe that the Government should either show the film or should compensate Tyne-Tees which has acted correctly all along. Perhaps the Under-Secretary of State for Defence for the Royal Navy, who is wriggling a bit, will say something about the matter when he winds up.
  The Under-Secretary of State for Defence for the Royal Navy (Dr. David Owen): I was not wriggling.
  Rear-Admiral Morgan-Giles: I hope that the hon. Gentleman will not wriggle when he replies. The Naval Staff College comes directly under Vote 5 and Vote 5.Q relates to lands and buildings. There has been a lot of argument throughout the period of this Government about the College moving to Camberley. Although the Government have not been able to effect this move, they still have not been able to let go of that idea. I submit to the Minister that it is a mistake to move the college to Camberley. I believe that the stage at which junior officers should become inter-service-minded is at the Joint Service Staff College which is being retained on a permanent basis. After all, when an officer goes to his staff college, the complications of life in all the Services these days are such that he has a great deal to learn about the other branches of his own Service if he is to become a competent staff officer.
  I move now to Vote 5Q and Vote 7K. I am concerned about the facilities for re-fitting our nuclear submarines. From the history of the nuclear submarine, we know that there are facilities and a skilled work force at Cammell Lairds in Birkenhead. We were told in last year's defence debate that the facilities were to be concentrated only at Vickers and that the facilities at Cammell Lairds were to be dispersed. To our surprise, we now learn that new facilities are being installed at Devonport, within the Minister's own constituency, for the refitting of nuclear submarines. I do not understand this, and I hope that the Minister can explain it.

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  Then there are various interesting grants in aid under Vote 5, and I refer in particular to V.9, in respect of the R.U.S.I., which we all agree is doing an excellent job as one of the very best of our "think tanks", and Vote V.11, which is the Sailors' Fund for rum. Can the Minister say how that fund is to be administered?
  If the hon. Gentleman's pencil is not blunt, I will move on to Vote 6, which is headed "Ministry of Defence, Pay, &c. of Civilians". As the pay of the Under-Secretary of State for the Royal Navy comes out of that Vote, I hope that I shall be in order in referring again to the concern about the proposals to abolish the separate Navy Minister. I do not want to see him abolished—not even the present one! The First Lord of the Admiralty is a title which is as old as the Royal Navy itself. The whole cohesion of the Service might be jeopardised by the feeling that there was no individual Minister politically responsible for standing up for the interests of the Service.
  Another aspect of great importance which falls between this Vote and Vote 1 is naval intelligence. I speak as a onetime Chief Staff Officer, Intelligence, in the Far East, and so I am aware of the security difficulties in discussing this subject. I do not want to embarrass the Government or step out of line about this, but it is public knowledge that the British Service intelligence organisation makes a valuable contribution to our various Alliances. Without going into details, which the hon. Gentleman cannot do, I think that the House would wish to have his assurance that the run-down east of Suez, including the Gulf, will not include any reduction in the intelligence organisation in those parts of the world. Our intelligence processing may be in the horse and buggy age, but our intelligence collection is very well organised. I understand fully that details could be better given on this sort of subject to a Select Committee, but the Minister can assure us in blanket terms about this important issue of Service intelligence.
  I come now to Vote 7, Defence Equipment and Related Stores. Vote 7A is the largest total net estimate of all. A Select Committee might expect to be given a breakdown of it, because it applies to what might be called warlike stores and war and contingency stocks of ammuni-
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  tion. At the time when the Services are being cut, it is natural for the Opposition to fear that war and contingency stocks are possibly being cut to below a prudent level. Without breaching security, perhaps the Minister can give us concrete statistics to reassure us that war stocks are not being cut. In this matter, the Government must not hide behind a security screen. It is of great importance that war stocks should not be cut to the point where an incoming Government find the cupboard bare.
  Still on Vote 7A, I come to the aircraft carriers. The Minister will scarcely be surprised that I have got round to this question. The arguments for keeping these ships in commission for the remainder of their useful lives have been stated in recent debates, and I will not repeat them. The Government have stated that N.A.T.O. is the focus of their defence policy and that they will phase out the carriers after our withdrawal from east of Suez. However, Admiral Thomas H. Moorer, the Chief of Naval Operations in the United States Navy, has told us:
  "May I say, too, that your aircraft carriers are still, in my opinion, as advanced as any in their operating techniques and equipment and second to none in their training and efficiency. And, as far as I can see ahead, N.A.T.O. will continue to need them."
  That takes us away from the idea that the carriers should be withdrawn simultaneously with our withdrawal from east of Suez. This is the Chief of Naval Operations of our principal ally saying that, as far as he can see ahead, N.A.T.O. will continue to need these ships.
  In addition, it is well known that the policy of the Opposition, if elected, is to continue the life of the existing aircraft carriers for as long as possible. In those circumstances, a responsible Select Committee for Defence would wish to be assured by the present Government that no essential stores, spares or ammunition needed for these ships or their air groups will be disposed of at this stage. Again, we do not want to find the larder bare of stores and equipment for the aircraft carriers. It is only fair to leave any incoming Government with freedom to manoeuvre so that they can do with these ships what they believe to be right.
  Mr. Wall: I am sure that my hon. and gallant Friend will agree that of equal importance is the future of the crews,

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  particularly the deck crews. We do not want to find that they have been discharged from the Service when we get back to power.
  Rear-Admiral Morgan-Giles: I agree with my hon. Friend that that is a most important point. Perhaps the Minister will understand if the Opposition are suspicious about this following the destruction of the jigs and tools for the TSR2, the unseemly haste to get the contractors to cut up the flight deck of H.M.S. "Victorious" when she was scrapped, and reports of wholesale helter-skelter disposals of much British Service equipment in Singapore. I hope that the hon. Gentleman will be able to assure us about the back-up for the aircraft carriers.
  Still on Vote 7A, I come to our submarines. Some of us feel that the Polaris submarines should be shown on a separate central Vote of the Ministry of Defence and not charged against the Service providing them. It has been argued that the deterrent should be charged against such a central Vote. Excluding the Polaris submarines, there are only 29 conventional and three nuclear fleet submarines. Essential refits reduced these numbers to 21 and two.
  The White Paper is misleading, because it says that a force of 27 patrol submarines will also be in service during the year, whereas only 21 will be in service during the year. It is a big difference. In 1966 there were 46 submarines, including those refitting and in reserve, so our submarine totals are falling at the wrong time. They should not be falling.
  The nuclear fleet submarines have been described by the Government as the main striking power of the fleet. Yet the building of these submarines was slowed down early in 1968 by the Government. By the end of 1971, according to the figures that I have, there will be only seven, instead of the 17 originally planned. Perhaps the Minister will confirm or deny those figures when he replies.
  The Mark 24 torpedo has been discussed. The Minister's right hon. Friend explained that he was hoping that the Plessey Company would take over the Alexandria factory. That is very good news. However, we also want to know where the torpedo will be made
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  when the bugs have been got out of it. Will the Minister assure us that he is equally alert on that aspect of the matter, because this torpedo is an extremely necessary weapon if our nuclear submarines are to be really effective?
  Naval planners are worried whether the number of submarines that we now have is sufficient, especially observing that a submarine is the best antisubmarine weapon and that the only possible potential enemy of N.A.T.O. has about 400 submarines in commission.
  From a national point of view, our submarine force is gravely overstretched even to meet its own training requirements. Submarine commanding officer courses—called "perishers" in the vernacular of the submarine service—have great difficulty in getting submarines to carry out "perisher" courses for future commanding officers. They also find that existing submarines are extremely busy trying to meet the training requirements of the other elements of the fleet. For any form of realistic anti-submarine training there must be a submarine target. Will the Minister remark on submarine numbers?
  I turn now to Vote 7M, "Advance purchases of defence equipment for sale abroad". Recently, when I raised the question of Sea King helicopters, the Minister said that it was not customary to reveal details about overseas sales of equipment. That is fair enough. But there is real concern, because the Sea King helicopter, with its sonar, electronics, automatic hover and navigational arrangements is more than a new helicopter; it is a giant stride forward in anti-submarine warfare. I believe that it would be reasonable for the Minister to assure the House that at least the Sea King would not be sold to foreign countries which have obtained supplies of arms from Soviet sources. It is well known that when arms are supplied to countries from Soviet sources, officers have to go there to learn how to work them. I believe that a differentiation should be drawn between one country and another in this respect. The potential loss of security by exporting the Sea King—the Minister will know what I mean—is important, and I should like an assurance that this matter will be reconsidered.
  On Vote 7A, new construction of ships, I should like to refer to one or two

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  other types of ships. We welcome the construction of new designs of ships from private builders. The type 21 frigate seems an excellent idea. Being a smaller, more economical, very up to date ship with, presumably, a smaller ship's company, it will be more economical in manpower and will get over the difficulty I raised in a recent defence debate about a hugely expensive and sophisticated ship being used, for instance, in the confrontation to intercept two bare-bottomed Indonesians in a canoe. We also welcome the survey ships which do valuable work and are built on commercial type hulls.
  Concerning the main frigate force—the maids of all work of the fleet—a select committee would wish to know whether sufficient allocation of money had been provided.
  Looking at new construction overall, since the end of 1964 only 28 new ships of all sizes, including Royal Fleet auxiliaries, have been ordered. That is about half the number ordered between the 1963 and 1965 Estimates. As an indication of the shortage which I believe exists in the fleet, last year a Russian squadron appeared unexpectedly off the north of Scotland, and it was desirable to trail this Russian squadron. This is normally done by both sides in this extraordinary world in which we live. When the commander-in-chief wanted to do so, the only ship that he could make available was a civilian manned naval tanker, the "Olmeda", which had no electronic monitoring gear and no sonar underwater gear to do this task effectively. If this is typical of the way that the fleet is over-stretched it is a remarkable example. The "thin grey line" must be stretched to bursting point if we have to send a tanker out to shadow somebody else's task force.
  Concerning overstretch, in the 1966 Review, published in February 1966, the Secretary of State published figures giving details of the average employment of destroyers and frigates. It stated:
  "The following figures give some idea of the strain involved."
  The Minister has heard it before and he will hear it again. The figures were given by way of illustration of the fact that the forces were not large enough. The figures were given to 1964. Every time I have asked for these figures to be brought up to date, even up to two years
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  ago, the Secretary of State has consistently refused to do so. This is his choice of yardstick for the adequate size of conventional forces. Because it no longer suits his book, he refuses to bring the figures up to date. If he wants us to believe that there is not overstretch in the fleet, he should bring these figures up to date, not against national security, which I do not believe is involved anyway, but up to the same degree of up-to-dateness that they were when originally published.
  My last point concerns the number of ships in reserve. This number has been reduced in the lifetime of this Government from 170 to 38 ships. Yet there are 52,000 naval personnel sailing ashore in the United Kingdom. What are they to do for ships in any kind of emergency?
  I believe that all the factors that I have mentioned would cause a Select Committee on Defence to look carefully and urgently at the size of the Navy today. If it did so, I believe that it would conclude that our naval forces are not now sufficient to make our proper contribution to the prevention of war—let alone to fight one.
  7.59 p.m.
  Dame Joan Vickers (Plymouth, Devon-port): I should like to congratulate my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) on a remarkable and all-embracing speech. I spent a certain amount of time ticking off the different points I had written down which I did not want to repeat.
  I should like to exonerate the Under-Secretary of State for Defence for the Navy. The dockyard is in my constituency, and I shall have something to say about it later. I support my hon. and gallant Friend's plea for easier commutation of pensions—commuting is difficult now—also his point about widows and their one-third pensions, which is important.
  I should like also to thank the Minister for arranging so many visits this summer. I found them extremely interesting, and the only disappointing thing was that on three separate occasions I was the only hon. Member to take advantage of them. On one occasion I had lectures from four naval officers for nearly two hours. I felt ashamed to put them to all that work, but I am sure that it was to my

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  benefit, if not for the Minister's as he had a number of letters after my visits some points turned out satisfactorily. I hope the visits will continue in future.
  Turning to the question of dockyards, I am in a somewhat difficult position because I am not quite certain of the division of the Minister's responsibility over this. In the defence debate the Minister of Defence for Equipment seemed to have overall responsibility for the dockyards. So if the Minister cannot answer me tonight and my questions have to go to his hon. Friend, I shall understand.
  I should like to see more construction done in the dockyards. I know that they are really mainly repair yards but to construct a ship from time to time does give the workmen—and they are specialised craftsmen—an added interest. I notice that the hull of the "Scylla" was made in Devonport and cost nearly £200,000 more than either the "Hermione" or the "Jupiter". Why? It may be that they are different types, but they are all supposed to be Leander class frigates. This does rather put one against suggesting that we should have other ships built there, although one would have thought that some construction of Royal Fleet Auxiliary ships or Royal Navy manned support ships.
  Paragraph 12 of page 33 of the White Paper says;
  "The Royal Navy has now widened its existing responsibilities to cover the design and procurement of all marine craft of the services … together with the major repair and refit of Army marine craft and the Royal Air Force's interim recovery vessels and long range recovery vessels. The transfer of responsibility to the Navy Department for the major repair and refit of the older Royal Air Force marine craft, currently carried out at R.A.F. Mount Batten, is planned to be completed by the end of 1970–71."
  As Mount Batten is so near Devonport, it might be convenient to transfer the whole organisation up to Devonport, and this would give more work where it is needed. The Estimates show that there will be a £8½ million cut—a major cut —in construction this year of naval vessels.
  As regards the replanning of the dockyard, I do not know whether the Minister can say something today. It is essential
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  that the programme is known in the near future. I have been privileged to see the design, which I think is excellent and will be very beneficial to the men working in the dockyard, and the amenities will also be better, but it is about time that we heard the programme for beginning this planning so that the men who are working there can have a little idea of what is ahead, and what may be the future career for young men.
  There is also still a certain amount of dissatisfaction about pay, and perhaps in replying the Minister could give, if not all the scales, at least some idea of what the lowest-paid worker takes home without overtime and also, perhaps, what a highly-skilled man can earn, as to my mind there is too much differentiation between the money that people earn in the dockyard.
  I am sure that the Minister will not be surprised when I raise—regrettably—the question of the apprentice group instructors once again. This has been going on for a considerable time. I have just received a letter dated 14th March which says:
  "I can now inform you that at a meeting of instructor representatives from all dockyards, it was unanimously agreed that due to lack of any visible progress being made on the part of the Ministry of Defence (N), further action will be implemented. This further action has the full support of the National Executive of the Civil Service Union and may therefore be termed 'official'".
  It goes on—
  "… further dispute action might still be avoided as it would be operational from April 1st, 1970."
  I suppose that the Minister has had a similar documentation.
  Notice has also been issued, which is not marked confidential, from the Flag Officer, Spithead, in regard to certain difficulty in arranging for supervision during the lunch breaks. It says that it will mean that there will be no alternative to closing down the centre from 12 noon to 1 p.m. daily. This has been going on for a long time and I have had several interviews with the hon. Gentleman and his predecessors over this as well, and there has been a deputation to Lord Shackleton. Surely it is not beyond the realms of possibility to get something settled amongst this small group of men who do an excellent job.

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  My other point—and I think the Minister will have some sympathy with this—is the question of the policy in regard to the building of married quarters. I have previously pleaded on this with the Conservative Government, and again tonight I consider that we do not want these large cantonments of people living together, having to work together all day and then go home and live near each other. Suppose I suggested that all hon. Members should live in one block of flats; what an awful idea that would be. This would be a similar idea as regards naval married quarters, and one should not have to work together all day and then go home together with Navy wives having nobody but Navy wives with whom to talk. It is a bad environment, and one must get away from the job from time to time.
  I now come to the question of victualling, and my figures are rather different from those of my hon. and gallant Friend the Member for Winchester. I would like to know the breakdown of these victualling allowances in lieu of provisions, which do not seem clear to me.
  I was interested—it is difficult to find the Navy figures—in the question of the number of ships which will be scrapped in the future. My hon. Friend the Member for Haltemprice (Mr. Wall) asked a Question and received an answer last Friday. I gather that there are about 23 different types of ships which are going to be scrapped. This is only in answer to my hon. Friend's individual Question but there are others in the White Paper. Is it really necessary to scrap these ships? I notice that two are being sold to Peru. Surely there might be smaller nations which might want some of them, and they cannot all be in a bad state. What about asking the Malaysian Navy if it would like more coastal minesweepers? We have sold two in the past; the Malaysian Navy needs ships to go round its coast protecting its coastline. Has the Minister any idea of the worth of the scrap metal of these ships and for all the pieces of ships? What would be the ultimate saving in scrapping these ships, as opposed to repairing some of them and selling them to navies overseas. What is to happen to H.M.S. "Albion"? We are all rather anxious about that in case we do not have sufficient ships for our amphibious operations.
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  I apologise for not mentioning a point about the dockyards and the labour force earlier. We know that there is going to be a cut-down in the labour force. On page 57 the White Paper says:
  "This is expected to be achieved by normal wastage without any declaration of redundancy."
  I would like to know whether this is really being carried out, because I think it is extremely important for the whole concept of getting future industry to Plymouth.
  I was going through the Estimates for the Headquarters Staff. Here again it is rather difficult to divide it up. The staff was put at 105 extra and I was fascinated to see that S.E.A.T.O. is having an increase of three principal officers. I thought that the Government's policy was not to have anything more to do with the Far East, yet here we are going to increase the number of principal officers.
  I also regret—though this may be something to do with the running down in Singapore—that the education staff is being severely cut in numbers. Surely this service is still essential to the Royal Navy.
  An interesting and fairly new feature is the Institute of Naval Medicine. I understand that it is to study nuclear and underwater medicine problems and environmental health physics and audiology —presumably to protect ears not only under water but from the effect of guns. I am also interested to note that the number of senior principal psychologists is to be doubled. Is the Navy getting neurotic so that it needs so many psychologists? The number of dentists, on the other hand, is to be cut. I should have thought that teeth were more important, especially in view of recent comments we have heard from the medical services.
  I notice that the numbers in H.M.S. "Britannia" are down, despite the fact that there are now two entries. We also seem to be getting far fewer people from overseas.
  The Under-Secretary of State for Defence for the Royal Navy (Dr. David Owen): No.
  Dame Joan Vickers: I am glad to hear that. The numbers are not adumbrated, and I thought that perhaps there had been

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  a fall. This is a very good service that we can give to overseas people.
  The other day, I had the opportunity of visiting the National Sea Training School at Gravesend and was interested to note that it does not seem to have difficulty in getting recruits. Indeed, I was informed that it takes only one in three applicants and the standard of the young men is high. I sometimes wonder whether the standard for able seamen is not being put too high. According to the newspaper advertisements, a recruit has to have at least five "O" levels in some cases. I know that in certain higher grades this is necessary, but in view of the education facilities in the Navy I wonder whether we do not expect too high an educational standard in some categories when recruiting.
  I believe that there are about 400 units of the Sea Cadet Force, and 55 Royal Marine detachments. This has so far been run as a partly voluntary service with the help of the Navy League. Is the Minister contemplating a change in the organisation to bring it into line with the R.A.F. and Army Cadets? What are his plans for the future?
  I support what my hon. and gallant Friend the Member for Winchester said about the fund of £2·7 million. We already have several naval funds, and we do not want overlapping. There are not many trained welfare officers in the Navy, and perhaps this would be a suitable job for some naval officers who are retiring; they could go on special courses. I think that, with the new changes in the pay scale, we may need some extra welfare help.
  Perhaps when the Minister is carrying out his reorganisations of Naval establishment, he could let us know what they are costing and how much money they will save. For example—and again this concerns young men—I am not very happy about H.M.S. "Ganges" going to Torpoint. It is a long way to travel. I understand that there is a possibility that it will not go until the school leaving age is raised. It is a great distance for boys to go, and there is the inconvenience of the ferry before getting into the town of Plymouth. It is also a long way for parents to visit.
  I am sorry to have fired so many different questions at the hon. Gentle-
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  man, and I shall understand if he cannot answer them all tonight. I know that he will write to me and give me details of those he is unable to cover.
  8.15 p.m.
  Mr. Eric Ogden: The hon. Lady the Member for Devonport (Dame Joan Vickers) will forgive me if I do not follow her in great detail on the effect of the Royal Navy on her constituency and the other things she spoke about. I want to place on record my appreciation of the occasions on which we have listened to her. I have the utmost admiration for her contributions. She shows real concern, and it may be that if she had been responsible for the Royal Navy in the Conservative Government my right hon. Friends would not have had quite so many problems to deal with, particularly in those matters concerning the welfare of Service men and women and their families.
  The hon. and gallant Member for Winchester (Rear-Admiral Morgan-Giles) rightly reminded the House that during the last 10 days we have had a full working week on defence matters. First, we had the two-day debate on defence as a whole and its strategy; then we debated each Service in turn; this afternoon we debated procurement and now we are having a series of mini-debates. Like him, I, too, wish that we could have these debates spread a little more over the year.
  The hon. and gallant Gentleman said that it was unlikely that by now anyone could say anything more about defence matters, and then produced in 37 minutes a formidable list of questions. If my hon. Friend is able to answer any of them at all, I shall be amazed, but no doubt he can. The hon. Lady was kinder to my hon. Friend than was her hon. and gallant Friend in saying that she was asking questions at short notice and that if my hon. Friend could reply in writing it would be helpful.
  On one matter I think there will be agreement on both sides. From time to time in the House reference has been made to the formation at some future date of a Select Committee on Defence. My hon. Friend the Member for Fife, West (Mr. William Hamilton) referred to it in the Navy debate. I support the suggestion. Such a Committee would

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  be formed, as I see it, with strict terms of reference, carefully formulated, and there would be great responsibility on its members for the way in which they conducted their affairs. But there is little doubt, I think, that there is now little likelihood of getting such a Committee in this Parliament even if, as it might well do, it lasts until 6th May, 1971.
  However, there is an interim step which could be taken and I hope that my hon. Friend will consult his colleagues on it. From time to time the Ministry asks hon. Members to show interest in ships of the Fleet, installations, ports and other things. It is some time, however, since hon. Members were asked to go to the Ministry itself to discuss with Ministers and possibly their advisers matters about which the House rightly shows that it has care and concern. The opportunities for hon. Members over the year are limited. Questions and Answers in the House come into the process but these are formal occasions.
  I made inquiry during the last Navy debate and I understand that, in years gone by, this was almost common practice, although not quite the same as is done in local government, where councillors and aldermen can discuss with the town clerk or the borough surveyor matters of concern. Normally, inquiries have to be made through Ministers, and rightly so, but there should be an in-filling position, and if good will were shown by the Ministry it would be of great help.
  After all, there are hon. Members who are known to be Navy men. No one would suggest that the hon. and gallant Member for Winchester is or ever was an Army colonel. There are Members on both sides who have a continuing interest in the Navy. I hope that my hon. Friend will put it to the Secretary of State that this would be a useful experiment, starting perhaps in a small way, so that we could learn where we agree and where we disagree. Then, instead of a rough series of Questions and Answers —Questions rightly put but difficult to answer across the Floor of the House—we could have a better understanding of the Services which, in one way or other, are our concern. There would be a vast difference from asking Questions in the House and there would result a better understanding in the House of the prob-
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  lems of defence and of the Ministry. We in our turn would be able to help Ministers. There would be nothing formal about it. It would simply be something we are putting to the Minister, asking him to put to his hon. Friends. A precedent was once established and in this House it is always good to lead on a precedent, particularly if it is a good one.
  8.20 p.m.
  Mr. John Farr: I listened with a certain amount of interest to the remarks of the hon. Member for Liverpool, West Derby (Mr. Ogden) in relation to a Select Committee on Defence, because I was a member of a Select Committee on Agriculture which was a new experiment established by this Government two or three years ago, amidst a lot of criticism. Initially it went very well. We got off to a great start. There were a number of people known to be interested in the subject as experts in a minor way in specific fields. We called as witnesses a variety of people from different walks of life associated with agriculture and at the end of a year's deliberations we produced an interim report.
  What happened then? We found that while it was not exactly a case of working ourselves out of a job, some of the items we had uncovered during the course of our investigations were found to be not palatable to the Labour Government at the time. The Leader of the House therefore took steps to see that our powers as a Select Committee were wound up and I believe that the experiment was officially classified as useful, but as far as Governments in power are concerned, slightly dangerous. It may he of interest to the House to know that although some 20 or 30 hon. Members from both sides of the House spent over a year on the Committee and produced a voluminous report it has never at any time been debated or discussed in the House and as far as I can see at the present time is unlikely to be.
  After that slight digression, I would like to return to Section 5, Defence Administrative Services. It would be appropriate at this time, in considering this particular Section dealing with administrative services, stores and supplies, to refer to the speech of my hon. and gallant Friend the Member

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  for Winchester (Rear-Admiral Morgan-Giles). He made a wide and embracing speech of intense interest. One point he made which caught my particular attention was that last year, I believe in the autumn, we had to send a fleet tanker or oil tanker of some kind to observe a Russian naval force because there were no other vessels available.
  He made the point that the vessel had to be dispatched to cover Russian vessels in waters to the north and west of this country. This brings me directly to Section 5, and the question of the Vote on H.M.S. "Sea Eagle". I believe I am right in saying that neither in this debate nor when we debated the Navy Estimates did the Minister make any official reference to certain points put to him in the debate. The illustration given by my hon. and gallant Friend lends even further weight to those who request that there should be some form of continuance of H.M.S. "Sea Eagle" and that that vessel should be retained with the effective use of the wonderful anchorage of Lough Foyle, for providing at least the flimsiest of naval patrols in those important waters. Lough Foyle is one of the best, most sheltered deepest anchorages in the British Isles. It is situated at a very strategic point in the British Isles. Apart from the political reasons for the desirability of retaining that vessel in its present form indefinitely in Northern Ireland there are very good strategic reasons why that base should be retained.
  It is, for example, a focal point for reservists and those who undergo special training from the whole of Ireland when N.A.T.O. exercises take place. There is a fine selection of administrative and executive blocks of buildings there. It is very well rigged out in a commanding position. I believe these facilities should be continued in their present very good use and should on no account be thrown away. I hope that when this debate is concluded and the Minister gets up to answer he will make at least some reference to H.M.S. "Sea Eagle".
  My first remark in connection with Section 7A, and the provisions for vessels is one which I do not believe has been made before in these debates but is nevertheless one which I regard as of some topicality at the moment. I would like to know if any serious consideration
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  has been given recently to the provision of a nuclear-powered surface vessel for the Royal Navy. I understand that a decision is likely to be taken over the provision of a nuclear-powered merchant vessel built in this country for the British Merchant Marine with the aid of Government financial assistance. Such a step is not being taken a moment too soon, because all other major maritime nations have such a nuclear-powered civilian vessel. The Russians have their icebreaker; and the United States of America, France, Germany and Japan all have or are in process of building their own nuclear-powered merchant vessels. We in this country are on the threshold. I understand a decision is likely to be taken fairly soon. The matter has been postponed for a long time.
  I wonder if it has ever been considered that the Royal Navy should give a lead in this respect. Not only would such a vessel be of considerable value as an addition to the fleet but its operation would provide us with a tremendous amount of data and information which could be passed on to those who handle nuclear-powered merchant shipping which sooner or later, if we are to remain in the forefront of merchant shipping in the world, we have to have.
  My hon. and gallant Friend referred to the importance of aircraft carriers, a subject which also comes under Section (7)A. I share his regret that if present plans remain unchanged we are likely to see the end certainly of "Hermes" and also of the "Eagle" and "Ark Royal" in the foreseeable future. I cannot but believe, however, especially in view of what my hon. and gallant Friend said about the efficiency of the vessels, that a prolonged use for them in their present rôle must and will be found. It will not be found because an American adviser says that they are second to none. His advice merely echoes what we already know. We have had the evidence with our own eyes and from our own experience. Other countries look on them with great envy, and I believe that sooner or later the Government, if they remain in office, will come to realise the inevitable.
  If N.A.T.O. is to mean anything, with the foreshadowed increasing withdrawal of American and Canadian forces the continued presence of "Eagle" and "Ark

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  Royal "in a N.A.T.O. fleet, and of vessels like them, will be of paramount importance to the whole structure of that organisation. I hope that this view percolates through to the thinking of the Secretary of State for Defence before too long. Many other speakers, far more qualified than I, have given very striking and sound reasons why the vessels should be retained. I support wholeheartedly all that they have said.
  I also support the strengthening of our hunter-killer submarine fleet and the speeding up of its construction. I think that it has been said that seven are due to be in operation shortly. There is no doubt that nuclear-powered hunter-killer submarines will be the major threat to any submarine attack on our shipping. Whether that attack comes from conventional vessels or nuclear-powered vessels, the hunter-killer submarine can deal with it. It has the speed and stamina to outrun and outlast other submarines. It has the size to carry all the necessary technical equipment, and can have the latest methods of detection. Its weapons are classified, but they are certainly of the highest category and are most effective.
  The nuclear-powered hunter-killer submarines are fine vessels, but I cannot help thinking that the seven or so that we have is a derisory figure. The Russians could deploy about 400 submarines. We have over 20 million tons of merchant shipping. To try to protect that amount of shipping against 400 submarines with seven hunter-killers would be laughable if it were not a very serious matter.
  Subhead A of Vote 7 refers to ships' hulls, and subhead F refers to weapons, and I want to speak about them jointly. I want once again to call attention to the overwhelming superiority of the Eastern fleets in the possession of surface-to-surface missiles and missile platforms. I told the House the other day that Russia and her Eastern allies possessed more than 200 such platforms. I understand now that the figure is nearer 300. They are capable of over 40 knots and have a range of from 20 to more than 250 miles. The warhead has a homing apparatus. The figures I have given may sound alarming and they are. But what is particularly alarming to me is that we appear to have no surface-to-surface or ship-to-ship weapon research programme and
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  manufacturing. We have a few surface-to-air guided missiles with a very limited range, which does not extend beyond the range of visibility. But we have no surface-to-surface missiles. It is said that some of our surface-to-air weapons have a surface-to-surface capability. They do, but at the most only as far as the horizon. An attempt to fight with weapons like that against a weapon deployed from over 100 or 200 miles away would be a very one-sided battle.
  I plead once again for more research into the production of a surface-to-surface missile. If a really whole-hearted effort were made, not on expenditure but to leap-frog the Russians and their allies by producing a more sophisticated generation in four or five years' time, we may have a chance of protecting ourselves and our merchant marine when the Fleet aircraft carriers go out of commission. But without a capable, useful and efficient surface-to-surface weapon, my own view is that any capability we may have of self-defence after that date will be negligible.
  To return to the back of the document we are considering, Appendix 3, relating to reservists and the duties they undertake, and their liability for call-up, I should like in particular to refer to two categories of reservists. The first is the R.N.X. and the second is the R.N.R. I should like to pay a tribute to the R.N.X., because if there ever was a silent service within a silent service it is the R.N.X. They are seldom spoken of; a most retiring body of people. They are really patriots, giving up hours, days and weekends, on recall or for training purposes, completely voluntarily. They come from all walks of life, and very often get little or no recompense, not only for the hours of work they put in on the job, but, in addition to that, for their travelling expenses.
  The R.N.X. are essential to the functioning of some of our naval defence systems. For instance, last autumn there was a N.A.T.O. exercise called Proud Warrior, and it is safe to say that without the R.N.X. being closed-up last autumn Proud Warrior would not have continued; it would not have got off the ground. Yet they have to struggle along on the poorest pittance of pay, with practically no equipment, in very poor surroundings, and almost have to beg to be

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  allowed to continue. I hope that the Minister will recognise publicly, for I think the first time in the House, not only the value of what the R.N.X. are doing at the moment in their training, but also the essential rôle that they will have to play relating to the control of shipping should a national emergency arise. Without the R.N.X., the plans which have been foreshadowed for the control of merchant shipping could not be put into effect when necessary.
  In talking about the Reserves, I should like to refer to the R.N.R. and say how essential is the work that is being done by naval control shipping officers. It is vitally important that their work, which goes hand in hand with the R.N.X., must in no way be stunted, and that they must be allowed to have adequate money and equipment. There is no shortage of volunteers for either of these groups of reservists. There is a shortage of money for some essential items; there is a shortage of equipment and accommodation. In view of the essential rôle they both have to play, I trust that the Minister will assure the House of their importance.
  In Appendix 7 we talk about the sale of defence equipment. Hon. Members in the House have probably seen, as they go up and down the road from Trafalgar Square to the House of Commons, a large notice on the right-hand side going towards the House of Commons, which is the office of the Sales Director of the Defence Equipment organisation. The White Paper refers to him and expenditure on his staff.
  How did the catalogue of defence equipment, which was being produced 12 months ago, get off the ground? The Minister may remember that this time last year all manufacturers of defence equipment were circulated by his Department asking them to send to a publisher details of all the defence equipment they produced which could foreseeably be of use to an allied country. A great deal of material was dispatched to the publisher through the Ministry, listing the different items, after it had been made absolutely certain that none of the equipment was classified.
  I wonder whether there is any liaison, and if so what, between the Department handling the sale of defence equipment
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  and the disposal of surplus naval vessels, to which my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers) referred. She asked what efforts were being made to dispose of unwanted naval vessels and suggested that patrolling the coasts of Malaysia as minesweepers would be better than putting them on the scrap heap. I agree, and I wonder whether there is a method by which these vessels are passed over "on paper" to the equipment department, where they are included in an annexe to the catalogue, which no doubt is available for our defence sales staffs abroad. This catalogue is a very embracing and well-produced publication. One would think that it would be a good idea to add supplements from time to time as surplus aircraft, army vehicles or warships become available for disposal. I hope that the Minister will answer that point.
  I had the privilege of speaking in the Navy Estimates debate when I asked the Under-Secretary five questions, only one of which he answered. I am therefore delighted to be able to put the other four to him again tonight, and I hope that I will get answers tonight.
  8.43 p.m.
  Mr. Emery: By kind leave of the House——
  Mr. Deputy Speaker (Mr. Sydney Irving): Order. As the hon. Gentleman has suggested, he will need the leave of the House, having spoken once already. However, in view of the unusual circumstances of the debate, the House may be disposed to grant that leave.
  Hon. Members: Hear, hear.
  Mr. Emery: Thank you, Mr. Irving. This is an unusual position in that, in the way that the debate has gone, we have tried to hold a general debate on procurement, which was accepted by many to have been of some success.
  I have given notice to the Department of what I now want to do, which is to raise one specific and primary constituency point—the position of No. 34 Civilian Anti-Aircraft Co-operation Unit, based in my constituency at Exeter Airport. This is a strange position, because it flows over all three Votes. It is used by the Navy, for specific target practice in the Plymouth sea area, the Portland

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  training area and the Portsmouth training area. It is also used by the Army on ranges at Manorbier, Senny Bridge and Salisbury Plain. At the moment, a decision has apparently been made that this unit will be transferred from Exeter Airport to St. Mawgan, about the end of 1971.
  The reasons for so doing are that it will involve much less capital expenditure by moving to St. Mawgan—about £175,000 will be saved and another £75,000 in running costs and overheads. Those figures I take directly from a letter sent to me by the Minister of Defence, Administration on 17th December, 1969. I have gone to a great deal of trouble in investigation of this matter because the closure of a civilian co-operation unit of this kind is a very major step to take. What is of much more concern when attempting to make any assessment of the decision is that it appears that the arguments propounded by the Ministry of Defence do not hold water.
  A considerable amount of correspondence has taken place on this question. I do not intend to weary the House by recounting all of it. That would be very tedious. However, I wish to take up a number of main points and to ask the Minister to give assurances on them. If there are to be major savings, in the region of a quarter of a million pounds, obviously I would wish to ensure that the proper cost-effectiveness of the unit should be carried through. If not, of course one has to pose the question and consider why this action has been taken.
  The first point arises from the capital factors involved. It is suggested that it was necessary for this unit to transfer from Meteors and Vampires to Canberras. I am still not convinced that that is actually in the best interests of the Services because on the whole the amount of silent tracking and the amount of target towing being done is more and more on the science side. Requests for the range varied between 64 per cent., and 36 per cent. and the flown time was silent 66 per cent. and towing, to 34 per cent. If those figures are substantiated, as I have every reason to believe they are because they were sent to me by the wing-commander in charge of the unit, the Vampire is a very much better aircraft to continue that type of silent tracking work.
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  There is the problem of phasing out the Vampires. I am informed that there are enough spares available to the unit to last for five years and, with a certain number of other Vampires which are still operational, this period could be extended to 1978. That would preclude the necessity for having immediately to transfer to Canberras and for having to make capital expenditure available at Exeter Airport to allow Canberras to operate there.
  In a letter to the Minister for Defence for Administration, I attempted to point out earlier this month—he has not had time to reply to me and I am not critical of that—that the position concerning capital expenditure at Exeter Airport, if it had to be made there, did not necessarily take into account the cheapest methods of obtaining the necessary improvements. Nor do I think that they have taken into account the possibility of contributions coming from sources other than the Ministry of Defence to meet this sort of improvement. If this is so, the proper cost-effectiveness study has not been carried through.
  I come to the major argument, which is that moving to St. Mawgan would be a cheaper operation from the point of view of flying time. Can this argument be substantiated? The distance from Exeter and from St. Mawgan to Senny Bridge is 80 and 112 miles, respectively, it therefore being in favour of Exeter. From Salisbury Plain to Exeter and from Salisbury Plain to St. Mawgan the distance difference is 65 and 128 miles respectively, again in favour of Exeter. From the Portland training area to Exeter and from Portland to St. Mawgan, the distance is 39 and 98 miles, again in favour of Exeter.
  From the Portsmouth training areas to Exeter is 82 miles, while to St. Mawgan it is 142 miles, again in favour of Exeter. The distance from H.M.S. "Cambridge" to Exeter is 37 compared with 34 miles to St. Mawgan, this being very slightly in favour of St. Mawgan. The Plymouth sea areas are 45 miles distant, from Exeter while to St. Mawgan it is 34 miles, slightly in favour of St. Mawgan. Manor-bier to Exeter and Manorbier to St. Mawgan are approximately the same distances, but the Manorbier range is being closed down, and then all of that work

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  will be done at the Salisbury Plain training area. This, I have already pointed out, is a difference of about 63 miles in favour of Exeter. It seems difficult, on this so-called major argument, to envisage from where the Ministry of Defence is getting its information.
  Nobody has denied that the financing of this type of unit—if run by civilian pilots, and particularly by civilian maintenance personnel—is much cheaper than having it run by R.A.F. pilots and maintenance people, which I gather is to be the position if there is a move from Exeter to St. Mawgan. Thus, in terms of operating costs on the maintenance and manpower side, the argument substantially comes down in favour of staying at Exeter.
  Operating at this civilian co-operation unit are about 25 extremely experienced ex-Servicemen, ex-Navy and ex-R.A.F. pilots who have spent a considerable amount of their careers with the Services, before them moving into this unit. I gather—I looked into this matter last week—that no real plans have been made for their redeployment or for compensation or redundancy to be paid should the unit be closed down. This is an unforgiveable omission which is not worthy of the worst employers. Men of this experience should not be treated in this way, particularly in view of their seniority. I hope that this error will be rapidly corrected.
  I have put forward views which show that, on the current situation, it would appear that there have been some overestimates of the capital charging, some incorrect figuring on the operational costs side and that certain errors have occurred concerning the economies that could be obtained.
  It is purely on this specific matter that I have asked for the leave of the House to speak again. This is an important constituency matter and a major Service matter dealing with targets and firing practices. I hope the Minister will take these arguments most seriously and look at the background to the decision. What worries me is that there are certain vested interests which would like to see the disappearance of the civilian aspect of this unit in order to have it transferred to the uniformed Forces. For these reasons it is imperative that the Minister should
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  be asked to comment on the matters I have raised.
  8.55 p.m.
  The Under-Secretary of State for Defence for the Royal Navy (Dr. David Owen): We have had more questions asked in the short space of this debate than have been asked in the House for some weeks, and I shall be hard pressed to answer even some of them.
  Perhaps it would help if I dealt with the question raised by the hon. Member for Honiton (Mr. Emery). This is a question about which he has written to my hon. Friend the Minister of Defence for Administration. The points he has mentioned in his letter are being examined now, and the arguments he has deployed this evening will be studied carefully by my hon. Friend. It is much better that we should make a balanced judgment on his representations. My hon. Friend will be writing to him as soon as he has done this. The use of Exeter Airport covers more than one Service, and I realise the genuine constituency interest for the hon. Gentleman. We will look at it most carefully because it obviously has repercussions for the whole of the south-west region.
  The hon. and gallant Gentleman the Member for Winchester (Rear-Admiral Morgan-Giles) asked some questions on the Navy Estimates, particularly on the effects on the military salary. As my right hon. Friend made clear a fortnight ago, the Estimates do not take full account of the improvements to Service pay which have been agreed, but the Supplementary Estimates which will be presented will not mean that the defence budget target will be exceeded. The precise figures have still to be calculated. For the Navy the figure is likely to be of the order of £20 million to £25 million.
  The defence budget will rise to about £2,370 million-£2,380 million compared with £2,280 million in the published Estimates. That is an increase of £90 million to £100 million. The Navy's Vote A is 22·1 per cent. of the total of the Votes A of the three Services. This should give a reasonable measure of the Navy's share of the extra money, but I must emphasise that these are tentative figures, and I would not like the hon. and gallant Gentleman to draw too much from them. These have not

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  yet been fully calculated, and statements will come forward later.
  The first reports on the pay review suggest that the Navy is generally well satisfied with the results. We think that the new salary for recruits ranging from £14 7s. to £17 17s. a week, which will increase to £17 10s. and £21 in April, 1971, will provide a valuable stimulus to recruiting. Much more competitive rates of pay for senior ratings will encourage more men to remain in the Service.
  The hon. and gallant Gentleman asked a detailed question about the living-out allowance. This is slightly different for the Army and the Navy. In the Army it is two nights in the field and in the Navy it is 48 hours in a ship, from mid-day. There is a mid-day rule. These regulations will be circulated to the Fleet and will be well understood from the time of introduction.
  Questions were asked about victualling allowances. The increase of £50 million is due to the extension of the ration allowance to single men and the grossing up of the ration allowance for tax purposes. The hon. Member for Plymouth, Devonport (Dame Joan Vickers) asked about the breakdown between the cost of provisions and victualling allowances. This is shown on page 13 of the Defence Estimates.
  I will deal with the Fleet Air Arm redundancies in some detail. The redundancy, as has been explained to the House before, is in two phases. The first phase entails discharges towards the end of 1970 and consists of six commanders mechanical air engineer officers, 13 special duty list air engineer officers and 794 Fleet Air Arm ratings. They have all been selected and informed of their approximate date of release. Almost all the officers and all the ratings were volunteers.
  The second phase does not involve anyone being retired as redundant until after 1st April 1971, and the majority will be retired after the middle of 1972. It is expected that about 200 to 300 Fleet Air Arm officers and about 2,600 ratings will be made redundant, although every en-deavour is being made to reduce these maximum numbers. Applications from ratings are now being received; the list closes on 15th May 1970. The numbers required and the numbers of volunteers
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  to date could be given roughly, but I think it would be better not to give this information as one does not know how many more people will apply.
  Special duties list applications closed on 31st October 1969 and general list officers on 31st January 1970. Supplementary list officers may apply until 1st May 1970. Those selected for redundancy will be informed; general list by 1st April 1970, supplementary list by 1st July 1970. The special duties list were all informed in December 1969. All the second phase special duties and general list officers selected are volunteers.
  The second phase also includes Royal Marines officers and other ranks and Royal Navy officers and other than those in the Fleet Air Arm, but redundancy in the Fleet Air Arm is the main issue, and I will try to explain how we have dealt with this. We have appointed specially a Fleet Air Arm employment liaison officer who is himself an aviator. His task is to strengthen the Naval Resettlement Organisation which already exists. He is expected to visit ships and shore establishments to advise individual officers on the options open to them and to assist those who retire on redundancy terms to find suitable civilian employment.
  May I deal with the options? Fixed-wing aircrew officers have the following options open to them. General list lieutenants may apply to transfer to rotary-wing flying. I am glad to say that a great many are doing so. They see that this offers an extremely good future in the Navy, and I am hopeful that more will do so. General list lieutenants may apply to transfer to the permanent list of the R.A.F., and we are doing everything possible to encourage them. General list lieutenants may apply for re-sub-specialisation. All officers may apply to revert to general service. Officers may apply for retirement under redundancy terms. I think the House will agree that these are generous options.
  Supplementary list air crew within a stipulated age and seniority bracket may apply to transfer to rotary-wing flying to complete their short service commissions. Air crew may apply for loan service with the R.A.F. to complete their present engagement, with the possibility of transferring subsequently to the R.A.F. Officers may apply for retirement under

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  redundancy terms. This does not apply to present rotary-wing pilots, nor would the House expect it to.
  Air traffic control officers may apply to transfer to the R.A.F. or to complete their current engagements on loan service to the R.A.F. Officers may also volunteer for retirement under redundancy terms.
  Any non-volunteer ratings who may have to be detailed will be offered opportunities to transfer instead of being made redundant. So no rating will be made redundant if he wishes to take up the option of employment in the general Navy. Those ratings would have to transfer and retrain. It is planned that the whole redundancy programme should be completed by 1st April, 1973.
  I hope the House will realise that I have given full information. The main reason is that I do not want it to be felt that there is anything covert about the redundancy situation. It is in line with the Government's defence policy. While the Government retain power, we will conduct that policy in the way we have set out. There is no truth whatever that we are either hurrying the transfer of Fleet Air Arm aircraft to the Royal Air Force. That is taking place as a normal stage plan and is totally dependent on the question of aircraft carriers and their deployment when they come back from overseas, the length of time it takes to de-store aircraft carriers, and so forth.
  Mr. Wall: I am glad that the hon. Gentleman has made that categoric statement to clear up some of the rumours that have been bandied about on this matter and which have not been for the good of the Navy. He will, however, recognise that the phasing of the rundown scheme is a difficult matter from the point of view of dates. Whatever happens at the next General Election, it will come round in the middle of this programme. Since it is the declared intention of this side of the House to maintain some or all of the aircraft carriers, which will presumably need some or all of these men, I hope that this will be conveyed to them.
  Dr. Owen: The House know that "Hermes" is coming to the end of fixed-wing flying rather earlier than the other two aircraft carriers. The House also knows that "Eagle" and "Ark Royal"
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  have to remain operational until our withdrawal from east of Suez, which does not take place until December, 1971. Whatever the date decided for the election, that withdrawal date will be after the next election. Hon. Gentlemen opposite are getting very sensitive about this matter.
  The new terms of redundancy have not yet been agreed. These will be announced as soon as possible and it will give full information to the House on the terms. There has been a lot of criticism about why we should have any redundancy when we are facing severe manpower shortages. The reason is clear. We must have a balance.
  It is difficult to know whether right hon. Gentlemen opposite are prepared to run on with both "Eagle" and "Ark Royal". If this is their firm policy, they have yet to answer how they will man them. They have yet to face up to the manning situation. These are not party political issues. There is a clear-cut issue, and they will have to choose, if they ever have the chance to put their policy into action. We are not wilfully getting rid of people from the Royal Navy. It is in our interests within the problems of specialisation, age groups, and so on, to retain as many of these men as we can.
  I do not deny that there will be isolated cases such as were mentioned by the hon. and gallant Member for Winchester when quoting a letter in one of this morning's newspapers. Of course, we regret it when a man wishes to stay on in the Navy. But we all know that the problem of the Navy is that it tends to be rather a younger Service than the two other Services. We do not keep people on for quite such a long career structure. We have to take notice of the balance of ages between particular branches and ranks.
  On the matter of pensions, on which a number of points were raised, I am not in a position to carry discussion any further. We have said that we hope to announce the new pension rates shortly. The points made about widows and people who marry after retirement do not, strictly speaking, relate to that announcement but I assure the House will be borne in mind by my hon. Friend the Minister of Defence for Administration, who deals with these matters.

