Sitting of 16 November 1970

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

    General Automobile Company of Baghdad
    Mr. Murrayasked the Secretary of State for Foreign and Commonwealth Affairs what representations about the correct geographical location of Edinburgh were made by the United Kingdom Ambassador in Iraq to the General Automobile Company of Baghdad, who insisted that cleansing vehicles manufactured in Edinburgh and purchased by them should be marked showing the place of origin as Edinburgh, England.
    The Minister of State for Foreign and Commonwealth Affairs (Mr. Joseph Godber): No representations were in fact necessary. The General Automobile Company of Baghdad has now agreed with the Edinburgh firm concerned that this description will not be used on future shipments.
    Mr. Murray: I thank the Minister for that reply. Will he take steps to ensure that members of our Diplomatic Services overseas are fully informed about Scotland and, for that matter, Wales and Northern Ireland and about their distinctive products so that they can promote interest in Scotland, Wales and Northern Ireland and their trade prospects and not just those of England?
    Mr. Godber: Certainly. I am happy to be able to assure the hon. and learned Gentleman that our officers are fully aware that Edinburgh is in Scotland, and that there is no doubt about this.

    Hong Kong (Chinese Language)
    Mr. James Johnsonasked the Secretary of State for Foreign and Commonwealth Affairs if he is aware of the discrimination against the Chinese language in Hong Kong; and whether he will legalise the use of the Chinese language in the Colonial Assembly and the law courts.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Royle): This is an important matter. The Chinese language is used by the Hong Kong Government wherever the convenience of the public or the protection of individual interests so requires. The Government have recently established a committee to advise on the possibilities of extending its use. The use of the English language in the proceedings of the Legislative Council is prescribed by the Standing Orders of that body, the amendment of which is a matter for the Council itself. Interpretation facilities are available in all courts of law.
    Mr. Johnson: Is not the situation as intolerable for the Chinese in many cases as it would be if we did not speak Welsh in Swansea or Aberystwyth? Is the Under-Secretary aware that a deputation of the Hong Kong Federation of Students will soon be here with more than half-a-million signatures upon a petition and that I shall have much pleasure in accompanying the deputation with the petition to No. 10?
    Mr. Royle: I think that the hon. Gentleman knows that I met the Federation of Students on a recent visit that I made to Hong Kong. The only statutory requirement prescribing the use of the English language relates to the proceedings of the urban council. The Council's powers are limited both in scope and in relation to the urban area. If the urban council thinks that there is scope for using the Chinese language in its deliberations I am sure that the Hong Kong Government would be sympathetic.

    Somalia
    Mr. James Johnsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on British aid to Somalia.
    The Minister for Overseas Development (Mr. Richard Wood): We are at present providing technical assistance to Somalia at the rate of about £150,000 a year, of which £44,000 is for the training of Somalis in Britain. We are also making a grant of £56,000 in this financial year to help Somalia to fulfil its pensions obligations to officers of the former British Somaliland Protectorate.
    Mr. Johnson: Does the right hon. Gentleman accept that this is meagre and that we have a continuing legacy to our former dependencies—for instance, North Somalia, North Somaliland in the old days—particularly in the matter of teaching the English language? Will he ensure that a little more than this is done?
    Mr. Wood: I understand that. It is in education that we are making a considerable effort.

    British Council for the European Movement
    Mr. Jayasked the Secretary of State for Foreign and Commonwealth Affairs whether he will now terminate the grant made from public funds to the British Council for the European Movement, in view of the controversial propaganda carried on by that organisation.
    The Chancellor of the Duchy of Lancaster (Mr. Geoffrey Rippon): No Sir. As has been made clear on previous occasions, the Foreign and Commonwealth Office grant is given to assist the British Council of the European Movement in organising exchanges of views with other Europeans.
    Mr. Jay: Is not the Minister aware that this organisation is carrying on propaganda throughout this country with which a great many taxpayers disagree? Though it is entitled to do this at the expense of private subscription, is it not a public scandal that taxpayers' money should be used for this purpose?
    Mr. Rippon: The right hon. Gentleman has completely misunderstood the position. The Foreign and Commonwealth Office grant is not available for publicity work directed at opinion in the United Kingdom.
    Mr. Blaker: What were the arrangements in relation to this grant when the
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    right hon. Member for Battersea, North (Mr. Jay) was a member of the Government? Were they not the same?
    Mr. Rippon: They were the same.

    European Economic Community
    Mr. Jayasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make available to hon. Members the documents presented by Her Majesty's Government to the European Economic Community in July estimating the amounts which would be payable to the European Economic Community budget on the basis of the United Kingdom becoming a member.
    Mr. Geoffrey Rippon: I would refer the right hon. Member to the reply I gave to the hon. Member for West Ham, North (Mr. Arthur Lewis) on 10th November.—[Vol. 806, c. 120.]
    Mr. Jay: Is it not essential that hon. Members should have all the information possible on this crucial issue? What reason is there for keeping this document secret?
    Mr. Rippon: I agree with the right hon. Gentleman that the House should have all the information possible. That cannot include confidential exchanges.
    Mr. Healey: Were the estimates made by Her Majesty's Government and presented to his colleagues on the negotiating body finally accepted by his interlocutors?
    Mr. Rippon: I could not give that information, which is part of the confidential exchanges. We have put in papers indicating the sort of figures that we think would arise. They have replied, and we are still discussing the matter.
    Mr. Pardoeasked the Secretary of State for Foreign and Commonwealth Affairs what estimate he has now made of the effect of Great Britain's entry into the Common Market on the United Kingdom's balance of payments; and how far this differs from the latest estimate by the European Commission, which has been given to him.
    Mr. Rippon: The effect will depend on the terms which are still being negotiated.
    Mr. Pardoe: I thank the right hon. and learned Gentleman for that not particularly helpful reply. Is it not obvious that the original British negotiating position in relation to our balance-of-payments costs of entering the Community were wildly unrealistic? Is it not a fact that this unnecessarily fuels the fires of the anti-European lobby in this country?
    Mr. Rippon: The figures varied from the wholly acceptable to the completely unacceptable and the totally improbable. The trouble with so many of these figures is that at various times everything depends on a variety of assumptions; and at this stage we cannot say which is the most or least valid.
    Mr. Barnesasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of negotiations for Great Britain to join the European Economic Community.
    Mr. Rippon: At this stage I have nothing to add to the statement I made to the House on 29th October.—[Vol. 805, c. 439–41.]
    Mr. Barnes: In view of the suggestion about a referendum, may I ask the right hon. and learned Gentleman to agree that it is most unlikely that a price will come out of the negotiations which is either clearly acceptable or clearly unacceptable? Is it not a fact that there will be many considerations which are impossible to quantify and which are not susceptible to determination by means of a referendum?
    Mr. Rippon: I am sure that a referendum would be most unsuitable in this matter. [Interruption.] I refer the House to an Answer given by the Leader of the Opposition on 25th November, 1969, when he was Prime Minister. He said that a referendum on this issue would be
    "contrary to our traditions in this country".—[OFFICIAL REPORT, 25th November, 1969; Vol. 792, c. 199.]
    He also suggested that Government Ministers who had always put forward this view might resign if they took a contrary view.
    Sir D. Walker-Smith: Has my right hon. Friend seen a statement which appeared in The Times recently about the frequency and volume of leaks of information from the countries of the Six
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    about these negotiations? Will he therefore make very frequent announcements to this House so that we may be relieved of the position of inferiority of information vis-à-vis the peoples of those countries?
    Mr. Rippon: Those who read The Times should never feel any sense of inferiority. There are informal reports from time to time, and I am always available to answer Questions in the House.
    Mr. Shore: Is the right hon. and learned Gentleman aware of certain obvious difficulties we have in making calculations as to where our advantage lies? For example, would he agree that unless he raises certain issues with the Six, such as the implications for Britain of the proposal for an economic and monetary union, we shall never be able to reach a reasonable judgment as to the results of these proposals?
    Mr. Rippon: I am sure that there are many issues which will be discussed while these negotiations are going on.
    Mr. John Wells: Is my right hon. and learned Friend aware that the entire fruit-growing industry in this country is extremely anxious because he appears not to have discussed the problems of this industry in any primary negotiations so far? Would he give a categoric assurance that he has this industry's interests and well-being reasonably at heart?
    Mr. Rippon: I am happy to give that assurance. In the context of agricultural problems we, of course, discuss horticultural problems as well.
    Mr. Moyle: Is the right hon. and learned Gentleman aware that when he last reported to the House on this matter he said that agreement had been reached on protecting the bacon, eggs and milk markets of the United Kingdom? Does he agree, on reflection, that that statement was somewhat exaggerated and that, in fact, there is no agreement on the methods by which the bacon, eggs and milk markets of this country will be protected?
    Mr. Rippon: I do not suppose that any agreement which we reach could give permanent protection to anybody anywhere. However, what we received were

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    assurances that the procedures which would be followed would protect our interests in the way I set out in that statement.
    Mr. Bruce-Gardyneasked the Secretary of State for Foreign and Commonwealth Affairs what consultations he is having with the Governments of the European Economic Community with a view to promotion of closer European unity in the political sphere.
    Mr. Rippon: Her Majesty's Government have received from the Federal German Government, in their capacity as Chairman, a copy of the report of the Six Foreign Ministers and we have commented on it.
    Mr. Bruce-Gardyne: In view of the excitement created among some right hon. and hon. Gentlemen opposite, and some commentators outside, by the Werner report on monetary integration, can my right hon. and learned Friend confirm that the pace of monetary integration is bound to be dictated by the pace of political integration, on which the views of the British and French Governments are likely to be fairly identical?
    Mr. Rippon: That is certainly so.
    Mr. Orme: Is it not a fact that the French Government take a very independent view in relation to the political situation in Europe from that taken by the other five members? Would the right hon. and learned Gentleman like to say something about the views of the French Government at the moment?
    Mr. Rippon: I am not answerable for the views of the French Government. At the end of the day they try to take a Community view, but in the course of forming the Community view every member of the Community has the right to express his own opinions, and will do so.
    Mr. Healey: Can the right hon. and learned Gentleman explain to the House how he reconciles the Prime Minister's rigid and dogmatic insistence that British foreign policy should be determined exclusively by the narrow view of Britain's national interests with the Prime Minister's simultaneous claim that he is moving towards political integration with Europe, in which British foreign policy will
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    disappear and simply be part of the foreign policy of the Continent as a whole?
    Mr. Rippon: It is a British interest, I think accepted by both sides of the House, that we should try to bring the current negotiations to a successful conclusion, believing that British interests and those of the rest of Western Europe are closely bound up together in all fields.
    Sir G. de Freitasasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the progress of the negotiations for the entry of the United Kingdom into the European Economic Community.
    Mr. Englishasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the progress of the negotiations concerning the British application to join the European Economic Community.
    Mr. Martenasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on negotiations to join the Common Market.
    Mr. Rippon: I have nothing to add at this stage to the statement I made to the House on 29th October.—[Vol. 805. c. 439–54.]
    Sir G. de Freitas: Is the right hon. and learned Gentleman aware that our television and radio programmes and the Press regularly ignore or play down the rôle of the European Parliament? In any statement that he makes will he draw attention to the possibilities of democratic control of the Commission by development of the European Parliament?
    Mr. Rippon: That has not arisen in the course of our negotiations. The right hon. Gentleman will remember the Anglo-Italian declaration of 1969, which I think was generally acceptable to the House.
    Mr. Wellbeloved: Is the right hon. and learned Gentleman aware that there is growing disquiet, on both sides of the House, at the continued refusal of the Government to report regularly the state of negotiations? Is the right hon. and learned Gentleman aware that this growing disquiet is heightened by the statement by the President of the N.F.U. that his union is having regular consultations

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    before and after each visit to the negotiating table at Brussels? Is it not time that the House was put in the same privileged position?
    Mr. Rippon: I made a statement after the first Ministerial meeting that I attended. My predecessor made similar statements after the meetings that he attended. There will be another Ministerial meeting on 8th December, and I envisage that I shall be making another statement after that. Meanwhile, I am always available to answer Questions in the House.
    Mr. Blakerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement about the position of Hong Kong in relation to the negotiations for entry into the Common Market.
    Mr. Rippon: I have nothing to add to the reply I gave to the hon. Member for Glasgow, Govan (Mr. Rankin) on 27th October and to my statement on 29th October. [Vol. 805, c. 64, 439–41.]
    Mr. Blaker: Would my right hon. and learned Friend agree that it would be helpful if Hong Kong could be included in the generalised preference arrangements which are being worked out in U.N.C.T.A.D.?
    Mr. Rippon: Yes, Sir, and we are continuing to press that point of view.
    Sir D. Walker-Smithasked the Secretary of State for Foreign and Commonwealth Affairs whether he has had access to the working paper on political union prepared by M. Davignon, Political Director of the Belgian Foreign Office, and other officials of countries in the European Economic Community; and whether he will make a statement in regard to the degree of consultation and the position taken by Her Majesty's Government in regard to the paper.
    Mr. Bodyasked the Secretary of State for Foreign and Commonwealth Affairs whether he has submitted to the European Economic Community Her Majesty's Government's opinion on the Davignon Report on political unification; and whether he will place copies of both the Report and his opinion in the Library of the House.
    Mr. Rippon: There have been full consultations. As I told my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) earlier, Her Majesty's Government have given the European Economic Community their comments on the Davignon Report. A copy of the Report has been placed in the Library of the House.
    Sir D. Walker-Smith: Can my right hon. and learned Friend in this context explain what precisely is the significance of the term "European unity", used more than once by his predecessor in his initial speech to the Community in July, and, in particular, what degree of political element there is in that phrase and with what institutional apparatus he sees effect being given to it?
    Mr. Rippon: One must always consider the word "unity", as my hon. and learned Friend will, I am sure, agree, in its context. I should be happy to construe the phrase "political unity" in any way my right hon. and learned Friend likes and on any occasion. However, I do not think that it is possible to give a short answer.
    Mr. Body: As we all agree about the importance of the working paper on political unification, is it not quite wrong the only copy in the Library should be in French? This makes it hard for some people, like myself, to read it.
    Mr. Rippon: I will certainly see what can be done about that.
    Mr. Moyleasked the Secretary of State for Foreign and Commonwealth Affairs what recent representations Her Majesty's Government has made to the European Economic Community concerning the recently concluded fisheries agreement.
    Mr. Rippon: I have nothing to add to the replies given to the right hon. Member for Orkney and Shetland (Mr. Grimond) on 2nd November and to the hon. Member for Kingston-upon-Hull, West (Mr. James Johnson) on 27th October.—[Vol. 805, c. 258, 68.]
    Mr. Moyle: As the E.E.C. reached agreement on its fisheries policy without reference to the views of the applicant countries, is it not clear that even if the right hon. and learned Gentleman did

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    make representations, the E.E.C. countries would not take much notice of them?
    Mr. Rippon: I do not think that it is that clear. Certainly the Six have the right to regulate their own affairs while they are the existing Community. What we have said is that it does not help our negotiations if changes in the positions of the parties take place in the course of them. We have made some pretty strong representations about the likely effect of the fishery regulations if they were applied to us.
    Mr. James Johnson: Would the right hon. and learned Gentleman be absolutely candid and tell us where we stand? Is it not a fact that we shall have to take holus-bolus the fishing policy of the Six? There is nothing secret about that. We do not want to fish in their waters, but they want to fish in our waters. Would not their fishery limits give them authority to land fish at ports used by our deep-sea fishing vessels? To what are we committed?
    Mr. Rippon: We are not committed to anything; we are not members of the Community. What we have to accept is that a matter like this must be discussed in the course of negotiations. We were asked for our comments and we have given them.
    Mr. Pardoeasked the Secretary of State for Foreign and Commonwealth Affairs what steps he has taken in the last four months to give publicity to the political effects of entry into the European Economic Community; and what steps he proposes to take in the future.
    Mr. Rippon: It has been made clear on numerous occasions that the Government believe that Europe can emerge as a Community expressing its own point of view and exercising influence in world affairs not only in the commercial and economic but also in the political and defence fields.
    Mr. Pardoe: Is not the right hon. and learned Gentleman aware that, however successful he is in his negotiations, the acceptability of the terms which he wins will depend on the level of political will among the people of the country? Does
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    he not think that he and his right hon. Friends should get into the country and create this political will?
    Mr. Rippon: We have made our general view clear from the outset. I think that the House understands that we are awaiting the outcome of the negotiations. It is only when we have obtained an outcome to the negotiations that we can present to the House and the country the reasons for accepting the result of the negotiations, or admitting their breakdown.

    South Africa (Arms Supply)
    Mr. Barnesasked the Secretary of State for Foreign and Commonwealth Affairs when he proposes to announce his decision about the supply of arms to South Africa.
    Mr. Hastingsasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about Her Majesty's Government's policy towards South Africa.
    Captain W. Elliotasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his talks with other Commonwealth Ministers about the sale of arms to South Africa.
    Mr. Nigel Fisherasked the Secretary of State for Foreign and Commonwealth Affairs whether he will delay a final decision on the supply of arms to South Africa until there has been a full exchange of views at the Commonwealth Prime Ministers' Conference.
    Sir Alec Douglas-Home: We have not yet reached a conclusion on this matter.
    Mr. Barnes: What representations has the right hon. Gentleman received from the Nigerian Government about this impending decision? Would he agree that it would be a great irony if, after the controversial steps which Britain took to maintain British influence in Nigeria during the civil war, we were now to force Nigeria into the arms of Russia by this policy?
    Sir Alec Douglas-Home: I certainly hope that we shall not force Nigeria into

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    the arms of the Soviet Union. The exchanges that we have had with Commonwealth countries must, of course, be confidential until Her Majesty's Government take a decision.
    Mr. Hastings: In this connection, would my right hon. Friend agree that those who would have us believe that the main source of danger to this country springs from the problems of race—though I agree that these problems are important—are completely wrong, that the main source of danger remains Soviet power and that this menace is steadily increasing?
    Sir Alec Douglas-Home: Soviet power can of course be a menace and if there were a monopoly of Soviet power in, for example, the Indian Ocean, the West might find its options closed as to the policies that it might wish to pursue. The problems of race are also, of course, problems of which we must take very careful account.
    Captain Elliot: Is my right hon. Friend aware that the careful and very proper consultations which he has already had have led to a much better understanding of the British position over this issue?
    Sir Alec Douglas-Home: I hope that that is true. What has happened in the Mediterranean and the pattern which might be introduced into the Indian Ocean has certainly impressed those whom we have consulted.
    Mr. Fisher: Would my right hon. Friend agree that there is no hurry to announce a decision in this matter and that on an issue which may well prejudice the future of the whole Commonwealth, it would be proper for the Commonwealth Prime Ministers together to discuss it, especially as their forthcoming meeting is to be comparatively soon.
    Sir Alec Douglas-Home: I will certainly bear in mind what my right hon. Friend says. I do not think that anybody could accuse us of not taking time to consult the Commonwealth.
    Mr. Healey: Reverting to an answer which he gave to an earlier supplementary question, may I ask the right hon. Gentleman to say whether he agrees with his hon. Friend the Under-Secretary of
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    State for Defence that the presence of the Soviet Fleet in the Indian Ocean is nothing to get steamed up against? [Hors. MEMBERS: "Against?"] Yes, to get steamed up against or, indeed, to get steamed up over?
    Is the right hon. Gentleman aware that there are five frigates of the Royal Navy allocated to the Indian Ocean with the duty of blockading the Port of Beira? Is he further aware that the whole of Her Majesty's Opposition strongly support the plea made by his hon. Friend the Member for Surbiton (Mr. Fisher) that a decision should not be taken until there has been a chance for collective consideration by the Commonwealth Prime Ministers in Singapore?
    Sir Alec Douglas-Home: We certainly have no intention of getting steamed up in this matter. However, Governments must use foresight, and the present Government are responsible for this nation's security. We must, therefore, look ahead and see what plans can be made for the security of the Indian Ocean.
    To answer the right hon. Gentleman's question about the point made by my right hon. Friend the Member for Surbiton (Mr. Fisher), that will certainly be taken into account.

    Aid Policy
    Mr. Patrick Wallasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on future aid policy.
    Mr. Blenkinsopasked the Secretary of State for Foreign and Commonwealth Affairs whether he will now make a further statement of Government policy regarding the level of Government aid to developing countries.
    Mr. Wood: The Government's proposals for an expanding aid programme were set out in the White Paper, Cmnd. 4515
    Mr. Wall: While welcoming the decision to adopt the Pearson target, may I ask my right hon. Friend to say what action he is taking to encourage private investment to ensure that it acts as a pump primer for Government aid?
    Mr. Wood: This is important, and it is to this end that we have set up a working party to examine the possibility

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    of stimulating private investment in developing countries.
    Mr. Blenkinsop: Is the right hon. Gentleman aware of the vital importance of maintaining the public contribution in this sphere, particularly because of the services which it can provide and without which private investment is hardly valuable?
    Mr. Wood: Yes. I recognise not only its importance but the importance of maintaining and increasing it.
    Mrs. Hart: Does the right hon. Gentleman intend to fulfil the plans of the previous Government for the publication of a White Paper covering all the aspects of his present overseas aid policy?
    Mr. Wood: I said quite recently that I would consider this. I am still considering it and I have the matter very much in mind. However, I am not able to say anything further about it at present.
    Mr. Tilney: Will my right hon. Friend consider the great help which private enterprise can give to aid if only it can insure against the inability to remit profits?
    Mr. Wood: That will naturally be one of the matters that the working party will examine when considering steps to stimulate private investment in the developing countries.

    Malta (Aid)
    Mr. Wallasked the Secretary of State for Foreign and Commonwealth Affairs if he will now make a statement on aid to Malta.
    Mr. Wood: The difficulties over the division between gift and loan for the £23 million, remaining available under the 1964 Agreement on Financial Assistance, have now been resolved. The flow of aid to Malta has therefore been resumed.
    With permission, I will circulate a fuller statement in the OFFICIAL REPORT.
    Mr. Wall: I very much welcome that statement. Has the decision been to give Malta a 75 per cent. grant? How long was aid to Malta held up by the previous Administration to coerce the Maltese Government?
    Mr. Wood: Apart from the £3 million for the dockyard and £1 million for the historic buildings, the division between grant and loan is 75 per cent. to 25 per cent., which is the same as the division in the first quinquennium. There has been a delay, but I hope that development in Malta will now be resumed.
    Mr. Rose: Will the right hon. Gentleman bear in mind the increased strategic importance of Malta, with Soviet penetration in the Mediterranean, and yet balance that against the distorted effect upon the Maltese economy that purely military work and military aid may have in that area?
    Mr. Wood: We should all recognise—not only ourselves, but our partners in the North Atlantic Alliance—the strategic importance of Malta. This is not being discussed now, but it will no doubt be discussed in the next year or two.
    Following is the information:
    The discussions with the Malta Government, in accordance with Article 5(b) of the 1964 Agreement on Financial Assistance, were reopened at the end of July. Agreement was reached on 6th October on the division between gifts and loans in respect of the period of five years ending on 31st March, 1974.
    It has been agreed that the amount of approximately £23 million still available under the 1964 Agreement, the proportion which will be made available by way of gift will consist of £1 million for the restoration of historic buildings in accordance with Article 7 of the Agree-merit, the £3 million available for the dockyard under the settlement of 31st March, 1968, and in addition 75 per cent. (approximately £14·25 million) of the balance. The other 25 per cent. (approximately £4·75 million) of that balance will be by way of loan.
    Further discussions at official level on the disbursement of aid to Malta in the current financial year were concluded satisfactorily on 16th October. The flow of aid has been resumed with the payment to the Malta Government on 20th October of £6·5 million of the grant element out of a total sum of £11·2 million available for drawing in the current financial year.

    Commonwealth (African Territories)
    Mr. William Hamiltonasked the Secretary of State for Foreign and Commonwealth Affairs if he will consider the appointment of a roving ambassador for the purpose of explaining the policies of Her Majesty's Government in African territories within the Commonwealth.
    Sir Alec Douglas-Home: I am not at present convinced that there is any necessity to supplement the normal diplomatic channels. Her Majesty's Ambassadors and High Commissioners maintain a regular contact with the Governments to which they are accredited and explain our policies as required.
    Mr. Hamilton: Can the right hon. Gentleman explain, then, why there is such almost universal hostility among the African members of the Commonwealth to the policies of Her Majesty's Government? Would he hazard a guess whether this is because they do not understand the policies of Her Majesty's Government or because they understand them only too well?
    Sir Alec Douglas-Home: I think that it is partly because the policies are not understood. Our recent talks with Commonwealth Prime Ministers and other leaders of Commonwealth Governments in Africa have, I think, helped explain Her Majesty's Government's policy.