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  In the current year over £1 million has been available on the CO.1 Vote to finance a major advertising campaign for recruits into the Royal Navy and the Royal Marines, and this has been welcomed in the debate. The money has been made to work harder than ever before, and many new advertisements with fresh material and a new-look format have appeared. We shall continue this campaign at much the same level in the current year. We are keeping our recruiting organisation up to date.
  As the House knows, a Sub-Committee of the Estimates Committee is at the moment looking at recruitment. A number of speakers have mentioned the need for a Select Committee on Defence, but we should not forget that a very important area of defence is being examined at the moment by that Select Committee of the House. Most hon. Members will have seen from that Committee's minutes the extent to which it is looking into the problems which we face. In the coming year, over £315,000 has been provided in the Navy Votes to assist the career services in the varied activities which they can provide and to improve the general naval publicity effort. Certainly we will continue to use this avenue to help recruitment, but it is only one avenue.
  I now come to stocks and reserves. Not unnaturally, I will not be able to give in detail the exact level of the reserves being maintained. However, stocks are at an adequate level, and the quantities of reserves of various weapons and equipment are kept very carefully under review. I hope that that general assurance will satisfy hon. Gentlemen opposite. It would be unrealistic of them to expect me to give detailed figures.
  The hon. and gallant Gentleman then referred to the Sea King helicopters. I can assure him that security considerations are always taken fully into account before any sales are authorised. They were in these cases. The Ministers are advised on this subject.
  The hon. and gallant Gentleman also referred to the number of submarines in service and, in particular, the figures given in the White Paper. However, he has been misled by the figure of 27 patrol submarines which appears in paragraph 20 of Chapter IV. That is the
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  total in service in the year, whether they be operational, preparing for service or under refit. On page 102, he will find the 27 patrol submarines identified by name.
  As regards fleet submarines, I am afraid that I cannot comment on the planned building rates. I have gone as far as I can on this subject in the main debate on the Defence Estimates. I gave some indication of the importance that we attach to the fleet submarines, and an indication of how much money we were spending in comparison with earlier years. A significant force of submarines will be in service when the aircraft carriers are withdrawn from service at the end of 1971.
  The hon. and gallant Gentleman raised a number of other points. For example, he queried, as other hon. Members have done in defence debates, the decision to abolish the single-Service Under-Secretaries. I have held my present job for just under two years. I confess to having enjoyed it. I have been proud to serve the Royal Navy. In my case, the change has not been forced upon me. I fully support it. Where a Ministry is evolving, this is rational and sensible. No one will deny that there are not arguments in favour of single-service Under-Secretaries. However, we are asking the House to make a judgment on the balance of advantage.
  Anyone who knew the late Minister of Defence for Administration knew that he had developed a very real knowledge of all three Services, yet he was a functional Minister. I admit that he had the earlier advantage of serving one Service, but it is possible for a functional Minister with across-the-board responsibilities to develop a real knowledge of the individual Services. The decisions made by Ministers in respect of one Service increasingly have to take into account the situation in the two other Services. Defence policy is becoming more and more a whole defence policy. It is impossible to make judgments on equipment and personnel matters without having in mind the impact of decisions on other parts of the Ministry of Defence. I would not dispute some of the arguments which are deployed in favour of single-Service Under-Secretaries but, in my experience, the balance of advantage clearly lies in favour of abolishing the single-Service

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  Under-Secretaries and going for across-the-board Ministers.
  Rear-Admiral Morgan-Giles: I am grateful to the Under-Secretary for the careful replies that he is giving to all questions. But the point is not so much what goes on in the Ministry. It is what the individual Serviceman in one of the three Services thinks about it.
  Dr. Owen: The individual Serviceman is realising increasingly that the person to whom he looks ultimately is the Secretary of State. Ministers are able on visits to show that they have the Service man's interests very much at heart.
  Over the last year there has been marked scepticism about the salary of Servicemen. But I think that most right hon. and hon. Members believe that this has been satisfactorily resolved. I believe that Ministers are capable of looking at individual Service problems when they arise and will be able, under the planned set up, to give them just as much care and attention as before. Many of the fears expressed in this connection are unnecessary.
  No one will deny that there have been strong advantages in the past. But we are now discussing defence on a new Vote structure. Evolutionary changes have gone on remorselessly in the Ministry of Defence. These have been put to the House at, I think, a reasonable time and we have encouraged discussion. I am giving my own personal view on this question.
  The hon. and gallant Member for Winchester welcomed the building of the type 21 frigate, and also talked about the survey ships. He reiterated his concern about the number of people ashore and called for reserve ships in which to put them. I assure the hon. and gallant Gentleman that what causes me concern is how in some branches some personnel are spending too much time at sea. Their sea-to-shore ratio is much too high.
  The hon. and gallant Gentleman argued about over-stretch. He cannot have it both ways. In a modern technological Navy we must have more than adequate back-up, and the balance towards backup to keep our operational fleet running may have to shift. We are noticing this in the amount of support costs that we
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  are putting in—for instance, the effort involved in keeping nuclear-powered submarines going. I do not believe that there is any need to worry about the number of people ashore at the moment. As for putting them into reserve ships, this does not meet the bill. According to the hon. and gallant Gentleman's argument, they are already overstretched, and we would add to the manpower problems facing us.
  The hon. Member for Devonport raised a number of questions with which I hope to deal. The hon. Lady paid tribute to visits to the Fleet. Visits by Members of Parliament are valuable. Many Members of Parliament, after visiting the Fleet, come back and talk to Service Ministers. We often correspond in detail. It is extremely useful to us, because often they can go to areas which we have not been able to visit recently. This is part of the continuing process of discussion which goes on.
  To deal with the point raised by my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden), I should be only too happy to have further discussions. We have had discussions with and representations from hon. Members representing dockyard interests. If hon. Members wish to come to the Ministry of Defence to discuss rather wider issues, I am only too happy that they should do so. One useful way may be to have a discussion following a visit. As the hon. Member for Devonport mentioned, visits have already been arranged for the summer.
  The hon. Lady also mentioned new construction. She knows that we have decided to build a transducer calibration facility—the RDVO 1—at Devonport, that building will start this month, and that it will be on the slipway about a year. Devonport will construct a number of dumb craft for the port auxiliary service. The importance of this decision is that the possibility of further construction work for the dockyard is left open and will be reviewed in 1971. By then, I hope that a number of the measures which have been taken over the last few years, and are still to be taken, will ensure improved dockyard productivity which will reduce overheads and that the difference in price with frigates constructed elsewhere will be so reduced that we

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  can justify to the public accounts building frigates inside the dockyards. It is right to mention, however, that the primary duty of the dockyards is to repair and refit ships. This being their primary duty, it is hard for them to keep their overheads down so that they can match the building facility of private shipyards which are just new construction shipyards.
  There are other internal arguments—namely, that this would help train young apprentices and men to obtain certain skills which are hard to obtain on just repair and refit. It has a very marked psychological effect in the dockyards which are keen on new construction. I make no secret of the fact that if it can be justified on economic grounds, I should like to see new construction in the dockyards. So far as Devonport is concerned, the option is open, and if it can be competitive when the position is reviewed again in 1971 the question of new construction is left open for it. I know the hon. Lady attaches some importance to this as do I.
  The hon. Lady also asked a number of questions regarding the amenities and the replanning of the dockyard. I very much agree—one hon. Gentleman has already said this during the debate—that it is very easy to throw brickbats at the dockyard. The dockyards have an extremely difficult task, and I think that they respond to the load which we put on them remarkably well. One has only to see the refit of H.M.S. "Ark Royal", which has been a project management carried out to time and within the cost limits, allowing for rising prices, to realise that this is a formidable achievement—an achievement of which any new construction yard could well have been proud.
  I agree with the hon. Lady that the amenities inside the dockyards have been bad. They have been bad for many years. What we are dealing with is, quite honestly, a neglect of capital investment in the dockyards which goes back over decades. It is particularly important to try to get working conditions improved.
  As the hon. Lady knows, we have announced the Leander refitting complex which is to be covered in Devon-port, and we are also looking into the question of the guided missile
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  destroyers at Portsmouth and whether we can justify it there.
  The conditions of working afloat in winter are not such as to encourage a man to improve his productivity. To put it bluntly, it is extremely hard and difficult to do skilled work such as welding in bad weather conditions.
  I hope to be able to announce plans for the modernisation of the dockyards fairly soon. Such plans must obviously go into considerable detail, not least because they put a heavy load on the construction industry, and this must be phased in while all the time widening requirements to meet the operational requirements of the Fleet. We hope to announce plans largely for Portsmouth and Devonport because the two other dockyards have been modernised.
  I should like to deal with the point raised by the hon. and gallant Member for Winchester about the third nuclear refitting stream in Plymouth and Devon-port dockyards. In the last debate right hon. and hon. Members speaking from the Opposition Front Bench made it clear that they thought this was a wrong decision. It is up to them to say this loud and clear when they visit dockyard constituencies. I believe that in the last defence debate we showed quite clearly why it was impossible at least to keep the option in Cammell Laird. The question was one of time scale, and the third nuclear refitting stream which is scheduled to be built at Devonport is not coming into operation until the end of the 1970s. So one has a long period when Cammell Laird cease building nuclear-powered submarines, and this is one of the very strong reasons, although there are other reasons, too.
  It was the party opposite which decided to build up the nuclear refitting facilities at Rosyth, and if its view is that dockyards are unable to refit ships, or unable to refit nuclear ships, it has certainly condemned the decision to put the third nuclear refitting stream in Devonport. I find this very hard to understand. The dockyards have given extremely good and valuable service, and just because they happen to be run by the Ministry of Defence we should not necessarily deprive them of the modern technological skills which I believe they have. I fail to understand the hon. and gallant Gentleman's dissatisfaction with the decision.
  Rear-Admiral Morgan-Giles: It is not a question of our thinking that the dockyards cannot do the job. They can do it, and I agree with the tributes the hon. Gentleman has paid to them for the complicated work they do so well. But we could not understand why the Government should dismantle the existing facilities and work force at Birkenhead in order to re-create them somewhere else.
  Dr. Owen: It is a question not of dismantling them but of the time scale. We have previously gone into detail on this, and if the hon. and gallant Gentleman looks up the arguments deployed in the previous debate, he will agree that they are substantial.
  The hon. Lady the Member for Devonport mentioned the apprentice group instructors. As she said, this matter has been going on for a long time. My predecessors were involved and I have taken considerable personal interest in it. I assure her that I hope to be able to announce a decision fairly shortly, and that is not just a stalling reply. As I have explained before, these are complicated negotiations, and the instructors do not help by threats. She read out a letter, and I assure her that we do not need threats behind us. We recognise that this case needs looking at thoroughly. That is being done, and I hope to be able to make an announcement reasonably soon.
  The hon. Lady also mentioned married quarters, and criticised the very large estates. I strongly support her views. I think that very large service estates are a bad thing. But there are problems. Unlike a local authority, we have to furnish the married quarters, keep them serviceable and provide rather more than most furnished houses are normally provided with. This means problems of organisation for the Ministry. We cannot have our married quarters scattered all over a major city. The question is the eventual size beyond which we should not go. I am looking into this matter. I have a great deal of sympathy with the idea of trying to spread married quarters throughout the local community.
  The hon. Lady also mentioned the Institute of Naval Medicine, and welcomed its formation. But she criticised
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  the appointment of more psychologists. But psychologists play an important part in recruiting and are perhaps unlikely to be doing the work which she thought—psychiatry. They are an important part of our trying to get such things as attitude surveys, trying to understand what motives people have in joining the Service or remaining in it. Hon. Members opposite should not make disparaging comments about them, because they have an important rôle to play.
  The hon. Member for Harborough (Mr. Farr) referred to the question of "Sea Eagle". The reason I did not mention this in the defence debate was that the decision had already been made and announced by my hon. Friend the Minister for Defence for Administration. The reasons both for the original decision to come out of "Sea Eagle" and for bringing it forward now are well understood in Northern Ireland. We had the problem of housing the Army contingents which have to be in Northern Ireland. There was genuine need to provide barracks accommodation. We have explained the reasons, and we have kept to our obligations to the civilian employees. The operation is going smoothly.
  No one would deny the great value of the joint anti-submarine training which has gone on at "Sea Eagle". We have to provide this. The White Paper mentions that part of it is going to Turnhouse in Scotland. We are looking at the whole question for the future. An important N.A.T.O. interest is involved. A considerable number of our N.A.T.O. allies use "Sea Eagle" and I join in paying tribute to what has been done there. The decision has been announced, and the reason for speeding up the withdrawal has been understood.
  The question of nuclear propulsion is not for me but for my right hon. Friend the Minister of Technology. The Navy is constantly looking at this matter. But the point is that it would not be right to make an experiment. We cannot do so. We have to justify it on economic and operational grounds for the Navy. We have the technology and the knowledge to do it. The question revolves round an objective evaluation of it. I looked at this myself in the not distant past, and I was satisfied that at

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  this stage, it does not make sense for the Navy to build a nuclear-powered surface ship. That is quite apart from the fact that nuclear power is very useful in submarines. But this is kept under constant review, and there is no option foreclosed for the future if it is shown to be economically or operationally viable. I hope that that satisfies the hon. Gentleman.
  He paid a generous tribute to the R.N.X.s I gladly pay it back. There is a tendency in these debates not to mention the activities of R.N.X.s particularly the control of merchant shipping in a possible emergency. They do a great deal and I am very grateful for all that they do.
  On reserves, I believe that the size of the naval reserves are adequate to meet the tasks laid upon them of the manning of 11 coastal minesweepers and fulfilling their special rôles of maritime headquarters, Communications Centre and the Naval Control of Shipping Organisation. A great deal is done up and down the country, and I certainly think they play an important part.
  The question has been asked: why do we not sell ships due to be scrapped? I can assure the House that their possible sale is very fully considered. We would certainly offer the full facilities for a sale to any allied country, or any country to which we can reasonaby sell our equipment; and this is done.
  There were a number of other points which I may not have been able to cover in the time available. One I would like to mention is the question of the Sailors' Fund. This will be used solely for the benefit of ratings and Royal Marine other ranks and their dependants; and ratings and Royal Marine other ranks will play a major part in the administration of this fund. The whole of the details of this have been dealt with in a Defence Council Instruction to the Fleet.
  The only other point was the question of anti-ship missiles, mentioned by the hon. Member for Harborough. He will find that I dealt with that in considerable detail in both speeches and particularly in my opening speech on the Navy Estimates. I am afraid I cannot go any further than I did at that stage. I would stress again the open-mindedness that we have on this whole issue.
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  A number of points have been raised already in debates on Army questions and I hope hon. Gentlemen will agree that I have covered as many points as possible.
  Rear-Admiral Morgan-Giles: Could the hon. Gentleman deal with the point about intelligence operations?
  Dr. Owen: The hon. and gallant Gentleman has had more questions answered than anybody else. He will know that this is a delicate area. Ministers are very conscious of sceurity issues. His question on our security interests in the Far East and the Gulf will certainly be borne in mind in deciding any reductions which may or may not be made. I am certainly not prepared to go any further. Clearly, that is something which is watched most carefully by Ministers.
  9.33 p.m.
  Mr. Jerry Wiggin (Weston-super-Mare): I am only glad that it is not on the Royal Air Force that I wish to speak tonight. The subjects I wish to raise have already been raised by myself last week. On that occasion we were rather pressed for time. I would like to expand slightly on two points I then made. The first is the question of TAVR. recruiting. The Minister will be aware that at the present time the TAVR. is 22 per cent. under strength. He has reduced the amount of money that is spent on advertising, and we do not seem to be any nearer solving the basic problem which is to get known to the people of the country the fact that the TAVR. exists; that the old Territorial Army has not completely sunk without trace and that the young men of this country can give military service in an acceptable manner to themselves and for the benefit of the country.
  I do not believe we have yet a proper answer to this problem. I do not believe that a programme has been instituted that will deal with the problem. I hope the Minister will be able to take up this point. The question of cadres is one that must be examined most seriously. I believe their very existence, and their creation, was in the first place an admission of the necessity of having something upon which our territorial force could be expanded. Three officers and five men constitute a totally inadequate force, even to administer itself.

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  The cost of expanding it, even by a modest amount—say, doubling it—would be comparatively insignificant, but it would give a much more credible power to the cadres, and make their whole administration easier. I am not in a position to know how far the Government have gone with their avowed intention to create a mobilisation store and nominal roll for 300 men, but it is that possibility that led to the cadres' creation in the first place, and I hope that a progress report can be made.
  I have mentioned many times in correspondence to the Minister the problem of the P.S.O.s, the staff officers who run the TAVR, who do the adjutant's job in many cases, and quite a lot of the training major's and commanding officer's job as well. The Minister is well aware that I, among others, consider them to be underpaid. The salary before the latest review was a mere £1,340 for men and £1,100 for women, rising after six years to the princely sum of £1,460 for men and £1,190 for women. That can hardly be described as a career structure. I believe that they do not receive the perks that a commanding officer receives, such as travel allowances and so on. They work very long hours but get no overtime pay. When there are volunteers present, the chances are that the P.S.O. will be there as well. I hope that the Minister will take up my suggestion of having consultations with commanding officers, brigadiers and generals dealing with TAVR personnel, who I think will confirm what I have said, and I hope that this may lead to a rather better deal for the P.S.O.s.
  I should like briefly to mention once again the question of H Troop, Royal Corps of Transport, since the point may have slipped by in the debate last Thursday night owing to the rush. This organisation was charged with the responsibility of animal transport in the Royal Corps of Transport. It was a quite small organisation. I thank the Minister for his courtesy in enabling me to visit it in Aldershot. Its present rôle is that of reinforcing 29 Squadron in Hong Kong, for which I believe that it sent three or four N.C.Os. The N.C.O.s. on the job now will finish in 1974 and as far as I can see there will be no one to replace them.
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  The cost of the organisation has been estimated by the Ministry at £80,000, using a technique know as "sliced" costing, which means slicing off the costs of neighbouring organisations and adding them to that which one wants to dispose of. I believe that it has been a little unfairly treated.
  The requirement may be considered to be out of date, but I remind the Minister that in Aden camels were used quite extensively in the Radfan for transport, and in Vietnam, despite the enormous number of helicopters the Americans have, a large number of mules are used. America is still very agricultural in many parts and can take from its farms experts in mules, horses and so on. I do not believe that the same can be said in this country. To keep even four or half a dozen N.C.O.s would seem to me to be a wise precaution. I believe that four men are leaving on redundancy on the disbandment at the end of this month. One of these days in some theatre I believe that the Army will regret the absence of those four senior N.C.O.s.
  The recruiting power of H Troop and its public relations aspect may have been overdone, as the troop itself might well admit, but the recreational aspect and the character training involved could be placed on the credit side. This is a small and false economy, and if there is any possible way in which they might be attached perhaps to the remount depot, as a Royal Corps of Transport responsibility, then I believe it would be a sensible decision. I do not think I need remind the House that it is always the unexpected that catches the Services unawares.
  9.38 p.m.
  Mr. John Fraser: I take as my text two items in the Defence Estimates relating to the Army. Paragraph 39 on page 8, describes the fact that the Royal College of Defence will be holding courses for European officers who will be able to come to this country to participate in defence studies which we will be carrying out here. I understand in the past it has been the practice, when inviting officers to the college, to take those that come from one of our N.A.T.O. partners, Greece. Secondly, paragraph 61 on page 28, Statement on Defence Estimates describes an exercise

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  in which the Army took part in Greece, along with some of our other N.A.T.O. partners.
  I think my views on this are well known. I know it would be entirely out of order in this debate to talk about Greece. What I do want to say to my hon. Friend is that, in organising courses at the Royal College of Defence on organisation exercises, and exchange of information and exchange of ideas about tactics and strategy in Europe, I hope he can assure the House that our Army officers are not going to play any part, and we are not going to co-operate with people that are responsible for the subjugation of another nation in Europe. This is particularly so if the Army is going to have people from what is, frankly, a Fascist State, participating in courses paid for by this Government and country, and I hope that we are not going to go in for the business of educating Fascists as well as co-operating in military exercises with them. Not everyone shares the view that politics should be introduced into the Army.
  I spent two years in the Army as an education instructor, and I know perfectly well that the way in which the Army works does not depend only on war games; it depends also on conveying to the men some idea of the philosophy and rationale for their being in the Army at all. When I was an instructor, we explained the reasons for participating in various defence pacts in Europe and other parts of the world. Not only did one explain to the soldier the strategy—I am sure this still goes on—one explained the reasons as well. I assume this continues, and that soldiers and officers in the Army are instructed upon the rationale and purposes of N.A.T.O. Indeed, a lot of the judgment about Army strategy in Europe is based on the assumption that one is providing for response against a misunderstanding between two ideologies as much as defence against possible wholesale aggression against Western Europe. Therefore, one cannot leave the rationale and the philosophy out of it. The Government have to make a decision about this.
  My hon. Friend the Under-Secretary would have expressed his views quite clearly when he was a member of the Council of Europe. I hope, equally clearly, on this very limited point, he
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  will express the view that the British taxpayer is not going to pay for pupils to come from a Fascist country to be educated in our defence college here, unless he is absolutely certain that they are as committed, both in practice as well as in theory, to the preamble of the N.A.T.O. treaty, in which we participate; that what defence in Europe is all about is the defence of liberty and democracy and the rule of law. Fascism, as well as Communism—in fact Fascism much more than Communism—has been in the past a threat to security in Europe. It again is likely to be a threat to security. I hope, in this very limited way, that my hon. Friend will be able to express the view that in co-operation with this military junta, the Army is going to make quite sure that it deals only with people committed to the cause of democracy.
  9.45 p.m.
  Mr. Philip Goodhart: I know that the Under-Secretary wishes to reply, so I shall be exceptionally brief.
  My hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) referred to the provision which had been made for retired pay. I, too, should like to refer to this. I know that the provision for next year is 2 per cent. greater than that for 1969–70, but prices will go up by much more than 2 per cent. In last year's defence debate, the hon. and learned Member for Northampton (Mr. Paget) reminded the House that some years before, speaking from the Opposition Dispatch Box with the full knowledge of the present Secretary of State and the then Leader of the Opposition, he made a solemn pledge that the Labour Party, if elected, would introduce parity in Service pensions. Obviously, they cannot appear in these Estimates, but is there any intention to honour that solemn pledge?
  My hon. Friend the Member for Aldershot (Sir E. Errington) in the debate on the Army Estimates on 12th March told us that he was the Chairman of a Sub-Committee of the Estimates Committee which was considering recruiting. He said that the first intimation that that Sub-Committee had had that the Ministry of Defence had called in civilian management consultants to reorganise the Army

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  recruiting organisation came in paragraph 19 of this year's Defence Statement:
  "The Army Recruiting Organisation is also to be reorganised during the next two years following the report of a firm of civilian management consultants"
  How is it that this important Sub-Committee was not informed that management consultants were carrying out this important rôle?
  Could the hon. Gentleman tell us what this reorganisation involves? I hope that it will involve Army, Navy and Air Force recruiting centres giving some information about careers in the other Services. I called into my own local recruiting centre, a few days ago, as I do from time to time, and found that there was no information of any sort available about careers in the other Services. I hope that this is just one of the points which the management consultants have told the Minister to put right.
  9.50 p.m.
  The Under-Secretary of State for Defence for the Army (Mr. Ivor Richard): Perhaps it would be as well if in the 10 minutes that remain for this debate I try to answer some of the specific points which have been raised, particularly those by the hon. Members for Weston-super-Mare (Mr. Wiggin) and Isle of Ely (Sir H. Legge-Bourke). It is not often that one can give some joy to hon. Members opposite, but I start by giving a certain amount of moderate satisfaction to both hon. Members.
  P.S.O.'s salaries were referred to by the hon. Member for Weston-super-Mare. These are being reviewed consequent on the introduction of the military salary. I hope shortly to announce the new rates. I take the point the hon. Member made about the valuable work they are doing. On the point he made about some expertise remaining in the Army in mule squadrons, the expertise will remain in the Veterinary Corps and the pack troop which it is proposed to retain in Hong Kong. I do not know whether he appreciated that it is the intention to retain that pack troop. To that extent the expertise will remain in the Army.
  On the point about commutation, mentioned by the hon. Member for the Isle of Ely, I will spend a few minutes
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  describing the rules and then state the present attitude to them. The hon. Member put his finger on an anomaly which appears to exist and which clearly deserves to have a considered answer. As he pointed out, the rules as they apply to officers and other ranks differ. An officer, without a great deal of difficulty, can commute up to 50 per cent. of his pension, while other ranks can broadly commute without difficulty up to 25 per cent. or a capital sum of £1,000, whichever is the less. On good grounds, generally compassionate grounds when a man perhaps wants to buy a business and so on, he would be permitted to commute further up to 50 per cent. of his pension if the Ministry of Defence thought that right.
  The amount of a man's pension which can be commuted can be up to 75 per cent. for someone who is not an officer, whereas it would remain at 50 per cent. for an officer. I recognise that there is substance in the anomaly. I recognise that at first sight to say that an officer is entitled to commute up to 50 per cent. without trouble whereas a warrant officer with 35 years' service in the Army has to get permission to commute more than 25 per cent., is prima facie anomalous, but a general review of Service pensions is going on.
  In the course of that review the question of commutation is one which we want to examine. We shall examine it in great detail, and, I hope, with a certain amount of sympathy. It would be very wrong for me to hold out any form of promise that the rules will definitely be changed, but I can at least promise the hon. Member that the points he made will be borne in mind very seriously in the general review.
  The hon. Member for Derbyshire, West (Mr. Scott-Hopkins) raised the question of offsets for B.A.O.R. I am not sure whether he understood precisely what the offset agreement is. It is not designed to relieve the United Kingdom of the budgetary burden of troops in Germany. It is designed to remove the foreign exchange costs, but not costs in actual cash. There is nothing anomolous or unjustifiable in bringing into the offset agreement the loan element referred to by my right hon. Friend the then Minister of State at the Foreign Office when he answered

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  Questions on this subject in considerable detail on 23rd July last year.
  In connection with 6 Brigade, I reiterate, in general terms, what my right hon. Friend said in the debate on the White Paper; namely, that agreement has been reached on the return of 6 Brigade and on the offset arrangements which go with it. Those arrangements are that the German Government have agreed to purchase a further 24 million Deutschmarks of defence equipment, this sum being 80 per cent. of the running costs of 6 Brigade for the six months ending 31st March, 1971.
  In addition, they will pay, as my right hon. Friend announced last week, up to a minimum of 13 million Deutsch Marks for what are called "settling in" costs. It would not be sensible to refer to any particular matter as offsetting the foreign exchange costs of any one unit. The total German obligation is to reach a target of 474 million Deutsch Marks and we have no reason to suppose that they will fail to reach that target.
  Thus, on the offset arrangements with the Federal Government of Germany, Her Majesty's Government reiterate what has been previously said; namely, that the offset arrangements amount to about 80 per cent. of the foreign exchange costs of British forces stationed in Germany, and that for Britain is an arrangement with which we should be pleased.
  My hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) raised the issue of his proposed visit to the British Army in Germany. It would be wrong of me to delay the House, in the few minutes remaining to me, dealing with this matter——
  Rear-Admiral Morgan-Giles: Where is the hon. Member for West Ham, North (Mr. Arthur Lewis)?
  Mr. Richard: With his customary courtesy, my hon. Friend informed me that he would not be present for the reply due to his having an engagement elsewhere. In view of his apology, I trust that a point will not be made about his absence.
  In view of the robust way in which my hon. Friend castigated us for the terms of the Press announcement, I assure him that there was nothing unusual about the form
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  of the announcement. When visits were made in 1969, almost precisely the same form of Press announcement was put out, and I do not think that that ruffled any feathers.
  A Press release of this kind is designed not to inform my hon. Friend's constituents that he will be abroad but to inform those in Germany of the reasons why my hon. Friend will be visiting them. It is, therefore, important to make it plain that the party going out does not represent my right hon. Friend the Secretary of State for Defence and has not been despatched by the authority of Parliament in the execution of any Government business going through the House of Commons.
  The visit has been announced in this form so as to make it clear, since the party is travelling ouside the United Kingdom under official Ministry of Defence arrangements, that it is not going in an official capacity as representing the Ministry of Defence. There is nothing sinister about it, and if my hon. Friend thinks that because of the phraseology used he would find it impossible to go on this visit, then we would naturally regret that, but the decision must be made by him.
  My hon. Friend the Member for Norwood (Mr. John Fraser) raised the question of co-operation with the Greek Government. Attendance at the Royal Defence College is part of our policy of increased European co-operation within N.A.T.O., and much as I sympathise with my hon. Friend's views, we have consistently made it clear that defence and N.A.T.O. aspects need to be kept separate from our general feelings towards the present régime in Greece. I undertake to look into the matter, which is all that I can say at this stage, since no more time remains available to me.
  Question put and agreed to.
  Resolved,
  That a sum, not exceeding £823,500,100, be granted to Her Majesty out of the Consolidated Fund, on account, for or towards defraying the charges for Defence for the year ending on 31st March, 1971, as set out in House of Commons Paper 110.

  LAND COMMISSION (BETTERMENT LEVY)
  10.0 p.m.
  The Joint Under-Secretary of State for Scotland (Mr. Bruce Millan): I beg to move,
  That the Betterment Levy (Minerals) (Amendment) Regulations 1970, a copy of which was laid before this House on 2nd February, be approved.
  Mr. Deputy Speaker (Mr. Sydney Irving): It may be for the convenience of the House if we take the five regulations and the Motion for an humble Address together. It will be possible to have separate Divisions on these with the exception of the Motion for an humble Address, which must be put at 11.30 p.m.; otherwise it would fall.
  Mr. Millan: What I would like to do is to say something about each of the affirmative regulations in turn and then something about the regulations which are the subject of the humble Address. I will deal first with the (Minerals) (Scotland) (Amendment) Regulations 1969 and the equivalent (Minerals) (Amendment) Regulations 1970. The main purpose of these regulations is to provide a new scheme for the assessment of betterment levy on mineral leases.
  The Land Commission Act recognises that transactions involving minerals cannot readily be treated in the same way as other transactions in land and provides—in Section 74, under which power these regulations are made—for minerals transactions to be dealt with differently. But this power, in itself, was not wide enough to cover the change now proposed, and Section 40 of the Finance Act 1968 extended the regulation-making power of the Ministers.
  Section 40 provides that levy may be charged as a proportion of rents, royalties, or other payments received under a mining lease, instead of as a capital sum at the start of the lease. In making this provision the Government recognised the strength of representations made by owners of mineral-bearing land against the method of charging levy as a capital sum. Briefly, they were these.
  When a mineral lease is granted there may be great uncertainty about the quantity of minerals which the land will
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  yield. But if betterment levy is to be charged as a capital sum it is necessary to estimate the mineral yield in order to arrive at the present capital value of the lease to the landowner. If, however, the actual yield falls well short of the estimate, the result will be that the landowner will have paid far too much levy, and there is the further disadvantage that the landowner must pay the levy in a capital sum long before he receives an equivalent income.
  The converse also applies, and if the mineral yield greatly exceeds the estimate the levy payable is at a very low rate. For that reason the new regulations provide a mineral landowner with the option to make a capital payment if he fels confident that this will be to his advantage.
  Under regulation 3 the basis of paying levy periodically in relation to royalties becomes the normal basis of assessment, unless the levy-payer elects, under Regulation 6, to remain on the capital basis, which is the normal way in which levy is charged on ordinary types of lease, and which may be more favourable to the landowner if he is fairly certain about the prospects of extraction. In Regulations 3 and 6 steps have been taken also to ensure that those who let mineral leases before the power to make these regulations was introduced in the Finance Act, 1968, can elect, retrospectively, for the new basis. The time allowed for the elections under Regulation 6 is two months. This period may be extended at the commission's discretion.
  Regulation 5 is important from the point of view of the levy-payer because it describes how to convert the capital sum which has to be assessed by the mineral valuer into a percentage equivalent to be paid on the royalties. We need a formula to ascertain the levy which should be assessed as a proportion of the actual payments made from time to time under the lease. This is done by putting the levy, calculated as a capital sum, over the "consideration"; that is, the capitalised value of the anticipated payments under the lease.
  Perhaps it would be easier if I explained this by the use of figures. If the market value is £50,000 and the base value is £20,000, the levy is on £30,000 which, at 40 per cent., gives £12,000 payable. This would give a fraction of

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  12,000 over 50,000—that is, the capital levy payable over the market value—and this fraction would be the levy charged on the royalties as received. The figure would be conveyed to the levy-payer by means of a "certificate of effective rate" under Regulation 8.
  Regulation 7 provides for the normal two months' service of a counter-notice when a levy-payer wishes to dispute his assessment. Arbitration is available to settle disputed cases if negotiations fail to produce a satisfactory result.
  There follows a series of short regulations which apply under the provisions of the main Act to transactions covered by the regulations, for example, powers to call for further information, penalties for false information, relief in respect of estate duty and a number of other things, on which I will not go into detail because they simply repeat the provisions in the main Act.
  Mr. W. R. van Straubenzee: Will the Minister kindly assist the House? He is gabbling through a brief which is before him. Will he please go a little slower because hon. Members this side of the House do not have the ability to follow him when he is speaking so quickly, neither do they have the facilities for having speeches written for them.
  Mr. Millan: I am sorry that the hon. Gentleman has introduced that offensive tone at this early stage in our deliberations. I hope he will find my explanation perfectly comprehensible.
  Regulations 21, 22 and 24 are anti-avoidance provisions. It is clearly necessary, with any form of levy, to protect the revenue by ensuring that avoidance of payment is prevented.
  The minerals regulations have one other purpose, which is to extend the exemption from levy already afforded to mineral undertakers under the existing minerals regulations. Broadly speaking, the existing regulations provide exemption on the start of a project where a mineral undertaking company owned land in September, 1965, when the Land Commission White Paper was published, or has since bought it in an arm's-length transaction. These regulations cover combinations of circumstances which have not previously been provided for; namely, land which a fellow member of
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  a group of companies owned in September, 1965, and cases where a new operating company is formed within a group to work the minerals. The Land Commission has already recognised the case for this further exemption and has operated it extra-statutorily since an announcement by the then Minister of State to the Ministry of Housing and Local Government in January, 1968.
  The House is also asked to accept that the date for the operation of the mineral regulations should be 1st April. It is normal practice for the date to be stated in the regulations, and 1st April, 1970, is a convenient date. It brings these regulations into line with a number of other regulations that are to be made this evening, and I ask the House to accept the common sense of making the date 1st April, 1970.
  The Exemption in Case C Order, which is item 4 on the Order Paper, provides exemption for the construction of agricultural dwellings. It was always intended that the erection of agricultural dwellings would not attract levy so long as the dwellings remained in agricultural use. The method by which this intention has hitherto been put into effect, by postponement of collection of levy with waiver of interest, has not proved entirely satisfactory in administration. Therefore, the Order provides for complete exemption, and I am sure that it will commend itself to the House.
  The next set of regulations is the Material Development (Amendment) Regulations. Material development is defined in Section 99(2) of the Act by way of exclusions from the definition of development in section 12 of the Town and Country Planning Act 1962. This was the English section, because, for reasons I shall mention, there is as yet no Scottish counterpart to these regulations. The exclusions cover development permitted under General Development Orders made under the 1962 Act, most of the development included in Schedule 3 to that Act, and development of any class prescribed in regulations.
  The main regulations except from the definition of material development a wide range of minor development. The purpose of the present regulations is to exclude from material development three more types of work. The main reason for making these further exclusions is

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  that at present a good deal of detailed work has to be done in investigating cases notified to the commission where these types of development are concerned, but where for various reasons there is generally no liability to levy.
  Regulations 2(a) and (b) deal with advertisements. A lot of small advertising is done under licence from the owner on whose land the advertisement is displayed. When an advertisement board is erected in such circumstances, the owner, not the advertiser, is the developer of the site for the purposes of the betterment levy. In practice, there is unlikely to be a liability to levy because of the £1,500 exemption introduced by the Finance Act 1969, but an owner may be unwilling to grant a licence because he fears that there may be a liability to levy. The purpose of Regulation 2(a) is, therefore, to give certainty and clarity to an exemption which in most cases will apply in any case.
  Regulation 2(b) brings the Material Development Regulations into line with the Control of Advertisement Regulations 1969, under which the construction of advertisements in the forecourts of business premises is permitted without express consent.
  Regulations 2(c) and (d) deal with electricity sub-stations, the construction of electricity sub-stations of under 1,000 cubic feet by electricity boards is already excluded from material development by the General Development Order 1963. Sub-stations of over 1,000 cubic feet are material development, but such projects are almost invariably exempt from levy because they are carried out on operational land of the boards, which are statutory undertakers; and Section 58 of the Land Commission Act provides widespread exemption from levy for operational land of statutory undertakers. The purpose of Regulations 2(c) and (d) is therefore to dispense with the need for the construction of electricity sub-stations of between 1,000 cubic feet and 100 cubic metres to be notified to the commission, rather than to confer an exemption from levy.
  Regulation 2 (e) is a technical point which arises from the General Development Order, 1968.
  I turn now to the Case F General (Amendment Regulations) 1970. These
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  regulations do two quite separate things. By Section 47 of the Finance Act 1969 a levy-payer may, in certain circumstances, use as base value the price paid for land during the interim period between the publication of the Land Commission White Paper on 22nd September 1965, and the coming into force of the Act in April 1967. Regulation 2 of the regulations applies this benefit to Case F dispositions.
  Regulation 3 applies the Case F provisions to compensation for depreciation in land values which is paid under a limited number of public and private Acts which are not included in the original Case F regulations. This is largely a tidying-up operation and brings into the schedule the Private Acts passed up to 1969. Since these Acts provide for transactions where compensation is given for depreciation in the value of land, it is right they should be brought within the scope of Case F where the previous Acts are already included.
  The final regulations with which we are dealing are the Planning Assumptions Regulations, to which the Opposition have put down a Prayer. No doubt the hon. Member for Crosby (Mr. Graham Page) will make a number of points about the regulations, and since I am speaking before he does, obviously I will not be able to deal with them. However, my hon. Friend the Minister of State will answer any points on the regulations which the hon. Gentleman makes.
  The purpose of the regulations is straightforward. The original Planning Assumptions Regulations were related to the General Development Order as it stood in 1967. The general purpose was to ensure that the right to carry out material development without express planning permission, which is conferred in certain circumstances on bodies such as statutory undertakers, did not result in unintended benefit to parties selling land to those bodies. There seems to be no reason in equity why parties selling land to those bodies should be exempted from levy.
  However, the General Development Order has subsequently been amended since the previous Planning Assumptions Regulations were put into operation.

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  Therefore, the present regulations bring the Planning Assumptions Regulations into line with the state of the General Development Order by adding to the original list the works which are now permitted by the General Development Order.
  Since the principle of this provision is already included in the previous Planning Assumptions Regulations, it cannot be said that the present regulations add any new principle. In those circumstances, I find it difficult to understand why the Opposition should have put down a Prayer against these regulations. But I must ask the House to reject the Prayer.
  Inevitably, these various regulations are rather complicated. I have gone over them in turn, and I think that I have explained the main provisions. I know that the hon. Member for Crosby will have understood my explanation, if on one else has. I commend all the regulations to the House and ask it to reject the Prayer on the Planning Assumptions Regulations.
  Mr. Speaker: I understand that we are taking together all the Motions on the Order Paper, plus the Prayer, and that my predecessor in the Chair has informed the House that, if we do not vote on the Prayer before 11.30, it will fall.
  10.18 p.m.
  Mr. Graham Page: I will endeavour to deal with the regulations in the order in which they appear on the Order Paper, as the Under-Secretary of State has done. Therefore, I deal with the minerals regulations first.
  There are two dealing with the betterment levy on minerals, one relating to Scotland and the other to England and Wales. I do not understand how the Under-Secretary of State could have the courage to put forward the arguments which were pressed by the Opposition during the passage of the Land Commission Bill and which were then rejected. That is what he has been saying tonight. I do not understand how he has the courage to say that these regulations are quite simple. He read from a very efficient brief. However, it takes a little time for a subject such as this to get out of the paper which is before the Under-
  338
  Secretary of State and into the minds of hon. Members. It is more than a little puzzling, especially when the brief is read at such speed.
  The point about the two minerals Instruments is that, throughout the passage of the Land Commission Bill one of the main objections to this levy was that, concerning Case B on leaseholds and Case C on material development, the levy is payable before the receipt of the money on which it is assessed. What happens about the assessment of levy in those cases is that the lease is capitalised and the levy-payer is called upon to pay on that capitalised value before he receives any rent.
  A further major complaint of the Opposition was that there would be double taxation, because there would be taxation twice on the same amount; that is to say, by an assessment of the levy and an assessment of corporation tax, so far as a company was concerned, and capital gains tax for others. We complained that the levy had to be paid out of money which was not received and that it was in the form of double taxation.
  Mining and quarrying operations were extreme examples of the unfairness and injustice of this betterment levy. Mining operators do not pay a fixed rent. They pay royalties on the mineral yield. Therefore, as the Act stood, The Land Commission sought to capitalise the estimated yield from a mine or quarry. This was abject nonsense, because nobody could estimate that ahead. The landlord would have been paying before receipt of his royalties without any real knowledge of what they would be. He might receive much less than he or the Land Commission anticipated. He might pay in levy, capital payment, and income tax and capital gains tax more than 20s. in the pound on royalties. That was how it was working out under the Act. Almost immediately after that rather fantastic Bill had become law——
  Mr. Speaker: Order. The Act is not the subject of the debate, as the hon. Gentleman well knows.
  Mr. Page: It is necessary to go back to the Act under which these regulations are made to show how it was amended shortly after it was passed. These regulations are directly related to Section 40

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  of the Finance Act, 1968, which endeavours to amend the Land Commission Act, 1967——
  Mr. Speaker: Order. We cannot discuss the parent Act or the amending Act. We can discuss only the regulations.
  Mr. Page: I am sorry, Mr. Speaker. I thought that I was discussing the regulations. These regulations are made under or by reference to Section 40 of the Finance Act, 1968. Under that section the Minister was empowered to make regulations so that the landlord could elect to pay a percentage on royalties rather than the betterment levy on a capitalised value. But we have had to wait all this time for these regulations to come forward. They have come forward three years after the Act, and they provide that the payment can be based on the royalties rather than on the capitalised value of the mining lease, but they still do not take into account the fact that within the payment of royalties there is a capital payment. There is no tax allowance for that payment. I call it "capital payment" because, in mining, the asset is being wasted all the time—I use "wasted" in the legal sense. To put it another way, the asset is being spent all the time.
  In having to devise a scheme to meet this difficulty with which mining and quarrying operations were faced, the Order introduces the concept of the "effective rate". This is the rate to be charged on the royalties, the percentage which will go into the pocket of the Exchequer via the Land Commission. It would need a magician of a mathematician to challenge the Land Commission on its notice of assessment of effective rate. It is too complicated for anyone, even those who are permanently operating in mining, to understand the calculation of this effective rate. A memorandum from the Country Landowners Association, which deals very effectively with this sort of subject, says:
  "It cannot really be claimed by the most fervent supporter of these regulations that they can be comprehended by the mineral owner who is subject to them. That is the main objection to them."
  It amounts to the fact that this is taxation at a rate decided not by the House or the Government but by the
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  Land Commission, because no one has the power to challenge that rate. By this complicated legislation, we are delegating the right to tax, and that is a fundamental objection.
  I pass now to the betterment levy exemption in Case C. In this case, the Order exempts the building of houses for agricultural workers from betterment levy. We are happy with any exemption from betterment levy. In fact, such buildings have in practice been exempt because the Land Commission has delayed collection of the levy to see whether the houses really are to be occupied by agricultural workers. It having been made substantive law by this Order that the levy shall not be collected in respect of the building of houses for agricultural workers, is the Order to be retrospective? What is the position of those who are now subject to postponement under the existing practice? Is the Sword of Damocles to hang over their heads in future in case they may change the use of the property? This does not appear from the Order.
  These houses are to qualify for exemption if the occupation and the user will, in the opinion of the Land Commission, fall within a certain provision in the General Rate, 1967. The same applies similarly to Scotland under the Statute which applies there. That provision of the Act describes what is an agricultural building. It may be that, when the Land Commission has to consider the matter, it will not be known whether or not the building is to be used for agricultural workers; this levy falls on the developer at the moment he starts to build. That is not the point, however.
  The point here is whether or not it will be an agricultural building and not whether, in the opinion of the Land Commission, it is going to be an agricultural building. The Land Commission is not concerned with whether this is going to qualify for exemption from the rate. It is concerned with whether or not it will be an agricultural building as laid down in the provision to which the Order refers.
  If the levy-payer does not agree with the opinion of the Land Commission, he can go to the Lands Tribunal. But what will he be faced with? The commission

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  will say, "In our opinion, this is not an agricultural building", and that is surely the end of the matter. The Order says that the building shall not be an agricultural building exempt from betterment levy if in the opinion of the Land Commission it is not. The Lands Tribunal will say, "The Land Commission has said that in its opinion it is not an agricultural building. The Order says that it is not exempt if in the opinion of the Land Commission it is not an agricultural building, so there is nothing more to appeal about."
  An effort was made to solve this sort of problem in Section 49 of the Finance Act, 1969, where it is said that if anything under the Land Commission Act, 1967, had to be dealt with to the satisfaction of the Land Commission the Lands Tribunal could consider the case and go into its merits. It need not be bound by what the Land Commission might say was to its satisfaction. But that does not apply to this case. Those words are not used here; the words used are
  "in the opinion of the Commission".
  If the Order stands with those words in it there will be a denial of an appeal on the merits to the Lands Tribunal.
  The next matter on the Order Paper is the Material Development (Amendment) Regulations, 1970, which give three exemptions from betterment levy. To that extent again we on this side of the House are happy, but certainly in the first case, that of advertisements, they do not go far enough. They are so complicated that I doubt whether anybody concerned with the erection of hoardings for advertisements or with advertisements on the walls of premises or in forecourts and outside shops could really understand whether he was liable to betterment levy or not. The regulations talk about areas not exceeding eight square metres, including new advertisements and existing advertisements, and define at great length what is meant by an existing advertisement. It is all extremely difficult to understand, and I would have hoped that when we are dealing with this sort of subject, exemptions from a tax, the matter could have been made perfectly clear.
  342
  Next on the Order Paper are the Case F General (Amendment) Regulations, 1970, which seek to increase the base value when a tenant disposes of property. Case F was that notorious case under the Land Commission Act, 1967, whereby, by regulations, the Minister could sweep into liability for betterment levy any transaction affecting land which the draftsman had forgotten to put in the Act. The Minister has taken advantage of that in the regulations since the Bill became an Act.
  Immediately the Act came into operation we had a Case F General Regulations, which the regulations before us seek to amend. They made compensation for depreciation, by public works, subject to a levy. What on earth can be the justice in this? What we are dealing with is a person whose property value has been depreciated by some public works near or even on that land. We are dealing not with compulsory purchase or with the price paid to the owner when his land is acquired, but with something in the nature of a statutory nuisance to the land. The loss to the owner of the land, the injury which he receives in the use of his land, will have been assessed, or, perhaps, there will be agreement to pay him compensation for the inconvenience, the suffering, which he has had to undergo from some public works—the loss of an easement, the loss of a right of light or a right of way. These are the sort of things we are dealing with and not cases in which the owner has been paid compensation for a part of his land being taken away. Having been paid that compensation, he is now to have 40 per cent. of it taken away in betterment levy. This is the greatest injustice of the levy.
  The Order is to come into effect on the operative date, but I am not sure whether it is retrospective to the previous Order or only takes place after the Order is made.
  This Order is so grossly unfair—that an owner should have to pay a levy on the money he has been paid for his inconvenience and suffering—that I would ask my hon. and right hon. Friends to divide against it.

  343
  I turn now to the Prayer. Betterment levy is assessed on the amount by which market value exceeds base value. The base value is calculated on a complicated basis, but the levy-payer's concern is to have his base value as high as possible, because that decreases the difference between the base and market values. Base value is calculated on the assumption that planning permission will not be granted for any material development. So to say that some activity is a material development is to exclude a potential part of the base value. It widens the gap and increases the amount upon which levy is payable.
  The regulations in question say that something—it is difficult to understand what—shall be put into the Betterment Levy (Planning Assumptions) Regulations 1967. One has to turn to the Town and Country Planning (General Development) (Amendment) Order 1968 to find out what it is. It is, in fact, boreholes for gas and runways for aerodromes. One might think that it does not matter very much to the general citizen to know that something is happening whereby levy is increased because there is a borehole or a runway.
  Our complaint is, first, that the jungle of regulations one has to fight through before discovering what this is all about makes it quite impossible for the ordinary citizen to understand what it is all about. Secondly, the Town and Country Planning Order, 1967, makes these particular items not material development. Thirdly, the effect of the Order, when we find what it is all about, increases the occasions for levy. It does so because it increases the gap between base value and market value. It may be said, "What does this matter to the public? It is only a liability for a couple of public bodies, the gas authority or the British Airports Authority. But any liability on public authorities is passed on to the public. It affects the owner of land in compulsory acquisition and affects the overheads of the gas authority or the British Airports Authority.
  It was a basic principle of the Land Commission Act that any matter included within a general development Order which did not need town planning per-
  344
  mission was not a material development and would not attract levy. I stress that. Throughout discussions on the Bill which led to the Act of 1967 we were given to understand that anything which did not need specific planning consent—that is to say, which was included in the General Development Order as having an automatic consent—would not be material development.
  The two items I have mentioned, even though they be only boreholes for gas or runways for an aerodrome, have been included, so for planning permission they are excluded and now brought in for the purposes of betterment levy. They are brought in by reducing the exemptions which an ordinary owner can claim whose property is being valued for the purposes of betterment levy.
  I assure the Under-Secretary that any Order which increases betterment levy will be opposed from this side of the House. We think the levy is an imposition which is quite unjustified, and as soon as we can get rid of it, we will.
  Mr. Speaker: Does the House wish me to put the Motions separately?
  Mr. Graham Page: We would not wish to divide on the first four Motions, but we would on the penultimate and last ones.
  Mr. Speaker: My Latin is, I hope, as good as the hon. Member's. I shall put Motions Nos. 2 to 5 together.
  Question put and agreed to.
  Resolved,
  That the Betterment Levy (Minerals) (Amendment) Regulations 1970, a copy of which was laid before this House on 2nd February, be approved.—[Mr. Milian.]
  Resolved,
  That the Betterment Levy (Minerals) (Scotland) (Amendment) Regulations 1969, a copy of which was laid before this House on 11th February, be approved.—[Mr. Milian.]
  Resolved,
  That the Betterment Levy (Exemption in Case C) Order 1970, a draft of which was laid before this House on 4th March, be approved.—[Mr. Milian.]
  Resolved,
  That the Material Development (Amendment) Regulations 1970, a copy of which was laid before this House on 3rd March, be approved.—[Mr. Milian.]
  Motion made, and Question put,
  That the Case F General (Amendment) Regulations 1970, a copy of which was laid
  before this House on 3rd March, be approved. —[Mr. Millan.]
  The House divided: Ayes 140, Noes 91.

  Division No. 84.]

  AYES

  [10.45 p.m.

  Allaun, Frank (Salford, E.)

  Fraser, John (Norwood)

  Morris, Charles R. (Openshaw)

  Alldritt, Walter

  Golding, John

  Mulley, Rt. Hn. Frederick

  Allen, Scholefield

  Gordon Walker, Rt. Hn. P. C.

  Murray, Albert

  Ashton, Joe (Bassetlaw)

  Gray, Dr. Hugh (Yarmouth)

  Neal, Harold

  Atkins, Ronald (Preston, N.)

  Harper, Joseph

  Oakes, Gordon

  Bagier, Gordon A. T.

  Harrison, Walter (wakefield)

  Ogden, Eric

  Beaney, Alan

  Heffer, Eric S.

  Orbach, Maurice

  Bence, Cyril

  Hobden, Dennis

  Orme, Stanley

  Bidwell, Sydney

  Hooley, Frank

  Oswald, Thomas

  Binns, John

  Horner, John

  Palmer, Arthur

  Bishop, E. S.

  Howarth, Robert (Bolton, E.)

  Park, Trevor

  Blackburn, F.

  Howell, Denis (Small Heath)

  Parker, John (Dagenham)

  Blenkinsop, Arthur

  Hoy, Rt. Hn. James

  Parkyn, Brian (Bedford)

  Boardman, H. (Leigh)

  Huckfield, Leslie

  Pavitt, Laurence

  Booth, Albert

  Hughes, Roy (Newport)

  Pearson, Arthur (Pontypridd)

  Boston, Terence

  Hunter, Adam

  peart Rt. Hn. Fred

  Brooks, Edwin

  Hynd, John

  Pentland, Norman

  Buchan, Norman

  Irvine, Rt. Hn. Sir Arthur

  Perry, Ernest G (Battersea, S.)

  Butler, Mrs. Joyce (Wood Green)

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

  Perry, George H. (Nottingham, s.)

  Callaghan, Rt. Hn. James

  Jones, Dan (Burnley)

  Price, Thomas (Westhoughton)

  Carter-Jones, Lewis

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

  Probert, Arthur

  Concannon, J. D.

  Jones, J. Idwal (Wrexham)

  Roberts, Albert (Normanton)

  Conlan, Bernard

  Jones, T. Alec (Rhondda, West)

  Rodgers, William (Stockton)

  Crawshaw, Richard

  Judd, Frank

  Rose, Paul

  Dalyell, Tam

  Leadbitter, Ted

  Ross, Rt. Hn. William

  Davies, G. Elfed (Rhondda, E.)

  Lestor, Miss Joan

  Ryan, John

  Davies, Dr. Ernest (Stretford)

  Lomas, Kenneth

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

  Davies, Rt. Hn. Harold (Leek)

  Loughlin, Charles

  Silverman, Julius

  Davies, Ifor (Gower)

  Lyon, Alexander W. (York)

  Slater, Joseph

  Dempsey, James

  McBride, Neil

  Spriggs Leslie

  Dickens, James

  Macdonald, A. H.

  Steels, Thomas (Dunbartonshire, W.)

  Dobson, Ray

  Mackenzie, Gregor (Rutherglen)

  Tavern, Dick

  Doig, Peter

  Mackintosh, John P.

  Tinn, James

  Doig, Peter

  Mackintosh, John P.

  Wainwright, Edwin (Dearne Valley)

  Dunwoody, Mrs. Gwyneth (Exeter)

  MoNamara, J. Kevin

  Walker, Harold (Doncaster)

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

  Mahon, Peter (Preston, S.)

  Wallace, George

  Edwards, William (Merioneth)

  Mallalieu, E L. (Brigg)

  Watkins, David (Consett)

  Ellis, John

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

  Watkins, Tudor (Brecon & Radnor)

  English, Michael

  Mapp, Charles

  Wellbeloved, James

  Ennals, David

  Marks, Kenneth

  Williams, Alan Lee (Hornchurch)

  Evans, Fred (Caerphilly)

  Marquand, David

  Williams, Clifford (Abertillery)

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

  Mellish, Rt. Hn. Robert

  Willis, Rt. Hn. George

  Faulds, Andrew

  Mikardo, Ian

  Wilson, William (Coventry, S.)

  Fernyhough, E.

  Millan, Bruce

  Finch, Harold

  Miller, Dr. M. S.

  TELLERS FOR THE AYES:

  Fletcher, Raymond (Ilkeston)

  Milne, Edward (Blyth)

  Mr. Alan Fitch and

  Fletcher, Ted (Darlington)

  Mitchell, R. C. (S'th'pton, Test)

  Mr. James Hamilton.

  Forrester, John

  Morgan, Elystan (Cardiganshire)

  NOES

  Allason, James (Hemel Hempstead)

  Fortescue, Tim

  Mackenzie,Alasdair(Ross&Crom'ty)

  Archer, Jeffrey (Louth)

  Gilmour, Sir John (Fife, E.)

  Maddan, Martin

  Baker, Kenneth (Acton)

  Glover, Sir Douglas

  Marten, Neil

  Berry, Hn. Anthony

  Goodhew, Victor

  Maxwell-Hyslop, R. J.

  Biffen, John

  Gower, Raymond

  Mills, Peter (Torrington)

  Black, Sir Cyril

  Grant, Anthony

  Mitchell, David (Basingstoke)

  Blaker, Peter

  Grant-Ferris, Sir Robert

  Monro, Hector

  Boardman, Tom (Leicester, S.W.)

  Grieve, Percy

  Morgan, Geraint (Denbigh)

  Boyle, Rt. Hn. Sir Edward

  Gurden, Harold

  Morrison, Charles (Devizes)

  Brown, Sir Edward (Bath)

  Harrison, Col. Sir Harwood (Eye)

  Mott-Radclyffe, Sir Charles

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

  Hawkins, Paul

  Murton, Oscar

  Clegg, Walter

  Heseltine, Michael

  Nabarro, Sir Gerald

  Cooke, Robert

  Hirst, Geoffrey

  Osborn, John (Hallam)

  Cooper-Key, Sir Neill

  Holland, Philip

  Page, Graham (Crosby)

  Crowder, F. P.

  Howell, David (Guildford)

  Pearson, Sir Frank (Clitheroe)

  Dalkeith, Earl of

  Hunt, John

  Peel, John

  Dance, James

  Hutchison, Michael Clark

  Pounder, Rafton

  Digby, Simon Wingfield

  Johnston, Russell (Inverness)

  Powell, Rt. Hn. J. Enoch

  Drayson, G. B.

  Kaberry, Sir Donald

  Ramsden, Rt. Hn. James

  Eyre, Reginald

  Kirk, Peter

  Rhys Williams, Sir Brandon

  Farr, John

  Lawler, Wallace

  Ridley, Hn. Nicholas

  Fisher, Nigel

  Legge-Bourke, Sir Harry

  Rossi, Hugh (Hornsey)

  Fletcher-Cooke, Charles

  Longden, Gilbert

  Royle, Anthony

  Russell, Sir Ronald

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

  Wiggin, Jerry

  Scott, Nicholas

  Taylor, Frank (Moss Side)

  Wilson, Geoffrey (Truro)

  Scott-Hopkins, James

  Tilney, John

  Winstanley, Dr. M. P.

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

  Turton, Rt. Hn. R. H.

  Wright, Esmond

  Silvester, Frederick

  van Straubenzee, W. R.

  Speed, Keith

  Waddington, David

  TELLERS FOR THE NOES:

  Stainton, Keith

  Wainwright, Richard (Colne Valley)

  Mr. R. W. Elliott and

  Stoddart-Scott, Col. Sir M.

  Walker, Peter (Worcester)

  Mr. Jasper More

  Tapsell, Peter

  ward, Christopher (Swindon)

  Motion made, and Question put,
  That an humble Address be presented to Her Majesty, praying that the Betterment Levy (Planning Assumptions) (Amendment) Regulations 1970 (S.I., 1970, No. 271) dated 23rd
  February 1970, a copy of which was laid before this House on 3rd March, be annulled.—[Mr. Graham Page.]
  The House divided: Ayes 98, Noes 142.

  Division No. 85.]

  AYES

  [10.53 p.m.

  Allason, James (Hemel Hempstead)

  Hawkins, Paul

  Powell, Rt. Hn. J. Enoch

  Archer, Jeffrey (Louth)

  Heseltine, Michael

  Ramsden, Rt. Hn. James

  Baker, Kenneth (Acton)

  Hirst, Geoffrey

  Rhys Williams, Sir Brandon

  Berry, Hn. Anthony

  Holland, Philip

  Ridley, Hn. Nicholas

  Biffen, John

  Hooson, Emlyn

  Rossi, Hugh (Hornsey)

  Black, Sir Cyril

  Hornby, Richard

  Royle, Anthony

  Blaker, Peter

  Howell, David (Guildford)

  Russell, Sir Ronald

  Boardman, Tom (Leicester, S.W.)

  Hunt, John

  Scott, Nicholas

  Boyle, Rt. Hn. Sir Edward

  Hutchison, Michael Clark

  Scott-Hopkins, James

  Brown, Sir Edward (Bath)

  Johnston, Russell (Inverness)

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

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

  Kaberry, Sir Donald

  Silvester, Frederick

  Clegg, Walter

  Kirk, Peter

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

  Cooke, Robert

  Lawler, Wallace

  Speed, Keith

  Cooper-Key, Sir Neill

  Legge-Bourke, Sir Harry

  Stainton, Keith

  Crowder, F. P

  Longden, Gilbert

  Stoddart-Scott, Col. Sir M.

  Dalkeith, Earl of

  McAdden, Sir Stephen

  Tapsell, Peter

  Dance, James

  Mackenzie,Alasdair(Ross&Crom'ty)

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

  Digby, Simon Wingfield

  McNair-Wilson, Michael

  Taylor, Frank (Moss Side)

  Doughty, Charles

  Maddan, Martin

  Tilney, John

  Drayson, G. B.

  Marten, Neil

  Turton, Rt. Hn. R. H.

  Eyre, Reginald

  Maxwell-Hyslop, R. J.

  van Straubenzee, W. R.

  Farr, John

  Mills, Peter (Torrington)

  Vaughan-Morgan, Rt. Hn. Sir John

  Fisher, Nigel

  Mitchell, David (Basingstoke)

  Waddington, David

  Fletcher-Cooke, Charles

  Monro, Hector

  Wainwright, Richard (Colne Valley)

  Fortescue, Tim

  Morgan, Geraint (Denbigh)

  Walker, Peter (Worcester)

  Gilmour, Sir John (Fife, E.)

  Morrison, Charles (Devizes)

  Ward, Christopher (Swindon)

  Glover, Sir Douglas

  Mott-Radclyffe, Sir Charles

  Wilson, Geoffrey (Truro)

  Goodhew, Victor

  Murton, Oscar

  Winstanley, Dr. M. P.

  Gower, Raymond

  Nabarro, Sir Gerald

  Wright Esmond

  Grant, Anthony

  Osborn, John (Hallam)

  Grant-Ferris, Sir Robert

  Page, Graham (Crosby)

  TELLERS FOR THE AYES:

  Grieve, Percy

  Pearson, Sir Frank (Clitheroe)

  Mr. R. W. Elliott and

  Gurden, Harold

  Peel, John

  Mr. Jasper More.

  Harrison, Col. Sir Harwood (Eye)

  Pounder, Rafton

  NOES

  Allaun, Frank (Salford, E.)

  Davies, G. Elfed (Rhondda, E.)

  Golding, John

  Alldritt, Walter

  Davies, Dr. Ernest (Stretford)

  Gordon Walker, Rt. Hn. P. C.

  Allen, Scholefield

  Davies, Rt. Hn. Harold (Leek)

  Gray, Dr. Hugh (Yarmouth)

  Ashton, Joe (Bassetlaw)

  Davies, Ifor (Gower)

  Harper, Joseph

  Atkins, Ronald (Preston, N.)

  de Freitas, Rt. Hn. Sir Geoffrey

  Harrison, Walter (Wakefield)

  Atkinson, Norman (Tottenham)

  Dempsey, James

  Haseldine, Norman

  Bagier, Gordon A. T.

  Dickens, James

  Heffer, Eric S.

  Beaney, Alan

  Dobson, Ray

  Henig, Stanley

  Bence, Cyril

  Doig, Peter

  Hobden, Dennis

  Bidwell, Sydney

  Dunnett, Jack

  Hooley, Frank

  Binns, John

  Dunwoody, Mrs. Gwyneth (Exeter)

  Horner, John

  Bishop, E. S.

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

  Howarth, Robert (Dolton, E.)

  Blackburn, F.

  Edwards, William (Merioneth)

  Howell, Denis (Small Heath)

  Blenkinsop, Arthur

  Ellis, John

  Hoy, Rt. Hn. James

  Booth, Albert

  English, Michael

  Huckfield, Leslie

  Boston, Terence

  Ennals, David

  Hughes, Roy (Newport)

  Brooks, Edwin

  Evans, Fred (Caerphilly)

  Hunter, Adam

  Buchan, Norman

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

  Hynd, John

  Butler, Mrs. Joyce (Wood Green)

  Faulds, Andrew

  Irvine, Rt. Hn. Sir Arthur

  Callaghan, Rt. Hn. James

  Fernyhough, E.

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

  Carter-Jones, Lewis

  Finch, Harold

  Jones, Dan (Burnley)

  Concannon, J. D.

  Fletcher, Raymond (Ilkeston)

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

  Conlan, Bernard

  Fletcher, Ted (Darlington)

  Jones, J. Idwal (Wrexham)

  Crawshaw, Richard

  Forrester, John

  Jones, T. Alec (Rhondda, West)

  Dalyell, Tam

  Fraser, John (Norwood)

  Judd, Frank

  Leadbitter, Ted

  Morris, Charles R. (Openshaw)

  Rose, Paul

  Lestor, Miss Joan

  Mulley, Rt. Hn. Frederick

  Ross, Rt. Hn. William

  Lomas, Kenneth

  Murray, Albert

  Ryan, John

  Loughlin, Charles

  Neal, Harold

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

  Lyon, Alexander W. (York)

  Oakes, Gordon

  Silverman, Julius

  McBride, Neil

  Ogden, Eric

  Slater, Joseph

  Macdonald, A. H.

  Orbach, Maurice

  Spriggs, Leslie

  Mackenzie, Gregor (Rutherglen)

  Orme, Stanley

  Steele, Thomas (Dunbartonshire, W.)

  Mackintosh, John P.

  Oswald, Thomas

  Taverne, Dick

  McMillan, Tom (Glasgow, C.)

  Palmer, Arthur

  Tinn, James

  McNamara, J. Kevin

  park, Trevor

  Wainwright, Edwin (Dearne Valley)

  Mahon, Peter (Preston, S.)

  Parker, John (Dagenham)

  Walker, Harold (Doncaster)

  Mallalieu, E. L. (Brigg)

  Parkyn, Brian (Bedford)

  Wallace, George

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

  Pavitt, Laurence

  Watkins, David (Consett)

  Mapp, Charles

  Pearson, Arthur (Pontypridd)

  Watkins, Tudor (Brecon & Radnor)

  Marks, Kenneth

  Peart, Rt. Hn. Fred

  Wellbeloved, James

  Marquand, David

  Pentland, Norman

  Williams, Alan Lee (Hornchurch)

  Mellish, Rt. Hn. Robert

  Perry, Ernest G (Battersea, S.)

  Williams, Clifford (Abertillery)

  Mikardo, Ian

  Perry, George H. (Nottingham, S.)

  Willis, Rt. Hn. George

  Millan, Bruce

  Price, Thomas (Westhoughton)

  Wilson, William (Coventry, S.>

  Miller, Dr. M. S.

  Probert, Arthur

  TELLERS FOR THE NOES:

  Milne, Edward (Blyth)

  Roberts, Albert (Normanton)

  Mr. Alan Fitch and

  Mitchell, R. C. (S'th'pton, Test)

  Rodgers, William (Stockton)

  Mr. James Hamilton.

  Morgan, Elystan (Cardiganshire)

  NUCLEAR PROPULSION (MERCHANT SHIPS)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]
  11.2 p.m.
  Mr. Edwin Brooks: It was about two years ago that the Government decided that future nuclear submarine construction would be confined to the Vickers yard at Barrow-in-Furness. In reaching that controversial decision to concentrate the Fleet programme on the lead yard, the Ministry of Defence unleashed a major crisis in the shipbuilding industry along the Mersey.
  The decision to deny Cammell Laird any further share of nuclear work was not made public for 12 months. Immediately, however, it caused consternation throughout the whole development area, particularly as the employment situation was by then showing those signs of slow deterioration which were to make the Hunt proposals for de-scheduling Merseyside clearly premature.
  On 10th March, almost exactly a year ago, the matter was debated at length in the House, and I will resist the temptation to quote my speech. However, in my final sentence I urged the Government to consider
  "the advisability now of helping the yard to invest its skill and expertise in the nuclear propulsion of surface ships."—[OFFICIAL REPORT, 10th March, 1969; Vol 779. c. 1075.]
  This possibility was also urged on my hon. Friend the Member for The Wrekin (Mr. Fowler), who was at that time Parliamentary Secretary to the Ministry of Technology, by a deputation from Birkenhead Council, which visited London on 2nd April.
  Since that meeting several hon. Members, including myself, have sought to clarify the situation, and in particular to discover what progress has been made by the Ministry's cost-benefit study of a nuclear ship project. This study was described in The Times on 24th February, 1969, and its existence was confirmed in a Commons answer of 15th April. On 9th July the Minister stated in the House:
  "Information is being sought from shipbuilders, shipowners, the Shipbuilding Industry Board and others. We hope to have the first results of the study by the autumn."—[OFFIcIAL REPORT, 9th July, 1969; Vol. 786, c. 1347.]
  352
  However, it seems that nothing definitive has yet emerged, although on 26th January my hon. Friend informed the hon. Member for Haltemprice (Mr. Wall) and myself:
  "When the current study of the costs and benefits of a nuclear ship project is completed, it will be possible to consider how best to respond to the interest of hon. Members."—[OFFICIAL REPORT, 26th January, 1970; Vol. 794, c. 227–8.]
  To this rather cryptic answer I would merely say that much more is at stake than the interest of a few hon. Members. I have no wish to sound melodramatic, or to exaggerate the gravity of the situation facing Cammell Laird in the 'seventies, but I believe that the future of shipbuilding itself along the Mersey cannot now be taken for granted indefinitely. In recent weeks there has been a spate of speculation in the Press following the disclosure of substantial losses on the shipbuilding activities of the firm. In The Times on 6th February appeared a detailed account of the financial tribulations caused by
  "serious disruption of the shipyard production programme … along with difficulties in delivery of materials from sub-contractors…"
  The article went on:
  "Cammell says that the problems were much more serious than anticipated. Plainly it had to undergo tough labour bargaining, and it comments somewhat elliptically that the changeover from the naval programme, after the loss of future Fleet submarine contracts, to merchant ship construction proved unexpectedly difficult."
  Unexpected or not, it seems clear that the loss of the vital submarine contract has cast a long shadow over Merseyside shipbuilding.
  Against this background of uncertainty. and with an unemployment percentage on Merseyside of 4·3 per cent.—which is the highest level since the Tory peaks of 1962–64—my hon. Friend must pardon my growing impatience with the sort of tantalising replies he gave me on 4th February and again yesterday. He informed me on the earlier occasion that the Ministry of Technology study was expected "shortly", whereas yesterday no reference was made to any cost-benefit study whatsoever.
  I hope that tonight is the night for hard news. But my constituency anxieties are not the only reason why I have sought to bring this matter before the House. My basic object is to gain some clarification about the Government's view of

  353
  marine nuclear propulsion at a time when major changes and advances in both super-tankers and container ships have radically transformed the economics of such an enterprise.
  The nuclear ship has obvious potential advantages over conventional oil-fired vessels, as the Padmore Committee of 1964 on Nuclear Power for Ship Propulsion fully recognised in principle. But its high capital costs will be offset only if vessels of very large installed shaft horsepower operating at high rates of utilisation can be introduced. Without a high rate of turn-round the nuclear ship cannot realise its optimum operating costs; in other words, a nuclear ship subject to fits and starts is as uneconomic as a nuclear power station subject to peaks and troughs in load factors.
  Similarly, a small vessel is unlikely to be worth considering, which is partly the reason for the Padmore Committee's conclusion that the time was not yet ripe for a nuclear ship. The committee had, in fact, taken as the effective upper limits of power and weight a mere 20,000 shaft horsepower ship reactor and 70,000 deadweight tons. But only last month we saw 200,000 ton super-tankers on the Mersey, and much larger monsters seem only a matter of time.
  Perhaps even more significantly, there has been a dramatic increase in shaft horsepower in container ships since 1965. The O.C.L. and A.C.T. vessels now in service have shaft horsepower in the range 30,000–35,000, and in a recent paper prepared by Messrs. Gaunt, Rouse and Wilkinson, of Vickers, a table was published showing a range of container ships now on order of between 60,000 and 120,000 shaft horsepower. These three authors had already, in October 1969, presented a design study for a nuclear-powered container ship, with parameters which included a limitation of power to 60,000 shaft horsepower and a service speed of 27 knots. It was planned to carry 1,800 containers, and would have been broadly comparable in speed and tonnage of cargo carried to the present generation of steam turbine and diesel container ships due to be delivered to O.C.L., Hamburg Amerika, Ben Line and Scanservice during 1971 and 1972.
  354
  The authors concluded:
  "The results gained from the economic comparison made between the conventional and the nuclear-powered vessel for this particular study were found to be most encouraging, and did further reinforce our long-held belief that the application of nuclear power to certain types of vessels over specified routes could be economically justified."
  More recently the authors have extended there design study to accommodate further itineraries, including the Panama Canal route for a global circumnavigation taking in Yokohama and Sydney. Further, in order to make meaningful economic comparisons between the nuclear and conventional vessels, a fleet of six nuclear-powered container ships was assumed to be operating on the specified itinerary, capable of transporting 4·9 million tons of containerised cargo a year. From this, a comparable conventional fleet could be calculated which proved to be one of seven vessels when using the 1575 container 27 knot vessel which it was calculated would have the same principal dimensions and displacement as the nuclear vessel.
  Time precludes my following through the detailed economic calculations based on the discounted cash flow technique which were then made of the two alternative fleets. Obviously many variables could not be costed precisely, notably the cost of nuclear fuel over the operating lifetime, assumed for discount purposes of over 21 years. But I presume that similar difficulties must face the Ministry of Technology forecasts, and in view of the uncertainties in the costing of, say, enriched uranium via the centrifuge process in the 'eighties, it is surely too much to expect that any long-term nuclear project will never involve a degree of risk.
  At any rate, the Vickers team calculates that only when discount rates in excess of 9 per cent. are reached does the conventional fleet of vessels show any advantage over the nuclear alternative. This rate rises to 11 per cent. if the assumption is made that future advances in nuclear fuel technology and fuel cell manufacturing techniques bring about a reduction of 7½ per cent. in existing nuclear fuel costs. As it says, such a discount level
  "would be considered, for most shipping ventures to be an extremely fair return on invested capital."
  This is not the time and place to enter these realms of the higher physics and

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  the flightier finance, but I gain the impression from the Vickers work and from the studies of Cammell Laird that we are at least very near the break even point in nuclear propulsion for the coming fleets of container ships. If this is so, I really cannot understand why the Government seem so coy about embarking on the feasibility studies and the prototype vessel which would have to be the prelude to any major British rôle in this development.
  I recognise that the Minsitry of Technology is hostile to the prestige extravaganza, and I welcome, as must any good member of the P.A.C., signs of financial rectitude in place of the blank cheque approach to the Concorde. But the Concorde lesson is not that advanced technological ventures must henceforth be shunned simply because there is an element of risk attached to them. Such timidity would have left the British shipbuilding industry still making coracles and dugouts.
  The real lessons of the Concorde which should be applied to any nuclear ship project are that no potentially costly and strange technologies should lack the discipline of periodic reviews and ceilings upon research expenditure, and that it is unwise to eliminate private enterprise and finance from such advanced and risky projects.
  In the case of a nuclear ship, I have seen numerous and probably highly speculative forecasts of cost, but the Vickers study proposed a figure of £12·8 million for each of the six nuclear container ships that it envisaged. The cost of a prototype ship is therefore likely to be in the range of £10 to £15 million, which means that the whole project is likely to cost little more than 1 per cent. of the total research and development which Britain and France will largely write off as a net loss on the Concorde. But, apart from this, the vessel will have an active life ahead of her following this expenditure, unlike the "Ark Royal".
  Three years ago, as my hon. Friend will recall, the Select Committee on Science and Technology heard Lord Penney argue that oil-fired propulsion would have a 10 to 20 per cent. economic advantage over a nuclear reactor. Lord Penney was not talking about the
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  present generation of container vessels of 60,000 shaft horsepower upwards which would benefit nuclear power owing to its smaller incremental costs with size. Nevertheless, even on his necessarily pessimistic forecasts, it would seem that the nuclear vessel, far from being a write-off as will the Concorde's research and development, will ply the high seas for many years at a cost only marginally more expensive than the conventional vessel.
  Since the conventional vessel will also cost money to build—one of comparable size would be in the range of £9 million to £10 million in all probability—I am simply arguing that investment in a nuclear prototype vessel, even on the more pessimistic forecasts of recent years, would cost the taxpayer far less than a mile of urban motorway in London.
  I think that we need to get these matters in some such perspective. We are one of the great martime nations of all time. and, with massive increases in world commerce, the scope for a major shipbuilding industry in the decades ahead seems evident.
  Of course, it may be said that we can afford to sit back and wait for the Russians, the Americans, the Germans and the Japanese to incur the costs of basic research in nuclear marine propulsion: let them iron out the bugs, for a change. But, in view of our work in reactor design and our world lead in so many of the peaceful uses of atomic energy, we would be unwise to appear to be opting out of a technology where we have accumulated substantial expertise through our Polaris and Fleet submarine work. It would be different if the costs seemed overwhelming, but I have tried to argue that recent work discounts such gloom, and I would hope that the Ministry of Technology's cost-benefit analysis takes into account the intangible as well as the tangible benefits of a merchant navy nuclear project.
  Even the announcement of such a project would bring an electrifying response among the shipyard workers of Barrow and Birkenhead, whose yards have contributed so much to British naval security over the years. The effect on morale may be difficult to quantify in the cost-benefit calculations, but it can make all the difference between an image of industrial decline and bloody-mindedness

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  and an image of sophisticated skills thrusting towards the future.
  This Government have been generous towards the development areas, with £50 million preferential assistance going to Merseyside in 1968–69. Also there are many exciting developments in the region, not least the development at Capenhurst of the world's first ultracentrifuge technology for the enrichment of uranium. Yet the shipbuilding workers feel bruised and bewildered, and the Government cannot avoid a large measure of responsibility for the way in which the naval nuclear rug was pulled from under their feet.
  It would be paradoxical if at a moment when a completely novel, yet potentially most exciting technology arrived in Capenhurst a much older industry on Merseyside should appear to be denied any opportunity to pioneer a similarly novel, yet potentially most exciting, nuclear technology. So I urge my hon. Friend to consider whether the time has now come, particularly as the economy is so manifestly on the mend, for Britain to take the road to maritime nuclear power for peaceful purposes. I recognise that this would need to be done in stages, and it may well be that such work would need to be shared between the two yards possessing experience in nuclear propulsion.
  The first stage is presumably to seek from both Vickers and Laird a major feasibility study of the concept. As Gaunt, Rouse and Wilkinson said recently:
  "At this point in time, uncertainty as to the values of cost for the nuclear aspects is inevitable for until a full design programme for these items has been carried out, a large degree of variation cannot be ruled out."
  They go on to speak of the need for a national research effort to reduce the current uncertainties to reasonable, accurate probabilities, and I assume that such work might embrace industry outside shipbuilding in the narrow sense.
  However, if we are to stop chasing each other round the mulberry bush for ever, someone somewhere has to focus all this research and industrial effort, and I should like to see the Government and the container consortia groups jointly finance the two shipbuilding yards to carry out the
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  necessary preparatory design work for a prototype vessel. Perhaps we can encourage or involve other European partners in such work. The Germans have recently shown interest in nuclear propulsion, as in the "Otto Hahn", and there is, after all, the precedent of the centrifuge collaboration between three States, all of which have a notable shipbuilding record. But, whatever the response from other countries, and even if it were eventually decided to build an exclusively British nuclear ship at Barrow rather than at Birkenhead, I would still feel as strongly that this is well worth pursuing for the sake of Britain in the 'eighties.
  For us to spoil the ship for a ha'porth of tar, in a manner of speaking, would be to risk missing the boat for ever. In terms of technological spin-off, or, say, of benign nuclear fall-out, there is a strong argument for being up among the leaders in research and development, and I suggest that the potential rewards for the balance of payments ten years and more from now would alone justify the scale of risk which now seems to be implicit in such a venture.
  I end by quoting the optimistic, if tentative, conclusion of the Vickers team. It states:
  "It is clear from the results given in this paper, that provided the actual cost figures for reactors and for nuclear fuel are eventually established to be within certain favourable ranges of possible values, then nuclear power is more than competitive in the type of ship we have described, when operating in the given itinerary."
  I simply remind my hon. Friend that he who hesitates is lost.
  11.18 p.m.
  The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Ernest A. Davies): I am grateful to my hon. Friend the Member for Bebington (Mr. Brooks) for bringing forward the question of the nuclear-powered merchant ship for debate this evening, because a number of hon. Members have asked me a lot of questions on this subject recently, and it gives me an opportunity to reply in a fuller manner than is possible at Question Time to a number of these important points.
  My hon. Friend has, of course, spoken in very strong terms, as one would expect of him, of the Government's decision to withdraw the work on the nuclear

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  submarines from Cammell Laird. This, I know, springs from his very deep concern for employment prospects amongst his constituents and for the prosperity of the Wirral in general. The House and the Government are very much aware of my hon. Friend's very deep feeling on the matter. No one could have made more determined representations to the Government on the subject than he has, but I am sure that he would not expect me to go into the question of the submarines, as that is not a matter for my Department.
  My hon. Friend paid tribute to the Government's general policy of support for the region, and, in particular, the support for additional industrial development of an area which has known a lot of difficulty in the past. This is, and continues to be, a massive programme, and I am grateful to my hon. Friend for bringing it to our attention now—
  Mr. Speaker: Order. It will help the reporters if the hon. Member speaks up.
  Dr. Davies: I now turn to the main question of the nuclear ship. My hon. Friend would not expect me, in the course of this debate, to go in for a detailed exchange on all the economic questions or on all the detailed figures, some of which he has quoted from a paper. But I should point out that the Government's involvement in the nuclear ship project has been going on for a number of years.
  As my hon. Friend remarked, we had the Padmore Report in 1964, and the Select Committee on Science and Technology reported on an investigation that it carried out in 1966–67. That report contained evidence taken from Lord Penney, who was at that time the Chairman of the Atomic Energy Authority. Lord Penney suggested that the oil-fired ship was still considerably in advance, in economic terms, of the nuclear-powered ship, but he went on to remark that perhaps the matter ought to be looked at in two or three years. That second review has precipitated the debate tonight.
  I am obliged to recognise that over this period there have been changes in ship design. Super-tankers of up to 200,000 tons deadweight are now sailing the oceans. As my hon. Friend has
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  pointed out, larger ones may be forthcoming in the not too distant future.
  We have seen a considerable growth in the use of the container ship and the container as a general means of transportation. Obviously, if the container ship is to be a profitable and useful vessel it must have a quick turn round and a higher speed than would normally be expected of, say, a conventional merchant ship now or in past years. These two matters—the massive size of the tanker and the demand for greater speed from the container ship—call for a more powerful propulsive unit. The figures being talked about are anything between 60 and 70 megawatts of output. I use the electrical term because this gives us a direct comparison with the scale of power output from a nuclear reactor in a power station. This is where we have most experience of these units.
  In the face of developments of this kind, there seemed to be a case for a further look at the prospects for nuclear propulsion. This has also been prompted by further developments which have taken place abroad. In the 'sixties Germany built a nuclear-powered ship, the "Otto Hahn". In Japan one is being built now. But I should point out that these two ships were or are being built by nations which have no experience and have no capacity for building naval vessels with nuclear propulsion units.
  If we look elsewhere abroad, in the 'fifties both the U.S.A. and the U.S.S.R. built nuclear-powered ships. Both those countries have a capability for building naval ships with nuclear-powered units.
  Britain and France have the capacity for building, and, indeed, have built, naval ships with nuclear-powered units, but have not gone on to build civil craft. There is, therefore, a distinction between those with no naval experience and those with. But it is important to recognise that those countries which have built merchant ships with nuclear-powered units have built them knowing that they would not be economic in that, if used in the ordinary commercial sense, that they would not yield a profit.
  It is clear that the latest building in the 'sixties is specifically to get experience not just of a merchant ship but also of nuclear-powered construction. It is interesting to note that the two countries

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  that were first with nuclear-powered merchant ships have not gone on into any further programme of civil building. This shows how important it is to look not only at the technical problems concerned with design and construction but at the other aspects to which I shall come in a moment.
  It has been suggested that because of this progress in other countries we might be falling behind. I do not wish in any way to suggest that we should be other than always on the alert for the opportunity to keep our industry in the forefront of sensible development. This is essential. We are a trading nation, and we have to trade with sophisticated products. I hope, therefore, that what I am about to say will not suggest any sense of complacency; on the contrary.
  As we have such a tremendous amount of experience in the use of nuclear power for civil purposes, such as the generation of electricity, we have a tremendous expertise in nuclear matters. We also have a tremendous expertise in shipbuilding. In purely technical terms, the designing and creating of a reactor and putting it into a suitable ship to sail across the oceans is within our capacity, and, therefore, in that sense we need not think that because there is a merchant ship sailing the seas but not under a British flag we are falling behind in the technological respect.
  In view of the changing circumstances to which I have referred, industry and Government must always be on the alert, but the real point at issue is whether a nuclear-powered ship can be built and operated on a normal commercial basis, and this has to be taken account of over and above the technical considerations of design and construction. It is necessary to consider the entire economics of operation.
  It was against that background that my right hon. Friend the Minister of Technology put in hand a new study by the Ministry. This was announced to the House on 15th April, 1969, and in reply to Questions and promises were made that some of the results of the study might in due course be made known. This study has been undertaken in considerable depth, and has been in progress ever since my right hon. Friend made his statement. If it is to be an adequate, deep, and worthwhile study,
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  it must take time, and it means consulting the interests and authorities concerned.
  My hon. Friend referred to papers by Gaunt, Rouse, and Wilkinson. These papers are known to, and have been studied by, the study group. It has also looked into evidence from many quarters, both at home and abroad, including evidence from two British shipbuilders who have gone into this subject recently, and, naturally, there have been consultations with the Atomic Energy Authority.
  The first task of the study group was to consider whether, in the present and foreseeable conditions, there was an economic or commercial advantage for the ship operator. This is the vital question, and, quite rightly, the first one that the study group had to consider. Its second task was to estimate what the demand might be for the kind of ship in which nuclear propulsion might be in competition with the more convential power unit. Its third task was to consider what part the Government ought to play in any nuclear-powered ship project and what the cost to public funds might be. Its fourth task was to assess the benefits to the country's economy if the Government embarked on such a programme.
  In carrying out its task the study group has given due weight to many factors. These include changing technical factors such as the increase in the size of tankers and the demand for faster container ships. Individual ships and the fleet concept have equally been studied. The various sea routes acress which a ship might reasonably be expected to operate have also been considered. In addition, more is now known about the cost of marine oil fuels than was known a little while ago, and also about their likely trends in future.
  From this point, I hope that my hon. Friend will accept that this matter has been gone into very thoroughly. I have not listed all the factors which are taken into account but I have given examples in reply to some of the points put. It is because we have gone into this matter so deeply that the study has continued up till now. Shortly, as I have told the House, the results of the study will be placed before Ministers and will then be

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  considered by them. We shall then consider how best to make them known to the House since this interest has been shown.
  I am glad to note that my hon. Friend shares the Ministry's opposition to what he described as technological extravaganza and that, as a member of the Public Accounts Committee, he accepts the need for financial discipline, which is essential in any project, even if the costs might appear marginal when compared with some other, larger, project. He has called for a major feasibility study of the nuclear ship project. I hope he will accept that the study I have just outlined is pretty well in line with his request.
  I am also glad to notice that my hon. Friend thinks that ship owners and ship
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  operators should be brought into this matter. It is so often argued purely in terms of shipbuilding, whereas, of course, the heart of the matter lies in successful ship operation. I can tell him that ship owners have been consulted.
  I finish on the note that if my hon. Friend accepts the need for some kind of financial discipline, he will recognise that there is some merit in the Ministry's view that one such method would be the prospect of orders from the ship owners.
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-eight minutes to Twelve o'clock.