    Gibraltar
    Mr. Cordleasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on Gibraltar.
    Mr. Godber: The basic situation is unchanged. We continue to stand by the people of Gibraltar and the economy, with the help it has been possible to give from here, is successfully withstanding the effect of the Spanish restrictions. But these unfortunately remain in force, although there has been some reduction of tension over the past year.
    Mr. Cordle: Whilst I accept that improvements have taken place recently through the talks between my right hon. Friend the Foreign Secretary and the Spanish Foreign Minister, does my right hon. Friend agree that the loyal people of Gibraltar deserve urgent help to main-
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    tain their standard of living, which has suffered seriously since the closing of the border?
    Mr. Godber: I accept that there is a responsibility to help them. We are providing aid to the tune of about £4 million under a three-year arrangement negotiated by the previous Government.
    Mr. Jay: Does the Minister of State agree that the referendum held in Gibraltar recently under British authority was a valuable way of enabling the people of Gibraltar to show whether they wished to join Spain or remain within the Commonwealth?
    Mr. Godber: Referenda can be very suitable, perhaps, in certain circumstances and in some cases, but we have never accepted them in this country.

    Berlin
    Sir T. Beamishasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress made in the four power talks over the future of Berlin, and summarise the Government's main objects in these negotiations.
    Sir Alec Douglas-Home: The 10th round of Four Power talks at Ambassadorial level is taking place today in Berlin. The Allied objective is to reach an agreement with the Soviet Union which will eliminate potential causes of tension from the situation in and around the City and which will secure practical improvements for the ordinary Berliner.
    Sir T. Beamish: Will my right hon. Friend bear in mind the view that a failure by the Soviet Government to agree to the very reasonable demands we are making about the future status of Berlin would make the holding of a European security conference to discuss much wider issues an extremely doubtful proposition?
    Sir Alec Douglas-Home: Yes, Sir, but I do not think that we need anticipate that the Berlin talks will fail. Progress has been made so far, and I hope that the Soviet Union will agree to easement of access and transit arrangements which will make the life of the ordinary people of Berlin much easier than it is now.
    Mr. Healey: Whilst I echo the right hon. Gentleman's hope, will he confirm

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    that Her Majesty's Government's position is the complement to that which his hon. and gallant Friend suggested, namely, that if progress is made on the Berlin matter, one major obstacle to the early holding of a European security conference will have been removed?
    Sir Alec Douglas-Home: If a European security conference is to be held, it must achieve something practical, and therefore considerable preparation of the agenda of such a conference will be necessary. I do not have a closed mind at all. I think that if there were really good preparation for it there is something to be said for it, but it will depend largely on what good will the Russians show over Berlin.
    Mr. Longden: What has become of the apparently mutual agreement that there should be a standing commission—organ, I think they call it on the other side—set up to go into the question of such a conference?
    Sir Alec Douglas-Home: I think that there are two matters here. There is the question of preparation, for which a body would have to be set up to make sure that a conference was properly prepared. There is another proposition that there should be a standing organ following such a conference which would look at all matters of European concern. These are two parallel matters which must be worked out together.

    Mr. Peter Crouch
    Mr. Rankinasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the Chinese Government's arrest, imprisonment and release of Mr. Peter Crouch.
    Mr. Anthony Royle: We welcome the release of Mr. Crouch. This is undoubtedly a step in the right direction. We should like this release to be followed by the release of all British subjects still detained in China.
    Mr. Rankin: I thank the hon. Gentleman for that reply and wish him well in his new office. Has he read in today's issue of The Times the account by a former Prime Minister of France of his very recent visit to China? If the hon. Gentleman has not done so, will he do
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    it? Is he aware that if he does he will find more good sense in what the French ex-Prime Minister said than in any information he will get from any British agent who has been in China?
    Mr. Royle: I have read the article. It is very interesting.

    Anguilla
    Mr. Nigel Fisherasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement arising out of the Wooding Commission's Report on St. Kitts and Anguilla.
    Mr. Godber: As I stated on 6th November a Senior Official from the Foreign and Commonwealth Office has been in St. Kitts and in Anguilla to hold preliminary discussions on the Report, with both the Government of St. Kitts and with the Anguillan leaders. My right hon. Friend is considering the Report in the light of those discussions.—[Vol. 805, c. 1424–5.]
    Mr. Fisher: Now that St. Kitts has apparently accepted the Report and Anguilla has rejected it, as I rather feared, could my right hon. Friend give an indication of his own attitude and whether he hopes to be able to use the Report as a basis for discussion between the two sides, perhaps with himself in the chair?
    Mr. Godber: I am most anxious to get a satisfactory solution of this problem. I am in close touch with both the Government of St. Kitts and the Anguillan leaders. I should like to have time for fuller discussions before making any comment about the position of Her Majesty's Government.

    Detained British Subjects (China)
    Captain W. Elliotasked the Secretary of State for Foreign and Commonwealth Affairs how many British subjects are still detained in China; and if he will make a statement.
    Mr. Anthony Royle: There is still one British subject detained, Mr. Johnson, of the Chartered Bank in Shanghai, and four are believed to be detained, in China. We have made clear to the Chinese Government our grave concern about them on many occasions. The latest was on 4th November.
    Captain Elliot: Will my hon. Friend consider that when discussions take place about the admission of China to the United Nations he should draw the attention of the Chinese to the provisions for human rights in the Charter?
    Mr. Royle: Our relations with China are showing some improvement. We should like to see a further improvement, but the continued detention of British subjects in China, underlined by my hon. and gallant Friend, is a serious obstacle.
    Mr. Rankin: If we want to improve our relations with China, could we not do something to reduce the number of British and American agents who are being given shelter in Hong Kong, which is British territory, in order to spy against China?
    Mr. Royle: I think that that is an extraordinary allegation. I am not aware of any British or American agents based in Hong Kong.
    Mr. Rankin: There are 800.

    United Nations (Secretary of State's Speech)
    Sir A. Meyerasked the Secretary of State for Foreign and Commonwealth Affairs if he will place a copy of his speech to the General Assembly of the United Nations on 24th September 1970 in the Library of the House of Commons.
    Sir Alec Douglas-Home: I did so on 2nd November.
    Sir A. Meyer: Is my right hon. Friend aware that there is in this country the widest possible agreement with the view that he expressed in that speech, namely, that the use of terror and violence is never justified, even against a régime as odious as the South African régime? Is he further aware that right hon. Gentlemen opposite are committed, by a resolution of their party, to supporting the use of terror and violence in South Africa?
    Sir Alec Douglas-Home: The latter part of my hon. Friend's question would seem to be right, unless the right hon. Member for Leeds, East (Mr. Healey) is in a position to say that it is not so. This is not my responsibility, but his.
    Mr. Healey: Would not the right hon. Gentleman agree that his hon. Friend's
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    statement in his supplementary question, apart from being offensive to the well-known Scottish family to which the Foreign Secretary belongs, in view of its long history under the Black Douglases and so on, is also insulting to the members of the Special Operations Executive in the last world war when we all, on both sides, recognised the need to use violence and terror to overthrow a régime which maintained itself in position exclusively by the use of oppressive powers?
    Sir Alec Douglas-Home: If that is the excuse which the right hon. Gentleman seriously advances, I can only say that it is the lamest that I have ever heard. Of course nations must defend themselves in war. That is admitted. What my hon. Friend was talking about, and what I was talking about in my speech at the United Nations, was the use of freedom fighters in peacetime in other countries, which is a different matter.
    Mr. Healey: Would not the right hon. Gentleman agree that throughout the history of Europe brave men have sought to overthrow tyrannies which have maintained themselves in power by violence by using violence themselves, both in peace and in war? Will the right hon. Gentleman recognise, as does the World Council of Churches, that if the use of force is ever justified, the use of force is justified against a violent and repressive tyranny?
    Sir Alec Douglas-Home: I hope that the right hon. Gentleman will think out the implications of what he said. Whatever may have happened in the past, it is surely much too dangerous to interfere with force over the frontiers of other countries and to interfere in their internal affairs.

    United Nations (Peacekeeping Machinery)
    Sir A. Meyerasked the Secretary of State for Foreign and Commonwealth Affairs whether he is satisfied with the peacekeeping machinery which exists within the United Nations; and if he will make a statement.
    Mr. Godber: No, Sir. In his statement to the Commemorative Session in New York on 23rd October my right hon. Friend the Prime Minister urged the speedy completion of the work of the

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    United Nations Special Committee on Peacekeeping, whose task is to establish proper procedures for the organisation, control and financing of peacekeeping.
    Sir A. Meyer: Is my right hon. Friend aware that there is general support for the policy enunciated by my right hon. Friend the Foreign Secretary that the United Nations is something which should be made to work, and not something to be worshipped?
    Mr. Godber: I strongly endorse that view. I wish that we could find an effective way of making it work. In this context it is one of the most difficult and intractable aspects, and one which the Government have always been seeking to resolve.

    Soviet Foreign Minister (Discussions)
    Mr. Blakerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about his recent discussions with the Soviet Foreign Minister.
    Mr. Frank Allaunasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his talks with Mr. Gromyko.
    Sir Alec Douglas-Home: I had about six hours' talks with Mr. Gromyko. The main subjects we discussed were Anglo-Soviet relations, European matters, the Middle East and Indochina. It was useful to hear a full explanation of Soviet views and to have these contacts with the Soviet Foreign Minister at an active time in East-West relations.
    Mr. Blaker: Is my right hon. Friend aware that in recent years our balance of trade with the Soviet Union has been continuously adverse, and has tended to get worse, and that the remedy for this situation, in view of Soviet trading methods, lies entirely in the hands of the Soviet Government? Did my right hon. Friend raise this matter with Mr. Gromyko?
    Sir Alec Douglas-Home: We had quite a long discussion about how this situation might be remedied.
    Mr. Allaun: Was the question of a European security conference discussed? Why is it that although 24 European
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    Governments are supporting the proposal the Foreign Secretary, from the indications in his public speeches—and from what he said today—seems to be dragging his feet? Surely considerable preparation should not be used as an argument for postponement, delay or even frustration altogether?
    Sir Alec Douglas-Home: The position is that the Warsaw Pact countries have made certain proposals. These are being considered by the N.A.T.O. allies, and at the next N.A.T.O. meeting we shall look at the question of a security conference. Nevertheless, if this is to be useful, and not to be simply a propaganda exercise, it will need the most meticulous preparation.

    European Integration Department
    Mr. Bodyasked the Secretary of State for Foreign and Commonwealth Affairs what are the functions of the European Integration Department of the Foreign and Commonwealth Office.
    Mr. Rippon: It advises my right hon. Friend the Secretary of State and other Foreign and Commonwealth Office Ministers on policy in relation to European integration; the European Economic Community; the European Coal and Steel Community and Euratom; the European Free Trade Association; the Anglo-Irish Free Trade Area Agreement; and economic aspects of Western European Union.
    Mr. Body: Is my right hon. Friend aware that those were the functions of the European Department? Is there any significance in the change of name?
    Mr. Rippon: No, there is no particular significance.
    Mr. Pavitt: Is the Integration Department considering alternative initiatives in the event of the E.E.C. negotiations breaking down?
    Mr. Rippon: I do not envisage their breaking down.

    Middle East
    Mr. Longdenasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the principles which govern Her Majesty's Government's policy towards a settlement of the Arab-Israeli dispute.
    Sir Alec Douglas-Home: The principle which governs our policy is that a settlement in accordance with the terms of Security Council Resolution No. 242 of November, 1967, would be in the best interests of all concerned.
    Mr. Longden: When, sooner or later—and we all hope sooner—agreement is reached within the terms of that resolution and the boundaries of the State of Israel are finally fixed, does not my right hon. Friend agree that Israel may reasonably expect some guarantee of those boundaries so that she may continue to live in peace within them? What has my right hon. Friend to suggest for that?
    Sir Alec Douglas-Home: Yes, Sir. Without wearying the House, I think that the House will remember that on a number of occasions from the Opposition benches I have said that it was only reasonable that if there were to be a settlement, Israel should enjoy security comparable to that which she is able to enjoy from her own strength now, and I am sure that that is right. As to the actual form of the guarantee, I think that it would be better to wait for discussions between the parties.
    Mr. Healey: While strongly welcoming the right hon. Gentleman's reassertion that Israel must enjoy equal security after a settlement to that which she enjoys today, may I ask whether Her Majesty's Government support bilateral initiatives to reach settlements of at least part of the problem such as, I assume, were envisaged by the recent meeting of the Israeli Deputy-Prime Minister with King Hussein of Jordan?
    Sir Alec Douglas-Home: I do not know that it is for Her Majesty's Government to support such approaches as have been reported to have been made by Israel. I think that it would be better if we wait to see what comes out of such conversations before Her Majesty's Government express a view.
    Dr. Glynasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the progress of moves towards the settlement of the Arab-Israeli conflict in which British interests are involved.
    Sir Alec Douglas-Home: The cease-fire on the Suez Canal has now been extended.
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    We hope that it will soon prove possible for Dr. Jarring to resume his mission.
    Dr. Glyn: In thanking my right hon. Friend for that statement, may I ask him to confirm that his recent speech at Harrogate in no way altered Her Majesty's Government policy in this area?
    Sir Alec Douglas-Home: It does not. Anyone who read the speech from start to finish would see that at regular intervals I said that any settlement must be agreed between the parties.
    Mr. Clinton Davis: Does not the Foreign Secretary recognise—this is something which did not appear from the Harrogate speech—that it is quite impossible to expect Israel to cede her hold on the Golan Heights, for example, from which her settlements were shelled incessantly over a period of 20 years? Will the right hon. Gentleman clarify his policy on this issue?
    Sir Alec Douglas-Home: That is quite right. I think that it falls under the heading of what I have just said, that Israel must have comparable security if a peace arrangement is to be made. During that speech, I was thinking, as I have often said before, of demilitarised zones properly guaranteed.

    Federal Republic of Germany and U.S.S.R. (Treaty)
    Sir T. Beamishasked the Secretary of State for Foreign and Commonwealth Affairs if he will give an assurance that the undertakings given at Yalta and Potsdam and the peace treaties with Rumania, Bulgaria and Hungary will be kept in force notwitstanding the terms of the agreement between West Germany and the Union of Soviet Socialist Republics.
    Sir Alec Douglas-Home: Her Majesty's Government do not consider that the Treaty signed between the Federal Republic of Germany and the U.S.S.R. will in itself affect the undertakings to which my hon. and gallant Friend refers. The Treaty expressly provides in Article 4 that it
    "shall not affect any bilateral or multilateral treaties or arrangements previously concluded"
    by the parties to it.
    Sir T. Beamish: In so far as the wartime agreements refer to self-determination is my right hon. Friend aware of the

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    very strong opposition to the view that détente is somehow synonymous with putting the stamp of legal and moral responsibility on the Soviet Union's position in East and Central Europe?
    Sir Alec Douglas-Home: The Federal Government of Germany, while hoping to introduce more flexibility into its relations with East Germany and with the Soviet Union, has been meticulously careful to protect the allied position, both in Berlin and in relation to the whole of Germany, so far as a final peace settlement is concerned.

    Western Samoa
    Mr. Bryant Godman Irvineasked the Secretary of State for Foreign and Commonwealth Affairs what official welcome has been accorded Western Samoa on becoming a member of the Commonwealth.
    Mr. Godber: Consultations about Western Samoa's membership of the Commonwealth were conducted, as is now the practice, by the Commonwealth Secretary-General, through whom we expressed our welcome. It is customary to send a message to a country at the time it achieves independence. This was done in Western Samoa's case on independence in 1962.
    Mr. Godman Irvine: As Western Samoa has been independent since 1962 and has, after mature reflection, applied to become a member of the Commonwealth, would it not be fitting for us in this House to send its people our warm welcome at this time?
    Mr. Godber: Yes. My hon. Friend's Question gives a very happy opportunity for that, and I endorse every word he said about it. I am sure that both sides of the House welcome Western Samoa as a member of the Commonwealth.

    British Solomon Islands
    Mr. Bryant Godman Irvineasked the Secretary of State for Foreign and Commonwealth Affairs what steps have been taken to implement the British Solomon Islands Order of 24th March, 1970.
    Mr. Godber: The Order was brought into operation by a proclamation of the
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    High Commissioner for the Western Pacific on 10th April, 1970. Elections to the Governing Council were held in June. The Council was first constituted on 15th July and it held its first public meetings later that month.
    Mr. Godman Irvine: As conditions in the Solomon Islands are so different from those prevailing at Westminster, may I ask my right hon. Friend to convey to those who have worked out the constitution the congratulations from all of us here? Might we at the same time ask my right hon. Friend to convey to those who are working under the constitution our good wishes for the future?
    Mr. Godber: Yes. I would not want to cast aspersions on Members of this House by comparison with the Solomon Islands, but I recognise that there is a difference and I am only too happy to endorse what my hon. Friend said.

    Vietnam
    Mr. Onslowasked the Secretary of State for Foreign and Commonwealth Affairs, in view of Great Britain's co-chairmanship of the Geneva Conference, what is Her Majesty's Government's policy regarding President Nixon's latest proposals for peace in Vietnam.
    Mr. Anthony Royle: We welcomed these proposals as a fair and reasonable basis for a negotiated settlement, and regret that the Communists appear to have rejected them without exploring their possibilities. We have always believed in the desirability of a negotiated settlement, either through a Geneva-style conference or in some other way.
    Mr. Onslow: Would not my hon. Friend agree that since these are reasonable proposals, it is high time that Hanoi should enter into serious negotiations?
    Mr. Royle: I agree with my hon. Friend. Hanoi's reactions so far have been negative, and no progress towards a settlement can be made until the Communist side is ready to participate in serious negotiations. This could take place in the first instance in the context of the Paris peace talks if the North Vietnamese so wished.
    Mr. Pavitt: Did the Foreign Secretary make any progress in his discussions with

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    Mr. Kosygin about the reconvening of the 1954 Agreement in the light of these American proposals?
    Mr. Royle: My right hon. Friend discussed the subject with Mr. Gromyko when he was here recently and Her Majesty's Government, like the previous Government, have on a number of occasions urged the Soviet co-Chairman to join in convening a Geneva-style conference.

    Singapore and Malaysia
    Mr. Onslowasked the Secretary of State for Foreign and Commonwealth Affairs what further consultations he has had with Commonwealth Governments in South-East Asia, Australia and New Zealand with regard to the retention of a British military presence in Singapore and Malaysia after the end of 1971.
    Sir Alec Douglas-Home: I would refer my hon. Friend to the statement made by my noble Friend the Minister of State for Defence on 28th October. We continue to consult closely with our Commonwealth partners.—[Vol. 805, c. 223–6.]
    Mr. Onslow: Is my right hon. Friend yet able to say when he expects the next Ministerial meeting of the Powers concerned to take place and how soon he hopes to have an agreement finalised?
    Sir Alec Douglas-Home: I think that there will be an official meeting in December, and as soon after that as is practicable, and as soon as such a meeting will lead to results, Ministers can meet.
    Mr. Dalyell: In view of the Prime Minister's rather Delphic answer to me on Thursday and in view of the outright denial by the Minister of State for Defence, equally on Thursday, can the Foreign Secretary comment on Mr. Ross Mark's allegations from Washington in yesterday's Sunday Express that the British and Americans are going ahead with a staging post to the Far East in the Indian Ocean at Diego Garcia?
    Sir Alec Douglas-Home: I should like the hon. Member to put that Question down.
    Mr. Healey: How does the Foreign Secretary propose to reconcile the commitment of Malaysia and Singapore to a
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    foreign policy of non-alignment with the commitment of Australia and New Zealand to military alliance with the United States? How will this be accommodated in the new arrangement? Secondly, can the right hon. Gentleman confirm that the five naval frigates which are the only naval contribution to the combined force are the five frigates which are carrying out the patrol off Beira?
    Sir Alec Douglas-Home: If the right hon. Gentleman wants that information, he must ask a Question of the Secretary of State for Defence. No doubt we shall announce the political arrangements which ought to govern the defence agreement among the five Commonwealth countries. The political definition has been given, and it should be announced before very long.

    Rudolf Hess
    Mr. Neaveasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the detention of Rudolf Hess.
    Mr. Rippon: An approach suggesting the release of Rudolf Hess was made by Her Majesty's Ambassador in Moscow on 23rd February to the Soviet Government on behalf of the Three Powers. It was unsuccessful. Since then, however, the Russians have agreed to certain improvements in Hess's conditions of imprisonment. We shall of course continue to watch for an appropriate moment to raise once again with the Russians the question of Hess's imprisonment.
    Mr. Neave: I thank my right hon. and learned Friend for that reply. As it is Her Majesty's Government's policy that this man should be released on compassionate grounds, will my right hon. and learned Friend initiate new high-level talks with the French and American Governments with a view to a new approach to the Russians at Ministerial level?
    Mr. Rippon: The answer to the first question is, "Yes, Sir". As for the second, we shall continue to search for a suitable moment to raise this matter again. If I may say so, I welcome my hon. Friend's interest in this matter. There is certainly no man in the House or

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    outside who has a better claim to press this matter.
    Mr. Rose: Would the right hon. and learned Gentleman stress to the Soviet Union that those who suffered most at the hands of the Nazis would expect a higher degree of humanitarian conduct, and that to keep this man incarcerated indefinitely when he is half-crazed and no danger to anybody at this stage is an act which no one in the House can possibly support?
    Mr. Rippon: I am grateful to the hon. Member for his comments. I agree.

    United Nations Security Council (Resolutions)
    Mr. Hugh Jenkinsasked the Secretary of State for Foreign and Commonwealth Affairs if he will list those resolutions of the United Nations Security Council, mandatory or otherwise, which the United Kingdom has accepted as binding.
    Mr. Godber: In general, Her Majesty's Government has accepted as binding decisions of a mandatory character taken by the Security Council in accordance with Chapter VII of the Charter.
    Mr. Jenkins: As Her Majesty's Government did not oppose the Security Council resolution about arms to South Africa and as since that time the Government appear to have had second thoughts in the matter, may we assume that the Government will act in the light of that resolution?
    Mr. Godber: If the hon. Gentleman wishes to discuss a particular resolution, I should be grateful if he would ask a Question about it.
    Mr. Lane: As the hon. Gentleman has reverted to the South African issue, will my right hon. Friend bear in mind that many of us believe that the maintenance of the Commonwealth, particularly in Africa north of the Zambesi, will be just as important to Britain's long-term interest as the strengthening of strategic arrangements in the Indian Ocean and the South Atlantic Ocean?
    Mr. Godber: These, as are the other issues involved, are matters which are exercising the Government's mind. That is why consultations are still continuing.

    U.S.S.R. (Writers and Civil Rights Supporters)
    Mr. Leonardasked the Secretary of State for Foreign and Commonwealth Affairs whether he will raise at the Human Rights Commission of the United Nations the harassment and imprisonment of writers and civil rights supporters in the Union of Soviet Socialist Republics.
    Mr. Anthony Royle: No, Sir. I do not think any useful purpose would be served if Her Majesty's Government were to take the initiative now in raising this matter at the Human Rights Commission.
    Mr. Leonard: Will the hon. Gentleman ask his right hon. Friend the Prime Minister and his right hon. Friend the Foreign Secretary when they pay an official visit to the Soviet Union to express to the Soviet Government the abhorrence of the British people at the continued deprivation of human rights in the Soviet Union and the beneficial effect on Anglo-Soviet relations if persecutions such as the recent trial of Mr. Andrei Amalrik were to cease?
    Mr. Royle: We deplore violations of human rights wherever they occur. The Soviet authorities are already fully aware of our views on this subject. I will certainly pass the hon. Gentleman's comments to my right hon. Friends the Prime Minister and the Foreign and Commonwealth Secretary.