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

BRITISH STANDARD TIME EXPERIMENT
LORD O'NEILL OF THE MAINE: 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 now consider, after two years experimentation, that Greenwich Mean Time should be restored for the three darkest months of the year.]
LORD BESWICK: My Lords, the decision whether or not Greenwich Mean Time should be restored will depend upon the results of a comprehensive review of the effects of British Standard Time during the winters of 1968–69 and 1969–70. The review, which is being undertaken during the first half of this year, will include a comparative analysis of accident statistics, a social survey of the views of the general public, and special consideration of the effects of British Standard Time on those sections of the community which are most affected by early morning darkness.
LORD O'NEILL OF THE MAINE: My Lords, while thanking the noble Lord for that reply, may I ask him whether he is aware—and he obviously is, from his last remark—that this new system affects the North and the West very much worse than it does the South-East, where of course, of necessity, our legislators live? May I also ask the noble Lord whether he is aware what pleasure it would give to the Irish, North and South, on St. Patrick's Day if he could hold out some hope that next winter will be the last one in which we shall be inflicted with this penalty?
LORD BESWICK: My Lords, I am aware that different parts of the country
992
are affected differently by the present arrangement. I am also aware that the majority of both Houses of Parliament voted for a three years' experiment, which we are now undergoing. So far as the position in Northern Ireland is concerned, much as I should like to give them glad news on this day I can only say that the decision as to whether or not the Act is repealed lies with the Northern Ireland Parliament.

KIDNEY MACHINES: SUPPLY AND PERSONNEL
2.38 p.m.
LORD AUCKLAND: 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: —

(1) how many kidney machines are in current use in hospitals in Great Britain;

(2) how many persons are on waiting lists for treatment by these machines;

(3) how many technicians are available to operate these machines; and

(4) what plans Her Majesty's Government have in mind to increase the supply both of machines and trained personnel to operate them.]

THE MINISTER OF STATE, DEPARTMENT OF HEALTH AND SOCIAL SECURITY (BARONESS SEROTA): My Lords, in January of this year there were 278 equipped hospital places for intermittent haemodialysis, treating 509 patients. In addition there were 378 installation in patients' homes. The numbers awaiting this form of treatment are not known centrally. According to the latest available figures, the medical staff in post was 147, and the non-medical 445. Further development of kidney failure services, both trans-plants and dialysis, within the National Health Service is a matter in the first instance for the hospital authorities but is one in which my right honourable friend takes very close interest.
LORD AUCKLAND: My Lords, while sincerely thanking the noble Baroness for that reply, may I ask her whether she

993
is aware that these figures will give limited satisfaction? In view of the large amount of regional development which is taking place involving moving people out of London, is there not a strong case for making more kidney machines and technicians available in the regional hospitals? Is the noble Baroness aware that if this were done it would assist schoolchildren to attend school more often, and those in employment who have to use these machines would be able to work more easily and more satisfactorily?
BARONESS SEROTA: Noble Lords will be aware how recent a development are these new forms of the treatment of chronic renal failure, and I think that the only way I can answer the noble Lord's supplementary question about the national spread of these facilities is by giving the House the figures of units which now exist. In 1965 the only dialysis facilities that existed were in a handful of small research units; on January 1 of this year there were 31 major units in England, six in Scotland, and one in Wales. Two units have commenced work since then; a further five are being extended and three more are planned. I can assure the noble Lord that as a result of these developments the service is spreading throughout the country.
BARONESS BROOKE OF YSTRADFELLTE: My Lords, could the noble Baroness tell us how many of these kidney machines are not being used through lack of trained manpower or womanpower to look after them?
BARONESS SEROTA: My Lords, I can-not give the noble Baroness exact figures, but of course the machines are not operated by special operators. The technicians are required for the maintenance of the machines. The units themselves are operated by nursing staff under the direction of the medical staff in our hospitals.
BARONESS BROOKE OF YSTRADFELLTE: My Lords, will the noble Baroness be kind enough to tell us how much lack of trained technical skill there is for the maintenance of these machines?
BARONESS SEROTA: Not for the country as a whole, my Lords, but if the
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noble Baroness is anxious to have the detailed figures I will get them for her.
LORD SEGAL: My Lords, is my noble friend aware that the figures she has given of the rapid increase in the number of these machines and their more extensive use will be received with very great gratification in all parts of the country?
BARONESS SEROTA: My Lords, I am grateful for the comment that my noble friend has made, and indeed for this opportunity of thanking all those who have been concerned with developing these services in such a short period, knowing how much they do for those who are suffering from this particular kind of chronic disease.

FORENSIC PATHOLOGY AND CRIME INVESTIGATION
LORD DERWENT: 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 have any policy for strengthening the Forensic Pathology Service.]
LORD BESWICK: My Lords, although Her Majesty's Government have no statutory duty to provide such a service, the Home Secretary has for many years assumed responsibility for ensuring, so far as possible, that every police force is able to call upon the services of an experienced pathologist to assist in the investigation of murder and other serious crimes against the person. He does this by appointing part-time Home Office pathologists. Some difficulty has been found in recent years in obtaining re-placements; but in general the arrangements are working well. My right honourable friend hopes that the Report of the Departmental Committee on Death Certification and Coroners later this year, will provide guidance leading to improvements.
LORD DERWENT: My Lords, am I right in assuming that the Committee to which the noble Lord referred is the Brodrick Committee, which was set up six years ago and which, so far as the public is aware, has made no report so far? Also, has the noble Lord seen various articles and comments in the

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Press, by Dr. Camps and other pathologists, saying that there is a grave short-age of doctors who are trained in this kind of work and that it is quite likely that a good many murders nowadays go undetected because the pathologists who have to be brought in to help the police are not trained in this work?
LORD BESWICK: My Lords, the Committee to which I referred is the Brodrick Committee, which was appointed in 1965. It has, I agree, been sitting for some time. I hope that its report may be available within the next month or two. One would hope, too, that the thoroughness with which the Committee has gone into this problem will, in the end, mean that the delay has been worth while. I have seen some of the reports to which the noble Lord referred, particularly the interview with Professor Camps. If I may say so, I think that the language in which he couched his comments was in some respects rather more stimulating than helpful. But the difficulty ought not to be exaggerated. There is only one area of the country, the South-West of England, where there is a real difficulty; in other parts of the country the present system is working well.

GIBRALTAR DEVELOPMENT: AID FROM BRITAIN
LORD MERRIVALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what technical assistance they have committed themselves to provide in Gibraltar:

(a) for about a further 750 housing units;

(b) for the school sports centre, additional medical facilities and port development;

(c) towards appropriate schemes for tourist development;

and what has been provided to date.]
THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD SHEPHERD): My Lords, we expect to appoint consultants very shortly to prepare detailed housing plans and to advise generally on other construc-
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tion works proposed in the Gibraltar Development Programme, including additional medical facilities and the sports centre. Consultants' reports on both port and tourist development have been made available to the Gibraltar Government and we have provided a Director of Tourism.
LORD MERRIVALE: My Lords, I should like to thank the Minister for his reply. I am not quite sure how long "very shortly" means in the Government's mind. May I ask the Minister two questions? Will he not agree that the requested expert advice should promptly be made available, for any delay in this technical assistance further postpones the date when the £4 million development programme can start being implemented? Secondly, can the Minister state what progress has been made regarding appropriate schemes for tourist development? I am thinking particularly of the Parcar project delays, about which I understand the Chief Minister in Gibraltar has spoken on a number of occasions.
LORD SHEPHERD: My Lords, as regards the Parcar scheme and other tourist development, the Financial Secretary from Gibraltar is now in London and we are having conversations with him. I do not wish to go any further than that, except to say that the building development of the Rock Hotel and two other hotels is now proceeding since labour is available. There has been no delay in providing this technical assistance to Gibraltar. On the question of what we mean by "very shortly" in regard to the appointment of consultants, I really mean shortly—I hope within the next month.
LORD MERRIVALE: My Lords, I thank the Minister for that reply. In effect, may I take it that within the coming month these necessary consultants will be available in Gibraltar, particularly with regard to the 750 housing units project?
LORD SHEPHERD: My Lords, I should not wish to say when they will be in Gibraltar, but when they have been appointed, which, as I said, I hope will be shortly, then matters should proceed apace.
LORD MERRIVALE: Within the month?
LORD SHEPHERD LORD SHEPHERD indicated assent.
LORD SORENSEN: My Lords, arising out of that question, can my noble friend say whether any comprehensive survey has yet been made of the need for domestic housing now and in the next few years in Gibraltar?
LORD SHEPHERD: My Lord, may I remind my noble friend that as a consequence of my talks with the Gibraltar Government we undertook, in December, that we should undertake a housing programme of some 750 houses in the next three years. It is for this that the consultants who will shortly be appointed will draw up a scheme.
THE MARQUESS OF SALISBURY: My Lords, may I ask the noble Lord whether we can have an assurance that the Government regard this matter as one of very real urgency?
LORD SHEPHERD: Without the slightest shadow of doubt, my Lords.

GOVERNMENT STATEMENT
LORD BESWICK: My Lords, at a convenient moment after half-past three, my noble friend Lady Phillips will be making a statement on the reorganisation of local government in the counties of Glamorgan and Monmouthshire, and on proposals for the reorganisation of the health service in Wales.
PORT OF LONDON BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
HOOKER ESTATES LIMITED (TRANSFER OF REGISTRATION) BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

BRITAIN AND THE EUROPEAN COMMUNITIES
2.50 p.m.
THE LORD PRIVY SEAL (LORD SHACKLETON)THE LORD PRIVY SEAL (LORD SHACKLETON) rose to move, That this House takes note of the White Paper, Britain and the European Communities: An Economic Assessment (Cmnd. 4289). The noble Lord said: My Lords, in rising to move the Motion that stands in my name on the Order Paper. I feel that it is important to emphasise at the outset that Her Majesty's Government's policy remains the same as it was when we applied for membership of the Communities in May, 1967. My right honourable friend the Prime Minister made this clear on February 10 when, to quote his words, he said:
"There are no options open at all in respect of the decision to open negotiations and to approach them in the determination that they should succeed if the price is acceptable ".
We are ready for negotiations as soon as our negotiating partners are ready to meet us; and, fortunately, it now seems clear that this will be by July at the latest.
My Lords, in my view this will not come a moment too soon, and it is encouraging that the Opposition leaders in another place did not dissent in the recent debate there from the view that this is the right time for negotiations. Indeed, it is in many respects a better time than ever before because of Britain's greatly improved economic position, which makes it clear, even to some who were previously sceptical, that we should be a strong and desirable partner in the enlarged Communities. The fact that we can now look forward confidently to the early opening of negotiations of course reflects a new situation, and a very strikingly new situation. Prospects for progress in Europe are to-day greater than they have been at any time since our application. All the Governments of the Six have made it plain that they regard enlargement and British membership as desirable—and, of course, so have the Commission. The way in which they have been conducting their business lately shows that their intention to achieve practical results is serious.
I have said that our policy remains the same and that the publication of the

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White Paper does not affect it. I should like to stress that the White Paper is not a policy document but an information document, just as the other White Papers, published in 1967, on the Common Agricultural Policy and on Legal and Constitutional Implications of our Membership, were also information documents. The Government have always taken the view that the British public have a right to be informed of these matters, and that is why, in response to public demand and the fact that there have been a number of significant developments in the Community and here, including the devaluation of sterling, we felt it right to set out again what the economic consequences might be. Indeed, I believe we had no option in fact but to proceed as we have done.
Of course, the White Paper is not a full response to the questions that have been asked about the economic consequences of entry into the Communities. A full response is impossible. It covers only the economic costs, and these only in the short teen. These limitations are very clearly stated in the Introduction to the White Paper, but as the White Paper itself shows it is quite impracticable to make any one really reliable and quantified assessment of even the short-term effects. Some people have complained about this, but none, so far as I know, has shown how it could be done. My Lords, it is clear, as the White Paper says, that:
"Any assessment of the effects of adopting the Common Agricultural Policy must depend on a whole range of assessments and be subject to a substantial range of possibilities ".
But this is true not only of the Common Agricultural Policy but of almost all other aspects of Community membership.
Over and above this central uncertainty there are two main problems. First, we cannot make reliable estimates of Britain's position in the late 1970s if we are not a member; but it is this position and not our present one whch, in the end, must be the real criterion for comparison. Secondly, the White Paper deliberately takes no account at all of changes which might be agreed upon in negotiations. I have already reminded the House of the position which we have adopted as the basis for negotiations, and that was made public in the speech by the former Foreign
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Secretary in July, 1967, which was published as Cmnd. 3345. But noble Lords will understand how damaging it could be if we attempted to forecast the outcome of the negotiations or provided a basis for conclusions to be drawn about the detailed terms which this country might seek. But quite apart from these major uncertainties it is inevitable that calculations of this kind involve a variety of separate and interrelated assumptions even when strictly economic criteria can be used—which, incidentally, they rarely can be.
The magnitude of the sums involved means that quite small variations in assumptions can lead to a huge range of answers. As I point out again—it has been pointed out several times already— a 1 per cent. error in forecasting the balance of overseas trade in Britain alone next year, if applied to both exports and imports, would mean a difference of over £150 million. But the White Paper attempts to look much further ahead and over a much more complicated field even than that with which I have been dealing. It is of course possible, as some of our more determined critics have done, to adopt a grossly simplified assumption about our future and that of the Community, and thereby arrive at the precise figure which they themselves hope to find. It is possible, but unrealistic and highly misleading. This White Paper covers a wider range, and attempts to do so in greater detail than the estimates made in 1967. In the highly important agricultural field, there have been two main changes since 1967. First, there is now a higher level of expenditure by the Communities' Agricultural Fund; and, secondly, devaluation has raised Com-munity prices in sterling terms.
The White Paper does not attempt to quantify the dynamic effects of membership, although I shall be talking about these in a little while. The C.B.I., in their admirable report, Britain in Europe, published last December, tried to quantify some of this by assuming that the United Kingdom can obtain a substantial increase in its share of the Community market; and it is clearly right that those who are engaged in industry and trade, and who will have to carry the burden and take the responsibility of day-to-day decisions which entry into the Communities would entail, should attempt such an

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assessment. But although these independent studies have employed different methods and adopted different assumptions, noble Lords will be aware that their overall conclusions are not dissimilar.
I should like to say something about the food prices since the sections in the White Paper dealing with these have perhaps attracted more public attention than any other. This is perfectly understandable. But, of all the tables in the White Paper, probably the one which has been most misused and most misinterpreted is Table 7, which sets out some of the retail prices of the main foodstuffs in the countries of the Six and in Britain. Those of our critics who feel that their arguments need some horrific backing have presented this table as proof positive that British food prices will leap overnight to the highest levels visible in that table. It is nothing of the kind. Table 7 certainly shows that the average price in the E.E.C. countries of the foodstuffs concerned is higher than in Britain, but, equally, it illustrates the extraordinarily wide range of retail food prices within the present Community.
My Lords, what do we conclude from this? We must conclude that there are at present no uniform retail food prices in the Six and that food prices in this country, if we join the Community, will be determined not only by the Common Agricultural Policy but also by the efficiency and adaptability of our processing and distributive systems—a field in which we should not be nervous of competition.
Again, the White Paper figure of an increase of from 18 to 26 per cent. in food prices has received selective and indeed misleading treatment. There are two important points that I should like to make here. First, the range we have given, of 18 to 26 per cent., represents our assessment of the maximum range within which the increase in retail food prices is likely to lie. It is based, as the White Paper makes clear, on the assumption that present price differentials at the wholesale stage would apply if we stayed out of the E.E.C. and therefore would have to be closed if we joined. But in fact the pressure of surpluses within the Community which has produced proposals by the Commission to cut some prices—of butter, for example;
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and of wheat and of sugar—makes it quite possible that this gap will in any event narrow significantly. Prices in the United Kingdom, if we were to remain outside the community, might rise relatively to those within it, thus reducing the gap still further.
The second important point is that we are not talking here of an increase which would burst upon us overnight. The rise would be spread over a period of years, with the full effect being felt only after that transitional period. Let us therefore be quite clear about what the White Paper actually says. It certainly forecasts an increase in overall retail food prices if we join the Community. This, in isolation, obviously is rather unattractive; no one wants to pay more for food than he has to. But what must be understood is that food prices, past, present or future, do not in themselves give anything approaching a fair idea of the standard of living of the community concerned, or even of the real cost of food to the consumer. In short, they should not be taken in isolation.
I have already said that food prices are obviously important. But there are some other important figures which we have to take into account. I should like to look at these other figures, both our own and those of the present Community. The most important figure of all is that of wages. Over the years 1960 to 1968, the average hourly earnings in this country increased by 61·8 per cent. The Community figures are as follows: Germany, 82·3 per cent.; France, 79·8; Italy, 87·9; Netherlands, 106·6; Belgium, 74·3, and Luxembourg, 63. These are significant figures, and against a background of in-crease in consumer prices in the Community below, or no higher than, our own (in only one did the increase exceed our own over the years 1961 to 1968) their wages increased a very considerable amount more than ours did in comparison to the average run of retail prices which, both here and in the Community, was something of the order of 30 per cent.
I do not suggest that our own performance was a poor one: this country is substantially better off than it was eight years ago. But it is equally clear that the Community countries are becoming better off a great deal faster than we ourselves are. The prospects are better in terms of current trends. This is not

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only a matter of their wages; it is reflected also in the level of their social services. This adds up quite simply to a higher standard of living and a faster increase in that standard. That is the context in which we must look at the likely increase in food prices—an item of expenditure, incidentally, which accounts for a declining proportion of individual expenditure as incomes rise in an economically developed country. Ten years ago the proportion in Britain was 30 per cent.; it has since declined to about 25 per cent.
My Lords, the White Paper makes no attempt to evaluate the dynamic effects of entry. It makes a fundamental distinction between impact and dynamic effects. The impact changes relate to given condi-tions—for example, supply and demand; reactions to tariff changes and higher prices. In these cases projections and assumptions are necessary because we are dealing with a future situation; but information exists, however imperfect, on which to base estimates. The dynamic effects, however, consist in changes in the underlying conditions of supply and demand resulting from rationalisation, large-scale investment and more rapid technological development arising from membership of a wider and faster growing market. The fact that we have not been able to evaluate the dynamic effects does not mean that they will be less real than the effects which we have tried to quantify.
There is no doubt that the benefits of joining the European Communities— benefits for our economic structure, our growth and our competitive power— could be much more substantial and significant than the short-term disadvantages, the impact effects, provided that fair terms can be obtained in negotiations and that our industry responds to the opportunities offered to it. I should mention at this point that the word "impact" give a rather misleading impression, because almost all the costs of joining, as I have explained in the case of the Common Agricultural Policy, and as all members of the present Community recognise, will be spread over a substantial period of years.
I should like now briefly to say something about the opportunities for dynamic growth which the Community affords us.
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So far as trade is concerned, the last ten years have shown that the markets of Western Europe, and more particularly of the Community countries, are of crucial importance to this country. Our trade— and we know that this country trades to live—with the Community countries has shown the most rapid increase of any of our trading sectors, while the proportion of our trade with the Commonwealth has very considerably declined. The Community is a market of vital importance to us and one, moreover, with a high marginal propensity to import; greater, in fact, than the United States market and with the greatest potential for future growth. This potential is illustrated by the fact that although the E.E.C. has long been our fastest growing market and our trade with Community countries has multiplied by two and a half times, intra-Community trade has multiplied by four times.
While on this question of trade I should like to make clear that we are not as some have tended to suggest, faced here with a choice between EFTA and the European Community. Our membership of the Community will lead to other EFTA countries joining or seeking arrangements with the Community. It will be a question of adding one market to the other, not of choosing between the two. I do not want to make too much of the effects, favourable and adverse, of tariff changes. In recent years the average level of tariff, following the Kennedy Round, has been quite low, and the scope for further reduction is limited. Of much greater importance to us is the need to create, as the C.B.I. Report so clearly shows, a harmonised environment in which industry can operate effectively on a European scale and in the setting of an enlarged Community throughout which uniform legal, fiscal and financial regulations will apply. My Lords, this is a theme on which one could talk at great length and I do not doubt that a number of noble Lords will refer to it; in particular my noble friend Lord Brown, the Minister of State, Board of Trade, will have more to say about it to-morrow.
I should like now to consider the question which I have raised at various points, about what would be the effect on this country of staying out of the Community. I have, of course, no doubt about Britain's ability to survive, and

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even to prosper, outside the Community. Our people are always capable of responding to challenge, and during the past twelve months we have shown to the world our capacity for economic discipline and recovery. But our decision to remain outside the Community would not mean that the rest of the world would stand still. For example, we could not expect that Commonwealth preferences would remain as they are to-day. The Community has already begun to act as a magnet of economic attraction to some Commonwealth and to many non-Commonwealth countries, and the system of trade preferences is already being eroded. Of course, our trade with the Common-wealth and the rest of the outside world will remain of vital importance, but we should note that the Community has, in recent years, been more successful in trading with the outside world, including the Commonwealth, than we have; and I see no reason why the British economy, operating from a wider and more dynamic base, should not preserve and expand Commonwealth trade.
I have said that the rest of the world would not stand still, and Community Europe would not stand still either. The Communities are definitely on the move and the Hague Communiqué has shown the range of their ambitions. They have expressed their serious intention to work for economic union—for example, by the harmonisation of company law and fiscal arrangements—and we must expect far-reaching moves in the field of monetary integration. Nor do I expect their actions to be limited to furthering their own prosperity. The Prime Minister and the Leader of the Opposition have made two very notable speeches. I think that if noble Lords have not read those speeches, they should do so. Both rejected the charge that the European Communities were likely to develop on an inward-looking basis and they paid tribute to the remarkable record of Community countries in the fostering of aid to a large part of the developing world.
Britain would have its own great contribution to make in all these fields, and, to my mind, that makes it all the more important that we should take advantage of the opportunities offered by membership to play a full part in shaping the integrated Europe which the Communities are determined to construct, and which
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they will go on to construct even if we do not join. Nor should we underestimate their determination to make progress in the political sphere. Indeed, Her Majesty's Government have always regarded the political aspects as decisive. The Prime Minister said in another place, in May, 1967, when he announced the Government's intention to apply for membership:
"…whatever the economic arguments, the House will realise that, as I have repeatedly made clear, the Government's purpose derives, above all, from our recognition that Europe is now faced with the opportunity of a great move forward in political unity and that we can—and indeed must—play our full part in it."—[OFFICIAL REPORT, Commons, 2/5/67; col. 313–4.]
My Lords, it would be contrary to the whole weight of history of this island to concentrate just on internal affairs. It would also be contrary to our national character to be satisfied with expressing opinions about the great problems of the world in the knowledge that we can help less and less with their practical solution. No doubt we can all interpret history to suit our own ideas, but if there is one recurrent theme it is the story of missed opportunities for wider associations and co-operation between communities and States.
Many noble Lords, those who followed classical studies in their youth, will remember the tragedy of the Greek cities, which came together, as have other communities and nations, in the face of an aggressor and then, when the threat was removed, fell apart and paid the price of disunity. To-day, my Lords, we are faced, not with a threat of that kind, but with an opportunity. Something more than conventional alliances and co-operation is required if the momentum towards greater unity is to be maintained, and the Communities have shown us the way. There is, of course, no automatic obligation to any political federation or any particular kind of political unity in adhering to the Treaty of Rome. But many of us—I certainly do—feel that there is a case for developing institutions towards political unity in Europe. We believe that geography, history, the emergence of the super-Powers, trends in world trade and in technology, indicate that our common interest is increasingly with our neighbours in Europe. As a member of the Community we can shape the definition of that Community. We

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can play a leading part in Europe which can, in turn, play a leading and constructive part in the world as European countries have done since history began to be recorded. My Lords, I beg to move.
Moved, That this House takes note of the White Paper, Britain and the Euroean Communities; An Economic Assessment (Cmnd. 4289).—(Lord Shackleton.)
LORD BARNBY: Before the noble Lord sits down—
SEVERAL NOBLE LORDS: Order!
LORD BARNBY: My Lords, could the noble Lord, the Leader of the House, give some interpretation of his sentence about complete economic and financial integration? Does that include a common unit; and also, if so, how long is is contemplated that that would take to evolve?
3.20 p.m.
EARL JELLICOE: My Lords, as I seem, according to the Daily Express, to be among the minority of 19 per cent. in this country at the present time, I feel that I should straightaway declare myself. I have for two decades or so believed, and believed with passion, that perhaps the greatest challenge and the greatest opportunity facing our country in the post-war world was to play a leading part in the creation of a more united Europe. I well remember my frustration twenty years ago at what I held to be the lack of imagination and insight of my elders and betters when, as a young diplomat in Washington, I heard of our failure to seize the opportunity presented by the Schuman Plan. I recall, in Brussels, still as a youngish diplomat our failure to accept what Europe was then, in the late 'forties and early 'fifties offering us, and offering us on a plate—namely, the leader-ship in creating a more united Western Europe. That failure, if it was a failure, was a failure of imagination and insight not only of officials but above all on the part of our two great historic political Parties.
That is why I so warmly welcome the conversion of these two great Parties— and it was a pity, I think, looking back that that conversion was not simultaneous —to the belief that, provided the terms were acceptable, it was in the interests
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of Britain, of Europe and indeed of the world that Britain should enter the European Economic Community as a full member. I believed in the early 'sixties, when our application was first made, as I believed in 1967, when it was renewed, that in the light of all the great post-war changes that we had seen, this was in fact the right path for our country to seek to tread in the changed circum-stances of the time. I still hold to this belief and do so for very much the same reasons given by my noble friend Lord Carrington in a notable speech last autumn on the humble Address.
In economic terms our industry needs the wider opportunities which only a great internal market—in this case a market of up to 300 million people—can provide. In terms of technology, neither Britain nor Europe will be able over the long term to begin to keep pace with the United States and indeed with the Soviet Union unless we can together achieve a far higher degree of integration. It is clear, in any event, that this is the era of wider economic groupings, and there is no economic group, in my view, into which this country can really fit which can serve the economic interests of our country as can the Community of the Six, if we can but find the right key to the door and if the guardians of that Community are prepared to unlock it.
By the same token, I should wish to identify myself with the view just now expressed by the noble Lord the Leader of the House that the case for our entry into the Common Market is as compel-ling, other things being equal, on political as it is on economic grounds. I should like to revert briefly to this subject in conclusion. For that reason I would myself on reflection have wished that this Motion, which we are discussing over the next two days, had been cast rather more widely. On reflection I think that it would have been more helpful if, in-stead of running over much the same ground as was covered in the two days of very full debate in another place only two or three weeks ago, we had been able to address ourselves not so much to this specific White Paper but to some of the more general considerations which we should have in mind in our stance towards Europe. However, it is the White Paper to which this Motion is addressed and it is to the White Paper I now wish to turn.

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The difficulty which all of us hitherto have faced was that while it seemed possible to quantify the shorter-term disadvantages to Britain's economy of joining the Common Market, it was totally impossible to quantify the no less certain but much more intangible longer-term advantages. Some of us, perhaps rather naively, may have expected that the White Paper would have been able to throw some real light upon the more tangible balance of advantage. But, that of course, is far from the case. In fact, far from being able to be more specific about the longer-term advantages, the authors of the White Paper have honestly confessed that it is quite beyond their capacity to make even an approximate estimate of the shorter-term costs. I must frankly confess that in many respects I think the White Paper's treatment of this whole subject matter, honest and above board though it doubtless is, compares pretty unfavourably with the admirable report of the C.B.I. to which the noble Lord referred. The C.B.I. report is a more convincing document, a deeper document, particularly because it makes clear the assumptions on which many of its estimates are based. That is not clear in the White Paper itself.
Be that as it may, we are confronted in the White Paper with an estimate of the adverse impact on our balance of payments of joining the Common Market, ranging from the low figure of £100 million per annum up to £1,100 million. The range is so wide—indeed, it is so absurdly wide—that one is inclined to throw up one's hands in despair. Given this spread, we are all bound to paint with a pretty broad brush in this debate. Nevertheless, there are a number of specific queries which I should like to pose to noble Lords opposite and a number of glosses on the White Paper which I should like briefly to make.
As the noble Lord, Lord Shackleton, has remarked, it is the cost of living which has most caught the public eye, and for the British housewife, faced with an insidious and persistent rise in prices at the counter, the White Paper's rather bleak and naked predictions about the impact of joining on the cost of living must seem to her to be something of a final straw. I very much agree with what the noble Lord said about this matter in opening our discussion. But I
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must confess that I was surprised when I read the White Paper estimate of the price tag, in terms of retail food prices, which the authors of it had placed before us—an increase of 18 to 26 per cent. in retail food prices, amounting to a cost of living increase of some 5 per cent. I was surprised, since these estimates are so much higher than those which have been made by the Commission itself— 12 to 15 per cent. for food prices and something like 3½ per cent. for the increase in the cost of living—and by the C.B.I. also.
I should like to ask the noble Lords who are replying if they can account for these wide discrepancies. Can they to some extent be explained by the fact that the C.B.I., unlike the White Paper, have made allowances for a possible decline in the price of manufactured goods? Be that as it may, all these predictions point to substantial increases in the cost of food and in the cost of living. I am glad that the noble Lord in opening this debate did not burke them. He rightly pointed out that these increases are unlikely to fall upon us and upon the housewives in any one fell swoop.
More important (and I think that this is not a point to which the noble Lord specifically referred) no account is taken in these estimates of the possibility—I would put it no higher than that, but I think that most people feel that this is probable—that the gap between world prices and Community prices of food is likely to close over the next decade. And of course there is also the essential point, clearly made by the noble Lord, that we cannot consider the cost of living in isolation. The essential point is the relationship between the cost of living of all of us if we join the Common Market and our standard of living if we join. And on this point the C.B.I. Report was quite specific. In the words of the report:
"Increases in the cost of living should be more than compensated for by increases in income."
Next, there is the likely impact of joining on agricultural production in this country. The White Paper estimate is that the increased prices paid to the producer mean that our farmers may be able to produce between 3 per cent. and 10 per cent. more per annum. All I can say here is that observers far more experienced and informed about agriculture

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than I am hold this estimate to be pessimistic. If, as they suspect, our farm production is likely to rise more steeply following entry, this will, of course, lessen the adverse impact on our balance of payments.
Again, I am inclined to feel that the estimate in the White Paper on the effect on the United Kingdom's visible trade—an adverse effect of between £125 million and £275 million—is also unduly pessimistic. The noble Lord referred to the fact that the White Paper—and it makes no bones about this—makes it clear that its calculations are based solely on the so-called impact effects. There has been no attempt in this area to quantify by estimate the effect on the visible trade balances of the more intangible element, the dynamic effects of membership. Here again the C.B.I.'s approach was far more satisfactory. They drew our attention to the so-called import effect; the tendency of prosperous countries to spend more proportionately on imports; and they came to the conclusion that this tendency in the Six might well be of considerable benefit to our trade. In fact, they calculated that the benefits were likely to outweigh the adverse impact effects of the tariff changes by the late 'seventies. And they and others have drawn our attention to another trend; that is, the tendency of smaller markets to expand more rapidly than big markets when those smaller markets are merged with bigger markets. This will be the case, of course, if we succeed in joining the Six on acceptable terms. Our entry will in-crease the home market of the Six by some 30 per cent., but for us entry will mean that our home market is increased by 300 per cent.
Finally, in this context, there is the 64,000 dollar question—or rather the £670 million question: the cost of our contribution if we join the Community budget. Here we find the widest variations among many other wide variations in the White Paper estimates. Here, again, I frankly find the White Paper's treatment of the matter a litle curious. In paragraph 42, for example, we are told that £670 million—this horrific figure—is a theoretical upper limit, but further on, in paragraph 101, we are told that this theoretical maximum is in fact substantially over-stated. Why then state it in the first place? The C.B.I.'s estimates of
1012
£400 million in the late 'seventies, falling to £200 million to £300 million there-after, seem, at least to this lay eye, to afford a rather more solid footing. I accept that here again there must be imponderables, and this is likely to be one of the crucial areas of negotiation.
LORD SHACKLETON: Perhaps I may interrupt the noble Earl. His reactions are very similar to those of a large number of people, which is quite understandable. But it is necessary to recognise that this White Paper is based on a series of econometric studies of a fairly complex kind. When you have them, you either publish them, or you do not. The Government felt that it was right to publish them, and to do so without attempting to import too much judgment in what was essentially a statement of conclusions from the econometric study. In this case it was necessary to point out that the totality of these sums came to this figure. The Government could be criticised, perhaps, for saying that it was unlikely to happen. This is one of the cases where some judgment was expressed.
EARL JELLICOE: I am grateful to the noble Lord for his painstaking explanation of these econometric processes. The conclusions that I should like to draw from these estimates are in fact quite simple ones. In the first place, it is quite clear to me, and I think to all of us, that the higher figure for the short-term costs of joining, albeit econometrically respectable, is quite unacceptable. It would impose a crippling burden on our balance of payments, and negate the growth of our economy which as I see it is the whole point of this economic exercise. Secondly, I candidly feel that those figures give us very little to go on. Whether we are anti-Market or pro-Common Market, we can all find seams to explore and exploit in this particular quarry. My third conclusion follows; namely, that the only sensible course is to negotiate as soon as we can, positively but firmly, with a view to determining whether the cost that we are being asked to bear is acceptable or not.
The balance cannot be struck merely by totting up the short-term economic advantages and disadvantages. There are other longer-term economic factors which our negotiators will have to weigh

1013
when they come to their final determinations. There is, of course, the heavy question of whether the cost of entry in terms of our balance of payments can be balanced by a substantial accretion in our national wealth. The White Paper has pointed out that even the balance-of-payments cost, at the highest estimates, would involve a claim on our annual rate growth of something less than I per cent. of our gross national product: and the Chancellor made it clear that even at our present rate of growth we can look to an increase of some £6,000 million in our national income by 1975.
But this may not suffice. We may still find ourselves caught in the familiar straitjacket where growth is held back by the balance of payments, and the balance of payments is fragile through lack of growth, unless we can look for some real and substantial increase in the rate of economic growth as a result of joining the Community—in sum, unless we can look for some forced draught here as opposed to natural growth. It is my belief that in all probability we can. I do not wish to argue an inevitable link between membership of the Community and an enhanced growth rate, but I believe that the figures in Table 14 are of particular significance. Even more significant—and this is implicit in those figures—is the post-war economic history of a country not entirely dissimilar to ours in economic structure, Belgium. In the mid'fifties, the Belgian growth rate was 2·8 per cent., the rather sluggish sort of growth to which we have become only too accustomed. But in the 'sixties Belgium's growth had spurted to 48 per cent. An increase of even half this amount by us would mean that we could carry with comparative ease even the heaviest burden which the authors of the White Paper would seek to lay upon us.
There are other purely economic considerations which our negotiators will need to weigh in the balance when they come to their final determinations. They bear on the effects of exclusion on Britain's international economic standing. The Six are already a powerful economic unit when it comes to international negotiations: the Kennedy Round has shown how formidable they are. Spain has recently concluded an agreement, and I understand that Japan may follow suit
1014
reasonably soon. And the magnetism of the Community for the developing countries is already evident. Exclusion from the Community carries with it the risk for us that vital international negotiations affecting vital economic interests will be carried on and decided over our heads. This is a factor which certainly our negotiators must weigh.
Again, one of the most significant trends in the Community at the present time (and it is one to which the noble Lord alluded) is the momentum which is being generated towards closer economic integration over a very wide front. There is the mounting attack within the Community itself on barriers other than tariffs to intra-Community trade There is the move towards a far closer harmonisation of economic policies between the member countries. And, most important of all, there is the gathering momentum behind the move towards closer monetary union leading, perhaps, in the not too distant future, to the formation of a European Reserve Fund into which the various European reserves would be poured. From the Community's point of view we cannot but rejoice at this gathering wind behind their economic sails. Nevertheless, if these trends are consummated, and if at the same time we are excluded from the Community, or exclude ourselves, there is a growing risk that vital decisions within Europe on vital economic matters affecting our vital economic interests will be taken over our heads. By the same token, inclusion, as Professor Triffen, for example, has pointed out in a recent paper, would hold very great advantages for us.
As in so much else here, inclusion would be good for us and would be good for the Six; and exclusion would be bad for both. I trust, therefore, that when we come to strike the economic balance we shall do so with these wider economic considerations in mind. By the same token, and given especally the growing solidarity and confidence of the Community itself, I think we can be confident that the Six will not seek to exact too high a price for our entry, because it cannot be in their long-term interests to seek to bring in to the Community a Britain so plucked that it is bound to be a lame and limping partner for the Six themselves.

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I had wished to say something on the political aspects, which I believe to be equally important. But since there are many speakers to follow in this long debate. I will confine myself on the political front to these few words. There are many signs that we are entering upon a new and more flexible era in international relations at the present time. Some of the familiar landmarks may be disappearing, and some of the old ice packs are breaking up. The world we are entering may not in any way be a safer world than the one which we appear at the pre-sent time to be leaving. For a whole host of reasons I believe that it behoves us to do all we can, in that new and rather uncertain world, the era into which we may be moving, to reinforce the political unity of Europe. It behoves Europe, in the interests of the Continent itself, that there should never be a war which would once again disrupt Western Europe. It behoves us, in view of the looming menace or question mark of a third great super-Power just over the horizon, China, joining the other two great super-Powers, the Soviet Union and the United States, to work and seek that greater political unity, if only to endeavour to restore the shattered unity of Europe itself.
I believe that a politically more coherent Western Europe will act as a powerful but peaceful magnet on the oppressed nations of the East. It behoves us to pursue a greater political unity in Europe when we bear in mind the drift of American policy to-day—in fact that in the near future we in Europe may well be asked to bear a greater weight of the burdens of the Free World. It behoves us, not least, to promote that greater political unity as we contemplate that other great division of the world in which we live at the present time, perhaps the most serious division of all: the growing gap between the living standards and future expectations of the North—the rich, industrialised, predominantly white nations, mainly in the Northern Hemisphere—and those of the Southern Hemisphere, mainly the poor, developing and, for the most part, coloured nations.
I am convinced that a more united Europe may have a very great role to play in closing that gap in the next
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decade or so. And that role can be far better and far more effectively discharged by a Europe, the kernel of which is a prosperous, responsible and outward-looking European Economic Community, with Britain as a full member. These my Lords, are some of the political issues —the more intangible but none the less real political issues—which will be at stake in those vastly important forth-coming negotiations. Let the economic balance fall as it may. But these are some of the reasons why I believe that it is so much in the interests of ourselves, of Europe and of the wider world beyond that those negotiations should not once again fail.

LOCAL GOVERNMENT AND HEALTH SERVICE CHANGES IN WALES
3.45 p.m.
BARONESS PHILLIPS: My Lords, with the permission of the House I should like to repeat a Statement which is being made in another place by my right honourable friend The Secretary of State for Wales about the reorganisation of local government in the counties of Glamorgan and Monmouthshire and about proposals for the reorganisation of the Health Service in Wales. The Statement is as follows:
"Following the Statement on local government reorganisation in Wales by my right honourable friend the Prime Minister on October 28 last, I have reviewed the situation in Glamorgan and Monmouthshire with a view particularly to eliminating the arbitrary divisions between towns and country.
"This review included a socio-geographic study of the area by the Welsh Office, and it examined a wide range of possible patterns for re-organisation of local government in the area. I am now satisfied that the needs of this area would best be met through a system of unitary authorities. I accordingly propose that in Glamorgan and Monmouthshire local government should be reorganised on the basis of three main authorities, each responsible for all the major functions in its area, one containing Cardiff (which will, of course, remain the capital of Wales), one Newport

1017
and the third Swansea. A White Paper setting out the details is published to-day.
"I am writing to each county, borough and district council in the two counties, and to their associations, inviting them to send me their comments on the White Paper, and I shall then arrange full consultation with them.
"These proposals relate solely to the geographical counties of Glamorgan and Monmouthshire. In the rest of Wales the previous proposal that local government should be reorganised on the basis of 4 counties and 20 districts will stand.
"I am also publishing to-day a Green Paper with proposals for the reorganisation of the Health Service in Wales. As in England, the Health Service will be administered by area health boards outside but closely associated with local government. The boundary between the Health Service and the local authority public health and personal social services will be drawn in the same way. There will be area health board coterminous with the four new counties of Clwyd, Gwynedd, Powys and Dyfed and with the three unitary areas which I now propose for the counties of Glamorgan and Monmouthshire. These are firm decisions, but the other proposals in the Green Paper are for general discussion. I shall be consulting the interested parties in Wales and I shall be associated with the consultations which my right honourable friend will be having on those proposals which will be common to England and Wales."
3.49 p.m.
LORD BROOKE OF CUMNOR: My Lords, in the unavoidable absence of my noble friend Lord Aberdare I should like to thank the noble Baroness for repeating this Statement. As to the National Health Service part, am I right in thinking that it is proposed that the arrangements in Wales shall be broadly idential with those in England, except that there will be no intermediate body between the area health boards and the responsible Government Department? As regards local government, I wonder whether the noble Baroness could explain why it is proposed to assimilate the local government
1018
arrangements in Glamorgan and Monmouthshire to the arrangements in England, and to leave a distinctive Welsh arrangement of local government only for North and Central Wales. It seems unnecessarily complicated, and a cruel carving-up of the unity of Wales.
BARONESS PHILLIPS: My Lords, the noble Lord is of course correct in his assumption concerning the Health Service. On his second point, I am sure he would be the first to agree with me that this particular area is much more highly urbanised, and in fact much more closely populated, and therefore must be considered in a slightly different way from the rest.
LORD OGMORE: My Lords, while thanking the noble Baroness for repeating this Statement, may I ask her some questions? First of all, why have the Government changed their mind with reference to local government in Wales within two years of the publication of their White Paper (Cmnd. 3340)—a White Paper which broadly was accepted in Wales as a whole? Secondly, following on what the noble Lord, Lord Brooke of Cumnor, has said, would it not be highly inconvenient in a small country like Wales to have two completely different systems, one in the area now covered by Glamorgan and Monmouth, and the other in the rest of Wales? Thirdly, will this decision which the Government have taken prevent the implementation of the proposals of the Crowther Commission on the Constitution, if those proposals should include a domestic Parliament for Wales or an elected Assembly for Wales? Lastly, may I ask the noble Baroness whether she will explain a little more fully what she means by this rather obscure reference to Cardiff? How can Cardiff remain the capital of Wales if it is itself part of a larger area and is no longer an autonomous authority?
BARONESS PHILLIPS: My Lords, I should like at once to reassure the noble Lord on his point about Crowther. We are awaiting the Crowther Report, and this Statement does not in any way affect the final outcome of the decisions taken from the Report. So far as the question of the Government having changed their mind is concerned, I am sure the noble Lord would agree that it is, after all, a dynamic and flexible policy which looks all the time at the proposals that were

1019
originally in the particular Paper to which he referred. They were, I stress, proposals, just as in fact some of the points in the Green Paper are proposals, and therefore must be always subject to investigation.
The Study which was carried out relates again really to the point raised by the noble Lord, Lord Brooke of Cumnor. I am sure the noble Lord will agree that this particular area of the Principality is different in several ways (though we need not go into them to-day) from the rest of Wales, but notably it is highly urbanised and the population areas are closely linked together. The Study took into account a number of factors, not only the patterns of living but the patterns of movement, of work and of travel; and these recommendations were the result of the very close consideration by my right honourable friend of the Study's findings.
LORD HEYCOCK: My Lords, may I ask my noble friend a question? At the conclusion of the last debate on Welsh Affairs I posed three questions, and I will relate my remarks to two at this moment. One was whether the Maud Report, whose publication was then imminent, would have any effect on local government reorganisation in Wales. My second point was that made by the noble Lord: whether the Constitutional Commission were going to have any effect upon it. I believe, frankly, that in the Statement which has just been made the Government have gone away completely from what we understood in respect of local government reorganisation. As we are well aware, when the Royal Commission on Local Government was established (there was Wheatley for Scotland, and Maud for England) Wales got a Departmental Committee because it was then assumed that the reservoir of experience from the previous 1958 Commission would be available and that local government reform would come much more quickly in Wales. But we have completely departed from that. We are now, if I may say so, putting it very clearly, influenced by the Maud division.
BARONESS PHILLIPS: My Lords, I am sure the noble Lord will appreciate that this is not a debate on Wales but
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simply questions on a Statement. I should not like in any way to pre-empt a debate on this subject, although I am quite certain that we shall have one soon in this House. I would merely say to the noble Lord that the position in Wales is not identical with that in England. If he looks at it carefully, he will see there are several quite distinct differences, and I think he is perhaps rather assuming too much.
LORD OGMORE: My Lords, may I ask the noble Baroness whether she will reply to my final question, which I think she overlooked, regarding the effect of these proposals on Cardiff?
BARONESS PHILLIPS: My Lords, I did not reply to the noble Lord because I am not quite sure what effect he was suggesting these proposals would have. Cardiff will remain, as I mentioned in the Statement, the capital of Wales. Although it is to be part of the unitary authority, it will be, as it were, still pre-empting certain powers.
LORD OGMORE: My Lords, I am sorry that I did not make myself clear. What I meant was this. The new authority will be a large authority—presumably at least half the present Glamorgan. Will the whole of that authority be the capital of Wales, or will the bit that is now Cardiff be the capital of Wales? That is what I meant.
BARONESS PHILLIPS: My Lords, subject to correction I understand that it will be Cardiff—the City of Cardiff.
LORD BROOKE OF CUMNOR: My Lords, is the noble Baroness aware of any other case where the elected council of the capital city of a country would have no more powers than those of a parish council?
BARONESS PHILLIPS: My Lords, I should not like to answer a question like that, which if I were answering in another place I would suggest was heavily loaded. I cannot give any reply. I have not had time to study other countries in their relation to their capital, or indeed their structure of central and local government. I hope the noble Lord will accept that these are proposals and that they will still be discussed at great length. Perhaps the noble Lord will return to this point when we have a debate on the subject.
LORD ILFORD: My Lords, is the noble Baroness able to say a little more about these three new areas created around Cardiff, Newport and Swansea? Are these to be metropolitan areas like the metropolitan areas to be formed in England, or will they be something quite different?
BARONESS PHILLIPS: No, my Lords; they are not to be metropolitan areas.

BRITAIN AND THE EUROPEAN COMMUNITIES
3.58 p.m.
Debate resumed.
LORD GLADWYN: My Lords, I am not at all sure that this is the right moment for a major debate on the desirability, or otherwise, of our joining the European Economic Community. Officially, of course, as has already been said, we are merely taking note of the White Paper. I shall have certain things to say about that Paper later. But if the recent excellent debate in another place is to be taken as a guide, it will, I suppose, be impossible to restrict our remarks this afternoon to this one rather technical subject.
However, though there will inevitably be a major debate to-day and to-morrow, we must surely all recognise that nothing we say this afternoon is likely to have any great effect on the course of events, because there is now, happily, every reason to suppose that negotiations for our entry into the European Economic Community will start not later than the beginning of July, and that towards the beginning or middle of August they will be suspended for some weeks during the summer holidays, during which period, presumably, there will be further consultations on both sides in the light of which might reasonably be described as a preliminary skirmish. That will bring us up to the autumn, when there may, or there may not, be a General Election—though let us hope there will be, my Lords, since the prospect of intensive negotiations during the winter, that is, during a period in which the Election would draw nearer and nearer, is, to say the least, hardly alluring. Indeed, quite aside from Party politics, I suppose that most of us would think that such a development would be
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contrary to the national interest. Whatever side one is on, it is surely not a good thing that this issue should, as they say, become a "political football", as it obviously will be if it goes right on until the moment of an Election in a year's time from now.
On the White Paper itself, therefore, what can 1 say? First, that it is really not very evident why it was produced at all. I understand from the Press that there are various theories about this, and none of them makes much sense. The first theory is that the Prime Minister, teased by the anti-Common Marketeers, said in a rash moment that he would produce facts and figures about the probable result of our entry and that he just could not go back on his word. On the whole I think this is the most likely theory. So, as the Economist said in an article, two gangs of civil servants got to work: those, one may suppose, from the Ministry of Agriculture, Fisheries and Food being probably "con" and perhaps those from the Board of Trade— I do not know—but certainly those from the Foreign Office being "pro".
They then put up this extraordinary document which, as we all know, comes to the solemn conclusion that on the important but improbable assumption that the present common agricultural policy of the Six will be maintained in all its absurdity when we enter the Market, and that we shall have to hand over the entire proceeds of the levies to the Central Agricultural Fund, this providing about half its income, and regardless of any other consideration— on this assumption, I say, they have come to the conclusion that the cost of food and the cost of living might be increased —I agree it is "might be"—by 18 to 26 per cent. and 4 to 5 per cent. respectively; the change in our food import bill could range from a reduction of £85 million a year to an increase of £255 million a year; and the overall balance of payments cost could vary, as the noble Earl, Lord Jellicoe, said, between £100 million and £1,100 million a year.
It is quite true, my Lords, that the White Paper, having stated these figures, immediately remarks that they are "positively misleading". If that is so, why publish them at all? Anyhow, it is the only set of figures in the whole White Paper that has achieved world-wide publicity. So, apart from salving

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the Prime Minister's conscience, what, in the name of Heaven, was the point of coming out with all this? I heard what the noble Lord the Leader of the House said, but he did not convince me. Personally I strongly suspect that the only real "Pro" in the whole operation was "Con", and I imagine—although this is pure speculation—that if his influence had prevailed we might have had something much more like the intelligent and well constructed paper of the C.B.I., which at least had a shot at working out the possible economic results of our entry on several assumptions and not only on the most deeply pessimistic of all.
Noble Lords will recall—or at least those who have read it will know—that according to the C.B.I. (and here I am quoting) a
"reasonable probability would be a total cost to the balance of payments… rising annually during the transitional period to about £400 million in 1977–78, and thereafter declining, in line with the expected fall in total F.E.O.G.A. expenditures, to a level of £200 million to £300 million per annum in the 1980s",
and that the expected rise in the cost of living would not be more than 4½ per cent. and could even be as low as 2 per cent. I should like to ask the noble Lord the Leader of the House, or the noble Lord who is going to wind up the debate, whether the Government dispute this apparently reasonable conjecture. It would be interesting to know.
This brings me to the second hypothesis; namely, that the White Paper was firmly based on the most pessimistic assumptions in order in the first place to increase Mr. Thomson's bargaining power in Brussels, and in the second place to demonstrate to rebellious Labour Party comrades that the Government knew very well that there were conditions for entry that they would never accept— "We will never crawl into Europe on our hands and knees," and so on. So even if they did have to accept what might be thought to be tough terms, the Government could at least show that they had avoided the worst. The trouble about this theory is that in the first place the Six know just as well as we do what the economic position of this country is and what the results of entry on the various assumptions are likely to be, and, in the second place, obviously no White Paper, however constructed, will mitigate the
1024
opposition of comrades on the Left, which is based not on economic but simply on ideological considerations, any more than it will influence those on the Right whose objections are founded on pure, old-fashioned nationalism.
So, my Lords, we come to the third hypothesis, which is that the Prime Minister is preparing, as the Leader of the Conservative Opposiiton hinted in another place, to "rat" on the whole idea. Personally, I do not see how Mr. Wilson, even if he would, could possibly stage such a dramatic coup before the General Election which, as I have already said, we must all hope will be in the autumn, if not sooner, Even if we hold the dreary view, my Lords, that he is going to hang on to office for another year or so from now it is hardly possible to imagine that the negotiations will be so far advanced by them as to give Her Majesty's Government an excuse for staging a walk-out, even if they wanted to. Incidentally, what would happen to the Labour Government of the time if such a thing took place? We all know that many members of the Labour Government are convinced and ardent "Europeans" who might well think that a satisfactory solution might be reached if the negotiations were continued. No, my Lords, I am sure that the scenario of the "cunning plot" does not seem on the face of it to make any sense either.
LORD SHACKLETON: My Lords, may I interrupt the noble Lord to say that his scenario—his own—is totally without foundation?
LORD GLADWYN: My Lords, I thought it was, but it has been widely put about—indeed in the other place a great point was made of it. I am flying to the assistance of the Government, in the sense at any rate, that I quite discount that possibility.
LORD SHACKLETON: My Lords, we can do without it.
LORD GLADWYN: My Lords, it is indeed possible to maintain that the Prime Minister has no very fixed convictions about the possibility, or even the desirability, of constructing a wider Europe that is anything more than a mere congeries of nation States. Indeed, there is a wide choice of quotations from his many speeches over the last ten years or so which would confirm such a view.

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But this does not mean that he has not now effectively burnt his boats as regards Europe or, in his own language, has "surrendered one of his options". For I rather think that he has, my Lords.
Leaving the White Paper aside, I should like to make a few observations on the position in which we now find ourselves. When the negotiations start, as I have already said I assume they will— although this is not absolutely certain— there is little doubt that the French will take a pretty tough line, even if they do not demand (as has been said) their full "pound of flesh". They will probably not make extreme demands because, as a nation, they are now reconciled to the British entry into the European Economic Community. But the Gaullist or, one might even call it, the xenophobic element in the Government, and especially in the Assembly, is still strong— strong enough anyway to insist on pretty severe terms, though I think that even the orthodox Gaullists are becoming rather alarmed at the possibility of a breakdown in negotiations which might involve the possibility of German domination.
Besides, apart from the great, over-shadowing agricultural issue, and the almost equally important and difficult one of the lengths of the various transitional periods, there are certain points of real difficulty which can be solved only with mutual good will and, probably, as a result of long discussions. It is not essential, for instance, nor is it strictly necessary under the Treaty, for us to reach some kind of agreement with the Six on monetary policy. But it would ease the situation greatly if we did; and, indeed, the Six are now expressly negotiating within their own Community with that very end in view. It is even arguable that the decision to do this was the most significant decision taken at the Conference at The Hague at the end of December, which, after all, set the Six off on the supra-national path that we ourselves shall have to follow if we ever do go into the Community.
Then there is the whole question of the composition of the Commission at Brussels, in the light of the amalgamation of the existing three Communities—that is to say, the European Economic Community, the Coal and Steel Authority and Euratom—and the likelihood of an exten
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sion of the membership of the whole amalgamated body from six to ten. This will bring us straight up against the great issue of the kind of enlarged Community that we are aiming at; in other words, the degree of supranationality that it will contain. What, for instance, will be the exact agreed role of the new Commission? Will it have the same function as regards the preparation and the administration of the Community budget as was proposed in the Hallstein project of 1965, torn up by General de Gaulle? And what exactly will its relations and those of Ministers be with the Parliament of Europe? I do not think that we can avoid discussion of these great problems with our prospective partners during the negotiations by saying that we will simply agree with anything that they themselves may have agreed to. If we are to join the Community our whole future may well be affected by the decisions arrived at in this field alone.
I need not perhaps dwell also, at the risk of boring your Lordships, on the great complexity and importance of the arrangements, no doubt provisional arrangements, not only for New Zealand and the so-called Common-wealth "sugar islands" but also for many countries of the so-called Third World, involving such matters as the treatment of raw materials, the import of industrial goods from what are known as low-wage countries, and the effect of all this on the Aid policies of the Six and ourselves which, it is devoutly to be hoped, we may now in some sense amalgamate. The same applies to the interests often conflicting, of the various members of EFTA whom, we have often said, we will by no means leave in the lurch. And may I say, in passing, that I trust that they will not leave us in the lurch either?
Finally, there is the whole political aspect, touched on by the noble Earl, Lord Jellicoe, which, as I believe, can hardly be left on one side while we wrestle, no doubt for two or three years, with the great problem of grafting on to the fairly comfortable Economic Community of the Six a large, rather intractable body of 56 million, with its own political characteristics, its vast trade, and its strong continuing links with the Commonwealth and the United States and with the outside world generally. This can be done, and I believe will be done, though sometimes when one regards

1027
our present rake's progress towards inflation by way of wage increases and sky-rocketing prices one begins to have some doubts; but it is no good saying, with the Government and Macbeth (I think I have the quotation right): "If it were done when 'tis done, then 'twere well it were done quickly."
Let us therefore consider what I suggest may be the rather easier problem of achieving a measure of unity within the foreign policy and defence field—rather easier, I think, in spite of all appearances. Here the situation is at present complicated, it is true, by the continuing absence of France from the Ministerial Council of Western European Union, though there is happily considerable reason to suppose that she will return fairly shortly. There never was anything in the Gaullist suspicion that Her Majesty's Government would use W.E.U. for getting into the E.E.C., as it were, by the back door, any more than there were grounds, as some suggest or suggested, for suspecting that the reason why de Gaulle left the Ministerial Council in February, 1968, was in order to prepare for his Middle Eastern renversemem des alliances, which he might perhaps have found embarrassing to explain to his colleagues in the Council. But in any case the General is no longer in power, and there is now no real reason why the quarrel should not be patched up, even though it should not be patched up by our acceptance of the Gaullist theory that each member should have a veto even on the preparation of the agenda; that would be too much. So we must soon expect W.E.U. to be functioning normally.
But the real point is that if the Western democracies, faced for the first time, as I believe, with a massive deployment close to the Elbe of the Soviet armed divisions which in two days occupied Czechoslovakia, and with the evidently early prospect of a reduction of United States Forces in Western Germany, are to pull themselves together and strengthen and streamline their own conventional defence, it must be by some means more efficient than W.E.U. itself. That organisation, though useful both as a forum for Ministers and more especially perhaps for parliamentarians, has never up to now succeeded in formulating any common defence or foreign policy at all.
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It has not even succeeded in standardising the smallest item of military equipment. Still less has it made any advance towards a common arms procurement policy. And it is high time it did. It is not as if the intention would be to form a sort of Third Force in the world of super-Powers. That is impossible in present circumstances, and most people would think it pretty undesirable as well. The political entity which will gradually emerge in Western Europe, as I see it, will, we should all hope, form part of NATO, and it would in any case be within the Atlantic Alliance that its policies would be harmonised with those of America.
But there really is an urgent necessity to arrive at some common Western European policy on the production and deployment of weapons, on various technological schemes of great importance, and indeed—let us not funk this issue— on the future role of the nuclear deter-rents, if such they may be termed, of Britain and France. There is also a crying need for a common Western European attitude towards, for instance, relations with the Soviet Union, the crisis in the Middle East, and indeed towards South-East Asia generally.
It is not at all clear how all this can be accomplished within W.E.U. as at present constituted. The staff, though excellent, is quite insufficient. There is nothing equivalent, on the political and defence side, to the European Commission in Brussels. The Parliament, or Assembly, has no function beyond simple discussion; and, above all, the unanimity rule prevails in all respects in the Council of Ministers. To construct anything of value at least a start must be made to remedy all these deficiencies At the very least there should be an Independent Advisory Commission, or a body of "Wise Men", or a specially reinforced Secretariat—whatever you like to call it —who would not draw their instructions from any one Government, but would rather submit reports on all matters, and notably on great issues of foreign policy on which the Foreign Ministers could not, or would not, agree: in other words, a body which could at least begin to look at problems from the point of view of the group as a whole rather than from that of any one individual member of the group.

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What can be expected is not, of course, immediate agreement. No-body suggests that immediate agreement can be expected on reforms of this kind, however necessary we, or some of us, may believe them to be. To start with, as I see it, there should simply be a conference of the Six and the four candidates in order to discover how progress can best be made, whether inside W.E.U. or inside an enlarged W.E.U., or even outside W.E.U. altogether. This conference should try to agree on great questions of principle, leaving the details to be worked out by a high-level expert commission which would have to report to the next meeting of the conference, say within six months' time. By such means progress may be possible; it just will not be possible on any other basis.
I should be most grateful if the representative of the Government who is to wind up—I think the noble Lord, Lord Chalfont—could say whether the Government feel that a conference of the kind that I have described is at all likely; and in any case, likely or not, whether they themselves would favour it. It is quite useless to suggest that all such negotiations should be conducted within the framework of the present Brussels Commission, obviously overworked as it would be, and in any case quite incompetent to advise on matters of defence and foreign policy. As I see it, political and indeed monetary negotiations should run parallel with the economic negotiations during the next two or three or four years.
Generally speaking, it would seem to be along the lines suggested that we might more easily make progress towards greater European unity during the next year or two, and I would urge the Government not to ignore the arguments in favour of doing so, but rather, at a convenient moment, to take the initiative themselves of at least floating the idea of a conference. Surely it is time that they took some initiative in this all-important sphere, and did not give the impression all the time that they will eventually go along with anything that may be decided by our prospective partners across the Channel. To say that one is in favour of proceeding pragmatically is merely a cowardly way of avoiding the issue. Now, if ever, is the time to think big, and, if
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we can, to rise to the measure of our great opportunities.
4.24 p.m.
LORD GARNER: My Lords, as this promises to be a lengthy debate I propose to be as brief as possible and to confine my remarks to a single topic; namely, the repercussions of the White Paper on the Commonwealth countries. I hope to do so in a fairly broad way and not in any detail. I certainly do not wish to be destructive, or to say anything that is likely to prejudice the success of any negotiations, because I am in favour of the negotiations. I am in favour of the application. Everything depends on the terms eventually settled, and they must meet our essential requirements; but the only test can come in actual negotiations.
The first thing that strikes me about the Commonwealth in the current situation is the infinitely smaller amount of attention paid to the Commonwealth countries to-day than was the case in the great debates of 1961 and 1962, and to some extent in 1967. I think in some ways this is to be regretted, although I personally think that in some ways we exaggerated the position ten years or so ago. I think we made mistakes. For instance, first of all we tended to equate our relationship with the Commonwealth countries to our relationship with Europe. This was really false in that we were not comparing like with like. The Commonwealth never was a political federation, and it is never likely to become one. It has never been a military alliance or an economic unit, although we have had useful defence co-operation and helpful reciprocal trading arrangements; and the sterling area system certainly gave a degree of financial homogeneity.
One recalls, for instance, statements of the Government of the day, the Macmillan Government, that if there were any conflict between Europe and the Commonwealth, the Commonwealth would come first. One also recalls criticisms that by making an application to join the Community Britain was turning her back on the Commonwealth. I do not think either of these concepts is really valid. We may have let the Commonwealth down in other respects and for other reasons, and if Britain joins the Community there will of course be some practical effects on Commonwealth countries, notably in the

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trade field; and in the long term, if and when the Community develops greater political unity, there may be more far-reaching effects on the concept of the Commonwealth. But membership of the Community can be made perfectly compatible with continued membership of the Commonwealth. After all, Canterbury lamb is washed down very well with claret and I think this applies metaphorically as well. Secondly, I think that in a way we were possibly unduly apologetic about the Commonwealth some years ago, and made too much of the difficulties that obligations to the Commonwealth created in our negotiations without making enough of the positive side.
On the contrary, I think we should strike a robust note. The Commonwealth is an asset. It is something of great value that we bring to any association with Europe that we can arrange. If the Community hope to make a contribution to the world as a whole, then Britain has more to offer than any other Power on the Continent in this respect; although obviously France has much, and all have something to offer. Possibly our so-called special relationship with the United States was a handicap in certain persons' eyes on the Continent in years gone by, but I have never heard that our relationship with the Commonwealth came into this category at all. The most eloquent recent testimonial for what I am trying to say was said to Members of this House and of another place only a week or so ago by the German Chancellor who, when addressing us, said:
"The Community would be directly enriched by British traditions, the historical experience of the Commonwealth, Britain's continuing worldwide connections and appreciations of foreign culture."
That I think is precisely the point.
But, of course, there is also the reverse of the medal. If we bring our worldwide association as an asset, if we are able to join the Community, then we must ensure that it is in fact a continuing asset. The terms of our entry must be tolerable from the point of view of the individual Commonwealth countries. In 1962 great weight was attached to the requirements of the Commonwealth. I think we have all noticed that the emphasis has shifted over the years, and the White Paper, for instance, pays minimal attention to the
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position of the Commonwealth, although I accept that this was not the purpose of the White Paper itself. For example, there was the use of the phrase, "Commonwealth preferences have been eroded." I must confess that I always wonder why it is necessary to use this pejorative phrase to describe what is happening.
Certainly preferences have been diminished to some extent. But if they have been diminished, whose fault primarily is it? Surely this is primarily Britain's fault, for she has been announcing loud and clear—and I am not objecting to that —for the last ten years that she was contemplating ending the traditional preferences shared with Commonwealth countries, and was even prepared to subject her partners to the so-called reverse preferences; that is, putting a tariff on their goods which would enter free from foreign competitors. In these circumstances, it was only prudent for our partners to diversify as far as they could and to make what arrangements they could with others; as, of course, Australia has done very successfully over the years with Japan, and as a number of developing countries have been doing with the Community itself. Surely it is not for us to complain of developments on these lines.
Certainly, too, the proportion of trade to Commonwealth countries has declined relative to our total trade throughout the world as a whole. But to record the declining percentages as if they should lead to the assumption that our trade was insignificant is clearly a nonsense. Incidentally, I often think that the trade figures are somewhat distorted by the position of South Africa (to whom, of course, our exports are extremely important) because she went from one side of the ledger sheet to the other when she left the Commonwealth some 15 or so years ago. The actual figures are that in 1969 we sold to Commonwealth countries £1,590 million worth of exports, and earned from them in invisible earnings £1,021 million worth. Those are pretty hefty totals, and amount to nearly one-fifth of our total trade so far as exports are concerned, and nearly one-third on invisibles so far as they are concerned. Surely, if those total figures were to disappear, our balance of payments would look very sorry indeed.

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As the noble Lord, Lord Gladwyn, mentioned earlier, there are two major points to which the Government have always attached importance relating to the Commonwealth. The first concerns the position of New Zealand. For a century New Zealand developed as a producer for Britain; for a century they sent high quality food to this country at very reasonable prices. If that market were to be shut out, there would be no easy alternative for them. They are too small for industrialisation; they are too distant for union with Australia, and there is no ready alternative market immediately open to take all their produce. These people are our people, with whom we built up these relations over generations, and we just could not afford, morally or otherwise, to see them ruined. Secondly, there is the special case of the Common-wealth Sugar Agreement. For a century we developed a number of small islands for the production of sugar. This has been of very great benefit to us over the years, and, again, if this market were to be closed, there would be no easy alternative in sight. Many of these islands in the West Indies and elsewhere—or at least some of them—are depressed enough already.
There are various other matters concerning the developing and still dependent territories on which provisional agreement was reached during the negotiations from 1961 to 1963, and the position reached was spelt out in Mr. Brown's statement to the Council of Western European Union in 1967. I hope, therefore, that the Government will be robust in maintaining the position on all these points, and will recognise that a short interim period for adjustment is just not enough to meet some of the real needs, particularly of New Zealand and some other countries. However, I see not reason to despair of finding solutions. New Zealand's case is a very special one, and it was recognised as such by all the Six at an earlier stage. I do not think any of them was able to propound a solution, but the difficulty is readily understood. In 1962 the Community were by no means unreasonable in trying to accommodate some of our problems, and they made many helpful arrangements, particularly for developing countries, on the lines that I was suggesting earlier. It is not in our interests, and not in theirs, that violent disturbances should be caused to third
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parties if our application to join the Community is successful.
At the end of the day, Her Majesty's Government must judge what in fact are satisfactory terms, and this will involve a good deal of guesswork—perhaps with a little more authority than we can have now from the forecasts in the White Paper. But there will be a degree of guess-work involved about the future, and it may be that Commonwealth countries will not always accept our view of what the future is likely to bring under the arrangements proposed. We must face the fact that this may be a difficulty, and the only way to meet it is to have throughout, during the period of negotiations, the closest consultation and to try to develop complete understanding by all concerned. At the end of the day, if we finally join the Community, it will be an act of faith for everyone.
One of the first needs of the Common-wealth is that Britain herself should be strong. I believe that informed opinion in Commonwealth countries wants our application to succeed. Certainly this was true of most of my friends in Canada, and I believe it to be so in a number of other countries as well, even though they would not claim to look into the future. Subject to the terms being acceptable to us, and to our being satisfied that they meet essential Commonwealth needs, I believe that Britain's entry into Europe can be achieved in a way that will ensure Britain's continuance of her role in the Commonwealth; and if it can be achieved in this way, it will benefit not only Britain and the Community, but also the Commonwealth. Though I do not want to develop what has already been said by noble Lords who have spoken earlier in the debate, I believe that our entry into the Community can develop into a helpful influence on the baffling preoccupations of the world as a whole.
4.38 p.m.
LORD SILKIN: My Lords, if I were chairman of a company considering participating in a purely commercial or industrial undertaking and I had before me a document prepared by my economic advisers similar to the White Paper, with its many doubts, assumptions, reservations and unknown factors, I suppose common prudence would justify my hesitations; and probably if I had to decide on the basis of this White Paper alone I

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would decide against joining the under-taking—particularly if I were asked to pay a stiff price for joining. To-day we are being asked to consider the White Paper, and in my submission it is quite impossible to consider it without the things that accompany it, particularly the political implications of joining. Supposing I had, however, the detailed results of ten years' successful working of this undertaking and I was able to form a reasonable judgment about its future and as to what my own contribution would be to its increased success, I should, as would any businessman, feel it worth a much closer look. I presume that that is what we are being asked to do to-day: to review the White Paper and see what we think about it.
There are a great many doubts and vague statements in the White Paper which have been referred to by the noble Earl, Lord Jellicoe, and the noble Lord, Lord Gladwyn. Lord Gladwyn went so far as to suggest that it might have been wiser not to publish the White Paper at all. I do not know whether he read the Prime Minister's statement on the second day of the debate when he had been urged by some Members of the other place. The fact is that everybody agreed that a White Paper should be published, and it was pressed upon the Government. But when they came to submit the White Paper, which was to be a purely factual statement, they found the difficulties which are inherent in the situation.
They could have enlarged on the White Paper, they could have explained and elaborated; but it would have been quite wrong, particularly in view of the negotiations which are about to take place. I think the facts must speak for themselves. If the Government had withdrawn the White Paper because it did not contain useful or relevant or important information, they would have been subject to a very considerable amount of criticism and a great deal of misunderstanding not only from people in this country, but from people abroad. The Government would have been asked: "What are you hiding? What are you trying to keep away?" In the light of the prospective negotiations, it would have been a terrible mistake
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not to put the White Paper on the table for better or for worse.
As I said, in my view we cannot consider the White Paper alone, and perhaps the terms of the Motion before the House are somewhat too rigidly worded, because they should have given us the opportunity to hold a much wider debate. Therefore, as was done in another place, I propose to take a rather wider view and to have a closer look at the whole of the implications of joining the Community.
Nobody here has so far spoken against joining the Community, although I thought that the noble Lord, Lord Gladwyn, even though I know he is a very great supporter, spoke more against it than anybody else. He tended to derogate from the idea. He said it was going to take years, it was going to be very difficult, and so on. In my view nothing could be further from the truth. I do not know whether anyone intends to speak against our joining the Community, but those who have done so in another place and outside have confined themselves to the White Paper itself and have tended to ignore all other information or aspects.
That is understandable. We shall have to pay a substantial entrance fee. Whether it be of the order of £1,100 million or something less, there is no doubt that our entry will involve an increase in the cost of living over and above what might be anticipated in the coming years by ordinary inflation, rising wages and so on. There is no doubt that although we have every opportunity, if we take it, of increasing cur trade with the Community countries, we shall lose some of our present home market as a result of competition from the other members of the Community, once our tariff against them has been removed.
Though on balance the larger market will probably work in our favour, one cannot speak with any certainty, and it is fairly sure that we shall lose a certain amount of trade as a result of stronger competition from the other members of the Common Market. The other certainty is that our relations with the Commonwealth will inevitably grow less close and, in particular, the existing preferences which we offer to New Zealand and other Commonwealth countries will gradually have to disappear or lessen. I was very

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glad indeed and encouraged by the intervention of the noble Lord, Lord Garner, on this point.
It may well be that this matter is still open to negotiation with the members of the Community and that we could still retain our close connection with the Commonwealth, as has been the case with France, and even be in a position to grant preferences if we wished to do so. However, the fact remains that our ties and—we have to face it—our trade ties with the Commonwealth are becoming less than they have been. In the last resort, if we had to choose between entering and continuing our preferences to New Zealand and other countries, we should be placed in great difficulty; and I think the majority of people faced with that limited choice would agree that we should enter the Common Market. But I hope that we can negotiate something which will maintain our relationship with New Zealand.
If the whole story were contained within the White Paper, one might still be rather lukewarm about entering the Community, but of course it is not the whole story. Those who, like me, are strong advocates of the European Community are far more attracted by what is called the political aspect of our entry, and I was very heartened to read the Report of the debate in another place, to hear the speech of the noble Earl, Lord Jellicoe, and also to read the statement of the Bow Group the other day on our joining the Community. I hope that my noble friends on this side will not mind my saying that I agreed with practically every word that Mr. Heath said in the debate, naturally with the exception of the last few words which I think were really the result of misunderstanding on both sides. I thought his case for joining the Community was an extraordinarily attractive one, and one which could not have been bettered. May I say to the noble Earl, Lord Jellicoe, who is now resting after his efforts, that I was also very much attracted by his speech. I am glad that this is not a Party matter. Whichever side eventually has to negotiate, I hope that we shall arrive at very much the same kind of conclusion. With few exceptions, we in this House and in the other place are all merely concerned to join the Common Market
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and to accept the political implications of so doing.
The creation of a Third Force in Europe, equal in economic strength to that of the United States and the Soviet Union and with the possibility of enlargement, of which we were a member is a factor of tremendous importance in the history of the world. It is early days to enumerate all the possible outcomes of the advantages of political co-operation. It could lead—and I personally hope that it will—to the closest political union, as in the case of the United States of America and of the U.S.S.R.: to a federation of a sort, with a single democratically elected Parliament; or, as is more likely to be the case, at any rate for a long time to come, to a looser form of integration. Whichever way it goes, it will be an enormous factor for peace. We have not, of course, been at war with France since the Napoleonic days, but war between any of the participants in the Community would, if we joined it, become quite un-thinkable; and the existence of the E.E.C., with us inside it, would be a standing deterrent against attack from outside, and indeed would encourage closer co-operation with the other, existing World Powers.
There are many things we can look forward to for which the Treaty of Rome provides: for example, a single European currency by 1978; pooled reserves of foreign currency—which have been referred to already; and the many other provisions for closer association which are set out in the Treaty. I suppose it is too much to hope for a common language, but at least it is reasonable to expect that, with greater freedom of movement from one country to another within the Community, children will be taught as a matter of course at least one language— and one hopes two—other than their own. I hope that that will be generally accepted as a mater of routine.
My Lords, since 1961 we have been standing on the brink of the E.E.C. True, we have had two major difficulties to overcome. The first is the resistance of France, to put it no higher; and the second is the fact that our economic position has been until recently unattractive to the Community, and we might well have been considered a liability rather an asset. To-day the position is different, and is likely to remain so. We have a

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big contribution to make, as well as a great deal to gain, in the economic field. Our invisible exports are a very important factor, and in all the components which make up these exports—banking, shipping, insurance, transport and so on —we have a greater knowhow than any other country in the world. These invisible exports have in fact been increasing rather than decreasing.
Both these factors—the objection of France and the state of our economic position—are no longer valid to-day. We do not know whether France is going to be positively helpful, but she is certainly no longer antagonistic; and economically we should be one of the strongest members of the Community. Not only economically, but also from the political angle we have, as I have said, a tremendous contribution to make. Our experience as a World Power (which we no longer are), and our former Empire and, later, our Commonwealth have given us vast experience of relationships with other peoples of all races and all types. These experiences, together with the old form of democratic government which we possess, are all tremendous assets which we have to give to a political community, from which we should also have a great deal to gain.
There is one other aspect that I would mention, and that is defence. I should like to see, eventually, a common European Defence Force, under European command and with European headquarters, making its contribution as a European unit to Nato, so long as this is necessary. It is certain that we cannot much longer rely on the United States of America for the defence of Europe and of ourselves, and our entry into the Community would probably hasten the United States' intention of relieving themselves of a great deal of the burden of the defence of Europe—and I think it is high time, too. It has always struck me as rather humiliating that we and the other great Powers of Europe should be so dependent on the United States for our defence. It is quite time that we stood on our own feet; and I believe that our joining the Community will be a great help towards that. Anyway, it looks as if before long it will be largely inevitable. Coupled with a unified defence, of course, would go a common foreign
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policy, and I think that has got to come before very long. It seems inconceivable to me that a Community of some 300 million people should have six or seven diverse foreign policies. We must get together and work together as one unit, in defence as well as in foreign policy.
As I and other speakers before me have said, the Motion before the House is that we "take note of" the White Paper. We already have our application before the European Community, and we hope that it will be considered in the next few months, possibly in the summer. We are invited to consider this White Paper purely as an economic document, but as I and many previous speakers, both here and in another place, have said, it is quite impossible to look at this White Paper by itself. It has to be looked at as part of the future of Europe and of the future of this country, as well as from the point of view of all the various aspects which have been mentioned in the debate.
Although I recognise the difficulty of equating the economic with the less tangible factors that have been put forward —the political side—I suppose it has to be done. What sacrifice is it worth while our making in order to join the Community and to get the benefits, as I think, of our political union? Figures have been bandied about, but 1 do not think it would be helpful if anyone expressed a view on this aspect. We have to negotiate, and we have to make the best bargain we can. But I hope that we shall be pretty generous and shall not under-estimate the value of the political association. Nor should we be too pessimistic in estimating the economic value of our joining the Community. The figures in the White Paper take little account of what might be the benefits of our joining. Taking an optimistic view, these could be so considerable as to wipe out completely any deficiency that we may be called upon to bear; although I recognise that that is an optimistic view.
Of course I see the difficulty of equating a financial result with something so intangible as the political benefits of joining, but 1 hope that the time will not be too far distant when we shall have negotiated a satisfactory agreement on the economic field which will not be too burdensome to this country and which will provide a reasonable time to adjust ourselves to any additional burdens which

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it may be necessary for us to bear. I am sure that good sense will prevail in the course of the negotiations. Everybody realises that it is not a good thing to drive too hard a bargain, and those with whom we shall be negotiating will, I am sure, see the value of our entering the Community, as part of it, fully satisfied that we have had a fair deal in the transactions and that we are not being called upon to bear anything which is unreasonable.
I am not one of those whose judgment dictates that the burdens will not be great; but I believe that the economic benefits flowing from membership of the Common Market will go a very long way, if not the whole way, towards covering the financial costs. Taking the long view, that of future generations, I have no doubt that anything but a crippling cost would be worth bearing for the sake of the other advantages of membership. I wish our negotiators every success in the forthcoming task and I am sure that the whole House will await the outcome with the greatest of confidence.
5.3 p.m.
LORD HARLECH: My Lords, as the first speaker from these Benches to follow the noble Lord, Lord Silkin, 1 think I should start by expressing our gratitude for the bouquets that he conferred upon my noble friend Lord Jellicoe, upon the Bow Group and upon the leader of the Conservative Party. He said that he was very thankful that the debate on our entry into the Common Market was now not a Party issue. I agree with those sentiments. I think it was unfortunate that on our previous application, in 1961–63, it was a Party issue.
There seems to be a general feeling among noble Lords that the White Paper is not a wholly satisfactory document; although I think that we accept the reasons why it was published. I think it would be fair to summarise the conclusions of the White Paper as follows. In economic terms it could either be very expensive or rather cheap for Britain to enter the Common Market; on balance it would be a "good thing" for Britain to enter the Common Market unless the negotiations went very badly and it turned out to be to expensive. These are not very compelling conclu-
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sions. Therefore, in being asked to "take note of" the White Paper, I do not think that we are being invited to take any very radical or earth-shaking decisions. Indeed, it would be ludicrous—and here I agree with the noble Lord, Lord Silkin —to come to any judgment regarding this country's policy towards Europe on so narrow an assessment as is provided by the White Paper. It would be like judging the benefits of a contemplated marriage on the contents of a balance sheet drawn up by accountants showing the additional cost of adding one person to the household compared with the increased income the intended partner might bring in.
Of course, it is important that we should give due consideration to the economic aspects of the question, but we can only arrive at a balanced view about the right course for Britain to take if we look simultaneously at the political and defence aspects of the matter. In any case, I do not intend to deploy the economic arguments for our entry into the Community at any length because I believe that they are already well known to your Lordships. These advantages all stem from the creation of a vastly increased home market which it is expected will generate an increased dynamism in our economy and bring about those economies of scale which are of such profound importance in the modern, science-based industries of our country.
It is still not sufficiently appreciated that the United States' home market has at this moment a 50 per cent, larger purchasing power than the whole of Western Europe put together, including Great Britain. The inevitable result of the continued fragmentation of Europe will be that all Europe's advanced technological industries will be faced with a most unpleasant dilemma. Either they struggle on, on their own, dropping further and further behind America technically until they finally probably have to drop out of the race altogether; or they keep going by entering into agreements with American companies which give them access to American research and know-how and they end up by coming under the effective control of American industry. That is the crux of the matter, and it has been most vividly and ably described in Mr. Servan Schrieber's book, The American Challenge.