    Zambesi River Valley (South African Troops)
    Mr. Clinton Davisasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the South African troops and policemen operating with the army of the illegal Rhodesian régime along the Zambesi river valley.
    Sir Alec Douglas-Home: I have nothing to add to the answer I gave to the hon. Member for Pontypridd (Mr. John) on 9th November.—[Vol. 806, c. 19.]
    Mr. Clinton Davis: Has not the Foreign Secretary any idea of the number of troops or policemen who have been used? Have the Government made any representations to the South African Government about this operation, which is clearly designed to perpetuate the racial

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    tyranny of the illegal régime in Rhodesia?
    Sir Alec Douglas-Home: As I said on that occasion, there are no South African troops in Rhodesia as far as we are aware. The number of 3,000 or 4,000 South African troops or policemen in Southern Rhodesia has been very much exaggerated and the only approximate figure that I have been given is 250.
    Mr. Healey: Will the right hon. Gentleman tell us what reply has been given by the South African Government to the protests which the Minister of State told the House last Monday had been made by Her Majesty's Government on this account?
    Sir Alec Douglas-Home: I am awaiting a reply from the South African Government. I spoke to the South African Foreign Minister on this matter and I expect a reply.
    Mr. Dalyell: On a point of order. On Question No. 41 the Foreign Secretary asked that a Question should be put down on the issue of what we are up to concerning Indian Ocean bases. Perhaps the right hon. Gentleman would care to answer Question No. 76 on the Order Paper on Diego Garcia and Indian Ocean bases?
    Mr. Speaker: Order. That is an ingenious request, but it is for the Minister. He has not indicated that he wishes to reply.
    Mr. Concannon rose—
    Mr. Speaker: Perhaps the hon. Gentleman will defer his point of order for a short time.

EAST PAKISTAN (FLOOD DISASTER)
Mr. Braine(by Private Notice) asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the relief to be offered by Her Majesty's Government in respect of the flood disaster in East Pakistan.
The Secretary of State for Foreign and Commonwealth Affairs (Sir Alec Douglas-Home): Reports from the disaster area in East Pakistan are still
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to some extent confused but it is clear that a major calamity has struck the area of the Ganges Delta causing great loss of life and the destruction of homes and property over a wide area. The House would wish me to extend its deepest sympathy to the Government and people of Pakistan.
As an immediate measure of assistance, the Government have set aside the sum of £30,000 for the provision of relief supplies and we are in touch with the Government of Pakistan on what is required. The Royal Air Force is ready to fly relief supplies from Singapore to the disaster area if this would be helpful.
According to the information I have received, no British subjects have lost their lives.
Mr. Braine: Is my right hon. Friend aware that the whole House shares his deep concern at the magnitude of this terrible disaster and would wish to be associated with his words of sympathy to the Government and people of Pakistan?
Is my right hon. Friend further aware that we note with satisfaction the promptitude with which Her Majesty's Government have already acted? As it seems clear that this disaster is on such a massive scale that terrible consequences will flow for some considerable time, will my right hon. Friend give an assurance that Her Majesty's Government will be ready to send what further aid may be appropriate and necessary?
Sir Alec Douglas-Home: Yes, Sir. The Deputy High Commissioner in Dacca is reporting developments. We shall shortly know more from the Government of Pakistan of what might be required in the immediate and longer term, and we shall certainly give sympathetic consideration to any request.
Mr. Healey: I should like to associate Her Majesty's Opposition with the action of Her Majesty's Government in giving speeding aid to Pakistan. I should also like to associate Her Majesty's Opposition with the expression of sympathy which will be conveyed to the Pakistan Government in this unprecedented tragedy.
Sir Alec Douglas-Home: I am grateful to the right hon. Gentleman.
Mr. Wilkinson: Will my right hon. Friend take into account the deep distress which is felt by Pakistani citizens resident in this country at the loss which their compatriots and relatives have suffered?
While associating myself with the prompt and speedy efforts for aid and relief which my right hon. Friend has undertaken to give, may I ask whether he will be ready to make even further efforts in this sphere as British citizens are indirectly affected?
Sir Alec Douglas-Home: I know how concerned my hon. Friend must be, because he has many Pakistanis in his constituency. As I have already said, when the Pakistan Government are able to say what form of relief will be most effective and what they would like, Her Majesty's Government will give the matter most sympathetic consideration.
Mr. Kaufman: In joining the hon. Member for Bradford, West (Mr. Wilkinson) in expressing concern and sympathy for those people in this country who may be relatives of those who may have suffered in this appalling disaster, may I ask the Foreign Secretary whether, when the immediate chaos and confusion have blown away, he will be ready to afford and perhaps manufacture facilities for Pakistanis in this country to make inquiries through his Department if they have any concern about the fate of their relatives?
Sir Alec Douglas-Home: Yes, I will consider that.
Mr. Tilney: Having been privileged a few years ago to have been a member of a Parliamentary delegation to Pakistan, when we were taken by helicopter from Chittagong and landed on all the islands which have now been submerged, may I say how all the friends of Pakistan will sympathise with the Government in the appalling disaster which has hit them? Bearing in mind that it is almost impossible to say where the water and the mud end and the paddy begins and yet the islands are full of people, long term will the Government collaborate with other Governments and with the Government of Pakistan in an endeavour to build up the bunds to a greater extent to avoid these ghastly disasters?
Sir Alec Douglas-Home: Primarily this must be a matter for the Pakistan Gov-
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ernment. The House might like to know that my right hon. Friend the Minister for Overseas Development is going out to Pakistan this week, so he will be able to give a first-hand account of the conditions there.
Mr. Shore: As a Member with many Pakistani constituents who come from that area of Pakistan, I should like to express my deepest sympathy to all those concerned in this disaster? May I urge the Foreign Secretary to keep in very close touch with this disaster, because, from the information that we have, unfortunately the magnitude of it is only just beginning to emerge, and I am quite certain that, as a nation, we shall need to make a very special effort to help Pakistan get over this tragic event.
Sir Alec Douglas-Home: Yes, Sir.
Sir R. Thompson: Will my right hon. Friend accept from one who for many years lived and worked in East Bengal that this is one of the greatest tragedies that has overtaken the human race in this century? Will my right hon. Friend consider, in the face of that, that the initial scale of relief proposed in relation to the size of the catastrophe seems rather small and, when considering extending it, will he remember, apart from the devastation, that Pakistan is one of our greatest allies, a place where many of our own people have had their work and upbringing, and do his utmost to see that this is reflected in the scale of our provision of relief?
Sir Alec Douglas-Home: Yes, Sir. I do not think that the scale of assistance immediately given is small. In these matters it is always well to see what the Government of the country concerned really want and to be in a position to provide it when asked.
Mr. Russell Kerr: In view of what is already known about the magnitude of this disaster, may I urge the Foreign Secretary and his right hon. and hon. Friends in the Government to multiply by ten the amount of aid that they have proposed?
Sir Alec Douglas-Home: I think that we had better see what the Government of Pakistan decide is necessary and how far we are able to help.

QUESTIONS TO MINISTERS
Mr. Concannon: On a point of order. On 23rd July I submitted to the Table two Questions to which I was desirous of getting Oral Answers. I was willing to wait as long as possible, or to the nearest possible date, but I never thought that I should have to wait for 16 weeks and then find my Questions as Nos. 85 and 86 on today's Order Paper. These Questions were shown in the Order Book last week as Questions Nos. 7 and 8, and it came as a complete surprise to me this morning to find them at Nos. 85 and 86.
I know that there have been some changes in Government circles between Ministries, but I should think that the change in the Ministry of Technology and the Department of Trade and Industry would have been in name only. I hope that in future, when there are changes in Departments like this, Members' Questions, which have been in for at least 16 weeks, are taken into far more consideration.
Mr. Speaker: I am grateful to the hon. Gentleman for giving me notice that he would raise this point of order. I have utter sympathy for an hon. Member who finds that, through circumstances over which he has no control, his Question appears at such a stage on the Order Paper that it is not likely to be called within the hour—and it would be anticipating a miracle if Questions Nos. 85 and 86 were called within the hour.
For the benefit of the House, the position is that when the hon. Gentleman submitted his Questions on 23rd July, before the recess, the order of Questions then in circulation indicated that the Minister of Technology, to whom they were originally addressed, would be answering first today. As the House will know, that Ministry was abolished during the recess and its responsibilities and Questions transferred elsewhere. These particular Questions were transferred to the Department of Trade and Industry which today, on the current order of Questions, is marshalled below the Foreign Office and the Welsh Office. I should add that the marshalling of Questions takes place in the last 24 hours before the Order Paper is prepared.
Mr. Concannon: Further to that point of order. I understand what you have said, Mr. Speaker, but, so that this does not happen again, will it be possible, since the Order Book is regularly printed, for my Question to be brought more up-to-date? There is hardly any way in which an hon. Member can discover when his Question will be answered, except over the weekend. May I submit this for inclusion in the "Guinness Book of Records", because I should think that 16 weeks must be almost a record for an answer to be given?
Mr. Speaker: There are longer record delays than that in the history of Parliament. It is impossible to marshal the Questions on the Order Paper until it is known what Questions are down for the day. They cannot be marshalled days in advance in the way suggested by the hon. Gentleman.
Mr. Hugh Jenkins: Further to that point of order. It may be some consolation to my hon. Friend the Member for Mansfield (Mr. Concannon) to know that many of us have suffered this fate. I have tabled a score of Questions for Oral Answer which have received written replies. It is as a result of the Government changes. I hope that the Government will ensure that it does not recur.
Mr. Speaker: It is no consolation to an hon. Member to know that someone else also has suffered.
Mr. Dalyell: May I now raise the point of order which you asked me to defer, Mr. Speaker? In dealing with Question No. 41 on the issue of the British Indian Ocean territories and the staging post at Diego Garcia, the Foreign Secretary asked that a Question should be put on the Order Paper. May I ask him, through you, Mr. Speaker, whether he would care to answer Question No. 76, which deals with the issue of the Indian Ocean staging posts?
Mr. Speaker: With respect, I have dealt with that, I thought clearly. If a Minister wishes to answer a Question which is far enough down the Order Paper for it not to be reached, he can intimate to the Chair that he wishes to do so. The Minister has not so intimated. It is proper for the hon. Gentleman to ask the Minister. The responsibility is not mine but the Minister's.
Mr. Michael Foot: Further to that point of order. When a Minister in reply to a Question says, "I would be glad to answer the Question if it was put down", and if that Question happens to be on the Order Paper already, surely the Minister could seize the opportunity which he says he would be eager to seize? It seems to me a slightly different point.
Mr. Speaker: I am afraid that it is the same point. Whether the Minister seizes the opportunity which the hon. Member advises him to seize is a matter for the Minister, not the Chair.
Mr. Evelyn King: On a point of order. I wish to raise a point of order which arises out of the words following "who" in Question No. 52.
I have always understood that at Question Time it is in order to ask for information; it is not in order to give it, particularly when the information given is, as I submit, false, and, whether or not it be false, certainly tendentious. The information given in the Question is that Mr. Benjamin Ramotse was tortured. I do not believe that statement to be accurate; but that is not my point. My point is that, whether or not it is accurate, the Question seeks to give information which should not have been included in the Question.
Mr. Speaker: The answer is quite simple. An hon. Member is responsible for what he alleges in Questions. It is not for the Chair to investigate what an hon. Gentleman alleges in a Question. The hon. Gentleman disagrees with the hon. Member who tabled the Question. That is not a matter for the Chair but a matter of disagreement between hon. Members.
Mr. King: Further to that point of order. I accept what you say, Mr. Speaker. However, I have always understood that to give information of any character in a Question is out of order. [HON. MEMBERS: "No."] I submit that information has been given in Question No. 52.
Mr. Speaker: If I were to rule in the way suggested by the hon. Gentleman, it would be a blanket ruling which would take away the value of many Questions. I cannot give such a Ruling

TRADE STATISTICS (DOCUMENTATION)
The Secretary of State for Trade and Industry (Mr. John Davies): The previous Administration announced in June, 1969, that there had been a significant under-recording of exports in the trade statistics because some export documents were not being lodged with Customs by exporters, despite their legal obligation to do so. Exporters and their agents were urged to lodge the necessary documents in good time, and a procedure was instituted for checking from ship and aircraft manifests that the necessary documents had been received. By November, 1969, the shortfall of export documents had been reduced to negligible proportions. The checks carried out for the early months of 1970, however, now show that a degree of shortfall, of about 2 per cent., has re-emerged.
In view of the importance of these figures the Government do not regard it as acceptable that they should be subject to this uncertainty. The Government, therefore, intend to institute as soon as practicable a system of pre-entry whereby exporters will be obliged to give the Customs details of exports before they are loaded on the ship or aircraft.
Successive Governments have over a period of years been attempting to simplify the documentation of exports, and we are grateful in particular for the work that Lord Thorneycroft and his Committee have undertaken in this field. The Government therefore regret the need for this change and officials of Her Majesty's Customs and of my Department will consult the interested parties in order to work out arrangements which will place a minimum burden on traders consistent with the overriding requirement for accurate recording.
Mr. Mason: It is pleasing to know that today's trade figures show a £27 million surplus on visibles and that invisibles are running with a favourable surplus of £40 million, just as my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) predicted. I gained the impression when we left office that under-recording was running out due to an extensive checking procedure which the Labour Government brought into being. Obviously there has

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been quite a lapse, otherwise our export figures would be many millions of pounds greater.
First, will the right hon. Gentleman say what has been discovered to cause this fresh lapse of under-recording? Secondly, which group of exporters is guilty of this practice? Finally, can he assure the House that these new procedures and consultations will be carried out with urgency so that all concerned can feel assured that the monthly trade statistics, for which the right hon. Gentleman is personally responsible, reflect accuracy?
Mr. Davies: The situation, which had been remedied by the measures taken, has now deteriorated quite seriously. The time taken in detecting this deterioration is, as the right hon. Gentleman knows, considerable, because the inquiry which follows the examination of manifests is a most complicated process. Therefore, the shortfall has undoubtedly been running back to quite early months in the year.
It is impossible to say at this stage precisely what sectors of the commodity markets have been most affected, but this will be part of the consultative process on which I shall be embarking very shortly. I can assure the right hon. Gentleman that we shall treat this matter with due urgency, but I am very anxious to ensure that the weight of this system is not unduly onerous on industry and exporters. Therefore, I plan to have fairly extensive consultations before bringing a new system into force.
Mr. Pardoe: I welcome the knowledge that the Government regret the need for this change, but is the right hon. Gentleman aware that some of us do not share his view of the importance of the accuracy of these figures? Is he further aware that a 2 per cent. error either way is neither here nor there? Is it part of the Government's policy of disengagement that we should have to run to his Department and say, "Please, sir—permission to export"?
Mr. Davies: May I just point out that the 2 per cent. in question involves a figure of some £150 million over the year? This is a very significant figure indeed, bearing in mind particularly the
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detailed scrutiny to which these figures are put and also their importance not only to the Government but to industry. The figures involved are important both from the point of view of commodities and the territories to which exports are made.
Mr. Sheldon: Would the right hon. Gentleman consider whether my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) was not underestimating the balance of payments surplus if there were £150 million arising, as he has said today? Could the right hon. Gentleman say whether, in the discussions he will be having as to the limitation of the problems to the small exporter, who, I suppose, is the person primarily involved, he will consider that to him it is more important to get these exports than to get the forms?
Mr. Davies: On the first question, the balance of payments figures are not affected because the difference in question is taken up in the balancing item. It really is a shift, and the importance of the figure is that more and more interest is concentrated on current balance at the moment—and the figure specifically affecting the current balance—but the total balance of payments is not affected by the adjustments which will be made. As far as the small importers are concerned, they, of course, will be very much in our minds when having the consultations which we are undertaking.
Mr. English: Is the right hon. Gentleman aware that industry as a whole will be grateful for his assurance that this will not add to the delay in export documentation, if that is the case; but would he also say why he has specifically mentioned aircraft in his statement?
Mr. Davies: I think I must enter a slight hesitation on an absolute guarantee that there will be no delay. If exporters produce the papers in proper form and in due time there will be no delay; if not, there must inevitably be some delay. I mentioned ships and aircraft as being the primary vehicles of our export trade. Perhaps it is worth while my saying that, as far as postal packets are concerned, these requirements will not have to be applied.
Mr. Taverne: Would the right hon. Gentleman reassure the Chancellor of the Exchequer that there will be no charges from this side of cooking the books?
Mr. Davies: I am grateful for that reassurance.
Mr. Ronald Bell: Would not my right hon. Friend agree that the sooner we get our economy back into a state in which the flow of trade has not to be clogged up by such trivialities the better?
Mr. Davies: Like my hon. Friend, I am of course most anxious to see our economy build up, but I think that to call £150 million a triviality is not really reasonable in any country's balance of trade.
Mr. Adley: Would my right hon. Friend say whether the devaluation which was the cause of the present unfortunately limited balance of payments surplus was not also the prime cause of the present inflation which we are all suffering?
Mr. Davies: I think that that is another question.
Mr. Ginsburg rose—
Mr. Geoffrey Finsberg rose—
Mr. Speaker: Order. I called Mr. Ginsburg, not Mr. Finsberg.
Mr. Ginsburg: As a matter of academic interest, would not the Secretary of State admit that his statement means that the May export figures were under-recorded? Perhaps he would like to call the attention of the Prime Minister to this?
Mr. Davies: Certainly I accept that the figures throughout the summer have been under-recorded. I should like to point out, however, that the underlying trend is not affected by the under-recording.
Mr. Geoffrey Finsberg: I am grateful for your recognising, Mr. Speaker, the hon. Member for Dewsbury (Mr. Ginsburg), who must be getting some of my mail. May I ask my right hon. Friend, when he is examining this more closely, whether he will give some thought to the feeling that it might be wiser if these figures were issued quarterly and not monthly? Then they would have more relevance.
Mr. Davies: This issue has been raised on many occasions and it is under constant examination. It has always appeared difficult to seize the exact, best moment in time to make this shift which I think many of us would consider desirable.
Mr. Michael Foot: In view of these signs of improved trade figures, may we not expect the Government to pluck up their courage and have an economic policy which they can divulge to the country?
Mr. Davies: I think that that, again, raises other questions with which this statement does not deal.

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

ORDERS OF THE DAY
  SUPPLY
  [5TH ALLOTTED DAY],—considered.

  COMMITTEE OF PUBLIC ACCOUNTS (REPORTS)
  Mr. Speaker: I understand that it is the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) who is to open the debate?
  3.55 p.m.
  Mr. John Boyd-Carpenter: I beg to move,
  That this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute on those Reports (Command Paper No. 4518).
  The somewhat startling conjuncture of names on the Order Paper in respect of this Motion is a vivid illustration both of the continuity and of the determinedly non-party constitution of the Public Accounts Committee. I hope it gives me an opportunity for congratulating both the right hon. Gentleman the Member for Manchester, Cheetham (Mr. Harold Lever) and the Committee on the right hon. Gentleman's election to the Chair of that Committee. I am sure it is an appointment which he will find absorbing, if occasionally strenous, and I hope that, without being presumptuous, I may express the view that the right hon. Gentleman has all the qualities required to make a great success of his Chairmanship. In view of the fact that the Chairmanship always goes with Opposition, I hope it will not be misunderstood if I wish the right hon. Gentleman a prolonged chairmanship of the Committee.
  The right hon. Gentleman's name appears first on this Motion. I appreciate that. It amounts I think to giving us something of a blank cheque, and I hope I am not misunderstood if I say that there are few Members of this House from whom I would rather receive a blank cheque than from the right hon. Gentleman.
  The Committee, of course, is a peculiar one in that its Chairman is selected from the Opposition and the majority of its members from the Government side
  876
  of the House. But I am glad to be able to tell the House that during the six years in which I was in the Chair of the Committee, from 1964 to 1970, there was on no occasion a division of view or a vote on party lines. Indeed, the right hon. Gentleman will, no doubt, have the same curious experience that I had; for the earlier years of his Chairmanship he will, of course, be dealing with the things which went wrong during the period in which he was a member of the Government, and it is only after a year or two that he will come to disinterring such skeletons as may reside in the cupboards of my right hon. Friends.
  In view of the offices which the right hon. Gentleman has held, he may find himself having the same occasionally intriguing and entertaining experience as I had of dealing with a matter in which, as a member of the previous Administration, I had been involved in trying to prevent it from happening, but had been overridden. And it is always a wonderful illustration of the iron sense of discipline of our civil servants that though this fact must have been perfectly well known to the accounting officer or Permanent Secretary appearing before us it is completely offside to give any indication, other than an occasional wink, to suggest that that distinguished civil servant knows perfectly well that that was the case. If he does have that experience, as he may well have, I hope that he will have no greater difficulty than I had in keeping a straight face.
  As this is the last occasion on which I shall have the opportunity of making the first speech on this particular occasion, I hope the House will not think it tedious if I take the opportunity to express thanks to a number of people for their work and co-operation over the last six years. Thanks are due to Sir Bruce Fraser, and his predecessor Sir Edmund Compton, as Comptroller and Auditor General, two distinguished public servants of the highest calibre and devotion to duty: to the able and extremely hardworking staff of the Exchequer and Audit Department; to the two clerks from the Clerk of the House's Department, Mr. Clifford Boulton and Dr. Eric Taylor, whose services were and are of the greatest value.
  Perhaps I might also refer to four members of the Committee of last

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  Session who are no longer Members of the House—to my noble Friend, Lord Reigate, who presided in my absence; Sir Douglas Glover, whose idiosyncratic methods, which we knew well on the Floor of the House, were displayed to full advantage in Committee; Dr. Edwin Brooks, who brought a powerful and incisive academic mind to some of our problems, and Mr. Frank Hooley, whose efforts, hard work and practical experience were of the greatest value.
  I hope that those hon. Members who survive will feel that these tributes are not inappropriate and I cannot forbear specially to thank for their help the hon. Members for Heywood and Royton (Mr. Barnett) and Ashton-under-Lyne (Mr. Sheldon), known in the Committee, as the House may know, as the "heavenly twins", who have played so large a part in the work of the Committee and whose continued residence on earth and on the Committee I hope may long continue.
  Effectively, the significance of the Committee depends on three things, the first of which is that it works very closely with the Treasury. As hon. Members not on the Committee may not be aware, one of the Treasury Officers of Accounts attends as a permanent witness at all sittings where evidence is taken. It has also been greatly helped by the co-operation of the Press. I am deeply impressed every year at the speed with which the lobby correspondents absorb a massive and complex report which it has taken members of the Committee many months to work on.
  But above all, the Committee's effectiveness turns on the fact that its recommendations are treated with great seriousness in Whitehall. I will quote one large and one small example. The new system of dealing with non-competitive Government contracts, which is dealt with at considerable length in the Report of last Session, was evolved under the impetus of the reports of earlier Committees on Ferranti and Bristol Siddeley and also on a number of less spectacular inquiries. To take a more recent one, I would like to express my gratitude to the last Administration for putting through, shortly before Parliament was dissolved, the Insolvency Services (Accounting and Investment) Act, 1970, which resulted directly from a recommendation of the Committee.
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  Sir, you would rebuke me for tedious prolixity, if not repetition, if I were to attempt in one speech to cover, even briefly, all the subject matter of the massive Reports before us. I will, therefore, follow the practice of previous years and pick out one or two matters on which it might be of assistance if, as the Chairman at the time, I made a comment.
  I will start with a reference to the Post Office. As paragraph 198 of the Report spells out, the report before us is the last one covering a full year in which the Public Accounts Committee is likely to deal with the affairs of the Post Office. Every year for as long as I can remember the affairs of the Post Office have been before the Committee. This is not wholly surprising. The Post Office spends a great deal of money by way of capital investment on equipment and so on, and those hon. Members who have served on the Committee in the past will, I think, share my general impression that its relationship with many of the people who supply that equipment has been perhaps unnecessarily cosy. I do not mean by that to suggest impropriety or irregularity of any kind. But the impression created on my mind is that the Post Office policy in purchasing matters has been insufficiently commercial and not such as would be adopted by an enterprise which felt responsible for dealing with its own or its shareholders' money.
  For example, there was the long story of "the ring", the suppliers of telephone equipment and telephone exchanges. Successive reports of the Committee have urged the Post Office to introduce competition and not simply place contracts by arrangement with an arbitrarily limited number of suppliers. This has been important in financial terms and indicative of the somewhat uncommercial attitude which the Post Office has adopted for years.
  Another feature which is referred to in the Report between paragraphs 174 and 198 is the Post Office's habitual delay in fixing the price of what it buys. The whole incentive element in a fixed price contract is emasculated if the price is not fixed until the goods have been supplied or are nearly ready for supply. There is a particularly bad example of this in the Report.
  There has equally been the curious unwillingness of the Post Office to press

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  for the recovery of money owing to it. It has been the practice for some years on occasion to make progress payments on contracts the total of which exceeds the total price of the contract when it is finally arrived at. In these cases a sum of money is due back to the Post Office. We mention in our Report a number of examples, including one in which £159,583 admittedly due to the Post Office by way of such repayment was not in fact repaid for as long as four years. At present interest rates the financial unwisdom of such an attitude hardly needs emphasis.
  In paragraph 198 the Committee puts on record its anxiety as to the future when the supervision of the Committee and, more important, of the Comptroller and Auditor General is withdrawn. In parenthesis, concern was also expressed to us by the highly responsible staff association of the Exchequer and Auditor Department. I know that the Post Office Corporation will come within the scope of the Nationalised Industries Committee which, as I said as recently as last Thursday and as we all accept, is a Committee of great ability and force. But the Committee will be under the disadvantage of not receiving the help which the Public Accounts Committee had from the Comptroller and Auditor General and his staff. The accounts of the Post Office Corporation will no longer be audited by the Comptroller and Auditor General but by commercial auditors. I have no doubt that a distinguished firm of commercial auditors has been selected which will work with great efficiency, but there is all the difference in the world between an ordinary commercial audit for the purposes of the Companies Act and the kind of efficiency audit which over the years the Exchequer and Audit Department has undertaken.
  Therefore, if the Nationalised Industries Committee, or the Public Accounts Committee—if it likes to exercise the right it still has of going into the affairs of the Post Office Corporation without the Comptroller and Auditor General's help—wishes in the future to investigate the affairs of the Post Office, it will do so without the major advantage of an audit by the Exchequer and Audit Department.
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  I do not believe that the Post Office will be very much changed by substituting member of a Corporation for the Postmaster-General. The same people will be doing the same jobs, most of the way down the organisation. We all felt considerable concern as to whether something could not be put in the place of the Exchequer and Audit inspection of the Post Office in the future. Very large sums of money are involved, the Post Office's attitude on a number of matters has seemed insufficiently commercial, and I wonder whether my hon. Friend the Financial Secretary will be able to help the House by telling us what is the Government's thinking on the possibility of there being some other means of investigating this important body.
  We dealt at some length last Session with the administration of investment grants. Our views appear between paragraphs 13 and 34 of the Report. At the time we examined this matter it was of major financial significance. Public expenditure was running in round figures at £600 million a year. The recent announcement by my right hon. Friend the Chancellor of the Exchequer of the decision to discontinue these grants diminishes, although it does not wholly destroy the importance of our recommendations. It does not wholly destroy their importance partly because grants will continue to be paid for a considerable time where application was made before the date of the announcement and, secondly, some of our comments are pertinent not only to the particular system of investment grants but probably to any other system of helping financially investment in industry. I would therefore like to make one or two points arising from our Report.
  Paragraph 23 spells out some of the conditions under which these grants were paid. Briefly, they were that the article in respect of which they were paid should be used for at least three years, should not be moved out of this country or, where grant was paid at the development area rate, should not be moved out of a development area. Plainly, this is a difficult condition to police or to supervise, particularly as, by an administrative decision of the then Minister, grant was paid on individual articles down to an individual value of £25. The number in

  881
  respect of which grant is paid is therefore very large.
  Strictly, non-compliance with the conditions I have referred to involves a liability to repay the grant in full. In practice, rightly or wrongly, the Department did not insist on full repayment where the asset had been used for one year, but there is a more important point which our Report brings out. About 3,000 cases in which the conditions for use of the asset have not been complied with were discovered by inspection of a comparatively limited number of cases. When this happened, no distinction was made with respect to the repayment between cases where there had been no disclosure by the person who had received the grant—where they had been found out—and cases in which, in accordance with the conditions of the grant, a change of circumstance was properly reported.
  There was, in other words, no incentive whatsoever to any firm to carry out its duty of reporting that the conditions no longer existed. Indeed, the incentive was precisely the opposite way. A person who was caught was no worse off than a person who had owned up. There was a chance, and I think a substantial one, of not being caught and, if the worst came to the worst, and a person were caught, there was always delay and he had the interest on the money. I am glad to see from the Treasury minute that it is now the policy to adopt a much stricter approach where conditions of grant are not complied with.
  We spent a good deal of time examining the extraordinary way in which the system worked in respect of ships. Under the legislation grant could be paid, and in certain circumstances it was said had to be paid, in respect of a ship built abroad for operation abroad provided there was British ownership. In paragraph 31 we set out four examples of what happened and we were told that there were 30 foreign built and operated ships which were affected. I will not weary the House by reading out those examples because they are clearly set out in the Report. The ships were built abroad for operation under charter abroad and substantial sums were paid by way of investment grant simply because British ownership intervened. In several of these cases ownership arose by
  882
  purchase when the ship was already under construction.
  It is fair to say that the problem became so acute that the Industrial Development (Ships) Act 1970 was passed this year under which grant need not be paid in such cases if, in the opinion of the Treasury, it would be to the detriment of our balance of payments. But it was still left open that grant could be so paid. It is arguable that if that legislation had been in existence at the time when those cases occurred then some of the payments would not have been made; but the fact still remains that it is difficult to reconcile the payment of these moneys to people acquiring an interest in a ship being built abroad for use abroad with any direct benefit to the national economy. The names of the companies and individual concerned are given in the evidence and I would stress that no irregularity or offence was committed in any of these cases. They simply took advantage of the state of the law and, as we picturesquely put it in paragraph 34,
  "the coach-and-four committed no traffic offence."
  The 1969–70 Report includes for the first time the result of our inquiry into the affairs of the universities. The House may remember that the 1966–67 Committee stated in a special report that the time had come to end the situation in which the universities alone among the major recipients of voted funds were excluded from examination of their books and accounts by the Comptroller and Auditor General and from examination of their witnesses by the Committee of Public Accounts. We heard a good deal of evidence before making that special report and the right hon. Member for Grimsby (Mr. Crosland), with commendable courage in view of the academic disturbance at the time, accepted our report.
  The paragraphs in the present Report on this matter are the first to follow our recommendation and his decision. I believe the result proves us right. Many illustrious academic figures came before us in 1966–67 to say that inspection of the books of the universities would mean the end of academic freedom. But frankly our Committee did not believe it nor obviously did the right hon. Member for Grimsby. I hope that the House, having seen the results of the process now operating, will feel that academic freedom has not been affected in any way.

  883
  I call in aid a witness who came before us at that time—indeed he gave evidence also during this last Session—Lord James of Rusholme. I am sure the House agrees that he is one of the wisest and greatest men in the universities today. In 1966–67 Lord James stood out almost alone in favour of bringing the universities within our purview. When he came before the Committee on the last occasion and I asked him how he felt it had worked out he said that it had worked out very well and added, "I told you so".
  Our analysis has not revealed any major disasters but has revealed a quite considerable degree of weakness in financial control by the University Grants Committee. A number of cases illustrated this weakness. For example, three universities, apart from Oxford and Cambridge, charged college fees in addition to other fees charged. The universities included these fees quite properly in their accounts—and there is no reflection upon them whatever. But the University Grants Committee's witnesses admitted to us that when assessing grants to these universities they were unaware that this source of income existed, although the information in the shape of the university accounts was in their own office. It appeared that they were under-staffed, and I am glad to see that the Treasury minute suggests that this is being remedied.
  There is another element in the situation which might be expected in an area where there has not been the same degree of public accountability in the past as in other areas. It is that there has been a failure to match capital expenditure on buildings with current expenditure on maintenance with the result that universities did not receive sufficient current grants fully to use these buildings. There were also one or two cases in which buildings were bought by universities with the authority of the University Grants Committee, which required substantial conversion, but the University Grants Committee had not seen fit before authorising this purchase to find out how much either the cost of conversion would be or how long was the lease on which the property was held.
  I hope the House will feel that the view of the Committee—and, indeed, the deci-
  884
  sion by the right hon. Member for Grimsby some years ago—has been justified and that we have been able to help the universities by helping to secure that their finances are conducted in such a way that the always limited funds that any Government can make available shall be used the fullest and best extent for the desperately important purposes of advanced education. I hope there will be something of a shake-up in the administration of the financial side—I say nothing of the rest of it—of the University Grants Committee.
  Paragraphs 4 to 13 of the Report deal with a point of general interest to this House since the Committee sought to ensure that grants authorised by Parliament were paid only for the purposes Parliament intended. The Transport Act 1968 provided for a payment of subsidy to British Railways in respect of certain railway services. It appeared from the evidence before us that in certain cases where a subsidised passenger service was operating over the same tracks and using the same signalling apparatus as unsubsidised goods services the whole cost of both track and signalling had been attributed to the subsidised passenger service. The substance of the matter was that a subsidy was being given to the goods services since they were getting their track and signalling free. There is no harm in that in itself, but it is an important principle from the point of view of this House that subsidy by Parliament for one purpose should not be applied to subsidise something which, for better or worse, Parliament has not decided to subsidise. I am glad to see from the Treasury minute that steps are being taken to put this matter right.
  The longest part of our report runs from paragraphs 42 to 101 and, in spite of its length, I will deal with it extremely quickly. It concerns the immensely important and almost equally complex subject of the arrangements for Government contracts where it is not possible to go out to competition. There is, as the House will be aware, a large sphere of Government contracting in which the wholesome disciplines of competition are quite impossible. In developing a new type of aircraft or a new weapon, there is no competition in the ordinary sense and there are no competitors. The Departmen concerned has to go to a particular

  885
  firm with the know-how and enter into a financial arrangement with it. I do not wish to revive some rather sad and unhappy memories of how that kind of thing worked on some occasions in the past, but it is obvious that if a firm which has much better information about the real costs is involved in negotiating a non-competitive contract with a Government Department which itself does not know those costs, the possibilities of an excessive price exist.
  It was for this reason that some years ago the Committee recommended the now accepted doctrine of equality of information. Even that doctrine is somewhat complex when it comes to application. However, the Government of the day carried out prolonged negotiations with the Confederation of British Industry. I believe that these negotiations were conducted with great ability by the then Chief Secretary to the Treasury, now Lord Diamond, using his own considerable expertise as an accountant. A system was evolved which I will not attempt to explain to the House, since I can only do so when I am in particularly good form and at great length, but it contains a highly complex formula for determining the profits to be allowed. It takes into account a ratio between costs and capital employed. It lays down some arbitrary rules as to what should be taken into account by way of capital employed and is obviously a most difficult matter. On the other hand, very large sums of public money are involved and the Committee went into the whole matter and made certain detailed recommendations as to how the formula could be improved.
  The Government of the day wisely provided a Review Board to look at the working of the agreement. I understand that the review board has been considering the matter partly in the light of the Committee's recommendations and partly in line with its own views and that some refinement and perfecting of the system of Government contracts will result. The House will be interested to hear from the Financial Secretary about the present position.
  The Committee of Public Accounts has been in operation for over 100 years and I hope I may be allowed to say that over that long period it has succeeded in
  886
  rendering some service to this House and to the country. I conclude by expressing the hope that it will continue for at least another 100 years, and I wish the right hon. Member for Manchester, Cheetham great success in the work that lies ahead of him.
  4.30 p.m.
  Mr. Robert Sheldon: I associate myself with the tributes paid by the right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) to our officers and to those members of the Committee who are not with us during this Parliament. Beyond that tribute, I add one to the right hon. Gentleman himself. The whole Committee, throughout its six years, was deeply impressed by the chairman under whom we were fortunate to serve. He obviously spent a great deal of time in mastering the background, and his questioning and direct approach always impressed us, both in his knowledge of the subject and, what is more important in these matters, his understanding of it. His grasp of the whole of the problems facing the Committee was always assured. My only regret is that his party won the election, so that he is no longer able to utilise that talent in the admirable service of the House which he gave over so long a period. Perhaps that under-utilisation of talent will be remedied on a future occasion.
  Reference is frequently made during these debates to the small number of hon. Members who take part, or even attend. In an article in The Times last year, Mr. David Wood pointed out how deplorable this was. I think that he missed the point. The main purpose of the work of the Committee is to question those civil servants who, if the Public Accounts Committee did not exist, would not have to justify themselves as they have to justify themselves now. In a sense, one can say that the Committee which sits upstairs in Room 16 is very largely, though not entirely, an end in itself. That is not to say that we should not have debates here, but those who are troubled by the impossibility of debating every report of the new Select Committee on Expenditure should consider this.
  The old idea of the Public Accounts Committee was obvious: it was to ensure that the moneys voted went in those

  887
  directions which Parliament intended. Its value was clear. We have seen over the years a considerable change in the direction in which the Public Accounts Committee has moved. We have seen it even in the short space of the past few years. Led by the right hon. Gentleman the Member for Kingston-upon-Thames, much more of the questioning was directed not merely to ensuring that the money had gone in precisely that way, although that is an obvious and necessary function, but we were more concerned about establishing good methods of practice which might be copied by other Departments. As we learned more about certain errors, we tried to see whether those errors occurred in other Departments.
  The reputation the Committee once had of saving candle-ends is coming to an end. One saw the last flicker of this, if I may so put it, in the attitude of the University Grants Committee. It was clear that when the representatives of the U.G.C. originally appeared before us, they were very conscious of this aspect of our work and were rather frightened by it. As the right hon. Gentleman pointed out, their acceptance of the way in which we work and, beyond that, their understanding of the assistance that our work can give to Departments by questioning their methods and suggesting others, shows the way in which the work of the Public Accounts Committee has changed.
  We have mentioned this time and again, but I see no reason not to drive it home once more. The Public Accounts Committee was once called, I think by the right hon. Gentleman himself, a negative efficiency audit. This is true. Over the next few years, however, we might need to think about moving towards more positive ways of improving efficiency, for we know too well that the scope of a Department today goes well beyond the ability of any Minister to control it effectively. We see this in one of the unremarked paradoxes of the work of the Public Accounts Committee, that when we draw attention to serious errors or shortcomings, it is rare, if ever—it has never happened to my knowledge—that the Minister suffers personally as a result of a grievous error by the Department of which he is nominally the head. The
  888
  Minister is always exempt from criticism on this score.
  For those who still adhere to the doctrine of Ministerial responsibility, this is an obvious nonsense. They face the dilemma that either they must concede that Ministers do not have that power, or that the work of the Public Accounts Committee should be related to the Minister. We all know where the truth lies in this matter. It lies in the fact that the Ministers do not have that control over their Departments which our Constitution supposes.
  As a result, the work of the Public Accounts Committee is made even more important than might otherwise be supposed. If Ministers do not have that control over their Departments, the questioning function of those Ministers is not being exercised, and somebody has to question the working of the Departments. If the Minister does not do this, all we have available to do it is the new Civil Service Department, which, we hope, eventually may be able to take on some of these functions, which could be additional to those of the Public Accounts Committee. But I should not like to discuss that at this stage because it is a new field. The other alternative we have used for many years is that of using Parliament to provide for the crucial questioning, of a Department, which is controlled only in name, on some of the important things we discuss.
  As regards the particular matters we discussed during this year, I take, first, the point about the British Rail subsidy, to which the right hon. Gentleman referred. I believe that it was right to introduce a subsidy paid in relation to those services which in the public interest were held to be desirable. I believe in the distinction between those subsidies which are provided for general purposes and those provided for particular purposes. If one confuses the two, the difficulty is that one does not have the spur to efficiency which can be created if there is a distinction made between general profitability and the particular subsidy.
  The matter I found disturbing was that British Rail seemed to be unable to relate the subsidy to actual parts of the network which were losing money. If it was unable to make this distinction, it was

  889
  unable to found the claim to that money. There was another, though less important point regarding British Rail's inability to understand the matter of marginal costing which I noted. We must look for considerable improvement here if the scheme is to fulfil the purposes for which many of us hoped.
  I turn now to the matter of investment grants. There were several disquieting features in this connection, but that is not the point which I have in mind now. I am thinking of the change from investment grants to allowances. I understand that the Government consider that, as a result of the change, the Civil Service staff in this area will be reduced by about 1,000. That sounds quite a lot, until one costs it and finds that it is about one-fifth per cent. of the investment incentives. So it is not an important factor. What is important, however, is the way in which the grants or allowances are examined.
  Under the old system of investment allowances—or capital allowances as they will be from now on—the examination of assets was insignificant or almost absent. The introduction of investment grants, on the other hand, since the Treasury paid out money and Treasury control is very strict, meant that there had to be a physical examination of a number of the assets, with spot checks, and a full examination to make sure that the case qualified. As a result, we had a much more direct incentive in those areas in which applicants qualified for investment grants.
  In returning to the other method, we shall have much less control, so that, in my view, the investment incentives which the Government will be paying out will not produce the same return on their money as the investment grants produced. Depreciation allowances cannot be examined in the same way as particular kinds of asset could be examined, because the Inland Revenue does not have that sort of staff; the staff had to be recruited specially, and now, presumably, they will be disbanded.
  I think it wrong that, if one changes from one system to another, the method of control should be so much reduced. I realise that there are hon. Members opposite who do not agree, but it does not strike me that there is a great difference in principle between giving
  890
  money in the form of capital allowances and giving it in the form of investment grants, but what concerns me is that we should not sacrifice a measure of control in changing from one system to another. I should be most unhappy to see a lack of control develop such as existed before the giving of investment grants for the purpose of providing incentives for the investment which is felt to be necessary and desirable in the national interest.
  The most important part of our work, I suppose, concerned the costing of a number of projects undertaken in circumstances of little, if any, direct competition. The buying of goods or services in a competitive sector is relatively simple. One can go out to tender, receive a variety of quotations, and choose the best. But the work of efficiently settling prices for non-competitive work is an important part of the task of the Public Accounts Committee, and a growing part of that task. I quote here from the evidence. It is a passage in the questioning dealing with the payment of efficiency bonuses. A price was fixed, and if it was considered that the work had been done efficiently, there could be a maximum bonus of 3 per cent. for efficient work. This is Question No. 3762:
  "In the assessment of the three per cent. range, which I noticed, I did not understand how the calculation of the estimates varied. Can you tell me what is the highest percentage ever agreed for efficiency, and what is the lowest?—(Answer) So far, Sir, we have not in fact given anybody more than 1½ per cent. We have given almost everybody 1½ per cent., and the four cases—I think it is—which have not had that have all been below. No one has yet got more, but the sample is still pretty small."
  Thus, we see that an attempt made to evaluate efficiency related to a 3 per cent. maximum bonus available ended up in the payment of 1½ per cent. in almost all cases. That sort of efficiency payment is a nonsense.
  This is one of the great problems which the Government have to face. Marketplace efficiency is easy to measure. Monopoly efficiency is extremely difficult to measure. But what makes it even harder for us is that it is becoming increasingly important to measure efficiency in a noncompetitive situation. I believe that we have some new men now who are likely to prove valuable and to produce useful reforms in this important area, but the answer is a long way off. We shall need

  891
  to pursue the matter not only in this field but in many related fields.
  Finally, a word about the Post Office. A number of matters have come before us year by year in this connection, and the right hon. Gentleman the Member for Kingston-upon-Thames pointed to some of them. The difficulty is that when this body moves away from the purview of the Public Accounts Committee there will be grave doubt about the stimulus upon the Post Office itself year by year, not just every now and then through the Select Committee on Nationalised Industries. It is not as though we were always satisfied with its work. There have been a number of disquieting features, and we do not know how these are likely to be put right over the years ahead.
  It may well be that since a Minister will not be directly in charge of the board and will, therefore, have less control than the Minister of a Department which we do investigate—and he has little enough influence over that—the control of the Post Office as it now is will be quite inadequate. We may well have to inquire into and discuss other methods by which the valuable questioning function can be continued. I do not believe, as the right hon. Gentleman said, that it can be done by the auditors themselves. I do not believe that auditors ever do the questioning; they are too much committed on the side of the body itself. They have not that scepticism which is an inherent quality of the questioning process. I look forward, therefore, to hearing proposals showing how this necessary function is to be continued.
  I end as I began, by congratulating the right hon. Gentleman the Member for Kingston-upon-Thames on the magnificent work which he did for the Committee and for the House. I hope that my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) will follow in those footsteps so well and truly marked.
  4.48 p.m.
  Sir Henry d'Avigdor-Goldsmid: Not having been a member of the Public Accounts Committee, I scarcely dare to intrude on this occasion, any more than I should intrude in a Scottish debate, but I wish to follow the hon. Member for Ashton-under-Lyne (Mr. Sheldon) in one or two of the points which he raised.
  892
  First, I join the hon. Gentleman in paying my tribute to my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), the Chairman of the Committee, and to all those who served upon it. They undergo an onerous task, the most onerous of all our Select Committees, I think, and it is without question discharged to the satisfaction of the House. As my right hon. Friend reminded us, the origins of the Public Accounts Committee go back to Gladstonian times, when Mr. Gladstone considered that it completed the circle of control of public expenditure. He was very emphatic about that. I do not imagine that any of us, however much we honour the Committee today, would share that thought now. The fact is that the whole range of public expenditure has grown so wide that no one committee, however brilliantly staffed and however admirably led, can exercise the Gladstonian sort of control, which, of course, had something to do with candle ends. Candle ends are clearly out of fashion.
  The first point raised by the hon. Member for Ashton-under-Lyne which I want to take up relates to the Post Office. The Post Office was subject to a full survey by the Select Committee on Nationalised Industries led by the hon. Member for Poplar (Mr. Mikardo). An inquiry in considerable depth was conducted, I think successfully, and the Post Office Bill which followed that was based to some extent—not a negligible extent—on the report of that Committee. To start getting nervous about the Post Office now or to feel that its failings will be corrected only by a further inquiry is to do it less than justice. We have given it a start. It should be given a few more years to do its job.
  Next, the hon. Member expressed concern that investment allowances might be ill spent because they were spent without the Government's supervision. The philosophy of the present Administration is that it is not for Governments to supervise the expenditure of private companies in a business that they know. It is the Government's policy to reinforce success, and they regard the investment allowance system as a means to that effect. Therefore, it is not a question of one form of supervision or another. It is one philosophy or another. I can see no likelihood of there being any form of

  893
  supervision of investment allowances until that unlikely day when the hon. Gentleman's party takes office. Investment allowances do not need supervision. The hon. Gentleman said that about 1,000 civil servants could deploy their energies elsewhere. It must be evident also that at least as many officers of industrial companies will be able to devote their energies to more profitable matters.
  Mr. Sheldon: The supervision of investment grants was just a check to ensure that the money was spent for the purposes intended.
  Mr. Harold Lever: Done by the Inland Revenue.
  Mr. Sheldon: It was not done by the Inland Revenue. In the Public Accounts Committee we elicited the fact that the Inland Revenue imposed practically no check. For the investment grants system, because the Treasury was paying the money, there were spot checks to ensure that they fell within the right category. That system of minimal but necessary checks will still be essential under the investment allowance system.
  Sir H. d'Avigdor-Goldsmid: If I heard the hon. Member aright, he referred to the change-over from investment grants to investment allowances as freeing 1,000 civil servants. I suggest that it will free at least as many people in industry whose job it was to prepare information for those civil servants to look at. So the hon. Gentleman's explanation does not challenge my conclusion in any way.
  There is one point about which I am deeply concerned. It is in the context of the new Expenditure Committee which is to be set up. I wonder how a committee can function effectively without access to a staff of, the size which is at the disposal of the Comptroller and Auditor General—that is, a staff of more than 500. I have never heard any suggestion that the new Expenditure Committee should have more than a handful of staff.
  I am perturbed at the idea that by establishing an Expenditure Committee we shall do no more than go through a form of language. I am convinced that the whole edifice of national expenditure has become so wide and embraces so many activities which were far re-
  894
  moved from Mr. Gladstone's mind that there is no likelihood of the House establishing an effective form of control over expenditure unless we are prepared to get to the situation envisaged by the late Lord Passfield in which every civil servant had an auditor standing behind him. This is not a situation that any of us want to see. We cannot believe that such a doubling of manpower would perform the same result.
  I am driven to the conclusion that we should give a fairly free rein to those concerned with expenditure, subject always to the supervision of the Public Accounts Committee.
  I do not know how the tradition arose that this Committee should be chaired by a member of the Opposition. Perhaps the tradition goes back to the very origin of the Committee. I think that it is an extremely sound tradition. My right hon. Friend the Member for Kingston-upon-Thames could not have a better successor for Chairman of this important Committee than the right hon. Member for Manchester, Cheetham (Mr. Harold Lever).
  4.56 p.m.
  Mr. John Golding: You, Mr. Deputy Speaker, know that I speak for Post Office engineers, who have a vital stake in the wellbeing of British telecommunications. I welcome the recommendation of the Public Accounts Committee that a means be found to continue independent scrutiny of Post Office accounts. It is important that the very large investment programme of the Post Office be examined from time to time in Parliament, although it is of no real concern to me whether this be done by the Select Committee on Nationalised Industries or by any other body.
  The Third Report of the Committee and the evidence behind it reveals a disturbing relationship between the Post Office and the main telecommunications equipment manufacturers—A.E.I.-G.E.C., Plesseys and Standard Telephones. Delays in recovering money owed, the long delays in settling prices under the bulk supply agreements, the delay in abandoning the development of the TXE exchange, which eventually cost £1·8 million—all this shows the need for a much tougher attitude on the part of the Post