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We have no earthly chance of meeting that challenge without industrial integration on a European scale. The figures relating to money spent on research and development on the two sides of the Atlantic make the threat crystal clear. Due largely to the scale on which American industry operates, United States expenditure on research and development amounts to 20,000 million dollars a year. For the whole of Western Europe, including Britain, the figure is 6,300 million dollars—less than one-third of the American figure. This means quite simply that in the modern growth industries, such as the aerospace industry, the electronics industry, the computer industry and the nuclear power industry, the technological gap between a fragmented Europe and America will continue to widen.
And there is a subsidiary effect to all this that is of growing significance. I am referring to the brain-drain. One of my duties requires me to interview some of our most outstanding students who wish to carry on their studies in the United States. If those students are in the scientific field I sometimes ask them where they will do their research after completing their education. Quite frequently, their reply is that work in the particular field that they are interested in is carried on only in the United States. These are not young men and women who wish to go to America in order to earn higher salaries than they can earn here or because they wish to have a higher standard of living; they are people simply faced with the stark fact that if they are to make full use of their knowledge and of their intellectual potential they may have to go to work in the United States. In this way Britain and other European countries are not just losing the services of some of their most brilliant brains; they are actually helping to widen the disparity between American and European technology.
This situation is in no way contradicted by the statement made yesterday by the Minister of Technology, Mr. Wedgwood Benn, because he went on to indicate that the reason there is a counter flow is that there has been a falling off in orders in the American aerospace industry; and, as we know, there is the element of recession in the United States, and
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the Government has been cutting back expenditure. The fact is perfectly clear, though, that at the end of this process there will be far more British and other European scientists working in the United States than there will be United States scientists working in European industry.
My Lords, there may be some in this country who are not particularly concerned at the prospect of great sections of our industry being absorbed into the American industrial complex, or they may think that it is inevitable. But I would say this—and I say it as a life-long friend and admirer of the United States. I am utterly convinced that the industrial domination of Europe by America will most emphatically not be in America's own interest. It could set up social and political tensions in Europe which could explode in a most dangerous manner. Far better for the United States to have as a partner and friend a prosperous, vigorous, self-reliant Europe, than a Europe which was a resentful and even a rebellious helot. If Britain and the other applicants became full members of the Community there would be good prospects for a far more favourable development in our affairs.
Only last week in The Times Business News there was a report of a revised assessment made by International Computers of what might be expected from a unified European computer industry. Under existing conditions, Europe could be expected to export computers worth £280 million in 1975, but would have to import from America £400 million worth. There would, therefore, be a deficit of £120 million on a European output valued at £1,450 million. With an integrated European industry they expect that there would, in contrast, be a favourable balance of trade of some £200 million in 1975 and a considerable expansion in total output. After 1975, the consequential benefits would increase rapidly so that European trade and output might benefit by over £2,000 million during the decade 1970–80.
LORD SILKIN: My Lords, may I ask the noble Lord a question? Would these improvements result solely from Great Britain's joining the Community?
LORD HARLECH: No, my Lords, they would be the result of an integrated all-European computer industry, and the figures were given in The Times Business

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News supplement last week. But I think that this is just one example of what might be expected to happen in our more technologically advanced industries.
My Lords, I intend to be very brief about what one might call the "bread and butter" benefits to be expected from British entry into the Community, because they have already received a good deal of attention. It is not possible, though, to ignore the plain fact that, whereas ten years ago the standard of living in Britain was surpassed by only one of the six Members of the Common Market, to-day it is surpassed by all except one. I have little doubt that if we continue in splendid isolation, as some urge us to do, we shall in another ten years sink firmly into bottom place. There will be no sudden catastrophe, no actual decline in living standards, but just a consistent failure to keep up with the pace of advance elsewhere. Indeed, it is the almost imperceptible consequences of our relative failure that is such a danger. The public in general is simply not aware that during the 1960s alone four out of five members of the Community overtook the British standard of living.
Then there are the statistics with regard to the rate of economic growth. It is a statistical fact that if Britain had achieved a rate of growth no better than the least successful of the Six over the last ten years, we should now have additional resources available to us which could be measured in thousands of millions of pounds. The figures in this respect with regard to Belgium, to which my noble friend referred, are I think particularly relevant to us here in Britain. It is truly astonishing to witness the tortuous and incredible manipulation of these statistics which the anti-Common Marketeers have to resort to in order to try to bolster up their case. The economic evidence is overwhelmingly against them, and their arguments are even less impressive when they are advanced by persons notorious for inaccurate economic forecasting in the past.
My Lords, I intend now to turn for a few moments to some of the political considerations which seem to me to be of overriding importance. We must all be aware of a deep malaise in our society and, I am sorry to say, a growing disenchantment with politics and politicians. I believe that much of this malaise is due
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to the failure of political institutions to develop at a pace that is in keeping with the revolutionary changes that have taken place in man's environment. During the last century, and partly in response to the first Industrial Revolution, we saw the development of the highly organised nation State. But such a political unit alone, and on the scale existing in Western Europe, has become totally inadequate to meet the conditions which flow from the even more rapid technological and scientific revolution through which we are now living.
What is the result? On the one hand we see a failure to exercise effective democratic political control over the economic forces that are moulding the world we live in. On the other hand we see a growing disposition, particularly among the young, to disparage politics and to feel remote, even alienated, from a system which in certain respects seems rooted in unreality. My heart sinks when I hear people use phrases about "retaining an independent foreign policy" or" an independent economic policy." No doubt these phrases make an emotional impact, which is what they are intended to do. They are words with which to mystify the millions, but in this day and age they are pure fantasy so far as a country of this size is concerned.
Attempting to look ahead to the end of this century what should we find to be the position of this country if we sought to continue an independent policy? Broadly speaking, in the year 2000 the United States will have a population of about 300 million and a gross national product of at least 2,000 billion dollars a year. Western Europe, without Britain, will have a population of nearly 300 million and a gross national product of at least 1,000 billion dollars a year. The figures for the Soviet Union would be roughly similar to those of Western Europe. In contrast to these three, Britain alone will have a population of less than 70 million and a gross national product of about 200 billion dollars a year. In such circumstances, our power to influence events, whether in the economic field or in the fields of foreign policy and defence, would be minimal. Decisions taken by the three vast aggregates of power that I have mentioned would directly affect the lives of every man, woman and child in this country,

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but we should have had no direct say in the formulation of those decisions.
Again and again in our history we have been profoundly affected by events which have taken place on the Continent of Europe; and twice in this century alone the consequences have been well-nigh disastrous for us all. It therefore seems to me that no responsible British Government, elected to preserve the interests and the security of the citizens of these Islands, could accept such an isolated role for this country.
By joining a partnership in Europe, we shall not in any essential sense be abandoning sovereignty. Quite the reverse: we shall be ensuring that our people, through a sharing of sovereignty, will have their interests, their security and their prosperity taken fully into consideration. It is sometimes suggested that there are alternative groupings which could give us equal or greater advantages, but successive Governments have discovered, in some cases to their great regret, that none of them are practical propositions. No significant body of opinion now believes that the Commonwealth represents such an alternative. The so-called "special relationship" with America is equally unrealistic, together with its economic variant, the North Atlantic Free Trade Area. The truth is that successive American Administrations have always hoped that Britain would be able to play a full part in a united Europe, though for obvious and very wise reasons they do not go about publicly saying it. They have regarded British entry, as I do, as the first indispensible step to the building of a true and satisfactory partnership across the Atlantic.
When we examine our defence requirements, the necessity for greater integration in Europe is equally compelling. President Nixon has given fair warning that although he is prepared to resist for a year or two more the rising tide of opinion in Congress which is calling for an early and major withdrawal of American forces from Europe, we must now plan on the assumption that the security of Western Europe will soon be overwhelmingly the responsibility of Europeans, at least in the conventional field. In such circumstances, the burden will become intolerable unless the countries
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of Western Europe move towards a far more intimate harmonisation of defence policies than exists at present. Standardisation of weapons systems, common arms procurement policies, an armaments industry working on a Continental scale, will all be essential if we are to make the most economic use of our resources and avoid a rapid escalation of national defence budgets. And as we have seen— and the noble Lord, Lord Gladwyn, referred to this—in the case of W.E.U. ordinary inter-Governmental debate and liaison is woefully inadequate.
So far as nuclear weapons are concerned, we are completely in the dark as to what our long-term policy is to be. The only really effective element in our strategic nuclear forces is provided by the Polaris submarines, acquired under the Nassau Agreement so much criticised by certain people at the time. In fact, it was one of the most fantastic bargains in the defence field ever achieved by a British Government, and it is quite certain that no such bargain will be available from the Americans again. In addition, we know that the French nuclear programme is in difficulties. What is going to happen when our already diminutive capability in Europe becomes steadily more obsolescent? I do not myself think it is politically realistic to suppose that a Western Europe, left increasingly to defend itself with its own resources and lying under the shadow of a nuclear-powered Soviet Union, will be content with no nuclear capability whatsoever. On the other hand, it is perfectly obvious that if it is to be effective, the resources available to Britain or France individually will be totally inadequate for the task. Nothing less than a concerted effort by the whole Community, including Britain, will suffice. This poses political and economic problems of great complexity, but they must soon be faced if proper provision is to be made for the future security of Western Europe.
I think I have now given sufficient indication of the reasons why I feel so passionately about Britain's entry into Europe and why I hope so fervently for the success of the negotiations due to start this summer. Inevitably these negotiations will be difficult and protracted. It is therefore all the more important that they should be approached in the right spirit. We

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must not give the impression—and I fear that we may have given the impression —that we are backing gingerly into Europe because we fear that our standard of living may suffer if we stay out. The impression we ought to give is that we see a great prize to be won, not just for Britain but for Europe and for our Western civilisation.
We have an opportunity to help build an economic and political structure which will once and for all ensure that we have turned our backs upon the rivalries and bloodstained struggles of quite recent history and which will allow the genius and enterprise of Europe to flourish in unity. All six existing members of the Community now wish to see Britain join with them in the building of this structure, which alone can meet the needs of our peoples in the modern world. If, therefore, we keep this noble prospect before us, then despite all the difficulties there must be high hopes of our negotiations succeeding. Britain will then be in a position once more to play a role worthy of her historic past.
5.27 p.m.
LORD WOOLLEY: My Lords, following the remarkable speech we have just listened to from the noble Lord, Lord Harlech, I feel almost ignoble if I am unable to engender quite the same passion and emotion that he feels on this subject. If I bring the debate down to rather more bread and butter considerations it is because, after all, there is something to be said for bread and butter, and in the end we can get along a bit longer on bread and butter than on passion. However, I should like to congratulate the noble Lord, if I may presume to do so, on a remarkable and enjoyable speech.
This White Paper, of which I thought we were now supposed to be taking note, is an economic assessment. I am not altogether surprised that the great advocates of joining the Community take the earliest opportunity of leaving the field of economic assessment and embarking on the more specious field of the political nuance. I do not know: it may be that these political feelings and thoughts are right. I happen myself to be unconvinced on the political field, but that is not to say that the arguments are not right.
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I wish to talk about the agricultural aspect of the economic assessment which we are considering. Chapter II of the White Paper brings out starkly the serious economic facts that we are facing, the burden in terms of the increased cost of our food and the effect on our balance of payments. It seems to me that Chapter II is the most objective, frank and honest exposition of the problem that has been made by the present Government or by the previous Government, and I congratulate them on it. The author does his best to patch it up and present it in the best possible light. Chapter III is infused with the dynamic potentials which I think we ought to generate, whether we are in or out of the Common Market.
I am not surprised that there has been a growing warmth among the countries of the E.E.C. towards the prospect of Britain's becoming a member. When we look at some of the figures of the mounting surpluses and the cost of running their common agricultural policy we can readily understand that, from their point of view, it would be a great boon if this country entered into the Community and if, without the present colossal sums of intervention payments, export subsidies and support buying, they could make us pay this much larger price for the mounting surplus that their own policy has generated. This is a perfectly reasonable and natural attitude for them to take: it may be a bread and butter attitude, but it is a very practical one.
I am not suggesting that it is the only consideration, or that they are motivated only by some material gain; but it seems to me to come out of the figures. When one sees in Table 2, on page 9, that the total for three commodities alone— cereals, milk and dairy products and sugar —in the guarantee section of their agricultural fund in the year 1968–69 was £667 million, one can quite understand their feeling that the entry of Britain could be the saving of their Common Agricultural Policy even if perhaps only for a short time; it could have great significance, and they might greatly welcome it.
I think it is only fair to say that seven or eight years ago there were those who warned that this was a state of affairs which they thought was likely to arise from the sort of agricultural policy that they were pursuing, and who were then

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firmly opposed to Britain's abandoning her food and agricultural policy, a policy which had built up in this country an efficient agricultural industry and which is to-day estimated to be contributing at least £300 million a year more to the balance of payments than it was ten years ago. These are economic facts; they are not very inspiring, but as regards an economic assessment they are pertinent. I submit that, on the facts before us, it would be at any rate a gamble for us to abandon and dismantle this system in order to comply with the insistence of the members of the E.E.C. as regards the terms of a Common Agricultural Policy. I submit that there is not in Europe a coherent agricultural policy; nor do I see any clear sign of one emerging, despite the best intentions and earnest endeavours of a great many competent people on the Brussels Commission. I happen to have had first-hand experience of the difficulties of trying to ascertain within the confines of the United Kingdom the right balance between various commodities—milk and beef, cereals and all the other ranges of commodities—to try to secure a balanced agricultural production policy; that is to say, balanced in terms of a fair price to the farmer: a price which not only would give him a fair return but would be likely to produce the quantities of the various commodities that the market could absorb at fair prices, and which the housewife would be able to buy and for which she would be a willing buyer.
Little has been said here about the possible effect upon consumer demand. If I may relate a personal incident, I happened to see my butcher on Friday morning coming along with a piece of meat for the weekend. We had had some meat that was not very good, and I said to him, "I had better have a look at that." He showed it to me and said that it was very good. He said that it was off a Charolais heifer, but despite that I thought it was a nice piece of meat. He said, "This is a piece of sirloin." I asked him, "How much is it?" He said: "8s. a pound". I said to him: "You wait and see how much you sell." He said: "I know all about it. I am going out of business."
That is rather a flippant story, my Lords, but do not let us assume that
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these things have no significance. Do not let us get ourselves so airborne and so completely carried away that we forget that the great mass of the people of this country are concerned with the practical everyday things of life. They are concerned whether they are able to have a choice in food, and whether they are able to afford to buy butter instead of being compelled to buy a substitute. The National Opinion Poll shows that in the minds of the ordinary people of this country these things are important. I do not mean that we have to think only in these terms; but there have to be convincing arguments—and more convincing than I have yet heard—for our entry into the Common Market.
I know that the noble Lord, Lord Harlech, has referred to the people who oppose our entry and to the devious things they get up to. I feel that some of those on the other side think just the same about the advocates of our entry. There has been a fair amount of (shall I say?) inflation and gas injection. You can read the C.B.I. Report or Chapter III of this economic assessment: there you will see gas and inflation. I do not know whom the noble Lord had in mind when he spoke about people miscalculating, but certainly they would find it a little difficult to miscalculate more seriously than the people who miscalculated what the agricultural fund cost would be in 1968–69. I think they said that it would be £520 million. In fact it has turned out to be nearly 50 per cent. more—between £800 million and £900 million. So I do not think we should throw stones at people who make miscalculations, or indeed accuse people of straining the arguments.
But let me return to my agricultural thesis. The other factor is that in trying to formulate a policy, certainly in this country, we have had to have regard to reasonable access for the agricultural products of other countries with whom we are inextricably involved in international trading, and to guard against the Treasury liability's rocketing sky-high —although we do not need to worry particularly about that, because the Treasury take pretty good care of it without our concerning ourselves unduly. But these are all factors which have a part in shaping our agricultural pattern at Annual Farm Price Reviews. If I were

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to claim that the techniques are perfect, I should be, and rightly, open to the challenge as to why farmers are at this time demonstrating and expressing their dissatisfaction. I do not claim that our system works perfectly; and I do not think there is any other system that will ever work perfectly. But what I do claim is that it is basically within the joint capacity, if I may so term it, of Government and the farmers' representatives (with the emphasis clearly on the Government's influence and dominating part) to adjust and modify the changing circumstances as we go along through the years. Since 1947, changes have been made. There was a change in 1954 when we moved from individual fixed price guarantees and State buying to standard prices, virtually free markets and deficiency payments. I think, without checking, that it was done in 1953, when the guarantee for milk—a very big commodity—was related to a standard quantity, and the whole price-fixing pattern was changed. Another change was made in the early 1960s, when a considerable measure of import regulation was introduced for butter and bacon and there were minimum import prices and standard quantities for cereals. Those standard quantities were related to the guarantee that would be paid to the home producers.
I apologise for inflicting those remarks upon you, my Lords, but I did so to show that, difficult though it may be, we are able within the orbit of the United Kingdom to shape these things to the practical requirements of our country and to have regard to all the factors that bear upon the economy, the trading and the whole life of this country. I do not believe—and if it comes to pass I hope I shall be proved wrong—that there is the least likelihood of the E.E.C. being able to operate in anything like this way and to have this degree of influence on the pattern of European agriculture; and if we are part of that Community we shall certainly not be able to exercise any worthwhile influence in bringing that about. I am convinced about that. I am appalled by the task that would confront any body of men, however competent, in trying to create a coherent and balanced agricultural policy for a conglomeration of countries, for a stretch of territory from Scotland to Sicily and
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from the West of Ireland to the borders of Eastern Europe. That is the area which is referred to in Chapter III, this great "home market". If one tried to arrange something for the home within that lot we should find just how domestic it was. It is outside all practical possibility.
LORD HARLECH: My Lords, I am sorry to interrupt the noble Lord, because it is high time we had a speech by somebody who is opposed to the Common Market. However, I would refer him to the United States and the Soviet Union: they have territories much wider than that and, somehow or other, manage to establish an agricultural policy in both countries. You may not like it, but they have those policies.
LORD WOOLLEY: My Lords, in reply to the noble Lord, may I say that it seems to me, from what I read in the newspapers, that the agricultural policy of the Soviet Union is likely to be the downfall of Mr. Brezhnev and Mr. Kosygin, because they are in dire trouble. So I do not think that is much of a testimony. As regards the United States, I know that the noble Lord has far more knowledge than I, and I am sure he knows the bitter feuds that go on. There is nothing like a coherent policy. It is divided up. It is not, as we have, a national farm in concept and operation, but in the United States it is divided into pure commodity interests, and great trouble has been caused them with their soil erosion and soil bank. They have had the problem within the United States of trying to deal with the unbridled production policies of purely sectional interests. That is my experience of agriculture in that country. So, I am sorry, but I just cannot see this coming about, and it is no use pretending that I can.
One understands that within the concept of a completely integrated economic community there has to be a common agricultural policy, to some degree. One accepts that. I very much doubt whether the other members were wise to allow themselves to be propelled so far as they were by France in 1963. It was France who insisted on this; it was the quid pro quo that she, not unnaturally, insisted upon against the industrial advantage that she felt Germany was going to get in the Economic Community. So France aimed to be the butcher's shop,

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the bakery and the market garden for the whole of Europe, and the rest of them have been pretty well paying her for it ever since. No doubt they would like us us to come in and help to pay the bill.
I am afraid I have spoken for rather a long time, but in conclusion I submit that this White Paper brings out in clear terms serious economic problems which are connected with our possible membership of the European Economic Community. I have not enlarged upon the political side—that is another aspect of the matter. It would be more honest and practical if we dropped the pretence that, except for a few who are very powerful, vocal and influential, the economic prospects will be advantageous, and that there is, in any event, a case on political grounds. I personally do not think there is, but I am not going to argue on that ground. However, I can see that there is an argument. On the economic ground, I congratulate the Government on bringing out this much clearer exposition than we have had hitherto, but it still has not convinced me that my former views were wrong.
5.47 p.m.
LORD DONALDSON OF KINGS-BRIDGE: My Lords, I should have liked to follow the arguments of the noble Lord, Lord Harlech, whose speech I found most impressive and entirely convincing, but I find myself compelled to follow some of the arguments of the noble Lord, Lord Woolley, even though I do not agree with his conclusions. That is the unfortunate position one sometimes finds oneself in.
Let me begin by making my own position clear. I am in favour of joining the Common Market on economic and political grounds. My economic reasons were well stated in the other place the other day by my right honourable friend the Prime Minister, and by my right honourable friend the Chancellor of the Exchequer. The political grounds were much enhanced by the right honourable gentleman, the Leader of the Opposition. These give authority to my views, and I will not bother your Lordships with them; I do not want to tangle in these great questions. I want to draw your Lordships' attention, following the arguments of the noble Lord, Lord Woolley, to one
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particular and limited problem. I have noticed, from the earliest negotiations, a tendency to skate rather lightly over the actual difficulties involved in adapting our system of agricultural support to the E.E.C. system. There is no doubt that the White Paper treats this pretty scantily. I think it is important that we should not burk this problem. We should face it honestly, both in this House and in the country. I have made it clear that it is a problem that we can and must overcome. I think it will benefit from my making some remarks about it, even though it is following the general line which the noble Lord, Lord Woolley, has laid down.
The cardinal point is that we shall be under pressure, perhaps even obligation, to change from an extremely successful system of controlling output to a system of almost unrelieved failure. Since the war, the Ministry of Agriculture, whether led by Tory or Labour Ministers, and impelled more by horse-sense than a deep understanding of the long-term influences at work—one might say more by good luck than by good management— has succeeded in feeding the nation cheaply, mitigating the worst hardships to farmers during a period of fundamental and rapid change and, most important of all, in avoiding the accumulation of surpluses. Our industry has been subjected to a slow but steady squeeze which has reduced the number of workers from 669,000 ten years ago to 366,000 now; and the number of holdings, which is a rough guide to the number of farmers, over the same period from 356,000 to about 300,000. It has increased the capital investment by £1,000 million and has kept the price of staple commodities such as milk, eggs and sugar at or near 1958 prices—eggs actually lower, milk about 20 per cent. higher. That has been achieved without a major increase of bankruptcies and without any slackening in the upward pressure of land prices or shortening in the queue of young men offering high rents for tenancies. It has been a most impressive achievement of fairly painless rationalisation.
As Professor Britten said a year or two ago:
"It is my belief that although the cost/price squeeze has been irksome to farmers, it has stimulated them to reach for a high level of efficiency and has brought a healthy resilience to the whole agricultural community."

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Above all, we have avoided the accumulation of surpluses. We got dangerously near it with eggs, but the Government intervened; the Wright Commission was set up, and the matter is now in hand.
If we look in contrast, and with the greatest good will, at the performance of the E.E.C., we find that they began by fixing prices so high that surpluses were inevitable. The price for wheat in 1968 was £44 a ton in Duisberg; that against a world price of £29, but a price to us here of £27. Inevitably, too much wheat was produced and the bill for getting rid of it this year is estimated in the latest Common Market pamphlet at 700 million units of account—700 million dollars. Now they are cutting the price, too late and, in my opinion, too little, and raising the price of barley and maize.
To take sugar, the E.E.C. expect to produce this year over a million tons of sugar in excess of consumption, and to spend 100 million dollars in getting rid of it through exports. Contrast that with our position, which is almost beautiful in its neat effectiveness. I must declare my interest here because I am a director of the British Sugar Corporation. But the Corporation is only one factor in an elaborately contrived mixture of freedom and control which divides the home market between cane and beet growers, paying a fair price to each, and delivers sugar to the housewife at 11d. a pound, which is the cheapest in Europe, all without a penny in subsidy.
Lastly, the most flagrant example— milk and milk products, to which various speakers have referred. The main differences between our economy and theirs are well known. We produce much less per head of population, less than half, but we consume over 60 per cent. of it as fresh milk, as opposed to 20 per cent. in the E.E.C. It follows that we turn much less into butter—9 per cent., as opposed to 40 per cent. We can afford to do this as we can import butter from New Zealand and Scandinavia more cheaply than we can produce it. But the end result—and this is the point— is that we have stable and efficient dairy farmers, growing yearly more efficient, even though they do grumble a good deal, and producing all the liquid milk we need in winter and summer. In the E.E.C. the
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butter surplus has risen from 57,000 tons in 1963 to 150,000 tons in 1968, and now to 350,000 tons at the beginning of this year. And note that it costs more to store for three years than it does to produce. Note, too, that there is a surplus of skim milk of about the same size —350,000 tons. We have avoided these surpluses. I think we must be very careful indeed to refuse to become a dumping ground for other people.
There are reasons for all this, of course, and some progress has been made towards rationalisation, particularly, I should have thought, in France. The absurd price of wheat is a consequence of the fact that 90 per cent. of the one and a half million German farmers grow some wheat, although their average holding is no more than 17 acres, whereas ours is 86. So it has always been the practice to help the small farmer by raising the price of wheat, and of course it is painful to bring it down again. In this country the small farmer has been forced by economic realities to cut out grain-growing because he cannot compete with the larger man and is dependent on livestock of various kinds. Thus, obviously, since grain is his raw material which he feeds to his beasts, he is hurt and not helped by the rise in the price of feed grains. The point here is that we are a couple of decades ahead of the Germans in this respect. It is no more efficient for the small farmer in Germany or Italy to grow grains than it is for the small farmer to do so here. The difference is that we have learnt not to, and he has not. Yet if we adopt the E.E.C. price of wheat, which is designed to help the German and the Italian farmer to continue in his inefficient ways, we shall make it more difficult for our own far more rational small farmer to continue on his far more efficient course. He is being squeezed out fast enough in all conscience, without borrowing outdated methods from abroad to hurry the process.
I could make a very long speech on these lines, but I think I have said enough to make my point. We are years ahead of the E.E.C. countries, taken as a whole—not of course individually; we would not include Holland, but taken as a whole—as regards the structure of our agriculture. The E.E.C. are increasingly realising that they can never

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manage their affairs till they have re-formed their structure. In 1967 Dr. Mansholt said:
"We cannot go on in this way. We must call a halt and consider what is to be done to regulate the milk market so that we do not end up with these enormous surpluses, since these cannot be sold off to the world market. We must, of course, try to increase butter consumption within the Community, but I must admit that the Community does not yet know how this whole question is to be solved."
In December of the following year, 1968, he produced the Mansholt Plan, described in the Economist to-day as "the only hope, but friendless". This Plan is to reduce the number of farmers from 10 million in 1971 to 5 million in 1980, and to reduce the proportion of the population on the land from 16 per cent. to 6 per cent. in the same period. That is easier said than done, and while it is being discussed the butter surplus has doubled. I do not suppose any policy, for agriculture or anything else, has ever been more obviously at risk or, as some might say, in ruins.
The E.E.C. have shown themselves tough, persistent and versatile, and I am quite sure they will get this right in the end; but meanwhile they are in a state of unprecedented muddle, with no certainty how soon they can find and operate a solution. So we, who have managed our affairs with singular success, must be wary before we agree to modify the machinery, complex though it is, which maintains our successful equilibrium, to conform to the much simpler, much more logical, but completely ineffective, system employed in the E.E.C. To take an example, the Milk Marketing Board would not fit into the logics of the E.E.C. theory or practice. Yet it is certainly a major factor in the stability of our dairy industry, and it would be very dangerous to change it.
Still more, my Lords, we must stand by our friends. The stability of our markets for milk products and for lamb is closely bound up with the supplies we take from New Zealand: 170,000 tons of butter and 300,000 tons of lamb-nearly half New Zealand's total exports by value. Our stable sugar situation is dependent on the Commonwealth Sugar Agreement. We cannot go back on those agreements on any basis, but least of all to join anything as unpre-
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dictable as the current E.E.C. gropings towards an agricultural policy. The point I am trying to make is not that we should not go into the E.E.C., but that we should realise that we are the strong ones in this particular subject. It may not be true in industry, but where agriculture is concerned we are the top ones; we are the efficient ones. We must, and can, negotiate from strength. We may, by providing the one stable factor in the chaotic agriculture of the E.E.C., be able to help them solve their problems, which we have surmounted and which seem to be swamping them. Agriculture accounts for no more than a small proportion of this country's gross national product, and its special problems of entry must be solved for the greater good of the nation as a whole —I accept that. I have not minimised the difficulties, and I have tried to highlight a few of them to make clear that they arise, not from our backwardness, but rather from the fact that we are so far ahead of our neighbours that what suits them cannot be expected to suit us. So I hope, my Lords, that our negotiators will be very careful.
6.0 p.m.
LORD GRANTCHESTER: My Lords, like other speakers this afternoon, I do not feel that we can discuss the White Paper before us in isolation. From the first tentative moves after the war it has been a difference of background thinking that has bedevilled this issue. During the war the frontiers of Continental Europe were overrun and kept open. This enabled the resources of a wide area to be used to the best advantage. The lesson of this was not lost, particularly on the Germans. The price of peace and prosperity in the future was a Franco-German reconciliation. The background of the thinking on the Continent ran counter to our traditional policy of a "balance of power".
That our traditional policy dies slowly has, I think, been evident from the way in which, since their application to join the Community, Her Majesty's Government have tried to play one member against another, with the result that the Community now insist on waiting for full agreement among themselves before there are any negotiations with us. In the result, there may be precious little room left for negotiation. In January last, Le Figaro published a table showing

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the weight of Governmental debt per inhabitant in 25 countries. In this country this debt is three times what it is in France, and four times what it is in Germany. So, my Lords, we start negotiations with a considerable handicap on our backs.
The White Paper we are considering to-day is called An Economic Assessment. It does not turn out to be much of an assessment. Those who are engaged in trade and commerce usually find a way of overcoming great difficulties, many of them put in their way by the shortsightedness, the inexperience and sometimes by the plain stupidity of Governments. There is really only one economic argument which is relevant in this matter. It has been shown beyond all doubt that when artificial barriers to trade are removed the volume of trade increases; so there is no question that everyone could but benefit, not only from dismantling Europe's tariff barriers but by the removal of other obstacles and devices which sometimes hamper trade more than tariffs.
But, my Lords, as the White Paper shows at great length, this is not the only economic issue. There is a price to be paid in contributions to the Agricultural Fund. Perhaps I may recall an incident which happened soon after the signature of the Treaty of Rome, before any application to join had been made by us. On this occasion, at one of the periodic joint meetings of the European Parliament and the Council of Europe, M. Pleven presided over a group of all the Liberal representatives from the Council of Europe and the European Parliament. I was the only British Member present at that meeting. Without any warning the Chairman asked me whether I could say what I thought would be the conditions on which the British would be willing to join the Community. I replied that our country being a small one, we looked upon part of the agricultural production of the Commonwealth countries, and particularly of Canada and New Zealand, as part of our home production, and that, in my opinion, Britain would ask for a licence to continue to import from these countries up to the level we had reached at the date of our application.
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At that time this was unanimously accepted and considered to be a very reasonable stipulation. Of course there would be safeguards written in against our re-exporting any of that production, or against raising the level of home production so as to export it without paying the levy. But with these safeguards there was no objection to the suggestion I made, and in any political discussions since I have always adhered to this point. I suggest it is relevant to-day to bear this in mind. This is not a matter to be argued with the Commission. Before any negotiations are started with the Commission I suggest that "heads of agreement" (and they could be put on to a single sheet of paper) should be drawn up and agreed between this country and the Council of Ministers. This is a political venture and it requires a political decision at the beginning, between this country and the Council of Ministers, leaving the details to be worked out subsequently in negotiation with the Commission in Brussels.
My Lords, in order to facilitate a political decision it seems to me that not only do certain matters need the attention of Her Majesty's Government, but Her Majesty's Government should state their views upon these matters now. I should like to mention some of them. First, if we join, do Her Majesty's Government envisage that European views should normally be expressed through an enlarged Council of Ministers? There is much talk about a common foreign policy, but what means do we envisage to express that common foreign policy? Secondly, some EFTA countries may be accommodated within the Community in negotiations into which they may be drawn, but others will not be accommodated within the Community: I am thinking particularly of the so-called neutral countries, Sweden, Switzerland and Austria. Is it the opinion of Her Majesty's Government that those countries should retain at least the advantages in tariff reductions which they have secured through their membership of EFTA? I feel that on a matter of principle like this Her Majesty's Government should make a disclosure of their views.
Third, the system of weighted voting in the Community has been very carefully worked out to avoid undue pressure being brought against any member. I

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have seen no satisfactory method that could be applied to, say, ten countries instead of six. It would be helpful to know if Her Majesty's Government have studied this question and whether they can suggest any solution for this problem. The Community must avoid being torn into opposing parties where some countries will be forced to accept a decision contrary to their interests.
Fourth, have Her Majesty's Government taken a look at the wideness of British citizenship? Would this need adaptation, in view of the provisions of the Treaty of Rome regarding free movement? If so, this is a question that we might well deal with before we come to negotiations, because it concerns us and nobody else.
Fifth, What are the views of Her Majesty's Government upon the definition of powers, if any, which they are ready to surrender to a European Parliament? In the talks that were held with the Italian Ministers here there was a reference to a European Parliament. Some views were expressed which some of us found a little surprising. If the Government have any views as to what powers they should surrender to a European Parliament, it would help us very much to know where we are or where we may be.
Sixth, how far are Her Majesty's Government ready to go in harmonising our welfare services and our taxation levels with the countries of the Community? That is a subject which we could work on before the negotiations start, so as to know how much adjustment, if any, is necessary.
Seventh, do Her Majesty's Government consider the European Convention on Human Rights a satisfactory alternative for habeas corpus in the event of the arrest of a British citizen in a country of the Community? I think that recently attempts have been made to define the period which could elapse after an arrest before a charge is made. The conclusion reached, I understand, was that a delay of more than two years would be an unreasonable time to keep a man waiting. I do not think this is a very satisfactory position for a British citizen moving about freely, as the Treaty of Rome suggests, in Germany, for instance, or some other countries of the Community. I suggest, with respect, that this is a matter to
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which the noble and learned Lord the Lord Chancellor might give some attention.
Lastly, where do Her Majesty's Government stand on the question of curbing inflation—the fear of world inflation referred to recently by M. Giscard d'Estaing, the French Minister of Finance? Are Her Majesty's Government in favour of the creation of a stable European currency, possibly tied to gold, which might be useful as a reserve currency, as an alternative to the dollar, which is no longer convertible within the terms of the Bretton Woods Agreement.
If Her Majesty's Government are not prepared to answer these questions to-day, perhaps we might have at an early date another useful White Paper on them and other questions which have been raised in this debate.
6.17 p.m.
LORD WALSTON: My Lords, your Lordships have already listened to two interesting and authoritative speeches on agriculture, and I propose to subject you to a third discourse on the same subject. I do not do so because I am in any way obsessed with the importance of agriculture in this whole matter of our entry into the Common Market: to me it is inconceivable that a historic decision of this sort could possibly depend upon the interests of 3½ per cent. of the population in this country. And, in parenthesis, I would add that in my view the majority of that 3½ per cent. engaged in agriculture would in fact benefit considerably from our entry into the Common Market.
Nor can it depend upon such matters, important though they may be, as the price of butter. The noble Lord, Lord Harlech, in his admirable speech has given the real reasons why, sooner or later—and I very much hope sooner—we must become members of the European Community. But it is quite clear that agriculture is of very great importance, and very great interest, to all of us in this country who study this problem, and to those in the Community also. It is of interest not because agriculture is a way of life to 3½ per cent. of the population here, or to something between 12 and 15 per cent. of the population of the Community, but because it is a source of food for everybody throughout the whole of the world: so that people are naturally concerned with what is going

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to happen to their supplies of food and the price they have to pay for it.
We have heard from my noble agricultural friends—and I am sorry that the noble Lord, Lord Woolley, is not now here, because some of the things I shall say may be somewhat critical of him. We have heard from both noble Lords how very different the Common Market agricultural policy is from the British policy. We have also heard how admirable and how successful our own policy has been, and still is. I think that my right honourable friend the Minister of Agriculture might well have been pleased to hear these comments, particularly from the noble Lord, Lord Woolley, during the negotiations he has recently been carrying out. But it is good to hear that this policy has so much support in such an influential place.
My Lords, are there really such basic differences between the Common Market agricultural policy and our own? First of all, I suggest to your Lordships that our objectives are the same. What we want to do in this country, as indeed every sophisticated industrial country must want to do, is to ensure a reasonable supply of food and an adequate supply of food for the people of the country, whether it comes from home sources or from imports. It wants to ensure a favourable balance of payments; to ensure that those who are engaged in agriculture have a reasonably high standard of living, a standard comparable to that of people engaged in industry and, what is more, one sufficiently good to enable them to progress in their efficiency and to invest more money in such a way that it will accrue not only to their own advantage but to the advantage of the country as a whole; and to ensure, finally, that our industrialisation and our supply of labour in industry will not be interfered with and that our overseas trade will flourish. These, I suggest to your Lordships, are the objectives of our agricultural policy.
The agricultural policy of the Community, as stated by the Community, is that the factors which are taken into account by the Commission in Brussels for fixing their price levels in their Community are: first of all, the total agricultural income; the welfare of the farmers and the farmworkers themselves; the relative profitabilities of different crops in view of the needs of the Com-
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munity; the supply of food, the food that the Community wants from its own sources; the provision of consumer supplies at reasonable prices; the Community's role in world trade, with particular reference to international commitments, and the cost of financing the Common Agricultural Policy. Those are the Community's objectives. We know very well that in certain of them—not in all, but in some—the Community has failed. I do not think that we in this country can say that we have succeeded 100 per cent. in our own agricultural policy, though I fully agree with my noble friend Lord Donaldson that we have succeeded far better than the Community has up to the present time.
To turn to methods, there are certain significant similarities in the methods that have been adopted both in the Community and at home in Britain. In both areas prices have been fixed by Government action or intervention. There is no question of leaving to the free play of the markets the prices the farmer gets. In one form or another, there are guaranteed prices which bear only a tenuous resemblance to world prices. That is the first and most basic similarity between the two. The second one is that, in spite of what many people, including the noble Lord, Lord Woolley, say, there is in both areas an annual re-assessment of prices, in the light both of profitability and of the production of crops—call it an Annual Review or not, as you like. But if he were here, the noble Lord would say to me, "Yes; but in the United Kingdom system the farmers' representatives come into consultation with the Government". Of course they do, my Lords. But what good does it do them? They consult, but they cannot dictate. The Government listen to what the farmers' representatives have to say, and the Government make up their mind; otherwise, we should always have an agreed Review. I suspect that when we hear the result to-morrow of this year's Price Review we shall hear that it is not an agreed Review.
In the Community the Commission recommend to the Council of Ministers what the prices should be. They recommend these annually. In making these recommendations they naturally pay

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attention to the general position and to the wishes of the farmers' representatives, though there is no formal consultation— a weakness, I believe, but still not a basic difference from what goes on in this country. Clearly, when they come to approve, or to modify, the recommendations of the Commission, the Council of Ministers, being elected politicians, bear very much in mind—far more than our politicians do—the feelings of the farmers, solely because the farmers in the Community have a larger number of votes than they have in this country. So in those two basic aspects I suggest that there is a strong similarity between our two systems, upon which we can build when we come to negotiate the actual terms of our entry in so far as agriculture is concerned.
Now let me move quickly on to the second point. What are the general terms that we should hope for in our negotiations with the Community? First of all, I suggest that we should accept, once and for all, the outline of the Common Agricultural Policy, in so far as it lays down that the home producer has first call on the home market. That is an essential article of faith in the Common Agricultural Policy. I believe that we should accept that. But—and here is a most important "but", and it was rightly mentioned by my noble friend Lord Donaldson—we must at the same time insist that the policy which the Community takes with us in it is one that will prevent the appearance of increasing surpluses, which, as we have heard, and as we know so well, only pile up and have to be dumped at prices that cost the Community as a whole an in-ordinate amount of money. They are well aware of this; they know it perfectly well. Again, as we have heard, Dr. Mansholt and his colleagues are working hard, and with the good will of the Governments of the Six, in order to overcome this. I believe that here we can be of help to them. We must be adamant that the steps taken should be adequate steps. I am not despondent about it because, after all, they have already taken steps to reduce their surplus of sugar; they have restricted the actual area on which sugar is grown, and they have reduced the price paid to the producer.
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The second line on which we must be very firm is that our total contribution to the common agricultural fund should have an upper limit. Here I do not think that we shall meet very great difficulties. This is a principle that has already been adopted in the Community, the six members of which each have an upper limit above which they do not contribute. I believe that we should press for a modification of their form of annual price changes so that it comes somewhat more in line with our present Price Review.
There should be consultation between the joint farmers' representatives—and farmworkers' representatives, too, I believe—of the whole Community with the Commission in Brussels, and, if possible, they should agree between themselves what should be the prices to be recommended to the Council of Ministers. If they disagree, it will be up to the Council of Ministers, as it is at present up to the Government in this country, to decide between them.
I am in no way despondent, as the noble Lord, Lord Woolley, was, about the technical difficulties of organising agriculture on such a vast scale. Of course it presents problems, but in some ways those problems are less severe when one is dealing with nearly 300 million people, and a range of climate and population such as will occur in the enlarged Community, than the problems which occur in a much smaller and more self-contained community.
Let me turn to two points also mentioned by my noble friend Lord Donaldson, sugar and butter. Undoubtedly, those commodities give rise to two of the most difficult problems which are uppermost in the minds of people who give thought to these matters. I entirely agree with him that the Commonwealth Sugar Agreement must be retained. I think we must do so even if for no other reason than our obligations towards those Commonwealth countries from which we take our sugar. But what are the actual figures involved in this? We produce at home approximately one-third, 30 per cent., of our total sugar consumption. We buy under the Commonwealth Sugar Agreement, approximately 55 per cent. which leaves 15 per cent., in round figures, which has to be imported outside our obligations to our

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home farmers and Commonwealth producers. That 15 per cent. could well, I believe, be bought, and we should under-take to buy it, from the reducing surplus of the enlarged Community. All the projections that I have seen suggest that even at present production rates that surplus will not be a very large one, and if the measures which Brussels has mounted succeed it will be still smaller. If we were to take 15 per cent. from them, it would go a long way to absorb their entire surplus, and we could still stick to our agreements with the Commonwealth producers.
When we turn to the subject of butter the position is different, but far from hopeless. At present we are importing something like 450,000 tons of butter, and of that something like 150,000 tons come from those countries who would be members of the enlarged Community. In other words, we should still have to import a further 300,000 tons. If we were to take an extra 100,000 tons from the Community itself, that would absorb not their present 400,000 tons surplus, but what is likely to be the surplus that they will be producing at the time of our entry, assuming that they do not reduce their total dairy production at all. Therefore we could satisfy them by taking that 100,000 tons, and it would still leave us something like 200,000 tons to import from outside the Community—in other words, from our traditional suppliers. At present we are bringing in about 175,000 tons from New Zealand; so, if we wished, we could continue to take 100 per cent. Of the New Zealand supplies, and have 25,000 tons left over for other people. Possibly we should reduce the supply from New Zealand by a certain amount and take some from Australia and other traditional suppliers, leaving some to come from Finland, Poland, or the other countries that send it to us at the present time. I do not want to weary your Lordships with these detailed figures; I give them only to show that even this problem of butter, which has been so played up, when one looks at the figures with some care, does not present anything like an insuperable problem.
What about the cost? My noble friend Lord Shackleton dealt in considerable detail and with great clarity
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with the cost to the consumer, and he quoted Table 7 in the White Paper which we are discussing. He was right to point out that one of the important points in this Paper is the fact that it shows so clearly the great difference in retail prices, even in the Community, between comparable commodities; which emphasises the point that the actual cost of the raw material is by no means the determining factor in the cost that the housewife has to pay. For instance, if one looks at sugar one sees that there is a variation from 1s. 1d. in France to 1s. 6d. in Italy; a variation of nearly 40 per cent. in the price, although there cannot be much variation in the quality of sugar. If one looks at bread, one finds there is a variation between Belgium and the Netherlands at 11d., and France at 1s. 4d.—something like a 45 per cent. variation in price. That is in spite of a common agricultural price for the raw material, for the wheat. So it simply does not follow as an argument that because our raw materials will, in certain respects, undoubtedly cost more, there will inevitably be apro rata rise in the cost when it appears in the shops.
May I give your Lordships just one figure which bears out that point in this country? Between the years 1958 and 1967 the price of home-grown wheat on the market, as paid by the miller, rose by 4 per cent.; the price of imported Manitoba No. 2, which is the main ingredient of our bread, rose by 14 per cent. One might therefore have thought that the price of bread would rise by something in between those two figures— something like 10 or 11 per cent.—but in fact the price of bread rose by 54 per cent. Therefore one can almost say that in certain cases the cost of the raw material is insignificant when it comes to the cost of the final product. For those reasons, I am not unduly impressed by the calculations of a rise in the cost of food to the consumer. It will go up, there is no doubt about that; but I am satisfied that the figures my noble friend Lord Shackleton gave on the rises in wages and salaries will undoubtedly take care of any rise in the price of food that may take place, and so the standard of living will in no way fall.
So much for the cost to the consumer; now for the cost to the Exchequer itself. There will be a saving there, because we