  895
  Office towards the manufacturers, its suppliers.
  The Report raises one questionable point, however, when it suggests that effort should be made to interest further firms in the production of TXE exchanges. It supposes that the policy of relying mainly on Strowger exchanges in the medium term and TXE exchanges in the long term is correct. Unfortunately, there is a question mark hanging over this policy, a question the answer to which could have important implications for our exports.
  The question is: how well will we be able to sell either Strowger or TXE equipment in the world market?
  For a number of years the British telecommunications equipment manufacturing industry has been failing in the export field, at a time when imports have been rapidly rising. The growth of British exports of electric line, telephones and telegraph equipment between 1963 and 1968 was 0·3 per cent., compared with 60·8 per cent. for Germany and 116·2 per cent. for Sweden—our main competitors. The American General Electric Company, which makes the equipment for Bell, is prohibited from exporting.
  During this time, while Germany's share of the world market only fell from 24·3 per cent. to 21·1 per cent. and Sweden's increased from 18·3 per cent. to 21·4 per cent., Britain's share fell from 24·1 per cent. to 13 per cent. The electronics industry E.D.C. believes that the situation is improving. It believes that the United Kingdom is in a strong position in transmission equipment and should be able to offer the competitive crossbar type of switching equipment. Export orders are currently at a high level, the E.D.C. reports, and for these reasons our exports should be two-thirds higher in 1972 than they were in 1968.
  The report of the electronics industry E.D.C. emphasises that it is vital, in looking beyond 1972, to remember that a great deal depends on what equipment the Post Office selects to replace the obsolescent Strowger equipment, which forms the bulk of our present system, and whether this turns out to be the type of equipment which other countries, particularly our export markets in the developing world, will be requiring.
  896
  If the Post Office takes its decision with its eyes firmly fixed on likely developments in world markets, this sector could turn out to be a substantial source of exports in the long run. But if the United Kingdom system falls out of line with world requirements, as it has tended to do in the past, our share of world trade will continue to diminish. In this task the Post Office Industry Advisory Group on Systems Definition will have a crucial part to play.
  Britain must be careful not to create a telecommunications system which is out of line with world requirements. There is a rapidly growing demand for telephones and switching equipment throughout the world and we must be absolutely sure that there will be a market for TXE equipment before we develop totally along that line.
  Britain, which gained supremacy in this sphere by selling Strowger equipment at home and throughout the Empire, as it then was, lost that supremacy because of the development of the superior Swedish "Crossbar" exchange equipment which is faster, easier to maintain, more suitable for the majority of exchanges and better able to handle complex trunk routes.
  Other countries have switched from Strowger to crossbar, but in Britain the Post Office and the manufacturers decided in agreement not to do so in the early fifties. Instead, they decided to go straight into a telephone exchange system which would work by computer without moving parts. That decision, though brave at the time, proved to be wrong and perhaps it should have been abandoned when the Highgate all-electronic exchange failed in 1962. Because we stayed with Strowger equipment our industry has not had a sufficiently large home market to exploit the rapidly growing demand for crossbar equipment abroad. We must be sure that we are not at present making a similar miscalculation.
  By fitting only a small amount of crossbar equipment in our exchanges we are still mainly relying on Strowger equipment until the TXE type is available to replace it. If the TXE exchanges, which are not fully electronic but are based on reed relay switches, do not sell abroad, our electronics industry will be at a further great disadvantage.

  897
  Unfortunately these exchanges are expensive and may not be able to compete with crossbar equipment, particularly taking account of the development of a system called Stored Programme Control. How serious the situation is can be judged from the fact that the failure to convert the crossbar and the concentration on TXE exchanges, to the exclusion of Stored Programme Control, appears to have already lost us markets in Australia—which was formerly our biggest market. Although Plessey has started to develop work on Stored Programme Control, the British industry is still five or six years behind its international competitors.
  Considering the electronics industry E.D.C's. Report, I suggest that it is important that we examine in careful detail the costs of accelerating the pace of modernisation of the British telecommunications system and particularly of getting rid of our dependence on Strowger equipment. While I appreciate the points made in the E.D.C. Report about the difficulty of doing this, it is important to emphasise how much more expensive it will be to us if our system becomes yet again quite different from that adopted by the rest of the world.
  Leaving aside these technical problems, it is clear that the evidence given to the P.A.C. revealed serious shortcomings in the manufacturing industry. I regret that no comment was made about this in the P.A.C.s Report. Perhaps comments of this type have been made so often that the Committee gave up in despair.
  It was revealing to discover, for example, that with the ending of the bulk supply agreement, prices for telephones fell dramatically, by 27 per cent. between 1967–68 and 1968–69. Listening to engineers talking, I suspect that competition is still not working properly in the purchase of exchange equipment.
  Not only have prices been too high—this is clear from the Report—but there have been great delays in the delivery of equipment to the Post Office. The evidence before us shows that the number of contracts six months behind or more fell from 85 per cent. to 80 per cent. but that the overall delay has gone up to 8·4 months.
  In other words, 80 per cent. of contracts were six months or more behind and the overall period of delay of tele-
  898
  communications equipment to the Post Office went up by about eight and a half months. Given the number of warnings from successive Postmasters General, it was surprising to find that no penalty clauses were invoked. Indeed, I was astonished not to find a mention of this in the Report of the P.A.C.
  Where the delays were due to the Post Office failing to provide buildings, changing specifications or to slackness in giving details, then the Post Office must accept the blame and there can be no question of compensation from the industry. But the Post Office itself excused the industry its delays, partly because of the rapid increase in orders, partly because of the breakdown of a control system in a private firm and partly because of the strike of draughts-men.
  Why should the Post Office lose money because of the failings of the manufacturers? Knowing their own capacity and having contracted to deliver on time, they should have been penalised for their failure. The Post Office, and particularly its engineers, are frequently blamed by the public for delays in fitting telephones and for service faults when, at times, the fault clearly lies with the manufacturers.
  If people are waiting for telephones for six months or more and the equipment manufacturers are eight and a half months behind in providing the exchange equipment, the fault clearly lies with the equipment manufacturers. To meet the problem of high prices and delays in delivery, it would help if the Post Office were to manufacture some of its own equipment. It was disappointing to read in the evidence that the Post Office stated that it had not used their own, to use the words of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter):
  "highly competent engineers"
  to install exchange equipment. It is one of the absurdities of the present system that equipment is not being put into use because the manufacturers have not got the skilled labour to instal it. The Post Office has, and it is an absurdity that it does not install that equipment. It was also disappointing to me that the Post Office disclosed that it did not intend to manufacture equipment for itself in these circumstances.

  899
  In 1966, influenced by studies of the American and Swedish situation, the Select Committee on Nationalised Industries in the Report mentioned by the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) recommended the serious study of Post Office manufacture. It did so believing that this might not only give lower prices but also give to the Post Office
  "… the quick, direct and full feed-back to the Post Office's research and development organisation of relevant information regarding technical difficulties encountered in the course of manufacture."
  In the United States of America, A.T.T.I. controls development through the Bell Telephone Laboratories, supplies through Western Electric and operates through Bell. In Sweden the State system not only competes with Ericssons but has gone into a jointly-owned enterprise with it responsible for the development and production engineering of new systems.
  There are two ways in which the Post Office could emulate the American-Swedish pattern, a pattern which appears to have been successful in those countries. It could do so through its own factories or by the purchase of an existing company. Its own factories should be used. We have a skilled, well-trained and adaptable staff. During the war large-scale manufacture did take place in the Post Office factories, but this was stopped in the 1950s. In the circumstances of today, where private industry is failing completely to cope with the growth of demand for telephone equipment, these factories should be expanded once again.
  But there will be need for more than the expansion of existing Post Office factories. The American Brookings Institution—no wild socialist pressure group—stated of the supply of telecommunications equipment: in "British Economic Prospects":
  "The Post Office should go further in exploring alternative sources of supply … The Post Office should expand its research activities and consider acquiring one of the stronger supply firms for production and experimentation."
  The Post Office should take that suggestion very seriously if it wants to secure certainty of delivery and lower prices for the future.
  900
  If we are to avoid the sort of evidence presented to us in the Report, the Post Office should manufacture a proportion of its own equipment. Certainly, in view of what I have said about the export situation, it is vital that the Post Office and privately-owned industry get together now to work out how to face the technical and commercial threats from abroad. Engagement, not disengagement, is wanted here if we are to prevent our world competitors from taking a pot-shot at what could become one of the lamest ducks of all, to judge from the evidence. I am talking about the British telecommunications equipment manufacturing industry.
  5.15 p.m.
  Mr. David Knox: I am grateful to be called to speak in this important debate. I hope that the hon. Member for Newcastle-under-Lyme (Mr. Golding) will not mind if I do not follow his highly technical dissertation on a matter on which he is an acknowledged expert but about which I must confess I know very little.
  I also hope that the House does not think it discourteous of a Member who was not even here when the Public Accounts Committee sat to comment on the report. I have gathered from examining the report in HANSARD of the similar debate 12 months ago that, generally speaking, such a debate is the preserve of members of the Committee. There has been a change this afternoon, and I can only assume that the reason is that suggested by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), that some of the members of the Committee are no longer in the House for one reason or another.
  I am sorry that there are not more Members present at least listening to the debate, if not participating in it. But my right hon. Friend must take some satisfaction from this, because I am sure that the real reason is that hon. Members are very satisfied with the Committee's work and trust it, rather than that they show a lack of interest in its work.
  I have read the three reports of the Committee, and I found them extremely fascinating. The House is much indebted to the Committee's members, and particularly its chairman, my right hon. Friend, for the very hard work they have obviously put in over a very long period.

  901
  I intervene in the debate not as someone who is dissatisfied with the Committee's work or the reports, and in no way as an unfriendly critic. I find myself in general agreement with the Committee's findings. I intervene partly to support those findings and partly to emphasise two aspects. I do not wish to keep the House for long, so I should like to deal with just two items in the Third Report.
  The first, in the first and third paragraphs, concerns dealing with tax fraud and evasion and the Inland Revenue. The Committee has done great public service in drawing attention to the serious backlog in investigations of possible tax evasion. The fact that the number of back-duty inquiries rose from 9,300 on 31st March, 1966, to 31,000 on 31st March, 1969, is a matter for deep public concern. When we find in addition that the number of completed cases of fraud and evasion fell from 11,618 to 8,983 between those dates, and that the reason was the deferment of back-duty inquiries, the seriousness of the situation becomes plain to everyone.
  In general, I agree with the Committee that we must accept the Inland Revenue's reason for the deferment. Quite simply, it is the heavy additional burden on the Department following the Finance Act, 1965 with the complications and intricacies of the corporation tax and capital gains tax. I do not pretend to understand all the details of the Act, or of those two taxes, but what little I do know convinces me that that is a very substantial reason for the backlog of work in the Inland Revenue.
  Equally, we must accept the view of the Inland Revenue that when the work on the backlog is started again many of the cases should be cleared up fairly quickly.
  Those things said, this is a situation which cannot be allowed to continue for very long, for two good reasons. First, if it is allowed to go on for too long there will be a strong incentive to more and much wider tax fraud and tax evasion. If people think that they can get away with it, or if they think that there is only a remote chance of their being caught, more and more people will try to cheat the Inland Revenue, and once that sort of thing starts on a big scale it will be immensely difficult to stop. Indeed, it could result in a permanent,
  902
  long-term increase in the work-load on the Department in tracing such evasions and frauds.
  The second reason is that even the deferment for a relatively short period in the investigations must inevitably make it more difficult to investigate back-duty inquiries, thus making the recovery of the correct tax much more difficult.
  In view of all this, I am a little disappointed that the Committee accepted that there was no immediate solution to this problem. One accepts, as one must that the shortage of fully-trained inspectors makes an early solution difficult, but this is not an insuperable problem, and I ask that the Inland Revenue should look at this matter with some care to see whether it can overcome the problem fairly quickly by engaging fairly specialised staff to do the job.
  There is a final point. It is one that affects us in this House, and it is one to which I hope my hon. Friend the Financial Secretary is giving his attention. We can make a contribution to easing the work load on the Inland Revenue by doing something to simplify the tax system. One must accept that there is conflict between the principles of simplicity and equity in any system of taxation, and that in the middle of the twentieth century absolutely dramatic progress is not possible, but some simplification of the tax system is undoubtedly possible, and I hope that in next year's Budget, and in the next one after that, the team at the Treasury will have done something to simplify the system without in any way producing a dreadfully inequitable system in its place.
  The second major point to which I should like to refer relates to paragraphs 146 to 163 of the report as they apply to the universities, and particularly as they apply to the University of Keele. I thought that the hon. Member for Newcastle-under-Lyme might have touched on this because he, like me, is a Member for a North Staffordshire constituency, and no doubt, like me, he is a member of the Court of the University of Keele. I have not had time to discover what the Court does, but I can only assume that it is not a very important institution, not because the hon. Gentleman is a member, but because I am.
  Nevertheless, I think that in the report, and particularly in that part of it which

  903
  refers to the University of Keele, there is a situation which is a matter for some public concern, something about which one cannot be terribly happy. I am referring to the fact that there is over-provision of academic buildings, of library accommodation and of dining and catering facilities at Keele University. There were, when the Committee sat, about 2,000 students at the University of Keele. There was academic accommodation for 2,400 students, and there was library accommodation and dining and catering facilities for even more.
  What is really alarming about all this is that the surplus capacity at Keele was estimated as representing capital investment to the tune of £911,300—almost £1 million. What is even more alarming is the fact that the university thinks that it will be 1973 or 1974 before the surplus academic buildings will be taken up. Even when that happens there will still be the problem of extra library accommodation and extra dining and catering facilities.
  I consider this to be a very serious matter. It has arisen, as the report says, through a lack of co-ordination in the planning of capital grants for the building programme and the recurrent grants which determine how many students the university will have. It is obvious, and a superficial reading of the report shows this to be so, that the situation calls for better co-ordination of these two kinds of expenditure. The U.G.C. has started to make some progress in this matter. Obviously, as the report suggests, the root causes of the problem are inadequate information and the inconsistency of the decisions being taken. I hope that the Committee's Report will be accepted.
  Mr. Golding: The hon. Member knows that I support his remarks. Will he perhaps comment—as I cannot, being a graduate of Keele—on the inconsistency of the administration of Keele denying students a proper say in the running of their University, when the report reveals that the administration does not seem able to make proper provision itself for forward planning?
  Mr. Knox: I do not think that that is quite within the terms of the Committee's report, though I seem to recollect reading in the Evening Sentinel on Friday
  904
  that certain steps were being taken in this respect for Keele University.
  I hope that the Committee's recommendations will be accepted and that in future when total capital programmes are determined there will be implicit in them the intention to adjust the recurrent grants to ensure that capital assets are fully utilised. The second suggestion made by the Committee, which I hope will be accepted, is that there should be a greater degree of flexibility in adjusting the capital programmes and the recurrent grants for individual universities when these get out of balance, as they must do sometimes no matter how good the planning may be.
  This is particularly important because in this House, I think on both sides, there is considerable concern that we should each year increase, and increase considerably, the amount that we devote to education. There may be differences about how this should be allocated, but these are differences which exist not just between the two sides of the House but on each side of it. No matter what happens, no matter how much money the Government make available for education, there will still be some form of expenditure that we would like to undertake but cannot.
  In those circumstances, it seems particularly unfortunate that there is waste of the kind to which I have referred because of a lack of planning. I hope that in future much more concern will be shown to make sure that we get the right balance between capital expenditure and these recurring grants, and that there will be no under-utilisation of places in the universities, because this sort of extravagance and waste is not in the real interest of education.
  I conclude by saying again how indebted I believe the House is to the Committee for the work that it has done and for producing a Report of such a high standard. The Committee has done a particular public service in this respect, and I hope that in some small way my intervention may help in the furthering of that public service by drawing attention to and underlining two of the points made by the Committee.
  5.29 p.m.
  Mr. Tam Dalyell: Hon. Members are for ever excusing

  905
  themselves for not following one another. I hope that the hon. Member for Leek (Mr. Knox) will forgive me if I follow him, impromptu, and at a little length, because I thought that what he was saying about the Inland Revenue was important and interesting.
  Perhaps I may first give the hon. Gentleman a caution. When I was a new Member, I put down a somewhat brash Question to the then Prime Minister, Mr. Harold Macmillan, on how simplification could take place in the tax laws. Rather than snub me, as he could easily have done, he was very kind. He took me aside, and then sent me to see Sir Noel Hutton, the Chief Parliamentary Draftsman. I do not know whether it was kind in retrospect, because in an hour and a quarter I was torn to shreds by the Chief Parliamentary Draftsman. He spoke gently, and showed me with a good example that his business was not to concern himself with decent men and women who would abide by the spirit of the tax laws but to create tax laws which could not be got round by clever income tax evasion lawyers. I hope, therefore, that in what the hon. Member for Leek said about this, he will remember than 1 per cent. of the population at least is somewhat circumlocutory in its approach to the Inland Revenue.
  However, I was also interested in what I took to be references to the whole affair of the Estate Duty Office, and I take the opportunity of saying to the Financial Secretary that many of us are very worried about the set-up at the top of the Inland Revenue in dealing with these complicated estate duties and this kind of revenue.
  The hon. Gentleman will know the situation, for example, in the Scottish Estate Duty Office, where over a decade the figures are roughly that that office had 32 graduates whom it financed through the universities to be expert in these matters. I think I am right in saying that seven of those 32 went off to banking and insurance, 13 went to private law firms, four went off to get married, four were for other reasons unsuitable and about four remained. I am not certain of the current accuracy of those figures—they were for a 10-year period—but it is the sort of issue that we are up against.
  906
  Whereas the party opposite have no intention of trying to introduce a wealth tax, some of us who would like to have seen the Labour Government introduce a wealth tax were stymied on the issue of the Estate Duty Office and the fact that there were not the personnel to put it into operation. If, therefore, I say with my tongue in my cheek that in view of the coming of another Labour Government and a wealth tax I hope that the Financial Secretary will be fair about improving the Inland Revenue, he will know the point at which I am getting. The serious issue is that for all parties there is a terrible problem of high-quality staff in the Inland Revenue.
  I wish to follow the hon. Member for Leek in one more point. Much has been said in criticism of the Inland Revenue, and particularly my hon. Friend the Member for East Stirlingshire (Mr. Douglas) will know of the Estate Duty Office at East Kilbride. Having visited East Kilbride, I should like to record that whatever has been the experience of other hon. Members, as a Member of Parliament doing constituency work I have had total and prompt co-operation. If anybody takes the trouble—and any Member of Parliament is welcome—to go and see how the office does it and how its computers operate, one can understand something of the difficulty that is involved. I would like to record here and now in the House of Commons that many of us have had excellent service on behalf of our constituents from Centre One at East Kilbride. I would like the Financial Secretary to know this.
  I had better be careful about my comparisons concerning Chairmen of the Public Accounts Committee, because I served under two other Chairmen. One was my right hon. Friend the Member for Huyton (Mr. Harold Wilson), and the other was the current Chairman of the Parliamentary Labour Party, my right hon. Friend the Member for Sowerby (Mr. Houghton). If I were to say that the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was the best Chairman of the Public Accounts Committee under whom I had ever served, it might be a little awkward but—[Laughter.] Who knows?—the Whips might go running out to tell on me.
  At any rate I should like to record that it was part of my education to serve

  907
  under the right hon. Member for Kingston-upon-Thames. In this respect, I am grateful for having been what one might call a Boyd-Carpenter alumnus, because by the sharpness of his questions the right hon. Gentleman taught a great deal to all those incoming Members of Parliament who served under him at one time or another in the Public Accounts Committee.
  I should like to refer to a tribute that the right hon. Gentleman paid to my former colleagues, Edwin Brooks and Frank Hooley. I was on the Public Accounts Committee with neither of them, although I read a great many of their sharp and meaningful questions. I would say the same thing about a Conservative Member who lost his seat in 1966. That was Sir John Arbuthnot, the former Member for Dover. Here are Members who do a great deal of work for little or no political kudos, because I suspect that Sir John Arbuthnot got very few votes in Dover for what he did, and I suspect equally that my former hon. Friend Edwin Brooks got comparatively little help from the electors of Bebington for the work he did in the Public Accounts Committee.
  At the same time, in matters which are not secret, and no one expects a revelation of the Exchange Equalisation Accounts—I hope that I am not wrongly taken—I should have thought that of all the parliamentary procedures, this kind of Select Committee presents itself most aptly to the working of television. Certainly, many of the inquiries—not least the inquiry on higher education, in which there was very little of a secret nature—would have made superb adult educational television.
  I hope that when this subject comes up in the House of Commons again, thought will be given about how the long-standing Select Committees can properly be televised, not only for any electoral benefit that may accrue to members of the Committee, but because I hold the view deeply that it would be good for British democracy if the public could see this important part of the operation of Parliament in action.
  I go along with the right hon. Member for Kingston-upon-Thames in what he said about the examination of the
  908
  universities, because none of us could ever forget the absolutely stonewall opposion which was presented at the time. The very thought of examining the universities caused such a flurry among the vice-chancellors that one could hardly believe that academic freedom was not at stake. There was, of course, a very honourable exception, as the right hon. Member for Kingston-upon-Thames said, and the exception was Lord James of Rusholme. Lord James is well in a position to say, "I told you so". On the other hand, I agree with the right hon. Gentleman that the whole issue of the failure to match capital expenditure with current maintenance is a subject which all those in higher education should really look at.
  I gave notice a week ago to the Secretary of State for Trade and Industry that I wished to raise certain issues arising out of paragraphs 42 to 101, Class IV, Votes 20 and 21, and I am grateful to the Parliamentary Secretary to the Ministry of Aviation Supply for being here this afternoon as he has responsibilities for aviation.
  These are hardly recondite issues which should be buried in obscure Parliamentary reports. The issues which are raised here are the very issues that are exercising a great many of us on the fate of Rolls-Royce, and, for that matter, the same problems that surround Pratt and Whitney and the General Electric Company. As the right hon. Member for Kingston-upon-Thames, said, it is the whole issue of what happens when, as the right hon. Gentleman put it—although I might not put it in exactly the same phrase—the wholesome benefits of competition are absent, although I would add a caveat that foreign competition on almost all these occasions has very much been present.
  For the sake of coherence, I would like to relate my points fairly closely to the paragraphs in the Report and to the Treasury Minute. The first issue that I wish to raise is the question of what constitutes "reasonable contingency provisions in price estimates". Rather than refer to the paragraph, I turn to Question 2483, where the Chairman, addressing the Treasury, said:
  "Mr. Phelps, I see also there is provision for contingency allowances?"