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shall be saved the larger part of the £ 250 million—or maybe by to-morrow it will be still more—that is spent every year in agricultural subsidies. So there will be the possibility of reducing taxes as far as the taxpayer is concerned. I cannot weary your Lordships with the calculations which have led me to this figure, but I am of the opinion that the maximum cost in foreign exchange on the agricultural front of joining the Common Market would be in the neighbourhood of £ 250 million a year—I repeat, the maximum cost. That is taking the present situation as static; but of course it is not static because it depends on the movement of world prices and the ratio of prices in the Community to prices in this country, and I strongly suspect that when to-morrow comes we shall see that the ratio has closed considerably, which would reduce the cost very considerably. There is also the important effect which higher prices to the home producer in this country would have on production. Your Lordships will remember the "Little Neddy" Report which—I think I am correct but I am speaking from memory—spoke of an increase of £ 180 million worth at the end of 1972 or 1973. The Government reduced that target to something like £ 160 million. But if we were to achieve that during, I would suggest, the four-year transitional period, the cost in foreign exchange woud be reduced by the amount by which our home production would go up. If it went up by the full £ 160 million, it might well be that the cost in foreign exchange to this country would be under £ 200 million a year.
I repeat that the agricultural picture, although an important one, is in no way the determining factor in coming to a decision about the Common Market. All I would say is that the rise in food prices, the cost in foreign exchange because of our change of agricultural policy, the effect on our farmers of adopting to some extent (in the way I have outlined) the Common agricultural policy, need cause little, if any, hardship, and need be no deterrent whatever. My Lords, I hope that Her Majesty's Government will press on with all deliberate speed.
6.40 p.m.
LORD CACCIA: My Lords, after two days debate in another place, a London
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newspaper opined that everything that could or should be said about the White Paper had already been said. So why say it again? On listening to previous speakers and reading recurrent opinion polls, my answer would be that there is surely something to be said for this debate—indeed, for a continuing debate— on a question as fundamental to the national interest as this is.
For myself, my only claim to take any of your Lordships' time is that I was Permanent Under-Secretary in the Foreign Office during the first negotiations with the E.E.C. But I shall not of course weary your Lordships by trying to recount, like some Ancient Mariner, all the lessons that might be learned from that rather doleful experience. Rather, and to be brief, I will restrict myself narrowly to the terms of the Motion, to take note of the White Paper, and speak designedly without passion and in a minor key.
First, it is only fair to recall that Her Majesty's Government now, as Her Majesty's Government in 1961 to 1963, are under the handicap that they must at one and the same time try to inform and convince the public at home and negotiate abroad. While nowadays in the Western World we may all favour open agreements and set our faces against secret treaties, most would accept that this open diplomacy does not normally mean that open agreements should be openly arrived at. In such circumstances, there would indeed be precious few arrivals to report. But in the case of these negotiations, we are close to that. My sympathy now, as earlier, goes to the Government. What is wise to tell your countrymen openly may give hostages to fortune in negotiating. In case of doubt, I personally am in favour of inclining towards informing and convincing the public and taking a chance on it. I therefore support the publication of a White Paper.
Next, we are told that whatever the economic advantages long-term may be of joining the E.E.C., these should not be considered in isolation, and that the political factors may indeed be of greater significance. But surely the White Paper, though explicitly an economic assessment, in fact sets out the political elements sucoinctly but fairly, even generously, in paragraph 3. And here I must say a word of warning. Some now tend to

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talk as if the political benefits were there for the taking. If we look at things as they are, rather than what they might ultimately be, we should be forced, I think, to accept that it will be exceeding difficult to hammer out agreed European policies in foreign affairs and in defence.
The French, as we have seen recently, are often the odd men out and are not in the smallest embarrassed at being, like Jeeves on a certain occasion, a solemn procession of one. Does anybody seriously argue that in the foreseeable future the French attitutes towards NATO, towards the Middle East, towards Africa or over their very real agricultural problems are likely to change radically, and that they will abandon their views and interests in order to be convenient to an enlarged Europe and enable it to speak with unified, and thus hopefully with enlarged, authority? If so, they have little knowledge of France and far too little respect for her. "Oh, you Foreign Office people are so anti-French" (before the war it was so pro-French) I have heard some say when faced with this dilemma. Not at all, just respectful and mindful of M. Massigli's aphorism during the war: that although France could rarely achieve anything single-handed on the world stage it was often found that she had a veto. So let us be honest about the political factors. Let us not pitch the public expectancy too high for the near or even mid-term. Let us be content to say that it should be less difficult to hammer out European policies if we are in than out of the E.E.C. Then, I submit, we shall be on safer ground.
Thirdly, I was glad to see that the Government took the view that it would be as much a tragedy for Europe as for us if these negotiations failed. Exactly so. The corollary is that, although we and Europe should be better off politically and economically and in defence if we and our associates are in rather than out, the alternative is not national disaster. On the economic side, perhaps we can look again at economic arrangements short of membership, as the French have suggested. Perhaps there may be possibilities in wider arrangements through the GATT which would avoid the drawbacks of economic clubs about which the Financial Times wrote yesterday. Per-
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haps if once again entry is made impossible for us, we may explore the line suggested by Governor Rockefeller in a notable speech on November 5 last, when he wholeheartedly supported our renewed attempt to enter the European Common Market, but went on:
"If such a role for Great Britain does not emerge in Europe, it is essential to the future of the free world that the bonds between the English-speaking peoples stay strong. If Britain does nor join Europe, surely our nations must be joined firmly and lastingly, for we are more than neighbours in the world community. We are brothers in the world family."
On the political side, perhaps we can make some further use of the Council of the Western European Union to try to achieve common political policies and defence policies in Europe. These are just a few illustrations to show that, without much invention and much initiative, there are already a good many possibilities outside the mechanism of the E.E.C. which could be made "live" if the need arose. There is an Australian saying known to many of your Lordships when a vital choice has to be made, "Sydney or the Bush". All or nothing. Here I at any rate agree with what I understand the view of the Government and the Opposition to be, although rather differently expressed. This is that the choice before us is not "Europe or the Bush".
It has also been argued that the mere publication of the White Paper was a tactical mistake, for it might have been read by the Six as implying that our determination to seek admission had weakened. I have seen no evidence of this. The German Chancellor on his recent visit gave no public hint of any such thing. Surely we can take it that the nerves of the Governments of the Six are not so on edge nor their judgments so insipid. Nor have I seen any attempt on their part to argue that the economic analysis was itself biased one way or the other. It was certainly vague, but at this stage I should have thought that quite inevitable.
Some have argued, "If you cannot be precise, why do it at all?" That brings me back to my first point: the need to inform the public at home as well as to negotiate abroad. Let me therefore in conclusion return to the point that I made to begin with: that the Government at this time have an over-riding obligation to inform their public, and that in

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doing so they should be entitled to take some risks in saying enough to give the public a basis for forming a judgment.
I would therefore on balance support this White Paper, and would not myself think that our negotiating position with the Six has been damaged in any serious way. Both political Parties—indeed, all three Parties in this House—have expressed their determination (and I welcome this) to seek entry if proper terms can be negotiated, and this White Paper helps us all to make up our own minds what might be meant by "proper terms", or perhaps, more easily, what might not constitute such terms. Of course, the White Paper of itself settles nothing; no one ever claimed that it would. But it sets out the parameters of this problem. On balance, and with respect, I should have thought that that was worth while and that, in the terms of the Motion, the British public, as well as this House, might with some profit take note of it. No more. No less. No bouquets. No brickbats. Just that.
6.50 p.m.
LORD MOYLE: My Lords, we have had a very interesting introduction to this all-important debate in the very well reasoned and dispassionate speeches both of my own Leader, my noble friend Lord Shackleton, and, of course, the noble Earl, Lord Jellicoe; and we have had some interesting speeches from other noble Lords. The one which appealed to me was the excellent speech of the noble Lord, Lord Woolley. It was, I thought, based on fact, whereas most of the speeches in the other place, and indeed in this noble House, were based on faith. Even the speech in another place of my right honourable friend the Foreign Secretary was based, of course, as he admitted, on assumptions. Being a trade union product, I was brought up on the simple premise that one does not accept judgments unless they are based upon ascertained evidence.
My difficulty is that we are called upon to pronounce judgment upon one of the most fateful issues that has ever faced British democracy, and we are called upon to pronounce this judgment on the basis of assumptions. If one reads the White Paper—my noble friend the Leader of the House himself said that it was not possible to produce accurate data—
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one finds that much of it is tentative, and therefore I would put this question to this noble House: why make a decision now, in the absence of evidence? Why not wait until we have had an opportunity to sound the Common Market and to sound those in control of the Common Market to find out exactly what are the terms on which we shall be called upon to enter? I find myself in this position: that I am against the Common Market, but not wholly against it: I am relatively against it. I must be satisfied that the terms for Britain's entry are such as accord with the interests of the British people as a whole, and not just with those of newspaper proprietors or of leaders of heavy industry. It must be. so far as I am concerned, a judgment which accords with the interests of the British people as a whole.
My Lords, it is not easy to decide when one listens to a speech such as that made by the noble Lord, Lord Woolley, who speaks with authority on agriculture, as one of its leaders. We all know, as he said, that British agriculture is an efficient industry; one of the most highly mechanised agricultural industries, if not the most highly mechanised, in the world; and when he tells your Lordships that through our agricultural system we have been able, domestically, to make a contribution to our balance of payments of £ 300 million more than was made by British agriculture ten years ago, it makes one think. One cannot throw that in the maelstrom of European politics without having some compelling evidence on which to go into the Common Market, when we know that, if we accept the judgments of the Continental leaders of the Common Market only this weekend, what is not negotiable in the conditions of entry is the agricultural policy of the Common Market. My Lords, if that is so, I should have to think twice before I could support by my vote the entry of British agriculture into the Common Market, when I have a feeling that we shall be taxed in order to provide a featherbed for French agriculture. I merely put the question. I cannot answer it; I do not know the facts.
But there is another point which exercises my mind. I was in the other place for not quite twenty years, and I went through the 'fifties, when Mr. Harold Macmillan was the Prime Minister and appointed two excellent members of his

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Government to carry out negotiations with a view to our entry into the Common Market. They were the right honourable Member for North Barnet and the present Leader of the Opposition. Those negotiations went on for months. Little, if anything, was got out of it. But contemporary with that period of uncertainty and frustration we were having speeches galore from all quarters saying, "If we do not go into the Common Market, Britain will sink into unsplendid isolation, being pushed about by every Tom, Dick and Harry. It will cease to have any influence in the world, and will eke out its future as an offshore island". If ever a body of people spread gloom and despondency throughout the British nation, it was the then Prime Minister and his supporters.
What were the adverse effects of that? It depressed British agriculturists and industrialists. They began to wonder just exactly what the future held for them; and, of course, it hastened the disintegration of the British Common-wealth of Nations. The British Common-wealth countries lost heart because we had lost heart. Indeed, we were reduced to the abject position of running after General de Gaulle like a fox terrier yapping at the heels of its master—and this was Britain! We became, in that period of time, camp followers and not pioneers.
I am not competent to argue the conditions of entry, but I know that for the last few years people have come from France and from the Low Countries to Dover, to Margate, to Cliftonville, to Brighton and to Eastbourne to make purchases of food and clothing and boots and shoes, because the say that they are able to come here and enjoy the cheap markets of this country and still be in pocket after having defrayed the costs of their excursions from the Low Countries and from France. Those are inescapable facts that we have to consider.
My Lords, there is another argument, the argument of defence. What are we asked to do by some of the Common Marketeers? We are told that Britain is without defence, or at least that we do not have a defence that can stand up to the super power of America and Russia, and that we should constitute a Third Force by going into the Common Market. Let us look at that. Is there anything in the
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Continental position that encourages us to risk our future defence in the hands of different European countries? What about the political instability of the last 30 years in Europe? What about the development of the Communist movement in Europe—to give Italy and France as just two examples? Are we expected to commit the future defence of this country to the European Community? What is wrong with America? America stood by us in the First World War—and I am old enough to remember it. America stood by us in the Second World War. And they are standing by us now. If we have to choose an umbrella, let us at any rate choose our known friends and not put our trust in those who have yet to prove their loyalty to Britain. Therefore, so far as I am concerned, having been for a whole lifetime a supporter of the Anglo-American Alliance, I see in that link with an English-speaking community far greater security than in any alternative that is based on the instability that has for far too long prevailed in European countries.
One final word. The Brussels Commission, a bureaucratic body, as I under-stand it, is answerable only to the Council of Ministers. Faced with this bureaucratic system, are we not entitled to be assured that if we go into the Common Market the British Parliamentary system of democracy will not suffer? It has stood the test of time and, with one Cromwellian exception, has given us for over 600 years a political stability that is the envy of the world. Are we to treat that so lightly as to put it at risk by surrendering part of our sovereignty in order to strengthen, as it were, this bureaucratic organisation of "Wise Men", as they are described. Without hesitation I say that I am not prepared in any way to compromise the British Parliamentary system. For me, self-determination must be unquestioned and in no way restrictive if we are to be brought within the European Community.
My Lords, I come back to the point that I made at the outset. I am unconvinced by the evidence that we need to go into the Common Market in order to ensure a prosperous economic future for the British people.
On the assumptions upon which most of the Common Marketeers base their argument, I am entitled to say that I

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should find it more in accord with our history if we, the British people, set out as pioneers to try to evolve a North American Atlantic Free Trade Area, open-ended so that all who wish may come in. That, to me, is a much healthier, nobler and more world-wide concept of future relations for Britain and its Commonwealth than anything that the European Community can offer us.
7.6 p.m.
THE EARL OF LYTTON: My Lords, the fact that one of the speakers has dropped out has made me the 13th on the list. Looking around for a favourable omen to compensate me, I noted —but also note that it has just gone—in the buttonhole of the noble Lord, Lord O'Neill of the Maine, the emblem of St. Patrick. I do not know quite whether that is a double bad omen or not.
I am glad to follow the noble Lord, Lord Moyle—not that I agree with most of what he has said. My position is different; but I have every sympathy with him when he finds the White Paper which we are asked to "take note of" unconvincing. I find, for example, that Table 8 which, if it were correctly and not confusingly set out would be a compound of 18 variables, produces a theory of relativity that takes one off the ground altogether and conveys no conviction to anybody. If I had need of that conviction from the White Paper I should not have got it and I would refrain from showing it to others. People come to me and say, "What do you think of it?" I have to try, as many of your Lordships do, to persuade them of what we believe to be the right reasons for signing the Treaty of Rome. I follow the noble Lord the Leader of the House in accepting that, with all-Party agreement, we have applied; and I am not going to discuss whether we should or should not have done so. We go on from that point; it is a standpoint from which we must advance.
The noble Earl, Lord Jellicoe, referred to the cost of food as mentioned in the White Paper and said it appeared to the British housewife very much as the last straw on the camel's back. It appears to me, from the reactions of camels to various loads, that it is very much as if I approached a camel that had been
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loaded up with 400 lb., and started getting on it. I think it is unfortunate that it should be presented in this way. It is such an enormous increase in the price of food, and that, in a sense, is the "sacred cow" of the British urban dweller—cheap food from the cheapest market in the world. I think it hits them very hard and that it will take a good deal of reassurance before they see their advantages.
I am convinced as passionately, perhaps, as the noble Lord, Lord Harlech, in another way, that unless this entry into the Common Market, into the Community, is shown clearly as being to the economic advantage of our people, it will not stand the strain. They will not accept it heartily; they will never be enthusiastic about it. As they are not enthusiastic about Westminster politics, they certainly will not be more enthusiastic about those in Brussels. Unless the economic advantage is clearly theirs; unless it is a matter of consumer interest, it seems to me that we should be building on an incorrect foundation.
We may have protests against what is called the "Nine-line Whip" with representatives of some of the farmers, if they are against it (I am a farmer, and I am not), coming up with the housewives in a kind of democracy of incantation, "Europe, out!", unless our people are carried with us. I hope they will be, and I hope that some sort of Paper will be issued which starts with the admirable economic picture painted by the noble Lord, Lord Harlech. He mentioned bread and butter, but it was on such a high level that it did not come down to those who actually spread it. If we can supplement what he said, so that people really understand that entry into Europe is advantageous economically, that is what is wanted; and I hope that it will be done persuasively. Perhaps the noble Lord, Lord Harlech, can be enlisted to help to write the next Paper which goes out on that aspect of the subject.
My Lords, I turn to the balance of payments. I have rehashed what I proposed to say, because I do not wish to repeat too much of what other noble Lords have said; but I want to try to explain what is still a bother to me. I have read the speech made in another place by the Chancellor of the Exchequer on this

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subject of the balance of payments, and though it is a mine of useful information I could not find that which I thought related most to the circumstances before us. I noticed that the noble Earl, Lord Jellicoe, spoke of his worry about a balance of payments fragile through lack of growth. I do not know whether the noble Earl made a mistake, but my worry is the opposite. I am afraid of the impact of a weak balance of payments on our growth rate, which I believe is the essential factor. I cannot get an assurance on this matter, and there are certain aspects which worry me. I agree with, welcome and congratulate the success in producing a strong balance of payments. But this balance of payments is against an enormously long history of recurring weakness; almost back to 1925—the economic consequences of Mr. Churchill and all that. And just a temporary success is not in itself entirely convincing to me, especially as all our controls are still on, except the one control that really matters; namely, the control over the massive increase of wages all over the country. That is the danger that bothers me.
I think I heard the Prime Minister say —I trust I may be corrected if I am wrong—that we have reached a situation where one man's wage rise in another man's price rise. It is that fact which bothers me, because continuous, galloping inflation is a recipe for soaking the poor and sinking the balance of payments. It is that which continues to bother me. I do not wish to attribute blame; it is a most difficult problem which has defeated both major Parties for a great many years. I am, therefore, not reproaching anyone. I am merely saying that we do not have control of what is the essential factor of control. It is that which, I suspect, influenced the French more than anything to exercise their veto; that an elephant, lame in that way, with a weak balance of payments, would be a handicap in Europe. It is true that they also are a bit lame, but that does not make it any more easy for them to accept anybody else—one is enough. Therefore, I am still uncertain whether, first, we shall not be vetoed again from the same source for the same reason; and, secondly, whether if we go in, we shall not have continuous trouble and have to be propping up ourselves with the help of others. That is a posi-
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tion in which we ought not to be. For so long, up to the First World War, we were supreme in handling balance of payments problems and we should be able to do it again. I hope we can have some assurance that my fears are not well-grounded; but there they are, and I am among those who have to try to convince others.
Lastly, my Lords, there is the political factor. The Treaty of Rome, a copy of which I have before me, indicates that it is an economic community. Article 1 simply states that by this Treaty the parties establish, set up, a European Economic Community. Article 2 gives five sound economic reasons, aims, targets, tasks—or whatever it is. Incidentally, I am using the English translation which, I understand, is not an authentic version. Only the last indicates anything that might be construed as political; and it is, I should have said, political in the sense of what is necessary to carry out the economic tasks. That is what the Community is.
THE MINISTER OF STATE, FOREIGN AND COLONIAL OFFICE (LORD CHALFONT): My Lords, may I interrupt the noble Earl for a moment to ask whether he has studied with equal care the preamble to the Treaty of Rome? If he does that, I think he will find the answer to his question about the political nature, the political aims, of this Community.
THE EARL OF LYTTON: My Lords, I am very deaf and I did not quite catch what the noble Lord said, except that I shall find the answer somewhere. I should be very glad to find the answer.
I would only add to what I was saying that the statement made by the German Chancellor, Herr Willi Brandt, on "Panorama", as repeated in the Daily Telegraph, that all they are after is a qualified political co-operation, without supranational elements in the area of foreign, political, and security operations, seems to me the correct attitude of the Community in political matters. If it is not, the Germans can prevent its being anything else, because the opinions and views of one are sufficient to determine the limits beyond which the others will not go. And it seems to me that that is the kind of entente cordiale which ought to delight us all, but which may take us fifty to a hundred years to develop—this

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feeling of common good will throughout Europe. But it falls very much short of many of the speeches of politicians who advocate, both in another place and in this House, the supremacy of the political over the economic. That does not seem to me to be envisaged in the Statutes of the Treaty that we are contemplating joining and certainly not in the thinking of Herr Brandt, who I imagine would see in it a recipe for consolidating the Berlin Wall, for dividing brother from brother for ever, and for accepting the Iron Curtain as a permanent division between the countries of Europe.
Indeed, my Lords, I am a little on the opposite side of most people in their treatment of these countries. I notice that they are called "satellites", whereas I always refer to them as captive nations, which I would gladly see liberated. And I would work for that purpose by putting up an example that would cause the bastions of the monolith ultimately to collapse. I was rather horrified, in reading parts of the Report of the defence debate in another place, to learn that in certain circumstances we would lob a tactical "Hiroshima" into the satellite countries, by way of deterring the Soviet Union from further advances if the Red Army did advance into Europe. I have a totally different conception of what the attitude should be towards the captive countries in Eastern Europe. It is a part of the old question of Europe which I should like to see freed; and Russia as well. It will come, if we are patient. That is the third matter which I find difficult to follow. Although I agree that in Parliament it is generally accepted that the political dominates the economic, I regard that as what I call the Westminster gloss on the Treaty of Rome, which I do not think the Germans will accept and which, for all sorts of reasons, I hope they will not accept.
I should like to assure those who have been doing the work on this White Paper that I think the Paper is a remarkable achievement: it reveals an immense amount of work on the variety of circumstances that could arise, and I think that they deserve great credit. Though I cannot myself use the White Paper very much in persuading my fellow country-men I hope that Her Majesty's Government will address themselves to the
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housewife, on the ground that there are great economic advantages to her in our joining the Community.
7.23 p.m.
LORDTHORNEYCROFT: My Lords, we have had a fascinating debate, including many notable contributions, not least the elegant and interesting speech which the noble Earl, Lord Lytton, has addressed to the House. I enjoyed particularly the speech of my noble friend Lord Harlech, but perhaps most of all I enjoyed the speeches of the noble Lords, Lord Woolley and Lord Moyle, because it is the essence of a debate that there should be two sides to the question and it is difficult to intervene in a sensible way unless one has someone with whom to discuss. I hope to have an opportunity in a moment of dealing with one or two of the things they said.
We are also assisted by having a White Paper. I think that someone said of the White Paper that its authors were charged with a combination of the impossible and the irrelevant. This is not the first time that public servants have been asked to deal with the combination of the impossible and the irrelevant. They are quite used to it. On balance, I think that in this case they made a good show of it. They demonstrated that, by and large, with all the information available it was extraordinarily difficult even for a body like Her Majesty's Government to say precisely where the material advantage is going to lie.
I think that that is a good thing to say. It is right that the public should know this. It would have led to a lot of suspicion and ill will if even those facts, however easy or hard it may be to deduce a line of policy from them, were somehow concealed. Nevertheless, the debate is not about how to ascertain the unascertainable, or even about cod fillets or the price of custard powder in Rome, though all those matters are bread and butter matters and are all relevant. But they are not what the standard of man's life is really about; it is much more complicated than that. The relationship between what a man pays for his food and for his house, for what he regards as necessities and as amenities, how much the Government pay and how much he pays for some things and even, if I may mention it near the Budget period, how much of what he earns he

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is allowed to keep to pay for these things—all these are directly relevant to the standard of living. However difficult some of these tables may be, just to take them in isolation and say that this is the standard of living or the effect that entry is going to have on the standard of living is, as all of us realise, a considerable exaggeration.
I find that the arguments are tantalisingly balanced. It is always dangerous to put the case against yourself, became that is the bit your opponents always quote, but I should mention, in case nobody can follow my argument, that I have always been and still am in favour of going into the Common Market. But the arguments against it are more powerfully held outside this House than have been expressed in our debate. It may be that our collective wisdom is great indeed, but there are thousands outside this House who hold a different view, who think that it would be much better to stand on the sidelines, to let the Community grow up, trade with it, but not get mixed up with all the irrelevant eccentricities (as the noble Lord, Lord Woolley, thinks) of their agricultural policies, dictated in part, because they are human as we are, by political timidity, the farming vote and all that. So there are many who feel that there would be solid advantages in trading with the countries of the Community, with all the advantages of cheap imports and so on.
There are people on the other side— and I thought that my noble friend Lord Harlech put the arguments with great dignity and brilliance—who see an immense opportunity opening out ahead of us, an opportunity which exists nowhere else. I will come to what the noble Lord, Lord Moyle, said about America. But there is this important view of an opportunity which exists in no other part of the world, of suddenly finding a market of adequate size for modern-scale business, a place where capital can be raised, a solid area which is defensible and which has everything on a vast scale that goes with the conception of a modern community in a modern world. My noble friend urged upon us with great eloquence that we should seize this opportunity.
I have listened to this debate for 15 years, because it has been going on for a long time. I can remember the first days when the idea of whether we should
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have anything to do with Europe was being debated in the Government. I suppose one ought to be careful about what one says about any member of a Government of which you have been a member; though everybody writes about them, and books come out from time to time, so perhaps I may make a few tentative observations. These Ministries have independent souls of their own, with their own policies and ideas deep in them. The Board of Trade is basically free trade; it wants to trade with the world. It has been the leader in the desire to get into contact with Europe. The Treasury are a little behind, more concerned, and properly so, with the balance of payments, and most anxious about the kind of figures that Sir Con O'Neill has produced in this White Paper. The Commonwealth Office (as it then was) and the Ministry of Agriculture were both in the early days faced by far the greatest range of difficulties. Both were steered by great men—and we have had the opportunity of listening to one of them, the noble Lord, Lord Garner, in this debate. They were led by men like Mr. Duncan Sandys and, in the case of the Ministry of Agriculture, by our present Ambassador to Paris to think along the lines that, with all the difficulties fully recognised, there were still opportunities for solving them.
Then there is the Foreign Office. I do not want your Lordships to think for a moment that I have any more doubt for my friends in the Foreign Office; I have too many friends in the Foreign Office for that. I recognise, and have recognised over 15 years, their difficulties and responsibilities. So if I content myself in your Lordships' House by saying to the noble Lord, Lord Caccia, that it may be that in the coming months they may have to move a little nearer to Sydney or a little nearer to the bush, he will understand what I have in mind. Perhaps I may say just one more thing to the noble Lord. As one who knows Sydney, and loves that beautiful city, I think there is not very much between Sydney and the bush. It is important to remember that.
So we are going to move towards a negotiation. It will be a tough negotiation. I am not very worried about the negotiation, because I have taken part in many negotiations. I do not pretend to be a brilliant negotiator myself, but I

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have learned a lot about negotiating. One thing that I have learned above everything else is that it is no good negotiating unless both sides reach a satisfactory conclusion. Good negotiators make sure that both sides have a reasonable satisfaction of their real responsibilities and wishes if they are attempting something of this character. What would be the point otherwise? To put it at its lowest level, if you are merging two firms you do not want to ruin one firm before you put it in the other. You must have the best measure of success. I think it will be a long and difficult negotiation, but it will be successful. And it will not be just about money and figures. It will be about faith and friendship; whether we are really prepared (this is a difficult thing about which to make up our minds, and the noble Lord, Lord Moyle, touched on some of the deep feelings there are about this) to go along with them, at any rate to the horizons we see, and try to look over them to see whether we can go even a little further. It is a big decision for the British people to take. But that is what the negotiation is really about.
With regard to choice, I know that we talk in these debates as though we had a great choice to make. We are, in a broad sense, politicians. Many of us have played parts of one kind or another in running bits of the great Establishment that goes to make up this country, or have sought to influence events by the speeches that we make: and we like to think that we determine a little what happens. I am just a little doubtful whether politicians determine quite as much as they say they do; whether they alter history quite as much as they think, and whether many of the great events of history have been altered quite as much as we sometimes think from reading the history books. If the Southern States of America had won the Civil War there would still have been a United States of America. If Garabaldi had never lived Italy would not be a long peninsula of rather contesting provinces. Things do not work that way. Events take place, new developments occur, science develops, agriculture grows—all different things happen. With the very events occurring around us, we find that we have to create new structures.
There has been mention of the Maud Report. I am not going to attempt to
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debate the Maud Report (I cannot claim to understand it), but we have woken up to the fact that the range of a horse and cart is no longer the right measure of a local government boundary in this country, and that something must be done about it. I do not know whether it is the right thing or not, but it is quite a big thing that we suddenly find we have to do. But this is a recognition of the fact, and not something that is just drawn out of the air. So it is with Europe.
The Europe that we are dealing with is not the Europe that was crudely drawing lines with rulers all over the world, with rather scant regard to the tribes or races which lived on either side of the boundaries, in the 19th century. It is not even the Europe that has torn itself to pieces twice in our lifetime. It is a Europe in which France no longer has an empire; in which German and Dutch colonies have broadly disappeared; and in which the influence of Britain in the outer world, whatever view one takes of the policies we pursue East of Suez, is obviously far less now than it was at the time when most of us were born. It is an altogether different Europe, living in a different world. It is a world in which Russia and America are immensely stronger; China is growing stronger all the time, and the other parts of the world—Asia, Africa, Arabia—are much more dangerous, divided, terrified and nearer to handling modern weapons than ever they were before. So, my Lords, what we are talking about is really a new Europe and a new world. When we talk about the choice that we make, we are not making a choice for something that we were brought up with; we are adapting a society to enormous events which have taken place in our own lifetime.
What is it that we want to do?—because, broadly, Governments will do what we want: and by "we" I mean, of course, not your Lordships' House, but the mass of the people in Europe. What are they doing at what I may call the working levels, the places where people do not talk so much, but really do a job? Find a banker to-day in this country who really thinks that he can conduct his business, or any large part of it, without constant contact with the capitals of Europe. They spend their lives in contact with them; and of course they go to

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other parts of the world as well. They spend a very great deal of their time, sometimes in face-to-face consultations, and at other times in committees, but month by month, year by year, their job is a pooling, integrating, shaping arrangement on the finances and currencies of Europe.
Then I would say (and I should not have dared say this if the noble Lord, Lord Woolley, had still been in the Chamber: I am always nervous of the noble Lord, for he knows a lot about the farmers): find a farmer to-day who is not thinking a great deal about what advantages he is going to take out of our entry into the Common Market. Find anybody in the research world, and you will see that he moves all the time between Hamburg, Cambridge, Milan, Eindhoven, Berlin, and all the research centres of the world. This is already forming European research: it is already being pooled.
Another example is industrialists. I work in industry to-day, and I happen to work in industries which every day are becoming more involved in association between Europe and this country. Find almost any industrialist to-day and you will discover that he is considering with whom he can link and unite, whose interests he has in common: not simply how we can get a bigger share of the European market—which has been mentioned, and is very important—but how, by building up his strength as a European firm, he can take a bigger share of the world market that lies outside. The noble Lord, Lord Harlech, dealt very well with this aspect. It is a choice whether we are to be on the same level, to deal in the same way; and we have to have a partner. We are doing this, and it is happening all the time. Some people may say, "If it is happening all the time, why bother about the Common Market?" But it is happening in face of almost incredible difficulties. There are the complexities, of the different taxation systems, the different legal systems, customs barriers; and the problems experienced by even great firms in getting together are formidable. They all want to move in the same direction, and if we want it done on the larger scale, then I am quite satisfied that in this field—as in others—we shall all have to have systems, structures and
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arrangements whereby there is a commonalty of arrangements that is at least sufficient for us to move along these lines.
I do not wish to detain your Lordships, but take, for example, defence—because this matter has been mentioned; indeed, it was mentioned by the noble Earl, Lord Lytton, in his speech. If we forget for one moment this rather terrifying thought of nuclear trip wires somewhere along the German frontier—and I hope we shall forget it; if we talk about the conventional defence of Europe, the fact is that it is utterly impossible without France being solid, absolute and in the centre of it. France, for this purpose, is Europe. We may have difficulties with the French; they may be awkward. But they are there, right in the centre, and it is not possible to defend Europe unless the French defence is built right into the middle, and unless there are bases behind the Pyrenees; because conventional defence means that anybody attacking has to fight inch by inch, and yard by yard, from the German frontier to the Pyrenees and Portugal. That is what defence is about. This is a matter that is a long way removed from a nuclear trip wire and is a far more meaningful arrangement.
Whether you consider this subject in connection with research or industry, or from a military point of view; whether you ask industrialists, soldiers or research workers, you will find that they are all engaged at the present time in Europe, making their arrangements and planning. In other words, my Lords, what I am saying is that this is happening before our eyes. And when something is happening before your eyes, you do not have a choice except to try to act sensibly to work out the best arrangements possible. We have good friends there. We have wise and skilful men, and our civil servants, from my knowledge, will be widely welcomed there. There is the greatest1 respect on the Continent of Europe for the English Civil Service's ability, integrity and sensible methods of negotiation. Of course, everything is not right there; but then everything is not right over here. Between us we have to do what has often been done before—not anything very dramatic, not the creation of a new kingdom, but the rather humdrum job of getting down and trying to get out something which fits the world in which we are living to-day.
7.46 p.m.
LORD ROYLE: My Lords, as I have sat in my place throughout the whole of this debate listening to almost every speech, I have wondered more and more at my own temerity in having put my name down on the list, because the speakers who have preceded me have a much wider knowledge and great ability. I have not been helped at all by the speech to which we have just listened. That thoughtful and impressive speech which the noble Lord, Lord Thorneycroft, has just delivered to your Lordships' House was very involved, and with the background of his experience in the Cabinet at the Board of Trade and the Treasury it is a speech which I could not possibly hope to follow. Therefore, whatever I have to say will be on a much simpler note, and much less involved.
The noble Lord, Lord Thorneycroft, referred to the speech of my noble friend Lord Moyle. Throughout our debate to-day my noble friend has been the only one who has really come out against joining the Community. He made a very powerful speech. It was very impressive, and would need a great deal of thought to answer it. His courage to-day has been magnificent. I have always respected him, but I respect him even more for having taken the line he has. He said one or two things with which I do not agree, but I admire his courage.
There is one point that I have time to deal with, and that is with regard to defence. I was almost amazed when my noble friend talked about the Americans being, as it were, our saviours in two world wars. I wonder whether he has forgotten that they did not arrive until 1917. I was in France at the time engaged in helping to train the half-trained American Divisions which came out. Has he forgotten that it was only because of Pearl Harbour that the Americans came in later in the Second World War? While all this was going on, at least the French were there, particularly in the first war, and surely our relationships with the French must mean that for the future we should try to co-operate with them in any European Community.
Now I should like to come back to what I intended to say. My interest in this matter was first aroused when I was one of the British representatives in Strasbourg at the Council of Europe and the
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Western European Union. From the beginning I wanted us to be in on the Treaty of Rome. It has been one of my big disappointments over the years that we did not go in at that time, when I believe there were fewer difficulties around than there are now. Had we gone in at that time we should by now have been part and parcel of the great European Community.
in those days I had one great reservation, and that reservation was dealt with at length this afternoon by the noble Lord, Lord Garner, who made a very impressive speech, if I may say so, on the Commonwealth attitude towards the Common Market. In those days at Strasbourg, I remember—it was a nerve on my part; I was a very modest member of the British delegation—I suggested that we might look even further into what was then being discussed, and that the Commonwealth might be seriously considered as an associate member of the Council of Europe. If we had tackled it in that way, I still believe we should have established the greatest economic unit in the world, which would have made the United States in the West and the Soviet Union in the East secondary to our strength in Europe. It is because I see that we can move towards that, even without the Commonwealth, that I believe there is such a purpose in our going into the Community.
But I come back to a point touched upon mainly in the opening speech of the noble Earl, Lord Jellicoe. We have not realised to the full why it is that the British people are expressing themselves in the Gallup polls, as they are, against our going into the Common Market. That, in the main, is the simple issue I want to deal with in what I have to say. I believe that the fears which are now being expressed have largely come about through the terms of the White Paper. It may be that Her Majesty's Government set out to put the worst face on joining the Community, so that, if the terms proved too onerous, we could stay out without any loss of face. But the White Paper certainly gives the impression—and this is what has hit the British public—that the British housewife will wake up one morning to a 5s. in the £1 increase; and when this is read there is doubt and confusion. In fact, we are all confused. None of

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us is quite clear about the position, and the White Paper has not helped. It has been a gift to the anti-Marketeers because basic issues have not been made clear. The Press opposed to our entry into the Community spread banner headlines about 50s. a week on a £10 house-keeping bill; they spread on their headlines: "£1,100 million to pay".
Ignoring, for the moment, all political aspects, let us look at the £ s. d. I firmly believe it is wrong to think that entry will lead immediately to rocketing prices. The White Paper suggests 26 per cent. But, even if that were true and proves to be true, it would be very gradual and might not be reached for eight years. Surely, on the present tendencies and trends pay packets would be certain to rise at least as fast as prices. Let us look, for example, at this dear butter scare: "10s. in Europe; 3s. 4d. in Britain"—how the Press have used it! But we are a butter buying nation. We have never regarded butter as one of our luxuries, as other European nations have done. All of us have seen French people in their restaurants, and even in the streets, gnawing away at their uncovered baguettes which would stick in our gullets. Butter remains low priced here, I suggest, because we have an assured market, and that assured market makes it safe to produce, and to import, in bulk. I have not looked it up, but I am prepared to wager that spaghetti is cheaper in Italy than it is in London.
We hear a lot about meat—I am always talking about meat. On meat, there is no comparison between European beef, particularly, and British beef; it is a different commodity. We work to a policy of rearing beef cattle for our tables. The French, particularly, eat them only after they have finished milking them. It is hardly the same subject. Therefore, when we get together, if we do, these are issues that can be resolved by an interweaving of agricultural policies.
Let us look for a moment at the overall cost reckoned in the White Paper and seized upon by the anti-Marketeers. It could be £100 million, which I suggest is a drop in the bucket for a nation earning £39,000 million a year which could be £50,000 million a year, with a 3 per cent, growth, by the time we start paying to go into the Community. The overall cost figure at the top is £1,100
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million. Surely that could only be if the Six imposed the worst possible obligations on us—and they would be conditions we should never consider. For that reason, I believe, they will not try them on. After all, there are clear indications now that the Six are anxious to admit us. Even if we accept the £1,100 million figure, it takes no account whatever of the benefits we could conceivably derive. And no one can fault this figure: that British factories would be able to sell to 300 million people without customs tariffs. Mass production would reduce costs on small items made in our factories so that items, say, at present 20s. for 100 could be 20s. for 1,000. Let us remember that the Community would gain 50 million customers, while we should gain 300 million.
I have seen it suggested that a 1 per cent, increase in the gross national product would cover the cost of joining; and this may well be right. If that is so, the other 2 per cent, can go into the bank. I know it is anybody's guess, but it needs to be taken notice of as one of the arguments and reasons for joining the Community. If the argument is on the economic front, the opponents of joining the Treaty of Rome Powers have very little faith in the businessmen, the manufacturers and the workers in Britain at least to equal their Continental counterparts. I wonder whether opponents of entry will admit that lack of faith.
My Lords, it is interesting at the moment (and this is my last point) to watch what I regard as the vacillations of the United States in their attitude towards Britain's joining the Common Market. It would appear from my reading that they are anxious that we should do so from a political angle, to relieve them of many of their European responsibilities, but they do not appear to be quite so keen on the economic front. I think they fear a strong Europe in an economic sense as a rival to their own great potential in trade and industry; and I believe that this might be a pointer to the need for a strong economic unity for Europe, to the benefit of all the peoples of Western Europe. It is on those grounds, my Lords, that I join with so many other noble Lords to-day in saying to the Government "Go on; negotiate"—and ultimately, I hope, participate.
8.1 p.m.
LORD PLOWDEN: My Lords, in July, 1961, the noble Lord, Lord Crowther, and I wrote a letter to The Times in which we advocated an early start to negotiations to join the Common Market. Our reason was the need for a massive and continuing increase in exports from this country, and we saw no opportunity of getting this on a continuing basis unless we were part of some larger economic grouping. The Common Market was the only one that we could see. To-day I remain of the same view. Perhaps I should confess that in the terms used by the noble Lord, Lord Moyle, I am a "heavy industrialist". During the past years of discussion about the Common Market, as the noble Lord, Lord Caccia, said, every argument for and against has been used over and over again and it is not possible to say anything new, but I feel that both those of us who are in favour of joining and those of us who are against should be willing at this stage to stand up and be counted.
There is bound to be a price for entering, and in large part that price will be an increase in the cost of living, but, as the noble Lord, Lord Shackleton, pointed out, that does not necessarily mean that there will be a fall in the standard of living. Indeed, all of us who favour joining expect that there will be a substantial rise in the standard of living. But anything connected with the price of food quite naturally generates much emotion, and I thought that the Chancellor of the Exchequer, in the debate in another place recently, put this matter in the right perspective. He pointed out that this increase would not come in one sudden blow, but it would rise to its maximum—whatever that might be— over the transitional period, however long that was, and then it would continue at that rate thereafter. I personally think it probably would tend to fall as Continental agriculture became restructured and more efficient. But of course during the transitional period our economy would be growing and therefore should be that much richer and that much better able to afford the extra cost. Thereafter the rise in our economic growth would continue, hopefully, at a rather faster pace than it has done over the last ten years.
Again, as various noble Lords have remarked, there is a cost that will fall
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on the balance of payments, but, as the Chancellor of the Exchequer pointed out, the balance of payments is in far better shape to-day than it has been for many years, and he would be ready to devote some part of that surplus to paying the price of joining the Common Market. I agree with him. Some people fear competition from Continental industrialists if we were inside Europe and there were no tariff barriers between us; but we have to compete with those industries anyway in the third market and also within the Common Market but with the disadvantage of a tariff against us.
If we were members of the Market we should have the advantage of an assured market free from tariffs. In a Paper prepared for M. Monnet's action Committee last summer, Professor Winacker, the Chairman of the German chemical concern Farbwerke Hoechst and myself concluded that, valuable as a market free from tariffs was, it was no more than the first vital step, and to secure the real advantages of an enlarged market the legal and fiscal obstacles to the free circulation of goods and services must be eliminated. By that I mean differing company and patent law, specifications for capital groups and so on.
The creation of a larger market which for us, as the noble Lord, Lord Shackleton, pointed out, could be seen as some 300 per cent, greater than our present home market, would inevitably lead to the reduction of cost through long production runs and would permit a much higher degree of specialisation by allowing firms to concentrate on a narrower, and possibly a more highly sophisticated, range of products. There would be increased opportunities for the creation of trans-European companies, and the size of the market would also create the opportunity and the right environment suitable for small, highly specialised firms. That happens, just as this kind of firm has grown up in the United States of America, particularly in the vast technological industries. The larger market should provide the prospect of increased sales for products which have a high cost of initial development, and consequently European and British companies would be able to embark upon more expensive and more technically advanced

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development projects with a realistic hope of an adequate commercial return.
Now if European industry is to gain all the advantages of a large market it must be able to compete across national frontiers for public as well as private contracts, and that is an area in which a great deal still has to be done to remove non-tariff barriers such as I have described. In the field of advanced technology Governments or State bodies sometimes are the only buyers, of course in the defence field but also in such things as commercial aircraft, telecommunications, data processing and so on; and often the actual existence of these industries is dependent upon support from Governments. In the United States of America those industries have grown and flourished as a result of the massive defence programme of the United States Government. That has been highly coordinated in Washington, and a high degree of standardisation has resulted. In Europe, these industries are fragmented between countries, and unless an attempt is made to reach common specifications and common methods of tendering, these industries which in the United States are among the fastest growing will not exist in Europe except as offshoots from United States industry.
Here I find myself very much in agreement with what was put forward by the noble Lord, Lord Harlech. It is not just in the defence field that this applies. It covers things like telephone exchanges, power stations, and so on. All of them need common standards and common methods of tendering if they are to produce efficiently on a Continental scale. Of course joining the Market would give a great opportunity to the City of London and, I believe, a great increase in our invisible exports. All this is admirably set out, as noble Lords have said, in the document Britain in Europe, prepared by the C.B.I.
Most of the discussion about the entry to the Common Market takes place in economic terms, largely I think because we have learned painfully since the war that our influence abroad and the ability to do what we want at home have been controlled and limited by our economic weakness. But in the ultimate I believe that it is in the political field that we have most to gain and most to give. We
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have missed many opportunities. The Leader of the Opposition in another place recently said that in 1945 we could have had the leadership of Europe on a plate. Perhaps we could. But we did not want it; and that is quite understandable. We had just won a war; we were still the centre of a great Empire, and above all we were anxious to do nothing that would jeopardise keeping the Americans in Europe.
As an official, I had some considerable experience of this. In 1949, the then Chancellor of the Exchequer, Sir Stafford Cripps, sent the noble Lord, Lord Roberthall, and me to Paris to discuss with M. Monnet the possibility of closer economic arrangements with France. We did not come up with any very exciting ideas, but such proposals as we did bring back were soon turned down by then Ministers; and quite understandably. It was on this occasion that I heard for the first time M. Monnet use his famous phrase; that, with the exception of Great Britain and the neutrals, every country in Europe had been defeated in war, and every country in Europe had been occupied by an enemy army, so that all the peoples of Europe were ready for changes in their institutions because they had lost faith in their existing ones. To some extent I think this was a foretaste of the point of view that has been put forward this evening by the noble Lord, Lord Thorneycroft; that change has already begun and is taking place. In Europe, it had already begun in those days.
I cannot claim the prescience of the noble Earl, Lord Jellicoe, in seeing this twenty years ago. I am afraid that I became a convert to change only in the late 1950s, but I was in good company. When the Schuman Plan was put forward it met with a very lukewarm reception from the then Labour Government; and when the Conservatives came back to power in 1951, despite all the speeches and promises they had made in Opposition, they did nothing—indeed, one senior Minister asked me whether I thought that he ought to resign. Next came Euratom. This was turned down, I think rightly, on the ground that we had embarked on the development of thermonuclear weapons and were dependent crucially on American know-how, which came to us under an amendment to the McMahon Act, and I doubt