  909
  Mr. Phelps, on behalf of the Treasury, replied:
  "Where there are contingency allowances that of course reduces the risk to the contractor?—The new agreement provides that the need for contingency provisions should be separately identified and justified. This is something which the Department will be watching in negotiating their contracts. I think one can distinguish between the concept of a contingency provision and the concept of a reward for risk."
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): I apologise for intervening in the hon. Gentleman's speech, but I think that as a matter of accuracy I ought to point out that the first sentence of his quotation was in fact from the question put by the Chairman, not the answer by the Treasury official.
  Mr. Dalyell: In the interests of time, I will not read it again. The hon. Gentleman was quite right.
  "Where there are continguency allowances that of course reduces the risk to the contractor"
  was a question put by the right hon Gentleman.
  I should like to ask something about the intrinsic nature of these contingency allowances. I may be very dim, but this is a distinction which I do not follow, and it is a distinction which has some substantial importance in relation to recent events, because it is no secret that if there are difficulties with Rolls-Royce at the moment, those difficulties are very much bound up with the escalation of costs.
  If, for reasons of political pique, or for other reasons—I know not which and it is not pertinent to this debate to argue the matter too closely—the Government have seen fit to dismantle the I.R.C., rightly or wrongly, by what mechanism will the issue of contingency provisions in price estimates be dealt with? I for one would have grave doubts about the whole system of fixed price contracts. It may well be that the Rolls-Royce situation will not be unique. What is the Government's thinking on this matter in the light of paragraph 47 since it has assumed not tragic but pertinent relevance? What alternatives do the Government have in price estimating for aerospace projects to those which in the 1960s led to a certain degree of trouble?
  910
  My second point arises from paragraph 48. This concerns seriously defective or misleading data. The Treasury Minute says:
  "The Ministry have confirmed that they would normally refer to the Board cases where they considered that price adjustments were warranted because data presented by contractors was subsequently shown to have been defective or misleading."
  I wonder how many times this has happened.
  It may be within the recollection of at any rate the right hon. Member for Sowerby that I was the man who suggested that Sebastian de Ferranti, in the light of the Report produced by the then Comptroller and Auditor General, Sir Edmund Compton, should be brought before the Public Accounts Committee. For two or three years, I was very proud of myself for having made the suggestion. Now, in retrospect, perhaps because I have become less brash, I am not at all certain that this was a very good thing to have done, because this was not a case of black and white; it was a case of all sorts of shades of grey.
  Ferrantis were not pure white, because, in a sense, they put themselves in the wrong, and perhaps in a sense I may be forgiven because they did not produce information which should have been produced to the Committee. On the other hand, let us be clear that there can be all sorts of views about what constitutes defective and misleading information. Without going all over the story of Bloodhound again, I wish to say that there must be some deep thinking, and perhaps deeper thinking than I have been able to extract from the P.A.C. Report this year, about the relations between the Government and private industry and the whole subject of defective information.
  I take Rolls-Royce as the example again, and I use the issue of carbon fibres. I thought that the Press on Sunday was rather nauseating on this issue. How often have we been told that the British make the developments, but, because of inertia, or because of our incompetence or for some other similar reason, others have been left to exploit them? How often have we been lectured about not taking advantage of Whittle and jet engines because we did not have the will to exploit them? We are told that variable geometry in aircraft was a British

  911
  invention and yet the British somehow did not exploit variable geometry techniques.
  But, lo and behold, when a company tries to leapfrog into the future, as Rolls-Royce did with carbon fibres and carbon fibre developments and fan blades—and I will admit that the fan blades may be not the whole matter—it seems very cruel that Rolls-Royce should be hauled across the coals for attempting, albeit not very successfully as yet, to develop a British engine of lighter weight which might have been an enormous success. It makes me sick to see the very same pundits in the Sunday Press, who not so many months ago were holding up Sir Denning Pearson and Sir Dennis Huddie as the great heroes of exports, today running them down and talking about abortive essays into carbon fibres.
  What constitutes defective data? We are now told that the RB211 was based on defective and misleading data. A great deal more thought has to go into this subject. I leave it at that, because I have no wonderful conclusions to offer, but I should like to hear the Government's thinking.
  I come to paragraph 53 and the old subject of equality of information. How many times have we gone over this issue? I see the right hon. Member for Kingston-upon-Thames nodding agreement. I am particularly concerned with the equality of information among sub-contractors. The relevant passage on page xxvi reads:
  "Your Committee were informed that, with one exception, the sub-contractors had now agreed to give the Department the information required under the Standard Conditions for all future non-competitive contracts and the sub-contractor who had not yet agreed was expected to do so."
  I go on to the whole of paragraph 56:
  "Your Committee cannot regard it as entirely satisfactory that, so far, the Ministry have been unable to accept (on a trial basis) the cost-recording systems of only one-half of their main contractors as adequate to provide the required information, and that it is likely to be two more years before the systems of the remaining contractors can be examined and finally approved. They are also concerned to learn of the initial refusal of certain important sub-contractors to accept the standard contract conditions. Equality of information, and access to records to ensure that equality, represented one side of the bargain with industry of which the other side was improved profit rates. It is essential that in meeting their side of the bargain, the Ministry should insist on the provision not only of equality of
  912
  information but of information in a form which will enable them to negotiate fair and reasonable prices."
  I apologise for reading the whole of that paragraph, but anybody outside the House who reads the reports of House of Commons speeches is mystified if he does not know to what it is that an hon. Member is referring. I wish that we had the system of being able to insert into our speeches paragraphs in reports to which we refer, so that we do not have to take up the time of the House by quoting them.
  The remedy to the problem mentioned there is relatively simple—if the sub-contractor will not play ball on the general question of equality of information, the Treasury and the Department are entitled to expel that sub-contractor from the league. I should like to know the view of the Financial Secretary—perhaps the Parliamentary Secretary will whisper something in his ear—about the difficulties of obtaining equality of information from sub-contractors.
  No names, no pack drill, but I suspect that there is a major firm not very far from the constituency in which I live and which I represent which is extremely sticky about giving information on any kind of equality. It is often American-based companies which take that view. I ask the Government the direct question—is it more difficult to get information from international companies based in the United States than from British companies? What do the Government propose to do to twist the proverbial arm of a number of companies which are difficult about providing information?
  I should like to raise again the issue of stocks in paragraph 61. The Committee says:
  "There is therefore no direct evidence about the relative proportions of stocks and work-in-progress employed on government and non-government work. But Your Committee observe that, if there is in fact no disproportion, it would seem desirable that the Ministry should ascertain why the average levels of stocks and work-in-progress on government account, less progress payments, should represent as much as three months' production, and whether it would not be advantageous to reduce them."
  The comment of the Treasury Minute is:
  "The Treasury have approached the Review Board, who have confirmed that such analyses will indeed form part of their General Review and that the point would be covered in their Report. The Ministry would have regard

  913
  to the Committee's observation in paragraph 61 in the light of the outcome."
  The Public Accounts Committee has done a great deal of work on stock levels. The House might ask the Government for a political view of what conclusions they draw.
  I am sad that the sheer volume of work done by hon. Members on both sides of the House does not seem to be followed up. This is one of the pities of the sparsity of attendance at debates like this. It means, in a sense, that in Whitehall the Reports of the Public Accounts Committee are not sufficiently followed up. Indeed, had they been followed up in past years, I believe that the taxpayers would have been saved many millions of pounds which he had to pay out in the late 1950's and throughout the decade of the 1960's.
  On paragraph 64, I should like to hear the Government's view of capital employed on Government work. The whole philosophy of how research and development takes place is involved. This is not the time to discuss the Green Paper that was presented by my right hon. Friend the Member for Bristol, South-East (Mr. Benn). However, there are deep issues for British industry.
  I was lucky enough to be sent by this House on a delegation to Japan last year. We visited the great Japanese firms of Mitsubishi and Sony. When I asked what research contracts they placed with the University of Kyoto or the University of Tokyo, the Japanese very politely looked at me in astonishment and said: "Contracts? Contracts with the University of Tokyo? Why should we place contracts with the University of Tokyo?" The truth is that much of the research is done inside the great Japanese companies.
  Therefore, I should like to know the philosophy of the Treasury and of the Government on this important issue. I do not expect a long answer on the future of great Government research establishments in this country. But I would support hon. Gentlemen opposite if they wanted to hive off research either into suitable firms in industry or into the universities, because I think that there is a heavy argument for raising the issue of capital employed. By "capital employed", we mean much of the research
  914
  and development costs which are borne by the firms.
  Finally, I turn to paragraph 92:
  "Your Committee share the view of their predecessors that late price fixing has unfortunate consequences."
  In the light of recent events at Rolls-Royce, are we now to accept the doctrine that great companies should be run by accountants rather than by engineers? If so, this is a reversal of much of the thinking, as we understood it, in the 1960's. How often in the last eight years have I heard hon. Members and, indeed, Ministers making pious speeches in this House or outside saying that we must have more engineers in management and comparing ourselves, perhaps unfavourably, with the United States where managing directors and executive vice-presidents of companies are often practising engineers. We seem to have had a change about. If we are to believe the conventional wisdom put forward by Mr. Eglin and others in the Observer and the pundits of the Sunday Press, industry has now got so large that it must be run by accountants and apparently engineers are no longer considered fit to run mammoth engineering firms.
  I agree that there may be a real issue of size. It may be that the techniques of management of a giant merger—for example, Leyland and the British Motor Corporation—are rather different from those in what used to be a big firm. Equally, it may be true that it was one thing to manage Rolls-Royce as a large firm, but it is quite a different matter to manage a giant corporation consisting of the merger of Bristol Siddeley and Rolls-Royce.
  It seems, from paragraph 92, that deep and important issues spring up about the future management of British industry. I do not expect the Government—or any Government—to decide who shall be managers. But in many of these matters the Government can set a tone. What kind of tone and what kind of climate of opinion do they intend to set?
  I thank the House for giving me a hearing.
  5.56 p.m.
  Mr. Kenneth Baker: To serve on any Select Committee is an education, but to serve on the Committee of Public Accounts is a form of higher

  915
  education. I am not suggesting that the Chairman needs that form of education, but he led us down some very esoteric byways of public administration during the Committee's last session.
  I agree with the hon. Member for West Lothian (Mr. Dalyell) about the need for giving greater publicity to the work which goes on in certain select committees. I certainly advocate, as he did, the bringing of television cameras into the work of the Public Accounts Committee and possibly the new Select Committee on Public Expenditure. This would allow a much wider audience outside and, indeed, inside this House to appreciate the valuable work that is done in such committees, because the real purpose of the Public Accounts Committee is to ensure that the taxpayer gets good value for the money which has been spent.
  I appreciate that senior civil servants dislike intensely being called before the Public Accounts Committee and look upon it as a singularly refined instrument of torture. But the purpose of that Committee is to call to account the administrators and the people who are responsible for spending public money.
  I should like to deal with two particular aspects of the Third Report. The first, which has already been mentioned by my hon. Friend the Member for Leek (Mr. Knox), is the report of the Committee on Inland Revenue cases of fraud and evasion. It is deplorable that over the last three years the numbers of cases of fraud and evasion awaiting examination have increased substantially from 9,000 on 31st March, 1966, to 31,000 on 31st March, 1969. As the Report rightly indicates, these are cases in which the Inspector suspects fraud and evasion and puts them on a special list. I suspect that these cases will show an even bigger increase in 1970 and 1971, because, as my hon. Friend the Financial Secretary will recall, the Finance Acts of 1968 and 1969 were immensely complicated and the possibility of evasion under the provisions of those two Acts will not become known until 1970, 1971 and 1972.
  We are suffering from a tax system which has become not only absurdly complicated but onerous. I shall leave aside the heaviness of the system. The sheer complexity makes many people evaders almost by accident; the heaviness of the
  916
  system makes many people evaders on purpose. I hope that one of the objects of this Administration will be to simplfy the system. If it is not simplified, the scope for evasion is bound to increase. Each year there is a sort of bloodless battle between the Inland Revenue and private tax accountants. It is a battle without honours and it is fought to a bloody draw because as the evasions this year are dealt with, new evasions crop up next year. So it goes on.
  The flower of fiscal honesty is a very rare bloom. In some countries it does not flower at all. I suspect that this has something to do with whether a country is close to the Equator. Countries which are close to the Equator never seem to see it flower. The further a country is away from the Equator the more chance it has of seeing it occasionally. The difficulty with our tax system is that it does not encourage the growth of this flower. Parts of our tax system have turned parts of our nation into perpetual fiddlers and evaders, which is to deplored.
  I hope that the Financial Secretary, who is expert in tax matters, over the next four years—during the life of this Government and, indeed, of the next Government, of which he will be a member, I have little doubt—will set about simplifying the tax system.
  My second point on the Report relates to the Post Office. The House will not be surprised to hear that the conclusions which I draw from the Report are entirely different from the conclusions drawn by the hon. Member for Newcastle-under Lyme (Mr. Golding). The Committee rightly draws the attention of the House to the failure of administration in many contracts with suppliers to the Post Office. I could not agree more with the strong words which have already been used about the delays in deliveries of telephonic and exchange equipment. I could not agree more with the strong words used about the failure of the Post Office to invoke penalty clauses, which has been a grave oversight.
  The answer is not to set up the Post Office in the business of manufacturing equipment but, on the contrary, to try to stimulate, as the Post Office is already doing, more competition among the suppliers. I am sure that the hon. Member for Newcastle-under-Lyme will agree that

  917
  in respect of certain equipment—hand telephone sets, for example—there is very lively competition, but it has not spread to the more complicated and sophisticated equipment as yet.
  There is also the possibility of bringing in certain telephonic equipment from overseas. I would welcome that, but, as the hon. Member knows, when this has been done it has usually been fought tooth and nail, not only by the suppliers but by the Post Office and the Post Office Engineering Union. I would therefore welcome more competition from overseas.
  But for the hon. Member for Newcastle-under-Lyme to suggest that a patently inefficient situation within certain departments of the Post Office can be improved by permitting the Post Office to manufacture equipment is to make a bad situation worse. That would be no way out. I should have thought that exactly the reverse was needed. If the administration of the Post Office is not efficient, as the Public Accounts Committee has shown, to ask it to take on the burden of running factories, buying its own raw materials and manufacturing equipment to its own or other people's specifications seems to me absolutely crazy.
  Mr. Golding: When has the Post Office Engineering Union opposed the purchase of equipment from overseas?
  Mr. Baker: When this matter was discussed, at considerable length, in the Standing Committee on the Post Office Bill, views were expressed, as I thought from the Post Office Engineering Union—they were certainly expressed by members of the Post Office Engineering Union—about there being considerable reluctance to go further down that road. I think that there were only two of us in the Standing Committee who spoke up for it.
  To revert to the argument that the hon. Gentleman put forward about extending the scope of manufacture, I think that this is the wrong track for the Post Office to take. The Post Office should not engage in a highly capital-intensive business, namely, the manufacturing of equipment. It is already engaged in the highly capital-intensive area of buying equipment. If it were to go in for manufacturing equipment there would
  918
  be a massive increase in public expenditure, because the Post Office is the biggest spender of all nationalised industries on the capital account. It spends about £2 million a day on capital equipment. For it, in addition, to go into the business of running factories, with all that that means, and financing the work in progress in factories and the raw materials, would mean a massive increase in public expenditure.
  To summarise, the real virtue of the Report of a Committee such as the Public Accounts Committee is not simply to enable us to dig into the entrails of the past just for the love of doing so. We have been trying to find ways of improving the procedures of the future. I could not agree more with the closing remarks of the hon. Member for West Lothian, who hoped that there would be a follow-up to many of the recommendations in the Report. So do I. Many right hon. and hon. Members have spent many hours working on the Public Accounts Committee, and we all hope that Ministers and the Civil Service will take note of our recommendations and will ensure that some of the mistakes of the past are not repeated in the future.
  6.7 p.m.
  Mr. James Hill: I commend my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) on his very lucid and factual statement about what must seem to most people to be a very dull document. The title of the Blue Book is
  "First, Second and Third Reports from the Committee of Public Accounts".
  How dull it sounds. However, its 550 pages make as interesting reading as any Conan Doyle novel.
  Mr. Kenneth Baker: "A Study in Scarlet".
  Mr. Hill: Yes.
  My one criticism of the interesting report is that it solves many cases but the public do not know what the penalties are for the cases it has unearthed. Although in many instances the criminal has been detected, the punishment has not been announced.
  Referring to the money made by the entrepreneurs, and dealing with four cases of grant towards the costs of new ships,

  919
  my right hon. Friend the Member for Kingston-on-Thames, in the Report, says:
  "It seemed clear to Your Committee that neither in these four cases nor in others of a similar kind could the actions of any of the parties concerned be described as improper, let alone illegal, given the law as it then stood. The coach-and-four committed no traffic offence. Your Committee nevertheless regret that large grants in respect of ships built and operated abroad have been paid without evidence of gain to the British economy. They trust that the revised arrangements, particularly in respect of foreign built and operated ships, will be kept under close review to ensure that the loopholes have been effectively blocked."
  I hope that that will be done. It seems that the right hon. Gentleman then said that these people had acted within the concept of the law and that no criticism should be made of them. It is a case of legalised poaching. They still got the bird, and, unfortunately, they gave the Government the bird.
  There was another case in connection with the building of Heriot-Watt University. The university asked to purchase at the sum of £50,000; the University Grants Committee approved this building. A professional firm of consultants valued it. The university also valued it and then went ahead and entered into an agreement. The project started off at £50,000 but eventually ended up at £188,000 of which £25,281 was for professional fees. I am wondering whether that firm of consultants, who obviously desperately under-estimated the cost, should, in all fairness, have received their fees.
  Mr. Dalyell: I must express an interest in Heriot-Watt in that I often go there, but there were in this case peculiar difficulties associated with building university premises in the centre of an ancient and venerable city. There are peculiar difficulties in tackling work on old buildings. There were difficulties here, as was only to be expected.
  Mr. Hill: In the profession I have chosen myself, there are professional ethics; there are professional ethics here, and the difficulties of the site, the age of the buildings, and so on, which were to be encountered, should have been foreseen.
  My hon. Friend the Member for Leek (Mr. Knox) and the hon. Member for West Lothian (Mr. Dalyell) were very concerned about the Inland Revenue and
  920
  the evasion which had taken place. Apparently cases rose from 9,300 in 1966 to 31,000 in 1969 and over that same period, as is rightly said, cases deferred went from 11,618 down to 8,983. The reason these cases decreased, according to the Inland Revenue Board, was that so many were deferred. It is very difficult for any politician to gain any public sympathy where the Inland Revenue is concerned, but the tax system under which, unfortunately, people have to work, as has been so rightly said, means that they are bound to have this delay. That is not the fault of the tax system but the fault of the Government, whichever party is concerned. We make the laws and we give these people the burden of work, and the sooner we can simplify the laws and lighten the burden, the better.
  Another statement in the Report which impressed me greatly was that 34 officers who investigated certain claims over the period investigated 20,800 establishments, and about a quarter of them received grants. The total number of claims, apparently, during that time was 90,748 and the total grant was £46·3 million and only 352 errors were found in all the items. It seems quite true that honesty accounts for that balance.
  Another thing which particularly impressed me was how the Committee, which was very searching, investigated to the degree of getting refunds from Bristol Siddeley Engines for repairs and spares contracts. The public must bear that in mind if they think that such Committees as this do no work at all or when, as now, they see so few Members in the House. These Committees are doing their work upstairs. The refund was £3·9 million in this case. The refund was £1·6 million in the case of another company.
  One thing which was not sufficiently explained, I feel, concerned the accounts from the Durham, Kent, Lancaster and York Universities. It seems to me quite wrong that copies of those colleges' accounts showing their income from fees were not from the first sent to the University Grants Committee every year. The fees must involve hundreds of thousands of pounds, but obviously, there is another case in which the criminal did not receive any comfort.
  I would finish by saying how interesting I have found this Report, and how

  921
  impressed I have been by the tremendous amount of work which has been put into it. I hope that one day it may be my privilege to sit on this Committee.
  6.15 p.m.
  Miss J. M. Quennell: As a very new member of the Select Committee on Public Accounts, I intervene in this debate very briefly and very diffidently, but I should like to congratulate my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). Under his chairmanship in the past years the Committee has done sterling work. I am quite convinced that the right hon. Gentleman the Member for Manchester, Cheetham (Mr. Harold Lever), who now occupies the chair of the Committee, will in the coming next few years carry on the tradition equally well and with an equally esoteric taste for strange avenues of public expenditure.
  I think it was the hon. Gentleman the Member for West Lothian (Mr. Dalyell) who, in reference to various companies, put his finger on one of the weaknesses which must prevail when a Committee is trying to do this job; namely, the efficiency or otherwise of costing and forecasting in industry. I think that till we have a more efficient system of costing and forecasting we shall have examples which will give the Committee cause for concern. It was not costing in private industry only about which members of the Committee earlier in the debate expressed some concern. One of the State boards—the railways, to wit—provided an example of inability accurately to cost maintaining a track, and that has been exposed in this debate.
  I think that probably this Committee and the newly established Committee on Expenditure may in the coming years have to adapt their techniques and modify the processes which have been employed in the past to assess cost effectiveness when grants are made to State boards and to industries outside the State sector. State boards are not currently answerable to Parliament and, therefore, Members of Parliament, as such, cannot investigate expenditure on individual items or individual capital projects, but over and over again hon. Members have found in their constituencies instances in which they have felt absolutely certain that money spent could have been spent by public boards
  922
  much more wisely than it was. To amplify that point I will simply refer to an example in my own constituency. The gas board converted to North Sea gas. One of my constituents—her case is one among many, but hers is one of the more glaring—a widow, over 70, had only two gas appliances in her little flat. The cooker converted perfectly, but the gas fire in her sitting room did not. Although about 68 officials and employees of the gas board had tramped through her little sitting room, the fire still did not work; so she wrote to her Member of Parliament who took up the matter with the chairman of the board. If the conversion were accurately costed, what would be the true cost of this enormous number of people busying themselves about one appliance? This is but one of many cases. It is a reflection on the organisation of the gas board at the time, and it illustrates the importance of cost effectiveness. I suspect that as time goes on the Public Accounts Committee and the new Select Committee will have to busy themselves more with the cost effectiveness aspect of their work.
  One aspect which does not concern Parliament is local government expenditure which is supervised by district auditors. I do not believe that there is any area in which the Comptroller and Auditor General and the district auditors compare notes. The district auditor is established under the 1933 Act and is responsible to the local authority to which he makes a report, but he makes only a financial statement to the Minister concerned.
  These are areas which should be explored, and I mention them so that my right hon. Friends may apply their minds to these issues in the future. Large sums of taxpayers' money are involved, and it is relevant for the House to satisfy itself that that money is being spent wisely and well, and with the best possible effect at the least possible cost.
  6.21 p.m.
  Mr. Harold Lever: Although this is not the first year in which I shall have served on the Public Accounts Committee, I am a new member in that I was last a member when I was Financial Secretary to the Treasury, who, by convention, is a member, but, equally by convention, it is

  923
  assumed that he will stay away. I see that the Financial Secretary will uphold this tradition in both respects.
  I understand that the convention for the Chairman is somewhat different. He is a member, and, judging by the achievements of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), he is very much there. It is not a mere formal tribute from this side of the House when I echo the sincere sentiments which have been expressed from both sides in saying that the House was indeed well served in having the right hon. Gentleman for so many years as Chairman of this important Committee. I can only say, with considerable diffidence, that I shall set him as my model. I only hope that I shall win something approaching the esteem and confidence that he has won in his years of chairmanship.
  I hope it will not be thought that I am straying from the subject when I say that what becomes most important to the Member of Parliament is the opinion held of himself by both sides of the House. Sometimes we are fortunate to have great offices of State entrusted to us, and sometimes we may feel that we deserve them less than the greatness of the office would suggest. Whether one does or does not become entrusted with an office of State is a matter of the unchallenged decision of the Prime Minister of the day. The right hon. Member for Kingston-upon-Thames need not have the smallest doubt that, whatever views may be held anywhere else, the House regards him as an ornament, a man of the greatest ability who has contributed not merely as Chairman of the Committee but to our debates in a way which has won him the respect and admiration of both sides of the House. I regret that circumstances arose which removed him from an office which he so well adorned.
  The right hon. Gentleman having entered the Chamber, I can only repeat in his presence that I hope that my period in office will be briefer than his, but within that period I shall look upon him as a model, although I fear that it will be an inferior copy that will emerge.
  The right hon. Gentleman said that I will have the experience that he had, in
  924
  the first stages, of examining the work of a Government of which he had been a member. That is absolutely so. There will, however, be one point of difference. He appears to have had the good fortune of examining Departments in which he was Minister where he had opposed the decision the implementing of which had brought the Comptroller and Auditor General to report the matter concerned to the Committee. I might have the less fortunate experience of finding myself examining those decisions in my Department which, far from opposing, I had unilaterally insisted upon implementing. However, that is for the future.
  I am particularly pleased about the efforts the Committee made to deal with the question of direct grants for ships. A more thorough and impressive investigation of this matter yet within a small compass it would be difficult to imagine. But that is to pick out only one aspect of the supervision which the right hon. Gentleman and members of the Committee have exercised. In a way I am excrescent on this point, because it is the right hon. Gentleman's Report and I contributed nothing towards it.
  In principle, it is not always a rewarding task to exercise supervision for the protection of public funds in that one's work is not immediately appreciated by those who are supervised. Indeed, it may be said, as it has been said of education, that the greater the need the greater the dislike. Nevertheless, I am sure that the right hon. Gentleman's firmness, coupled with his fairness and moderateness, is absolutely right, and I endorse the tributes which he paid to the Comptroller and Auditor General and his staff who serve the Committee.
  I am in a way here on false pretences on my predecessor's Report, and I do not want to detain the House. The traditions set by the Committee will provide future Committees with a clear guide, and I can only express the gratitude and indebtedness we feel to the right hon. Gentleman and the members of the Committee who have contributed so effectively to its valuable work. The Members of the Committee have conveyed to me strongly that it has been a memorable experience for them to have the right hon. Gentleman as their Chairman and to serve under him in this vital parliamentary work.
  6.28 p.m.
  The Financial Secretary to the Treasury (Mr. Patrick Jenkin): I begin by taking up the final words of the right hon. Member for Manchester, Cheetham (Mr. Harold Lever), and joining all those who have paid a well-deserved tribute to my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) for the immense devotion and skill which he has brought over the years to the chairmanship of the Public Accounts Committee. Several hon. Members who had the privilege of serving with him have rightly praised the qualities which he brought to the work of the Committee, and I endorse what they said. It is work which is inadequately appreciated outside the House, but I can assure my right hon. Friend that it is not only acknowledged widely in the House but, as I know even from my brief experience, positively dreaded in Whitehall, and that is exactly as it should be. The work is essential and it is therefore necessary that it should be done superbly well, as it has been under the chairmanship of my right hon. Friend. The House and the country are deeply indebted to him.
  It is a tradition of the House that the Chair of the Committee shall be taken by a Member of Her Majesty's Opposition, and the right hon. Member for Cheetham, whom I warmly congratulate on his appointment, comes to the office with an enviable experience and qualities which I know he will put to the full service of the Committee in the tasks which it has to perform. His taking over the Chair represents the end of one era and the beginning of another, but the work of the Committee will remain as a vital link in our system of control and scrutiny of public spending.
  The Select Committee on Procedure which reported in the last Session recommended baldly and briefly that the Public Accounts Committee should be retained and continue to fulfil its present functions. Even in the few short months that I have been a member of the Government I have become well aware of the seriousness with which the Committee and its investigations are treated by the great Departments of State. It is right that we should have a debate on the Report and the Treasury's observations, and that I as a Treasury Minister should express the gratitude of the House
  926
  and the Government not only to the Members of the Committee but also to those hon. Members who have participated in the debate and let us have the benefit of their views. If I may not claim the indulgence of the House as a newcomer, perhaps I may have its sympathy when I reply to the debate which has covered such a broad canvas.
  Both my right hon. Friend the Member for Kingston-upon-Thames and the right hon. Member for Cheetham have previously held office as Financial Secretary, and they undoubtedly have the great advantage of having been Chairmen of the Public Accounts Committee after having been Financial Secretary to the Treasury. I have become aware that there would have been a great value in having served on the Public Accounts Committee before coming to the office of Financial Secretary.
  I will try to answer all the detailed points which have been raised during the debate, since we are not short of time and the points raised were relevant and valid. The Public Accounts Committee criticised the Board of Inland Revenue about the rising tally of back duty cases which the Inland Revenue had to report. As has been said by my hon. Friends the Members for St. Marylebone (Mr. Kenneth Baker) and Leek (Mr. Knox), this was largely due to the severe burdens placed upon the Inland Revenue by the new taxes in the 1965 Finance Act. It quickly became apparent that if those taxes were to be successfully implemented, other work had to be stopped, and inspectors were authorised from the beginning of 1966 to defer taking up new back duty cases for inquiry. The result, which has been slow to appear because these cases take some time to complete, has been a decline in the number of cases settled from an average of about 11,500 a year for the years to March, 1966, to about 9,000 for the year to 31st March, 1969. At the same time there has been an increase in the number of cases listed for attention when circumstances allow.
  As the Treasury Minute indicates, I am able to report that we have started to reverse this process. Since 1968 it has been possible to devote more resources to this important work. Again, it will be reflected only slowly in the statistics, but, even so, there are signs of a real improvement, and this will be maintained. The

  927
  figure of settled cases for the year to March, 1970, will be about 8,500, showing that the decline was then tapering off, and later statistics for the current year so far suggest that the turn has been reached.
  The number of cases awaiting that inquiry has now grown less steeply and may even now be slightly on the decrease. But as a number of speakers have pointed out, and as the Committee fairly recognised, the key element is the burden on the Department and especially on the trained inspectors. If we are to keep up to date with back-duty work we must be able to recruit enough people to man the Inland Revenue to a proper level of establishment. Our minute emphasises the efforts we are making in this respect.
  The last 12 months have shown a substantial improvement. In that time there were 100 successful candidates for the graduate entry; 71 have taken up duty. This compares with the year before when there were only 58 candidates, of whom only 28 came into the service. In addition, we have selected 103 of the junior staff in the Inland Revenue for full training as against only 39 in the previous year. I am happy to tell the House that the outlook is improving. It is not possible to forecast at what stage we shall be back to the former level. So much depends on the future balance of the Department and the level of qualified staff, but the Inland Revenues intend to make progress as opportunity allows.
  Mr. Peter Rees: When the 1952 Consolidation Act was introduced, the last date back to which the Revenue could raise an additional assessment was something like 1936–37. Would it not be advisable if that date were now brought forward? I am not asking my hon. Friend to condone evasion of tax, but it seems unfair to assess people on years prior to 1950 of which they cannot have any great record. Cannot there be a moratorium for these early years?
  Mr. Jenkin: I am obliged to my hon. and learned Friend for that suggestion, on which he recently asked a Question. This is certainly something one should look at. There are difficulties in drawing a line because inevitably as one approaches a back duty case the vista tends to open up further and fur-
  928
  ther back. I am grateful for the suggestion and we will give it consideration.
  The proper enforcement of revenue laws is essential to the fair working of the system, as is generally accepted. We will not be satisfied until the level of back-duty cases has reached its normal pitch. Hon. Members have suggested that one key to this matter was the simplification of the tax system. All I can say is that the point has been noted, but I know the House would not expect me to say more at present.
  I was grateful to the hon. Member for West Lothian (Mr. Dalyell) for the tribute to East Kilbride, for which I thank him. It has been rare and is all the more valuable for that. I will not go into great detail about East Kilbride since it does not arise directly out of this Report. All I will say to those many hon. Members who represent Scottish constituencies and whose constituents' affairs are handled at the new computer centre at East Kilbride is that we are well aware that the number of complaints has been and remains too high. The only thought I would leave with them is that over 2 million taxpayers are dealt with at East Kilbride. That means that the "chance in a million" happens twice a day. Therefore, it is perhaps not surmising that we should have had rather more complaints particularly in the early months, and this is a matter to which the Inland Revenue and I myself are giving a considerable amount of attention.
  I come to the matter of the universities. I agree very much with what my right hon. Friend the Member for Kingston-upon-Thames said that the chief conclusion that emerges from what the Committee had to say on this matter was that the anxieties, if I may so call them, which were widely expressed at the time the decision was made to bring them within the ambit of the Committee's work have been shown to be unfounded. On the contrary, the Comptroller and Auditor General's Department seems to have been able to offer welcome advice and help both to the University Grants Committee and the universities about how they might enhance the value gained from substantial sums of taxpayers' money which are paid out under this Vote. After the first year of investigation, the House will have noted that a memorandum dealing with some matters of common interest which had come to light was prepared by the

  929
  Comptroller and circulated to all universities by the Chairman of the U.G.C. I have no doubt that this procedure will be repeated to the benefit of universities in the future.
  In regard to the new U.G.C. procedures and the adaptation of existing buildings, I was interested to hear what was said about the Heriot-Watt case by my hon. Friend the Member for Leek about the collaboration between institutions, and also what was said about college fees. All these represent welcome improvements. The word "criminals" used by one of my hon. Friends was putting the matter a little high—
  Mr. Harold Lever: Offenders.
  Mr. Jenkin: Even "offenders" is too high. There are few account clerks working with the U.G.C. and one of the matters that has come out of the Report is the need to strengthen these and ways and means are being found to do so.
  My hon. Friend the Member for Leek also raised in relation to Keele University the under-utilisation of university buildings. In our minute we spell out some of the difficulties of guaranteeing that recurrent grants will be forthcoming always to enable maximum use of new buildings to be made. However, I entirely accept that there is room for better planning by the Department of Education and Science with the help of the U.G.C. to ensure that building grants and recurrent grants remain in step.
  We also intend to adopt the further recommendation that the implications of a decision on the total value of the capital building programme should be made known to Parliament. After the Government have taken such a decision, the University Grants Committee has the task of fixing allocations to individual universities. When this has happened, my right hon. Friend the Secretary of State for Education and Science will in future make it the practice to inform Parliament of the estimated number of new places that the programme will provide. For example, I can say today that in 1972–73 a programme of £25 million is expected to enable universities to accommodate 12,000 extra students in the academic year 1974–75. The Government have still to settle the recurrent grant for 1974–75 which falls in the next quinquennium. When they do so they will
  930
  take account, among other things, of these 12,000 additional students.
  A number of hon. Members have referred to investment grants. In view of the Government's decision to wind up the scheme in favour of tax allowances, I feel that I need not devote as much time to this matter as otherwise would have been the case. Of course, the policy of the change is not at issue in this debate. A system whereby over £600 million a year in cash grants was payable to industry with a large variety of qualifying conditions posed for the Department involved complex administrative problems. This was one of the elements in the decision which enabled us to reach the view that the system should be abandoned. But it will continue in existence for a year or two yet, though at a declining rate, not only because the grants are payable in arrear but because expenditure on pre-27th October contracts still qualify for grant.
  I feel the House would wish me to comment briefly on what has been said on this matter in the debate. The Committee criticised the Administration under three heads. First, as to the level of inaccuracy both of the claims and the Department's examination of them. It is fair to say that a high standard of accuracy is necessary and that, by and large, it has been achieved. Accuracy is necessary because the sums are very large. I say that it has been achieved because since the Report was published we have made a further check covering a 30 per cent. sample, which is a large sample comprising 12,000 claims and involving £35 million grant. The errors this check disclosed were overpayments £15,000; underpayments £3,000; or a percentage of error of 0·05—that is to say, about £1 in about £2,000. It could be said that even that is too much but, bearing in mind the complexity of many of the claims, the House may agree that this is not a bad standard of accuracy. Of more interest is the fact that the cost of carrying out that investigation was about £1,000 more than the money actually saved. When I say "saved" I meant in relation to errors disclosed. It is right that one should always balance the cost of these checks against the advantages in terms of saving money.
  The Committee's second complaint was about the enforcement of conditions. I

  931
  do not think I can add much to what was said in the Treasury Minute except to say that the new Department of Trade and Industry will now be predisposed to enforce full recovery of the grant where a condition is broken. There would be only partial recovery where particular mitigating circumstances existed. We accept the criticism that it was wrong that there should be no penalty for failing to report a change in condition or location or whatever it may be.
  On the matter of payments for ships operated abroad, I endorse what was said by the right hon. Member for Cheetham. This matter has occupied the time of the House on a number of occasions and I can claim to have been among the earliest of those who got on the trail of this piece of maladministration in a Question in January, 1968, when I elicited from the then Minister of State at the Board of Trade that £39 million would be paid to companies controlled by non-United Kingdom residents and that, of that, £35 million would be paid on ships built outside the United Kingdom.
  Mr. Harold Lever: I do not want to leave the hon. Gentleman in lonely modesty, but long before that I personally, not by virtue of my office, raised the matter.
  Mr. Jenkin: That only shows how suitable is the right hon. Gentleman's appointment to chairmanship of the Committee of Public Accounts. The committee's Report shows that the grants in respect of these ships were of doubtful value to the United Kingdom's economy.
  Earlier this year, the House passed the Industrial Development (Shipping) Act which gave the Treasury a veto in cases in which the balance of payments is not served. The House may be interested to know the results of the Act so far. Only two applications for investment grant covered by the powers of veto given to the Treasury have so far been considered. As the granting of these two applications would not be detrimental to the balance of payments, the Treasury has not had occasion to exercise power of veto. It has, however, been given advance notice of some 144 projected transactions in seven of which the Treasury has indicated that grant would be detrimental to the balance of payments and has told the companies con-
  932
  cerned that if applications were made the Treasury would exercise its power of veto.
  Similarly, the Department of Trade and Industry scrutinised some 30 inquiries and one application in respect of ships exempted from the provisions of the 1970 Act to ensure that the transaction will provide a gain to the British economy. It has paid particular attention to foreign-built and foreign-operated ships. One prospective ship owner has been told, on the available facts, that if an application were submitted it would not appear to be a case in which investment grant should be made. The Committee can take considerable credit for the extent to which it has pressed this piece of financial administration upon the Government because, clearly, there was a good deal of money being disbursed entirely legally—there was no question of any fraud, evasion or anything of that sort—but not to the benefit of the country.
  Turning, briefly, to the problem of railway grants, which a number of hon. Members have raised, the Ministry of Transport, as it then was, was criticised in two respects: first, that the grants were fixed on the basis of depreciation on a replacement cost basis; second, that the system of allocating track and signalling costs resulted in some non-grant aided lines being in fact grant aided.
  As regards the depreciation, as the Committee reported, this could result in the Railways Board building up a fund at public expense in advance of need. We entirely accept that this is not right, though it is right to point out that in 1969 the expenditure on the services in question exceeded the amount of the depreciation which was included in the grant. However, my right hon. Friend accepts the recommendation, and, if occasion for review arises, will certainly give further consideration to whether a change is required.
  As regards estimated, track and signalling costs, this is normally done on a ton-mile or train-mile basis. But the so-called Method 2, whereby the whole of the cost was loaded on to the grant-aided lines, is appropriate in some cases. I do not think this is disputed. There can be perfectly genuine reasons of marginal costing, and so on, where this is right, but if carried too wide the effect can

  933
  be to subsidise the non-grant aided services. Measures were already in hand, in consultation with the Railways Board, to modify the rules. Both my right hon. Friend the Secretary of State and the Railways Board are in broad agreement that the application of Method 2 must now be narrowed to the very limited number of cases in which it is appropriate. It is estimated that this will save about £1 million a year in grants to British Railways.
  As regards the Post Office, the House will realise that we are in some difficulty, in that, since the date of the Report, the Post Office has become a nationalised industry and is in the same position as any other public corporation. Therefore if the House will forgive me—particularly the hon. Member for Newcastle-under-Lyme (Mr. Golding) and my hon. Friend the Member for St. Marylebone—I would rather not pursue the very detailed points of management about which they spoke, the problem of procuring equipment, and so on. These are now essentially matters for the corporation and not for this House.
  However, a more general point was made on which it would be right for me to remark, the point that the Post Office will be the loser by not having the detailed scrutiny of the Public Accounts Committee to keep it, as it were, on its toes—
  Mr. Boyd-Carpenter: And, I am sure my hon. Friend wishes to add, the careful examination of its accounts by the Comptroller and Auditor General.
  Mr. Jenkin: Indeed. Rather unwisely, I tend to use the phrase "The Public Accounts Committee" as a compendious expression for the Comptroller, his Department, and the Committee itself.
  The Post Office Corporation will have its accounts audited by two distinguished firms, Cooper Brothers, and Touche Ross Bailey and Smart; the accounts will be presented to Parliament in the usual way by the sponsoring Minister; and, as a number of hon. Members have pointed out, it will be liable to examination periodically by the Select Committee on Nationalised Industries.
  I was glad to hear what my hon. Friend the Member for St. Marylebone said about the value of the last Report
  934
  of that Committee to the Post Office. The fact remains that Parliament has accepted that a nationalised industry status is inconsistent with Ministerial or Parliamentary interference as regards the day-to-day management of the industry concerned. A different type of relationship between the Government and these industries has developed over the last 10 years, and the constant stimulus to efficiency depends largely on the setting of financial targets as described in the two White Papers. I am glad to see present the right hon. Member for Greenwich (Mr. Marsh), who played such a notable part in the second of the White Papers—A Review of Economic and Financial Objectives. I am not sure that more detailed scrutiny would be consistent with the sort of commercial approach both sides of the House would wish to see. But it will certainly be the Government's intention to take any opportunity which presents itself to encourage these industries to develop their own aids to efficiency.
  Finally, I come to what has been the major subject of this Report, to which almost every speaker in the debate has referred, namely, the very technical and complex problem of the non-competitive Government contracts. My right hon. Friend the Member for Kingston-upon-Thames invited me in his opening speech to give the Government's view on this matter. If I may say so, we had some extremely relevant and interesting points made by the hon. Member for West Lothian. I will come to those points shortly.
  The House may find it helpful if I say something about the general background to this problem. The need for a profit formula is a consequence of a particular purchasing situation. Where the Government are buying equipment of an advanced or complex nature, it simply is not feasible in many cases to put it out to competitive tender. It is in these circumstances essential, therefore, to have some mechanism for establishing that the price which they pay to their contractor is fair and reasonable, both to the Government and to the contractor.
  The House will remember that the second Report of the Lang Committee dealt with some of the general principles of non-competitive contracting. One of

  935
  that Committee's most important recommendations, following on very much from what the Public Accounts Committee had said over the years, was that up to the time of fixing prices or target costs, a Department should have equality of information with its contractor. That is to say, the Department should have access, up to such time, to all the information on costs, manufacturing plans, and so on, which are available to the contractor. The need for this was heavily endorsed by the Committee under the chairmanship of Sir Roy Wilson, which investigated another of the rather unhappy affairs which we have had to consider over recent years.
  The second Lang Report dealt also with the rate of profit which should be earned on non-competitive contracts. On this subject the Report expressed the view that there should be a regular review of the profit rates to keep them in line with the general level of profitability in industry or sections of industry. The point was also made that there should be consultation with industry in carrying out any of these reviews. Thus in order to improve the arrangements for non-competitive contracts following this Report, the then Government entered into negotiations with industry with the object of securing the all-important right to equality of information, and the right to carry out post-costing where this was necessary. At the same time, they agreed to examine the case made by industry for a revision of the profit rates payable on the Government's non-competitive contracts. These had not been altered since they were introduced by the Government as part of the defence production arrangements of the Second World War.
  Here I join in paying tribute to the noble Lord, Lord Diamond, to whom my right hon. Friend referred, who played a particular part and brought particular accountancy skills to the negotiations between the Treasury and the C.B.I. The noble Lord, the Chief Secretary as he then was, made a statement about this in February 1968. The effect of the agreement reached was that for contracts placed after 26th February, 1968, the rates of profit were improved and the rights to equality of information and post-costing were secured.
  936
  A further important development in the operation of the machinery for these contracts was the agreement to establish an independent Review Board. The basic philosophy underlying these new arrangements was as before, that there should be fair and reasonable dealings between the Government and its contractors. The new arrangements improved the methods of achieving this, including the setting up of the Review Board by the joint action of Government and industry. Such a board can work effectively only if it receives the wholehearted co-operation of both sides. I should like to make it clear that the board operates quite independently of Government or industry and helps to ensure that the new arrangements work smoothly.
  As tributes are in order, perhaps it is right that I should pay tribute and say how grateful the Government are to Sir William Lawson, the Chairman of the Review Board, and his fellow members, for all the work that they have done and, in particular, for the interim Report produced in the summer and to which we made reference in the Treasury Minute.
  The new arrangements have a number of important advantages. In the first place, Government Departments now have access to more information to assist them in estimating the costs of non-competitive contracts. This is of paramount importance because, while profits are of obvious importance, the overwhelming proportion of a price paid on any contract by the Government is in respect of costs. Here, I wholeheartedly endorse what the Public Accounts Committee said in its Report, that it is much more important in the taxpayer's interest to reduce the actual costs of a contract than to limit the rate of profit. With the new arrangements for equality of information and the right of post-costing, confidence in the realism of estimates of costs is greatly enhanced.
  Second, the profit arrangements are to be reviewed regularly. It is clear that many of the difficulties experienced in the past have come about when the various formulae have simply ceased to be appropriate in changed circumstances. The whole structure of the arrangements can now be examined in an objective way.