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whether this would have been possible if we had been a member of Euratom.
My Lords, I, as you will have seen from what I have said, am strongly in favour of starting negotiations, and during those negotiations we shall discover not only the economic price of entry but what kind of Community it is we are seeking to enter, whether it is outward-looking and liberal, or the reverse. If, as I hope and understand, it is outward-looking and liberal, I believe that by joining we shall have won a great political prize, the prize of being an influential part (because we are bound to be a very influential part) of a larger economic and political grouping which is able to play a really constructive part in the dangerous world that will confront us for the rest of this century. Of course there are bound to be risks, but all decision involves risk. Doing nothing, hoping that nothing will happen or change, entails risk—the risk of becoming an inward-looking country with a slowly growing standard of living and quite unable to influence the forces, economic and political, that shape the world in which we live. But let us decide the issue on rational grounds, with all the facts ascertained in negotiation, not on the understandable but emotional ground that butter to-day in Paris costs two and a half times what it does in London.
8.16 p.m.
LORD WELLS-PESTELL: My Lords, there are very few Members of your Lordships' House, and for that matter very few people outside your Lordships' House, who can speak with greater authority on the economic aspects of going into the Common Market than the noble Lord, Lord Woolley. I want to say at the very beginning that I subscribe to everything that he said and would dot his i's and cross his t's to the utmost.
In the five years that I have been in your Lordships' House we have had two debates upon the Common Market, and on each occasion I have expressed my view that I was much opposed to going in. I accept what the noble Lord, Lord Plowden, says, that the time has come when we ought to stand up and be counted; and I have read nothing in recent months and heard nothing to-day which changes my opinion one bit. I do not think that it is self-evidently wise that
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we should go into the Common Market, nor have I heard any argument that would convince me of the wisdom of doing so.
We are here to-day, my Lords, to discuss the White Paper which is described as "an economic assessment", and I feel that it is in more senses than one a quite shocking document. What value can there be in a document which states that we shall have an overall balance of payments cost ranging from about £100 million to a possible £1,100 million if we enter the Common Market? The margin is so wide that if we are not able to be more precise it would, in my submission, not be wise to pursue the matter of entry. In many respects the White Paper is unhelpful when it comes to understanding and appreciating what is really involved.
I do not want to put forward the same arguments as the noble Lord, Lord Woolley, but I think we ought to bear in mind, if the White Paper is to make any contribution at all, that in referring to agriculture it states that our import bill could either go up by £225 million a year or fall by £85 million, and that our direct contribution to the Community's agricultural fund could be as much as £670 million or as little as £150 million. I should have thought that a more precise or closer estimate could have been made after all this time. We have been considering this matter, if not negotiating, for a good many years, and we are not, so it would seem, in a position to assess the financial liability more clearly. If we are not able to assess it more clearly I really think we ought to stop what seems to me to be a mystery tour which is not going to lead us anywhere. I should like to ask the Government whether they have any knowledge of the memorandum dealing with the amount of Britain's financial contribution to the Community Funds which was prepared recently by the Brussels Commission and sent to all six Common Market countries and referred to in the Press this last week-end.
At least the White Paper has one merit, for it gives us for the very first time an official indication of the huge cost of entering. We are running currently, I believe, a balance-of-payments surplus of upwards of £850 million. According to the Chancellor of the Exchequer, we can

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advantageously invest part of it in the cost of admission to the Community. I find myself asking, advantageously to whom? Not, I think, to the ordinary man and his family in this country; most probably it will be to the advantage of the Six, and perhaps the French farming community in particular.
The White Paper estimates that there will be an increase in retail food prices which will substantially raise the cost of living. I believe it will raise it to a figure far higher than that suggested in the White Paper itself. If we have any sense of responsibility to the society in which we live, I think we have to face the fact that this would mean a serious tightening of the belt, and, I believe, a lower standard of living for a large section of the British people; and I do not think that many could survive on a much lower standard of living.
My noble Leader disturbed me when he dealt with the possible rise in the cost of living. I feel that it was dismissed too summarily. And the noble Lord, Lord Harlech, said that we must not give the impression that we are going in reluctantly because of our standard of living. I do not know whether he meant that it would get worse or that it would get better; but I think we have to face the fact that, for many families in this country, it is going to impose a serious strain on their resources. We have paid a substantial price for our balance-of-payments surplus. I would remind the Government that it has been achieved at some sacrifice in terms of unemployment, high cost of living and high interest rates. I do not want to see that achievement dissipated by entry into the Common Market.
I accept that by going into the Common Market some people in this country will be a great deal better off; but they arc people who are already well placed financially. I believe that it would require a substantial increase in real income before the mass of the people of this country would benefit. I say, quite sincerely, that I cannot see that substantial rise resulting from our entry into the Common Market. Nor is there anything in the White Paper which leads me to believe that real income will improve dramatically in a reasonable time, if it improves at all. I accept the argument that what really matters is not so much
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a rise in the cost of living, but whether there is going to be a substantial increase in real income. There is no evidence, certainly not in the White Paper, nor in anything I have seen or heard, which leads me to believe that there will be a substantial rise in real income.
The Party represented by this Government is committed, and has been committed for generations, to provide the best possible standard of living for those less fortunately placed in our society. What I want to say now is probably very strong. I believe that to go into the Common Market would be a betrayal of that trust. There is no evidence that it will be disastrous for us if we stay out. I do not believe there is any evidence that there is a certain advantage if we go in. We have managed successfully over recent years to maintain a reasonable standard of living for our people, and I believe that given greater co-operation between management and workers, each showing more responsibility in the future than they have done of late, we shall have little difficulty in achieving the kind of society and a more equitable distribution of wealth which I think many in your Lordships' House would welcome.
If I could believe that it would not impose a serious financial burden on a very large section of the community that can ill afford to face and meet that burden, I would feel inclined to consider that perhaps it might well be to the advantage of this country to go in. I hope that the Government will pursue to the utmost the inquiries that they are proposing to make in the near future. But from what I have heard or read recently, I cannot see that there is a convincing argument for us to go into the Common Market, and I hope that ultimately the Government will come to the same conclusion.
8.27 p.m.
LORD ROBERTHALL: My Lords, as I am in the same frame of mind as the noble Lords, Lord Caccia and Lord Plowden, in so distinguished a debate as we have had, I cannot hope to say anything new. My excuse for speaking is that I was involved in many of the early arguments on this subject, between 1948 and 1961, when I was Economic Adviser to the Government; and although I do not for a moment suggest that wisdom lies in those with experience (because

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as we know they disagree strongly on almost every subject) I still feel that one has some obligation to state one's position.
For many years I have been in favour of Britain's joining the European Community. As noble Lords know, the original driving force for the Community's establishment was not economic, except in the widest sense. This is recognised in paragraph 3 of the White Paper. The background is that Europe had suffered tremendously from two world wars and it was felt that the best safeguard against repetition was to form a single political entity. The Economic Community was partly a step in this direction, and party a device for getting the constituent parts so scrambled together that they would not in future be capable of disentangling themselves sufficiently to go to war with each other.
Fundamentally, this is the background to my own thinking. It seems to me that nationalism is the curse of our time, and that anything which makes for larger units is likely to make for the welfare of mankind, and that anything making for smaller ones is likely to have the opposite tendency. This is a very unrealistic view to take at the present time, when we have these violent forces driving us towards setting up more and more smaller and smaller units. But the Common Market, with its ultimate objective of political unity, at least represents a step in the right direction; and it has already been an influence for sanity in the world, both by leading other areas to imitate it and by leading people to seek to establish links with the Community.
I mention these things because it seems to me that one of the great problems is to get the economic issues which we are debating to-day into perspective. A number of noble Lords, including the noble Lord, Lord Silkin (whose speech impressed me very much), have sought to do this. The White Paper is an assessment of the direct costs of British entry, but unless they were larger even than the highest costs shown in the White Paper it would be unbalanced to settle the matter on the figures. What we can afford depends to a large extent on how much we want the wider objectives; and the same considerations apply, in the other direction, to the potential gains.
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The White Paper does not attempt to quantify these, but it does give reasons for thinking that if we join the Community our growth rate would be faster than it would otherwise be. As the Paper says, an increase of 1 per cent. in the growth of our gross national product would be equivalent, in the mid-1970s, to something approaching £500 million a year at present prices. An annual growth increase of this order would quickly outweigh the costs imposed by our entry. I am one of those who believe that, on balance, and over quite a short time, the advantages would be greater than the disadvantages; that is to say, that over a period of time there would be no net cost of entry. But it would be equally wrong to set these advantages, however real and substantial one expected them to be, against the political consequences of entry, if we object to these consequences.
The most emotional aspects of the White Paper, so far as the ordinary man is concerned, are those dealing with food prices, and especially the prices of beef and butter, which were mentioned first by the noble Lord, Lord Woolley, and later by several other noble Lords, including the noble Lord, Lord Royle. I said earlier that the great task was to try to see the economic issues in perspective, and I think that this consideration underlines that. A great problem faces those who feel that we should join the Common Market; that is, how to explain why these emotional aspects, such as the price of beef and the price of butter, ought not to be the deciding factors. Fears about the cost of living, which rises inexorably every year whether we are in the Common Market or not, and the effects of these rises (which are far out-weighed almost every year by the growth in productivity, which leads to a constant growth of the standard of living), ought not to be the determining factor. Although it is an enormous advantage that the main political Parties want to keep this issue away from the elections, because of the danger that, in an atmosphere of elections, the electorate would be swayed by relatively trivial matters, nevertheless how to get this into perspective remains a great problem.
My Lords, I will not weary you by going once more over the ground which is covered—I think inconclusively—by the White Paper. In my view, the best

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speech on the subject was the one made by the Chancellor of the Exchequer during the debate in another place about a fortnight ago. In recent years the Chancellor of the Exchequer has done more than any other man to improve our balance of payments, and if he is not dismayed by the probable cost of entry to this balance I do not see why anyone else should be. It is easy to alarm people by pointing out that something will make a change in their lives, without calling their attention to the much larger changes which they are experiencing all the time. The White Paper puts the worst that can happen to prices at an increase of 4 to 5 per cent, in the retail index over a period of some years. A footnote calls attention to the fact that this index rose by 34 per cent, between 1962 and 1969; yet during this period our standard of living rose almost every year.
The real burden of our entry will be the cost to the balance of payments. This is different from an ordinary rise in prices, which is counterbalanced by rises in incomes. In the case of the balance of payments we have to pay more for our food imports, and we must also pay our share of the Common Agricultural Policy. The top figure given in the White Paper, of £1,100 million, is, I think, a quite impossible one, as indeed is explained in the same place, where, by applying three formulae they give the top figure for the payment to the Community's agricultural policy as £650 million. But, on the same page, they make pessimistic estimates, the most pessimistic of which gives the figure of £350 million.
Several noble Lords who have spoken in the debate have quoted the C.B.I. figure, which is about £400 million. That is close to the figure given by the noble Lord, Lord Walston, who suggested £250 million as the cost of the agricultural aspects, though he did not mention the White Paper figure for the industrial aspect. However, suppose we take the middle figure, of £600 million, or, more probably, £400 million, we might usefully remind ourselves that the Chancellor of the Exchequer, in the Budget of 1968, added over £900 million to taxation and that, partly because of that Budget, the balance of payments improved between the third quarter of 1968 and the third quarter of 1969 at an annual rate of nearly £600 million.
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The point is, of course, that people talk about these large figures without quite realising that in these national in-come matters one is always dealing with large figures. I have quoted two of them, the taxation of 1968 and the turn-round of the balance of payments; and the noble Lord, Lord Thorneycroft, mentioned a smiliar turn-round between 1957 and 1958. I doubt very much whether, in a few years' time, anybody but an expert statistician would be able to tell us what changes in his own position took place in these two years when these very large changes occurred internally. That is the kind of point that must be borne in mind when one is trying to get this matter into perspective. This is an emotional issue and we cannot hope to reach any agreement on what is likely to happen. But it is very unlikely that the direct cost of entry would be anything like the top figure shown in the White Paper. If our growth rate improved by even a small amount the improvement in our income would soon outweigh the costs imposed by our entry. But even if we were to take a gloomy view of the possibilities, it would not be right to decide the question on the basis of an economic assessment alone. If we want to go into Europe we can afford the cost, even if it is high.
I should like to conclude by mentioning one more point with regard to the negotiations. It is one that was raised by the noble Lord, Lord Thorneycroft, and with which I agreed. In the debate in another place, a number of speakers attempted to extract from the Government a precise figure of what they would be willing to pay to go in and what figure they would not go beyond. This is a complete misunderstanding of what we are engaged in. We are not buying a mink coat; we are not even buying another firm. We are trying to negotiate with people with whom, if the negotiations are successful, we shall hope to build up something very much better for us all. Undoubtedly in those negotiations the most important thing will be the extent to which we can see one another's point of view and one another's difficulties.
My own view, which has been expressed by several other speakers, is that the most difficult points for us concern New Zealand and the Commonwealth Sugar Agreement, because I think

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it would be dishonourable of us not to implement our undertakings, and if that point of view were not accepted that would be much more important to us than £100 million one way or the other. But if, as I am quite sure will happen, the negotiations show that they are between reasonable men who reasonably share the same objectives (although I believe that the consequence of that is that the price would not be too expensive, because a reasonable price is certainly something much less than the highest one) the great thing will be not the final price ticket but whether our real difficulties are understood, and whether we are agreed on directions of movement which we think will benefit us all.
8.44 p.m.
LORD GRANVILLE OF EYE: My Lords, the noble Lord, Lord Roberthall, is a considerable authority on these great economic questions and his speech has dealt with the broad issue, as have most of the speeches in this debate on the White Paper. In a sense this debate is somewhat academic, because the application is in, it is on the table, and there is not very much that we can do about it until the discussions begin in July, and then eventually Parliament will take the decision. But having listened to this debate, and having read the Report of the speeches in the two days' debate in another place, although in a sense it is somewhat academic I am rather surprised that no new arguments have emerged either from another place or from this debate in your Lordships' House. It seems to me that it is still an act of faith. It seems to me also that we are back to square one if, when the negotiations take place, it is found that the price is going to be too high. The long wait after these considerable discussions take place, and before the final decision is taken, is going to be something like waiting for Godot.
Another point that rather surprised me, listening to some of the contributions to-day, is that there were no ghosts present, although there were some noble Lords who had, I imagine, followed with some interest those who believed that there was a future Commonwealth economic policy —a policy which I imagine no one has crusaded for in this country in any political Party since the late Lord Beaver-
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brook. Of course history, if we look forward, may say that he was right and we were wrong. It may also say that the Rhodes scholars and Imperial Conference planners, and the mineral explorers of the deserts of Australia and of the riches of Alaska and the Canadian North were also right. History may also say that those who think that satellites and space flights are a Commonwealth season ticket to-day, and that the Commonwealth was an economic act of faith anyhow, were right, too. In fact, I think that the economic historians will look back in this regard to the point of no return, which I suppose was 1945 or, as has been said, the Imperial monetary policy of the 'thirties which, after the collapse of the World Economic Conference, worked successfully.
So after the White Paper, after several debates, we are back to the fact that it is still an act of faith. But it seems to me that it has to be an act of faith in one vital assumption if we are going to get what we hope out of this; that is, that British industry, its workpeople, its executives and its directors can give this country an industrial renaissance in almost every section of the community. Otherwise, we may find that the act of faith is going to be an act of faith in our old-time complacency as a nation of shop-keepers, taking in each other's washing and, "I'm all right, Jack"—what one economist referred to as the soft under-belly of industry in this country.
If we go in, it will mean competing with Italians, Germans and French here in this country and in their own countries as well. We have to ask ourselves whether a very large section of industry in this country which has never bothered about exports, which has not had to compete too much, which has found that it is difficult to export and that it is quicker to make profits on the home market, can meet on a successful basis competition from the tried, hard-time exporters and competitors in those countries to which I have referred. And can we do it quickly? Can we get the efficiency? Can we get this industrial renaissance, in that large section of industry where it will matter, done quickly? If not, if our exports are still going to be too much bother or too difficult, what are we left with, or what do we do in the interim?

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My Lords, when all of the talk has subsided and when everyone has expressed his view that this is an act of faith; when everybody has or has not convinced himself that the right thing for this country to do is to go into the Common Market, the acid test—not the speeches or the signing of treaties or the act of faith, but the acid test—is whether we can give the people of this country the standard of living to which they are looking forward in the future. I think that while we are waiting for this long drawn out discussion to take place and for the decisions to be made and submitted to Parliament after the Election, we have no time to lose in making a very large sector of British industry more efficient and more able to compete, as they will have to compete in this Market as never before with consumer goods— because in my view the very existence of the employment of a large number of work-people and technicians in this country is going to depend upon just that. An economist has listed all the things that we have to do to get industry efficient and able to compete—and there is no time to lose. But the rewards and the priorities, if we get this renaissance, will go only to the efficient and not to those who believe that all we need is an act of faith.
8.52 p.m.
THE EARL OF LAUDERDALE: My Lords, one might have thought that, with the Soviet submarine fleet scouring the ocean bed; with a NATO ready to wound with tactical nuclear weapons but afraid to strike with ordinary troops in the absence of the French; with the "demo." in control of the seats of learning and, at many places of work, the shop stewards likewise, such a crisis in the West would concentrate the mind wonderfully. Yet this White Paper, of which we are invited to take note, oscillates between the pros and cons like a metronome. It resembles little so much as an investors blurb at the time of the South Sea Bubble: "This is an undertaking of great advantage but none to know what it is." Its compilers would seem to have been neutroids, bewitched by the beauty of the Common Market, encapsuled in splendour and renown and yet somehow unable to perform—eunuchs in the harem of politics—
LORD SHACKLETON: My Lords, may I interrupt the noble Earl? As Minister in day-to-day charge of the Civil Service Department, I hope he is not calling civil servants neutroids and eunuchs. That is what I thought he was doing.
THE EARL OF LAUDERDALE: My Lords, I readily accept the gracious rebuke, if I may put it in that way, of the noble Lord the Leader of the House, who is always so kind in guiding us; and if my words give offence they are certainly not intended to do so. But at least this is a neutral operation by men of great skill and ability whose profession, if I may put it in that way, is to be neutral in political matters.
My Lords, this White Paper, in an age when cost-benefit is attached to almost every proposition, tells us nothing of the economic risks of moving towards federation with Germany, itself split like the twin charges in an atom bomb; it tells us nothing of the economic risks of doing a deep and intimate trade deal with one half of Europe to the exclusion of the other; it tells us nothing of the economic risks or implications of a common currency nor yet of the bearing of this upon the sterling area, that very empire of our invisibles; it tells us nothing of the influence of all this upon our own inclination toward affluence with inflation in the blood shown in each annual Budget and its recurring and mounting borrowing requirement; it tells us nothing of the economic implications of the common energy policy which is being developed, still less of the common transportation and port policy which is not. The White Paper gives us no sign of the sticking point, and it tells us nothing about the alternative.
My Lords, following Lord Thorneycroft's indications about industry, about banking, about commerce, about men of research one way or another seeking and making their own integration, I am mainly concerned that we build a policy of integration in practice. I want one that will be suited to the facts of life whether or not we go into the Community as it is or whether we stay out and explore some of Lord Caccia's indications about the way we might possibly go. I am concerned more with a pragmatic level of integration and with advancing our own interests; and I see our chance in the whole current of

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management concentration which is such a feature of the present economic scene, whether in this country or in Western Europe. My Lords, the pressures of optimising investment in the advanced capitalism that surrounds us surely fore-shadows a valuable way for Britain whether we go in or stay out; and it is well, perhaps, to remember that the only people who like the British are the English.
A critical fact—and paragraph 66 of the White Paper refers to it—is the rapid growth in cross trade between industrial countries, where indeed each place and each industry within it seeks rather to do some processing for others than a complete process from raw material to finished goods. We may bewail—and some do—that the British Steel Corporation last year felt itself forced to import 800,000 tons of partly finished German steel. But we should surely hail, as does B.S.C., that the year before it took 100,000 tons; that it has ideas of building a steel plant one day in Europe; and that the concept of taking half-finished goods from other industrial countries and completing the process is now the concept which largely operates in heavy industry all over the Western industrial world. Indeed, the picture is brought out by the chemical industry's "Little Neddy", which only the other day—and I take leave to quote—wrote these words:
"The industry operates increasingly on an international basis and individual firms, with plants in more than one country, must optimise their operations internationally to remain competitive ".
Little wonder that there has been talk of I.C.I. scheming for a chemicals pipe-line across the North Sea.
It is the international division of labour between the industrial countries which is now perhaps the overwhelming fact of our relations with Europe and it generates at this stage some unlikely passages. Aberdeen exports paper to Scandinavia and takes certain kinds of processed granite in return. We find Solvay in Belgium sells I.C.I. Ordinary and takes a stake, it would seem, in doing a deal with Laporte. New York-bound containers from Milan and Genoa come into Britain at Felixstowe and go out by the Mersey. This is the picture that is going on all the time and develop-
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ing. Perhaps its simplest picture is shown by the figures for trade between countries of the O.E.C.D. area. Last year the trade between them rose 15 per cent. by value and 16 per cent. by volume. The very equation of those figures itself is witness to the division of labour in the exchange of semi-finished goods. All this—and let tariffs be damned!
Whatever the negotiations over the Common Market produce, here is the situation to which we have to address ourselves. It is less the comparatively greater and growing volume of Common Market trade as such; rather it is the rising tempo of cross trade in semi-finished goods within the fraternity of the O.E.C.D. Electronics and chemicals are the growth field at the present time. I take chemicals and oil as an example. Non-cellulosic fibres from hydro-carbons have grown more than fifty times in twenty years in the O.E.C.D. area. Europe's petro-chemical industry has been growing at the rate of 15 per cent. per annum over the last decade. Even in sluggish Britain, our chemical industry has grown at twice the industrial growth rate. World output in plastics, to take another example, may well reach 90 million tons in ten years; and the plastics manufacturers and visionaries believe it may even outpace steel. The outlets are endless, whether it be building houses without need of painting or building motor cars.
Feed stock for all this is either natural gas or crude oil and certain crude chemicals. It is in this context (pipelines apart) that our maritime policy is vital and ship design in particular offers a particularly critical economy of scale. World output of oil has multiplied four times in twenty years but the Common Market import of crude oil has multi-plied 14 times during the same period. It is now of the order of 370 million tons a year, but as there is refinery capacity for another 130 million tons satiation on present form will not be reached just yet. But it will be reached. And of those oil imports to Europe one-third come from North Africa and accessible corners of the Mediterranean while more than one-half come from Africa and the Middle East; it sails up the English Channel and into the North Sea. It is here where, as time advances and tonnages used for economies of scale out-

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class the shallows of the North Sea; it is here in this sea that now divides us from Europe; it is here that there will be an increasing demand for refinery-linked trans-shipment points which can only build up a European desire to use the natural deep water sites and MIDAS that are available in the British Isles. West Europe has 170,000 acres of these MIDAS and plans another 60,000 by dredging and civil engineering. It calls upon us to provide something like 50,000 as well.
In or out of the Common Market, whether we follow the noble Lord, Lord Harlech, and go in; or whether we follow the noble Lord, Lord Woolley, and stay out, or whether we follow the noble Lord, Lord Caccia, in any case the European Market as it stands with its intense industrial development and exchange of semi-finished goods invites us to prepare for receiving the great ships which, as time goes on, can only come to British shores and British deep water bringing the raw materials for Europe. Here is where we can go, and I take leave to quote a specialist paper prepared not long ago by Mr. R. E. Takel, the Planning Officer of the British Transport Docks Board in South Wales. He wrote:
"The pure cost of increasing capacity and draught in continental ports with the accompanying traffic discipline, and insurance, required in the English Channel—these things give the opportunity to this isle to intercept the deep water trade in raw materials and to create the land bridge to Europe.
"Such a bridge should involve industrial processing en route, combining of Britain the advantages for Midas with those of an entrepot trade. It is possible to imagine the development of the major inlets on the West of Britain linked with those on the East in a complex of transport and manufacture "—
all this to combine a saving in sea distance with the industrial talent, the tradition and the topography of a land where the critical ten-fathom contour shows a deep penetration of our coasts, when no place is more than 50 miles from the sea; where our skills and our enterprise harnessed together, and at last released, can help all Europe, whatever be the sticking point in the negotiations. The noble Lord, Lord Caccia, showed that there were alternatives as did the noble Lord, Lord Thorneycroft, and although he begged not to be quoted I apologise to him in advance.
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But there is need for a dynamic of intent in these matters, hitherto alas! invisible. Where the six Common Market countries' transportation policy lags, and a co-ordinated Common Market port policy is absent, here we have our opportunity. But their competitive operations point a moral to the dynamic purpose that we require. Rotterdam enjoys a 67 per cent. grant on new capital works; Antwerp a 100 per cent. grant on basic capital works plus 60 per cent. grant on superstructure; Le Havre 60 per cent. and 80 per cent. respectively. And Britain?—our port modernisation grant is a miserable 20 per cent. In such a climate it is hardly surprising that our Government gave short shrift to an imaginative scheme by one of the most skilled harbour design specialists in Britain, Sir Bruce White, Wolfe Barry and Partners, to make a major physical contribution to relations with Europe and our trade with Europe irrespective of our signing the Treaty of Rome.
My Lords, is the North Sea too shallow? Are the Straits of Dover too congested for the big ships to pass by in safety both ways? Then do something about it. Spend £20 million; sink four roundheads of sheet steel piling in the Goodwin Sands; make a breakwater by dumping rubble to gain strength by natural accretion between them, and within two years, these experts have fore-cast, you will have a deep water road-stead off St. David's Bay at the very heart of the industrial triangle of the West between Hamburg, Paris and Birmingham. This could be a free port and a major transshipment point for the wealth of Europe.
My Lords, you burn incense to the gods of cost/benefit. Listen to what happened at Rotterdam. Within some six months of their making it known that they would invest another £15 million in harbour developments, something like £120 million worth of private industrial investment was called forth, at that point. My Lords, you sacrifice on the altar of economy? Then turn to paragraph 60 of the White Paper and look at the £6,000 million rise in the gross national product foreseen for this in the next five years.
We British, in a field of opportunity like this, bemused by negotiation, puzzled by White Papers, embarrassed

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by 15 years of debate—confused by it, at any rate, as the noble Lord, Lord Thorneycroft, reminded us—are misers in the face of great opportunity. The Touche Ross Report for the National Ports Council shows that if British ports enjoyed the subsidies of Rotterdam, Antwerp, Dunkirk and Hamburg we could slash port charges and, at certain points, drop them altogether. In so doing we should help Europe's bulk imports into the bargain. If we had Rotterdam's subsidy applied here we could cut charges by one third; if we had Antwerp's by between a quarter and a half; if we had Dunkirk's by one half and if we had Hamburg's by at least one half.
The White Paper's greatest weakness, despite the independence, the integrity and the academic distinction of those who compiled it, is its failure to show an alternative. The crisis of the West demands a style of British purpose less functioning with the solemn air of a major Power, albeit denied its satisfaction; less like auntie, treating adult entrepreneurs, whether in the public or the private sector, like children needing protection, and with more sense of risk, more vision, more zest for adventure. After Palmerston we accept no lasting enemies nor any eternal allies; but our maritime interests are, pray God! for ever, if we do but provision and protect them for the benefit of all.
9.12 p.m.
LORD MACPHERSON OF DRUMOCHTER: My Lords, a great deal has been written and stated here this afternoon, and elsewhere, about the E.E.C. and the Common Market, but the majority of the British public still does not appear to understand the main issues. Nor has it been convinced by the various statements that the basic issues are going to be dealt with satisfactorily. I therefore intend, briefly, to outline some of those issues as I see them, and to voice the fears of the public and, I may say, the fears of some of the Commonwealth countries. The noble Lord, Lord Walston, tackled this problem on similar lines to my views, but I hope that I may be able to offer a slightly different slant.
First of all, I believe that for Great Britain to flourish it is essential that we
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extend our home market. We cannot afford to remain outside the main European markets and continue to hold our position as one of the world's largest trading nations. During the past ten years the Community has been our largest single export market, representing some 19 per cent. of our total exports. But our share of this market, as a non-member, has fallen from 106 per cent. to 7·1 per cent. To illustrate this point further, only last week Sir Roger Jackling, our Ambassador in Bonn, stated that our share of the rising import market in West Germany during the past year had fallen from 4·8 per cent. to 4 per cent. I should mention that a half of one per cent. represents £50 million. Therefore, if we could push up our share of this market to, say, 6 per cent., it would give an improvement of £200 million in our balance of payments.
Apart from the necessity of adding some 300 million people to our home market so that we could compete with countries like the United States of America and the Soviet Union, who both have vast supplies of raw materials and home markets with populations of 200 million and 178 million, respectively, we must face the fact that during the past decade the whole concept of Common-wealth trade has changed, a point made by the noble Lord, Lord Shackleton, in his opening speech. I regret that both trade and preferences will, on a long-term basis, continue to decline. During the past 10 years, United Kingdom exports have doubled from £3,250 million to £6,183 million, but our exports to the Commonwealth have been running at almost the same level, which, expressed as a percentage of our total trade, represents a fall from 38 per cent. to 23 per cent. I appreciate that those two factors are not the only two major reasons for our joining the E.E.C., but to me they are the most important.
I now turn to the problem of our entry into the E.E.C., and my fears. The biggest problem is the Community's agricultural policy, which is based on a method different from our own, and the increase in the cost of living which follows, if we adopt their agricultural policies. As your Lordships are aware, with the United Kingdom system the cost of support prices and subsidies is largely borne by the taxpayer. With the E.E.C.

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system, the main cost is borne by the consumer. If we change to the Community's policy how would it affect us? It would mean that we should have to contribute to the Community's agricultural support fund. That would be achieved by levies on our imports of foodstuffs, and I estimate that that would cost, according to my reading of the White Paper, around £250 million per-annum. I am not taking into account any receipts we may receive from the Community's agricultural funds, which should be around £50 million to £100 million per annum. On the other hand, United Kingdom Government expenditure on agriculture during the year 1968–69 amounted to £315 million, of which £125 million was used in direct support of our farmers. To take this a stage further, the estimated increase in the cost of living index would be around 4 to 5 per cent. Behind those figures is a possible increase in food prices of some 18 to 26 per cent. Those increases would of course be spread over the transitional period.
All these figures do not necessarily mean a great deal to some people. Therefore, I refer your Lordships to the comparison tables on page 16 of the White Paper. The figures show, for instance, that the United Kingdom price for beef, for sirloin steak, is around 8s. 7d. per pound. This could eventually rise to 12s.; our pork from 6s. 3d. to 8s. 6d.; our chicken from 3s. 9d. to 4s. 4d. In milk there would be no change; on bread an increase of a copper or so. The big differences would be on dairy produce, where our price of approximately 3s. 4d. a lb. for butter would in time rise to around 8s., and for cheese from 3s. 7d. to 7s;. 9d. I say again that direct taxes should be reduced correspondingly, and those price increases would come into effect only gradually and spread over the transitional period of, say, at least four to five years. We all know that our food prices have risen during the past year, and maybe by the time the initial period is over these differences may have gradually been reduced—although I appreciate the possibility that some of the European prices may also increase during this period.
So far as the United Kingdom farmer is concerned, there are two points that I should like to make. First, I believe that
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our farming community, which is one of the most highly mechanised and efficient in the world, can compete with any country provided they are given the same terms and conditions. The prices at present received by farmers in the E.E.C. for most farm products are far higher than those received by our fanners. I should have thought that the British farming community would rather receive payment for their products based on world market prices, with protection from outside, than exist on negotiated Government support. I cannot agree with the noble Lord, Lord Woolley. His policy, that we are all right now so let us not upset the present position, to me seems a very short-sighted policy.
The second point I wish to make bearing in mind that our imports of foodstuffs amount to around £1,000 million a year, is that with the correct encouragement and incentive our farming community can achieve the "Little Neddy" target of increased production, thus making an import saving of around £220 million per annum. This would be a tremendous saving in the future on the levies that we should have to pay for imported food.
My last point concerns the fears that the British public and our Commonwealth partners have about the effect of our entry on such countries as Australia, New Zealand and the Commonwealth Caribbean. I can see that negotiations could successfully cover these problems on a short-term basis, but I am more concerned about the long-term position, particularly for New Zealand lamb and dairy produce, Caribbean sugar, bananas and citrus. Most people in the United Kingdom would be much more enthusiastic about our joining the E.E.C. if they were certain that these countries which are dependent on our market for their agricultural products would be safeguarded on a long-term basis. I have just returned from leading a trade mission to the West Indies, where I had discussions with six Prime Ministers from the main countries that I visited. I also had talks with the commerical people. The universal question I heard was: what will happen to the marketing of their products when the United Kingdom finally joins the Common Market?

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I know that Mr. George Brown, at that time our Foreign Secretary, when attending the meeting of Ministers of the Community at The Hague in 1967, clearly made the point that Britain must have safeguards for her dependent countries, and that consideration must be given to the long-term problems. The Ministers of the Six recognised and accepted this necessity. But, for my part, like a great many other people, I am still not clear how this is going to work out satisfactorily and still fit into the agricultural policy of the E.E.C. and the Treaty of Rome. It would be most helpful if the Minister winding up this debate could allay these fears which are so important to all of us.
9.27 p.m.
THE EARL OF BUCKINGHAMSHIRE: My Lords, I have listened with great interest to the many speeches that have been made in this long debate concerning Britain and the European Communities. Great Britain is facing her third take-over bid to joining the Common Market. The first two, which were made by Germany, were forunately unsuccessful. This one is being made by a group of "Europeans" who no doubt believe that it will be in their interests but really do not know on whose behalf they are endeavouring to promote world dominion and centralised rule over all nations.
We are all well aware of France's fantastically high food prices, and her inefficient agriculture; and the desire of the other Common Market countries to get us into the Six is what France hopes to use as the only bargaining weapon left to her. If the dear food policies of the Six continue in anything like their present form, the damage, from an economic point of view, to this country from joining would be far too great; and, if I may say so, almost everyone in this country now understands the situation. If the food policies of the Common Market countries are drastically changed in our favour, then the Government must bear in mind that the time to join is after they have been changed, and not before.
The fact remains that, whatever policies are pursued, the foodstuffs of the world —grain, meat and dairy produce—can be produced, for physical and climatic reasons, far more cheaply in North America, Australia and New Zealand,
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than ever they could be in Europe; and arising from this the British standard of living must, to my mind, permanently suffer, because we shall be buying less from the efficient producers and more from the Continent.
We must not be deceived when the Common Market is advocated as a mutually beneficial trading arrangement, thus camouflaging its real intention, which is to destroy the sovereignty and independence of the nations. We all know how deception accompanied the formation of the League of Nations. The support of the public was obtained by introducing it as an organisation under which the nations would come to each other's aid in the event of aggression. The real intention was later revealed when the name was changed to "Central Authority", and the title, "United Nations" was adopted.
Are the Government really prepared to deprive this country of self-government and themselves of the power to make decisions on political, economic, financial and other matters affecting Britain; on such matters as defence, food prices and immigration? The White Paper did not impress me or make me change my attitude for the reasons I have tried to give. In my view—and I agree with the right honourable Douglas Jay, who said and I quote—
LORD SHACKLETON: My Lords, the noble Lord may not quote from the speech made by a non-Minister in the other place, if it was a speech made last week. He may give the gist of it, but not quote it.
THE EARL OF BUCKINGHAMSHIRE: He said that there is all the more reason for caution because another and far better solution is perfectly possible—a looser association between EFTA and the E.E.C. which could achieve industrial free trade all round and not inflict disastrous food policies on Britain. This would be overwhelmingly to the advantage to Britain, to our living standards, our trade and our balance of payments. My Lords, this is what most of the EFTA countries desire—countries such as Austria, Finland, Portugal, Sweden and Switzerland, who are opposed politically to joining the E.E.C. Therefore I hope that when negotiations begin in the summer, our negotiators will accept the policy which British interests, above all,

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demand and that these possibilities will be explored again.
I will not take up any more of your Lordships' time, but I should like in conclusion to say this. What I, and many more in this country, want to see is a free and independent Britain, under a free system of exchange, with currencies valued for what they will buy, having no difficulty in paying with its own production for all it needs from abroad, and at the same time achieving a much higher standard of living than at present. My Lords, the lion has in the past had its tail pulled far too much and far too often, and it is high time that it bared its teeth and remained out of the Common Market.
9.32 p.m.
LORD NATHAN: My Lords, it seems to me that the differences between those who are in favour and those who are against our entering the Common Market essentially depend, first, upon an assessment of the present economic and political power of this country; and, secondly, on an assessment as to whether that power will increase or decline either within or outside the Common Market. This is the essence of the difference between the points made so forcefully, for instance (if I may mention names), by the noble Lord, Lord Moyle, and, equally force-fully, by the noble Lord, Lord Thorney-croft. It is a question of the assessment of power.
This is the difference which arises between the majority of those who have spoken in your Lordships' House this evening and those many outside who have expressed a view in polls against our joining the Common Market. I do not share so cynical a view that a large number of thoughtful people in this country would decide such an important issue, one way or another, simply upon the cost of cakes and ale. It is relevant that in 1963 a majority of people were said to be in favour of our joining, and, while the facts and figures were perhaps not the same as they are to-day, the people were not so insular as to think that such a matter was out of the question. Of course there were differences of view.
I think that the present difficulties for those outside this House to whom I am referring arise not only from the questions of the cost of living—those questions are
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indeed important; and their importance has been underlined here to-day—but also from a certain offence which was taken, rightly or wrongly, from the treatment accorded to our application by the President of France; from the subsequent differences within the Council of Ministers and the Commission; from the events of May in Paris; the difficulties in Italy and the difficulties in Belgium between those who speak Flemish and those who speak French. And there is a feeling that here we are, a homogeneous country with a stable Government: why should we get involved in all this? I think that this aspect is just as important to the people as a whole as the question of the steep rise in prices forecast in the White Paper.
The question is the assessment of power, and what worries me about the White Paper is that there seems to be an underlying assumption that if we remain outside the Common Market then conditions will remain as they are. For instance, there are three well known obvious developments currently in hand which call for comment. One is our position in relation to GATT and our dependence on a substantial measure of free trade and free movement for goods. Since the Kennedy Round was completed increasing support has been obtained for protection, not by tariffs— which are not thought to be particularly respectable—but I suppose by four main means: first, by establishing national standards of industrial products; secondly, by Government purchases; thirdly, by the vexed question of exchange rates, and fourthly, by taxation. The Secretary-General of GATT, Olivier Long, only the other day referred to his anxiety in this connection. It is clear that the United Kingdom alone at this time would have no real power to affect the arrangements under GATT— and not only the arrangements in connection with tariffs but also the underlying philosophy of GATT, which was the development of free interchange of goods. The two bodies which have that power preponderantly at the present time are the United States of America and the Common Market. I believe strongly that the United Kingdom would have a far greater influence within the Common Market to sustain not only GATT but the philosophy behind it, which it is so much in our interests to do.

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A very attractive idea was earlier mentioned in this debate, I think by the noble Lord, Lord Moyle, that there should be some kind of North Atlantic free trade area. That idea is, and must be, based upon the co-operation—indeed the leadership—of the United States. From my visits to the United States I would say that there is no indication whatever that they would be prepared to entertain any such ideas.
I referred first to the matter of GATT, which it seems to me is assumed in the White Paper will continue as now operating. I think that is a bold assumption; there is a movement towards protection. Secondly, there is the question of transnational companies, which I include in all their infinite variety—I mean companies having a national base in one country or another and operating substantially in large numbers of countries. I also include under this heading for this purpose those companies having more than one base of operations and operating internationally, and I include also those companies which have combined together for a substantial part of their trading operations. I do not think one needs for this purpose to differentiate between them.
These types of transnational companies have been growing and will continue to grow. They arise and exist because of the present economic conditions, which include the technological factors which so substantially give rise to their coming into being. They can be a spring-board for economic progress; they can also overwhelm the power of individual States. They are not in themselves either good or evil, but they are certainly here to stay, and there are two things about them. One is that they can only operate conveniently within a large economic community which is far more than one which is a free trade area. The reason for that is that a free trade area is only an area by definition because of the absence of tariffs. But, as I have earlier indicated, that is only one of the barriers to trade. It is essential for a substantial company of that kind to be able to operate in a large economic unit. That, after all, is why the United States has such a preponderance of them. But we in this country play no mean part in having companies of this sort of size. I suggest that the United Kingdom is too
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small to contain such companies in order that their development in this country shall be substantial. Secondly, this country is too small to control such companies, and this, I believe, is a serious reason why we should associate ourselves integrally as an economic unit with another; namely, the Common Market.
LORD WYNNE-JONES: My Lords, would the noble Lord forgive my asking him why he considers that Japan has been so successful in economic development when its size is no greater than that of this country?
LORD NATHAN: My Lords, I think there are perhaps two reasons. One is that its population is very substantial; the other is that the measure of control, particularly of foreign exchange, in Japan is greater than in this country. Successful she has certainly been. The question with which Japan is confronted is the question of the power of the individual industries in relation to the power of the State, and this is the problem with which I think we and most other countries are going to be confronted. In this connection I think of large companies. It is quite interesting that the Industrial Re-organisation Corporation is apparently exploring the prospect of creating links between industry in this country and industry on the Continent; and if my thesis is right in relation to the size of companies and the powers of States, this itself would create, if it were carried through, a problem for Government—not one particular type of Government, but any Government here.
In relation to this question of international companies there is at the moment a strong tendency for what might be called an international Civil Service to be growing up: an international industrial Civil Service, of people trained in a particular way, who have dissociated themselves, in the best way and from the best motives, from particular national associations, to serve the international companies. I think it is these companies, which at the moment are so preponderantly American, that are giving rise, and have given rise, to a certain phobia of these very large companies, as has been evidenced particularly in Europe and also, to some extent, in this country.
Passing from that particular problem, one comes to the third matter that I think

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is perhaps not sufficiently emphasised in the White Paper, although it is referred to; and that is the inherent question of monopoly in a comparatively small country which is well-trodden ground. It is a problem which gives rise to social, political and economic consequences. Underlying the many factors indicated in this debate as tending to show the desirability of our joining the Common Market, to increase standards of living in this country, is all the time this matter of power. Taking a ten-year view of our economic and political power, I believe (and this is really the subject of the debate) that if we are outside the Common Market it will decline both in absolute and in relative terms—that is to say, relative to the Common Market and the United States, the two most powerful economic units in the West.
By a happy chance our balance of payments is strong at a time when we wish to commence negotiations, and also by a happy chance there is a good deal of movement of ideas within the Common Market. It is quite conceivable that the Common Market institutions would by now have crystallised. Had that been so, it would have been much more difficult to negotiate. It seems to me that there is considerable flexibility for all sorts of discussions and changes to take place within the Common Market relating to agricultural policy, to finance, to taxation and so forth. This, therefore, seems to me to be the time, a good time, perhaps the last time, to negotiate hard for entry. I believe there is no time to lose.
VISCOUNT WATKINSON: My Lords, I beg to move that this debate be now adjourned until tomorrow.
Moved accordingly, and, on Question, Motion agreed to.

BUILDING (SCOTLAND) BILL
Brought from the Commons; read 1a, and to be printed.
HUNTINGDON AND PETERBOROUGH COUNTY COUNCIL BILL
  SOMERSET COUNTY COUNCIL BILL
  Brought from the Commons; read 1a, and referred to the Examiners.
  CHANNEL TUNNEL AND TRANSPORT CHARGES
  CHANNEL TUNNEL AND TRANSPORT CHARGES