  937
  Before coming to one or two detailed points on the problems which arise, and. in particular, to some questions raised by the hon. Members for Ashton-under-Lyne (Mr. Sheldon) and West Lothian, I have one more observation of general importance to add. One must remember that all these arrangements involve two sides, and in the last analysis this means a purchasing Department and a particular contractor in relation to a particular contract. There has to be understanding and a desire to co-operate if meaningful advances are to be made. Our belief is that, in the atmosphere of the present situation, such co-operation is possible.
  I come to the point made by the hon. Member for Ashton-under-Lyne about incentives in what are called cost-plus efficiency-addition contracts. I need not apologise in this debate for using that jargon, for it is the Committee's own jargon and I merely adopt it. The Committee realised the difficulties of negotiating target costs contracts and the preferability in certain circumstances of providing incentives by way of efficiency additions. On this type of contract, the House will have noted from the Treasury Minute that the latest arrangements already embody one of the recommendations of the Committee, that there should be a rather wider band of efficiency additions. Instead of the 0 to 3 per cent. basis, which the Committee has examined, it is now 0 to 4 per cent., and the purchasing Departments hope to be able to make full use of this wider range as their techniques develop. Moreover, we accept entirely the desirability of providing, where possible, a still greater incentive for efficiency.
  I must warn the House, however, that it is not easy to make rapid progress in this direction. The larger the scale of efficiency additions, the more difficult it is for Departments to fix efficiency at a particular point on the scale. One must remember that it is necessary to persuade the contractor that the Department's assessment is fair when what will be at stake is a more substantial part of the profit on the contract than under the present arrangements. However, I emphasise that we accept that it is important to make progress in this field, while stressing equally that progress must be
  938
  made by agreement rather than by unilateral action wherever that is possible.
  The hon. Member for West Lothian referred to paragraph 48, in particular, and discussed the question of defective and misleading information. This brings into issue what the Committee has to say about the suitability and adequacy of contractors' cost-recording systems. The Committee had a good deal to say about it. It could not regard as entirely satisfactory a situation in which the cost-recording systems of only half of the Ministries' principal contractors had been accepted on a trial basis for the purpose of fixing prices. It rightly argued that this was slow progress and was somewhat concerned that it would be two years before the process of approving cost-recording systems was completed.
  I can tell the House that the work of examining contractors' cost-recording systems has proceeded with high priority. The systems of a number of other large firms have been accepted, and the current position is that, of the contractors' systems we need to approve, about four-fifths have been approved on a trial basis, with opportunity for review in the light of experience. I submit that that represents welcome progress in this direction, although I recognise that there is still some way to go.
  It may be helpful if I put into proper perspective what I recognise to be a complex matter. As I have said, it is important that we proceed by agreement. It is important to note also that, until the new arrangement was reached, we had rights of access to contractors' records of costs in only a limited number of cost-plus contract cases, and these were almost exclusively research and development contracts.
  Contractors' records of production costs are maintained on an entirely different basis. Therefore, the process of having access to and approving contractors' production accounts posed some new problems for the Departments. Industrial companies formulate their cost-recording systems primarily with a view to the effective management of their own businesses. Their aim is to achieve the tightest possible budgetary control and to provide necessary information about costs so as to be able to take remedial action before it is too late. It is right to point out, also,

  939
  that these systems are highly sophisticated, involving, for instance, standard cost systems, and are frequently computerised. Although firms do these things for their own purposes primarily, it is in the Government's interest also that they should, for we want to operate with efficient contractors who know the state of their businesses and can run them.
  Second, although the Government are often the biggest single customer of these firms, it is rare that they take more than half of a firm's output. Often, when a particular component is manufactured, no one knows at the time of manufacturing whether it is destined eventually for the Government, for a civil customer or even for export. So the approach here must be to reconcile the Government's requirements with those of the firm. There must be give and take on both sides. Departments will not accept systems which do not enable them to fix fair and reasonable prices, so the approach must be one of seeing how, in co-operation with the firm, a system may be so adapted or added to as to meet the legitimate requirements of both sides.
  Finally, careful judgment is needed on another factor. Departments must have the information which they really need, but the resources of Departments, especially in accountants and technical cost staff, are, as the House knows, limited. Whatever arrangements are made, therefore, must not provide for such a flood of detailed information that the Departmental system is swamped, for in that case the last state will be worse than the first. A balance must be struck, and that is what Departments will try to do.
  Mr. Dalyell: Is there still a shortage of technical cost officers who can produce the information which is necessary?
  Mr. Jenkin: Yes, there is; it would not be right to conceal that this is still a source of worry to the Government, although it is right to point out, on the other hand, that some progress has been made in increasing the number of qualified people in the relevant Departments with this kind of work. But there is still some way to go. Clearly, the hon. Gentleman is absolutely right in regarding this as a matter of the utmost importance if equality of information is to mean what the Lang Committee, the
  940
  Public Accounts Committee and the House intend it to mean.
  The hon. Gentleman mentioned also the problem of assessing the capital employed, referring to stocks, work in progress, debtors, and so on. He will know that the concept which has underlain the profit formula for many years has been related to the capital employed in a firm, and that profit is expressed mainly in terms of return on capital. In practice, it is rarely possible to calculate an exact figure for the capital employed on a particular contract. The problem has been overcome over the years by the indirect method of using for each contractor the ratio that capital employed bears to the costs of production in his case and applying an appropriate percentage to the costs of the individual contract.
  The Committee's Report—the hon. Gentleman referred to this—stresses that the capital actually employed on the Government's work need not necessarily be proportionately the same as that employed in other work, and that the assumption which is inherent in this calculation may not be justified. The Committee therefore questioned, as did the hon. Gentleman, whether it operates as equitably between firms and the Government as it ought. The Committee recommended that there should be an examination of this question.
  I unhesitatingly accept this. However, it is a very complex matter and the examination must obviously be performed very carefully and thoroughly if the results are to be acceptable to both sides.
  Mr. Dalyell: If there is to be this examination, could a case study be made of the current difficulties in Rolls-Royce, because in some senses this is a classic example of the type of problem about which the Financial Secretary is talking?
  Mr. Jenkin: I am coming to make the point that the study will in fact be—and is, in fact, being—carried out by the Review Board. I shall make it my business to ensure that Sir William Lawson has taken note of the hon. Gentleman's suggestion. As this is an independent Review Board, the Government cannot tell it what to do; it must make its own decision as to how to conduct its review. The review will be put in hand after the arrangements have run for three years, the view being taken that it needs

  941
  a reasonable time before it can be reviewed, and it is the Board's intention to cover in its Report the general point of the calculation of capital employed.
  Finally, the Government are very well aware that this is a vitally important field of Government expenditure. In one way it is in the interests of every man, woman and child that we should get the very best value for money.
  The arrangements which I have outlined and which are now operating will be a big step forward. However, the area where most of the problems on non-competitive contracts arise is defence procurement, and here the difficulty has been primarily due to the fragmentation of responsibilities. Although the Ministry of Defence has had overall policy control, it has had only partial control over the procurement processes, as the old Ministry of Technology had the responsibility for research, development and production of military aircraft, guided weapons, communications, and electronic equipment.
  As announced in the Government's recent White Paper on the Reorganisation of central Government, a project team, led by one of the business men brought into Whitehall, is being set up to make recommendations on how best to organise the integration of all defence research and development and procurement activities under the responsibility of the Secretary of State for Defence. Among the possibilities to be considered will be the establishment of an agency within government—that is, a specialist department of defence procurement responsible to the Secretary of State.
  In the light of its conclusions on this, the project team will also advise on how best to handle the Government's relations with the industries concerned, including their responsibilities in support of civil aircraft projects and other civil aerospace activities.
  As I am sure the House will appreciate, this is a task of very great complexity, but we expect the team to make recommendations in time for new arrangements to be implemented by 1st April, 1972, and we are confident that this will result in a rationalisation of defence procurement on a lasting basis and that it will be a most important step towards greater efficiency and better value for money.
  942
  I must apologise to the House for having dwelt on the important problem of non-competitive contracts at such length. A number of hon. Members regarded this as a matter of the utmost importance, and I am grateful to the House for having listened to me.
  In conclusion, the debate has ranged very wide and has usefully underlined the three Reports, particularly the Third Report. I again state our thanks to the Committee and to my right hon. Friend the Member for Kingston-upon-Thames, who chaired it for six years with such distinction, and I wish the right hon. Member for Cheetham every good success and fortune in his taking up the reins of office.
  Mr. John Biffen rose—
  Mr. Speaker: Was the hon. Gentleman seeking to intervene?
  Mr. Biffen: I was.
  Mr. Ray Carter: Before the Minister concludes, may I put a question to him? He referred to the complexity of the problems which will be faced by the high-powered team which is to be led by Lord Rothschild and which is to examine the methods of procurement in the defence field—or the unit to which he referred, if it were not Lord Rothschild. Why is it to complex in a situation in which most of the suppliers of defence equipment are in a monopoly position?
  Mr. Jenkin: I hope that the hon. Gentleman will forgive me if I do not pursue that question at great length. I assure him that those who have given any study in depth to this problem have been immensely impressed by its complexity. It is not the central review body under Lord Rothschild which is carrying out this investigation. It is a team under a very distinguished business man who has had purchasing experience in private business. Despite the very difficult and complex nature of the task, we hope to have an answer by April, 1972 and to get the right answer.
  7.15 p.m.
  Mr. John Biffen: There is something very casual about breezing in towards the end of the debate when the Financial Secretary is on his feet. I apologise to the House. I have been

  943
  detained going round one of the largest casting manufacturers in the Black Country. From there, Mr. Speaker, I telephoned your office and expressed an anxiety that I should take part in this debate. I hope that the message got through, because I am most anxious to be acquitted of discourtesy.
  May I commence where my hon. Friend the Financial Secretary concluded and offer thanks and congratulations to my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). I speak somewhat as an alumnus of the Public Accounts Committee, having served on it some years back. It was an immense education.
  At a time when the House, quite properly, is anxious to find more effective ways in which the relationship between Parliament and the Executive can proceed, the current fashion of Specialist Committees is well tested by the degree of sustained interest that is shown by the House when its premier Specialist Committee—namely, the Public Accounts Committee—comes to the Floor of the House and reports on its activities.
  I am only sorry that the very hard work which is put in by the Public Accounts Committee does not receive wider parliamentary consideration on the Floor of the House when the opportunity so arises, because it is extraordinary that this debate is very nearly coming to a conclusion—indeed, my remarks will not prolong it very extensively—at 7.20 in the evening.
  However, in the light of what has happened over the last few days it would be wholly appropriate for there to be a little consideration of the relationships between the Government and the aviation industry. It is in this direction that I want to turn my remarks. I want to spend some time on the whole question of profits earned by this industry, a little on the Concorde project, and, lastly, just a little on Rolls-Royce and the advice that we may have from the Public Accounts Committee in consideration of the situation which was revealed to us a few days ago in respect of Rolls-Royce.
  We have pretty well come full circle in the consideration of profits being earned in the aviation industry in connection with the Government. The hon. Member for Birmingham, Northfield (Mr.
  944
  Carter) may be coming in a little late in the full turn of the circle because, if I followed what I believe to be the implication of his remarks, they would have chimed more with the days when Lord Wigg was in this Chamber and was the scourge of Ferranti.
  In those days there was the belief that vast profits were being earned by the aviation industry in relation to the Government. Although I dare say with hindsight Ferranti may feel that it had been somewhat imprudent in some of its commercial behaviour, I think that there is no doubt that the idea that a fixed price contract was almost a licence to print money for the aviation industry has been totally disavowed and disabused by subsequent events. I was particularly interested to read in paragraph 98:
  "Your Committee wish to emphasise that in their view it is much more important in the taxpayer's interests to reduce the actual costs of a contract than to limit the rate of profit."
  Those remarks would not have been expected shortly after the furore which preceded the setting up of the Lang Committee.
  The story which the Committee reveals to us about the Harrier aircraft is a good indication of how difficult it is to apply refined and sophisticated forms of profit control. I emphasise this by drawing attention to what the P.A.C. says in paragraph 90:
  "It will be seen that though target-cost arrangements were considered for all three Harrier contracts they had to be abandoned in favour of cost-plus for the latter stages of case (i) and in favour of a fixed-price in case (iii) and that in case (ii) the target-cost arrangement adopted was not very different, in effect, from cost plus a fixed profit."
  I suspect that the real truth is that in all these arrangements it does not lie so much in finding some formula which can most satisfactorily regulate dealings between Government procurement and the aviation industry. Rather, it is a shortage of sufficiently well-trained and skilled personnel to interpret those arrangements.
  I was particularly interested to read of the continuing difficulties which the Government have in recruiting sufficient high-calibre accountants; proceedings in which, as one would expect, the hon. Member for Heywood and Royton (Mr. Barnett) took a keen part. I was delighted that he seemed to be convincing himself of the significance of the market

  945
  economy when it came to the pay scales that should be offered by the public service to the accountancy profession. We have now come back to what I believe to be a more realistic conception of what are the problems involved in public procurement of aircraft and the profits to be made by the aviation industry.
  I congratulate my right hon. Friend the Member for Kingston-upon-Thames and the P.A.C. on their salutary and continuing reminder that the Concorde project is still with us. This gives Parliament an opportunity, one that we should value, to discuss this vital matter because, as we know, the Concorde project may soon be reaching a new stage when, with the development stage behind it, important decisions will have to be taken concerning the commercial production of this aircraft.
  My hon. Friend the Member for St. Ives (Mr. Nott) and many other hon. Members are particularly anxious that the representatives of the Treasury Bench shall be aware of the widespread and growing scepticism there is about the whole viability of the Concorde project, and this is our opportunity to make that clear.
  Whatever may be the gargantuan sum now associated with public expenditure on the Concorde, it does not seem to derive from laxity in the contracts drawn between the Government and the aviation industry. Indeed, tribute was paid to the way in which incentive contracts seem to have been reasonably well drawn, and this was contrasted with the unease that had been expressed about this matter in previous years. However, I cannot help expressing some apprehension when I read in paragraph 93(c):
  "Where, as in the case of Concorde, there is a guaranteed minimum profit the incentive to reduce costs diminishes as costs approach the level at which the minimum profit operates and disappears completely when that level is reached."
  I am sure that many hon. Members have uneasy suspicions that the cost will approach the point where any incentive may be totally diminished, and we shall need constant reassurance on this point. However, the House is particularly indebted to my right hon. Friend the Member for Kingston-upon-Thames for the cross-examination which he conducted of the witnesses from the Ministry of Technology, as it then was, about the
  946
  risk that was being borne by the aviation contractors in respect of the Concorde project. I will not weary the House by quoting in full the questions and replies on this issue, but there seems no doubt that the element of risk that is being undertaken by B.A.C. is extraordinarily limited.
  My right hon. Friend puts us in his debt by the way in which he conducted that piece of cross-examination, because there seemed to be a stage when the Ministry of Technology could almost have been the public relations spokesman for B.A.C., so persuasively did it originally suggest that B.A.C. had, as it were, a vast stake at risk in this project.
  I come to a point which was given particular relevance by the events of last Wednesday, and that is the whole issue of Rolls-Royce and the engine which is being developed for the Lockheed Tristar. It is a fascinating case of where, as far as one can judge, a contract was taken at a fixed rate, with inadequate escalation clauses, and where the original prices quoted were extremely keen.
  Hon. Members will be puzzled to know who will be the beneficiaries of the £42 million of taxpayers' money which will now be voted for this company.
  Mr. John Nott: The United States, of course.
  Mr. Biffen: It seems that we are offering dumped British technology for the benefit of American aircraft manufacturers, and I am obliged for that support from my hon. Friend the Member for St. Ives. There must come a time when we should try to get our sense of values right and say that it is worthier for this country to earn profits out of Carnaby Street than losses out of Rolls-Royce.
  Mr. Dalyell: Am I right in thinking that, had the hon. Gentleman been the Government, he would have let Rolls-Royce crash?
  Mr. Biffen: That is such a hypothetical question that my only reply must be that the hon. Gentleman is well able to interpret my remarks for himself.
  The House will need considerable reflection in the coming weeks of the principles which are relevant to the P.A.C. Report concerning the recent Rolls-Royce debacle. We have, first, the

  947
  nature of the commitment. We understand that Cooper Brothers are being, properly and prudently, employed by the Government to help assess the nature of the commitment.
  Mr. Nott: Ex post facto.
  Mr. Biffen: I find this just a shade ominous, because all too often we find when reading through the evidence to the Committee that there have been precisely those problems in the past, of not really quite knowing what the nature of the problem or the loss was. I draw the attention of the House to Question 2985 asked by my right hon. Friend in respect of Concorde:
  "Why did it take so long to agree the incentive arrangements?"
  to which the answer from Sir Ronald Melville, who was giving evidence for the Ministry of Technology, was:
  "… you cannot let an incentive contract until you can be pretty sure that to the satisfaction of both sides you can define what you are talking about".
  I do not give that quotation in any snide sense. This is perhaps endemic in such problems. But it means that £42 million is the first figure that has been pulled out of the bag. Is there anyone here so optimistic as to think that when the real nature of the problem is revealed we have seen the first and the last figure? I hope that the experience of the Public Accounts Committee will lead us to be extremely vigilant on this point.
  Second, there is the question of pricing policies, which, particularly in respect of original equipment and replacements, come to the fore again and again in the reports of the Committee. We know what has been happening in respect of prices for original equipment; but what will happen in respect of spares prices for the RB engines being used for the Tristar? Again, this is the sort of area where we are given at least some guidance from past work of the Committee.
  Finally, there is the whole idea that failure in one section of a company's activities is held to be so vital that that section must be reinforced, otherwise the entire organisation tumbles, the idea that
  948
  unless Rolls-Royce is redeemed in respect of its sales of this particular engine to the United States every other activity of the company cannot survive under the existing company structure, or under whatever reorganisation in corporate terms might follow a withdrawal of Government support for the Tristar engine.
  In the passages to which I referred earlier, my right hon. Friend the Member for Kingston-upon-Thames, cross-examining to find the level of the B.A.C. commitment in the Concorde aircraft, reminded us how all too often it is argued that when companies depend almost entirely on one project it can shatter a company's future should that project fail. I read with particular interest the way in which it had originally been argued that there were vast assets inside B.A.C. which had been created, as it were, for the purposes of the Concorde project. It was then revealed under my right hon. Friend's cross-examination that they were entirely assets that had been placed there by the Government.
  Mr. Boyd-Carpenter: At the expense of the Government.
  Mr. Biffen: I beg my right hon. Friend's pardon. Of course that is so.
  I should like to think that at some stage the Public Accounts Committee will bring its scrutiny to bear on the money which we shall be voting, £42 million, and whatever may follow it, to sustain Rolls-Royce in the difficulty it has encountered in this particular project with Lockheed.
  The Committee has contributed much to our understanding of the use and misuse of public funds over the years, but I suspect that we shall be more than ever in its debt if it can illuminate some of the uncertainties and darknesses that surround that particular Rolls-Royce project.
  Question put and agreed to.
  Resolved,
  That this House takes note of the First, Second and Third Reports from the Committee of Public Accounts in the last Session of Parliament and of the Treasury Minute on those Reports (Command Paper No. 4518).

  MOTOR CARS (DRIVING INSTRUCTION REGULATIONS)
  7.36 p.m.
  Mr. Fergus Montgomery: I beg to move,
  That an humble address be presented to Her Majesty, praying that the Motor Cars (Driving Instruction) (Amendment) Regulations 1970 (S.I., 1970, No. 966), a copy of which was laid before this House on 7th July, be annulled.
  The reason for the debate is that my right hon. Friend the Member for Wolver-hampton, South-West (Mr. Powell) and I are both concerned about the effects that the regulations have had on driving schools. I realise that my hon. Friend the Under-Secretary of State for the Environment was not responsible for the regulations. They are a hang-over—and "hang-over" is the operative word—from the last Administration.
  I am not sure who thought up the regulations. I can only hazard a guess that perhaps they were thought up as a means of improving road safety. I shall try to show during the debate that far from improving road safety, they could have the opposite effect.
  The regulations state that from 1st October, 1970, it will be an offence for anyone to give instruction, which is paid for by or in respect of the pupil, in driving a motor car unless (a) his name is in the register of approved driving instructors or (b) he is training for registration as an approved driving instructor and holds a licence to give instruction issued by the Registrar.
  The part of the regulations causing great concern is that devoted to the licence conditions. The conditions under which licences are granted are that (a) the holder of a licence is authorised to give instruction, for which the pupil pays, only from an establishment—in other words, a training centre, driving school or branch of a driving school—specified in the licence; (b) for the first three months of the period for which a licence is in force, the licence holder must be under the direct personal supervision of an approved driving instructor for at least one-fifth of the time for which the holder gives driving instruction under the licence.
  950
  It seems, according to the regulations, that
  "direct personal supervision"
  does not mean a preliminary briefing before a trainee gives a lesson to a pupil, but that the supervising approved driving instructor must accompany the trainee during the lesson, and, furthermore, that there must be at least one approved driving instructor for every licence holder who intends to operate from a driving school.
  I am told that originally the idea, when it emanated from the Ministry of Transport, was that there should be a ratio of four approved driving instructors for every licence holder, but because of the great outcry from driving schools up and down the country, the ratio was changed to a one-for-one basis—in other words, one approved driving instructor for every licensee. This is a piece of bureaucratic nonsense. If a licence holder is to have an approved driving instructor with him for one-fifth of the time he is giving driving instruction, why is he deemed quite safe to instruct for the other 80 per cent. of the time he is giving driving lessons?
  If there must be a ratio at all, it would be much better to have one approved, driving instructor for every five licence holders. That would have been much more logical, but logic does not seem to be very prevalent in the regulations.
  I do not have to tell my hon. Friend the Under-Secretary the upheaval the regulations have caused in driving schools. First, there seems to be a long wait for people who wish to qualify as approved driving instructors. No doubt my hon. Friend will reiterate that instructors were warned in February, 1969, that registration would be made compulsory, I think, originally in August, 1970, but that was changed to 1st October, 1970. However, I am told that it was not until June, 1970, that the conditions affecting trainees and how new instructors were to be trained became known to driving schools, and so there was a tremendous rush by instructors who were anxious to get the new and very necessary qualifications. As a consequence, there were long delays in getting test dates, and there seems also to have been inordinate delays in notifying the results of these tests.

  951
  I have proof of a man who took the second part of his test on 21st July, but did not get the result of it until 8th September. A period of seven weeks seems an excessively long time to say whether somebody has passed or failed his test. Bearing in mind the fact that 1st October was the operative date for these new regulations, to be told on 8th September that a man had not qualified could well have been disastrous for a small driving school, and I wonder how many of these small concerns have had to close because of these regulations.
  A constituent of mine runs a one-man business. Over the years he has acquired an excellent reputation as a driving instructor, and has achieved a very highly satisfactory rate of passes by those whom he has instructed. Unfortunately for him, although he is a competent driver, he has yet to pass the written part of the test. This man, who has built up this business entirely on his own, could have been driven out of business on 1st October because he did not have an approved driving instructor to go out with him for one-fifth of the time for which he was giving driving instruction. I am concerned about people like that, and about the small firms who have had so much to contend with in recent years. Fortunately for my constituent, just before 1st October he discovered somebody who had the necessary qualifications and was looking for employment. They have now come to an arrangement whereby my constituent can stay in business because he has a fully qualified man who can go out with him for one-fifth of the time that he devotes to driving lessons.
  I have informed my hon. Friend of the case of an instructor who was told to report to Coventry to take the second part of his examination. When he arrived there, he was told by the Ministry of Transport officials that they had made a mistake, and that he should have been at Quinton in Birmingham, at that time. The result was that he had to wait for another four weeks before he could be given another date for his test. My hon. Friend kindly arranged for him to be told the result of his test within a week of his taking it, but in my opinion that is the sort of thing which could have been disastrous to a small driving school.
  952
  I suggest that there are certain consequences which arise from these regulations. First, I believe that they could lead to the closure of small driving schools. Second, if some of these smaller schools are forced to close, it could be that an extra burden would be thrown on existing driving schools, and if the supply of approved driving instructors could not cope with the demand for instruction, it could mean a rise in the charges made by driving schools.
  That brings me to the crux of the argument, because these regulations apply only to instructors who give instruction for payment. They do not affect in any way the person who is taught to drive by a relative or family friend. I suggest that these regulations could have the effect of more people being taught to drive by unqualified instructors. We know that if people learn to drive with the help of a friend or a relative they usually learn in the family car, whereas if people go to a driving school they are usually taught in a car which has dual controls and is therefore safer on the roads. If these regulations are allowed to go through, far from there being an improvement in road safety, matters could get worse.
  I believe that these instructions have caused great dismay amongst driving instructors.
  Colonel Sir Harwood Harrison: Nonsense.
  Mr. Montgomery: I hope that my hon. and gallant Friend will have an opportunity to intervene in the debate. Apparently he has not had any complaints on this score. I assure him that my right hon. Friend and I have been inundated with complaints. Perhaps things are different in East Anglia from what they are in the West Midlands.
  These regulations have caused dismay amongst driving instructors. They do not appear to be in the public interest, and I therefore beg leave to ask that they be annulled.
  7.46 p.m.
  Mr. J. Enoch Powell: I believe, and I hope that by the end of the debate even my hon. and gallant Friend the Member for Eye (Sir H. Harrison) will not disagree, that

  953
  my hon. Friend the Member for Brierley Hill (Mr. Montgomery) has performed a service by directing the attention of the House this evening to the content of these regulations.
  I have been impressed in the correspondence which has reached me since reference to these regulations was made by my hon. Friend and by myself by the fact that the anxiety has been felt, and the dismay expressed, not by the shadier or less competent members of the profession of driving instruction, but by firms which are clearly amongst the best examples in the whole of the motoring schools.
  Amongst those affected have been not only one-man businesses, which can, of course, be as valuable and as competent as the largest businesses, but also schools which have been carried on for 10, 15 or 20 years with a substantial number of staff, which have a good reputation, and which, indeed, have been amongst the movers in the build-up of the scheme of approved driving instructors.
  I shall not traverse more than very briefly the ground which my hon. Friend has covered. These regulations are primarily concerned with the conditions under which driving instructors can be licensed; that is, become, if I may use a non-statutory expression, probationary instructors. The terms for the holding of a licence are set out in great detail in the regulations, and the various requirements—such as the one which my hon. Friend mentioned, that for at least one-fifth of the instruction time during the first three months of the currency of the licence the licence-holder should be personally supervised by an approved driving instructor—are policed by a detailed system of records which will show whether they are being fulfilled, and whether a proper course of training is being supplied to the licence-holder.
  With those requirements, and with the system of records as such, my hon. Friend and I have no complaint. What seems to be inconsistent with them, however, is the additional requirement in these regulations that in the firm to which the probationer is attached there should be one approved driving instructor to one licence-holder. There can be only one apprentice to one master—if I may use unofficial language to describe the situation. On the face of it, that would appear to be an unreasonable ratio—not as unreason-
  954
  able, indeed, as the ration of four masters to one pupil which was originally proposed in the draft regulations, but still unreasonable enough.
  I am not arguing that because the probationer needs to be personally supervised for only one-fifth of his driving time, it would, therefore, be possible to have a ratio as high as five to one. It might in some cases; but, clearly, it is not only during driving instruction that the licence-holder will constitute a claim upon the time of the approved driving instructors in the firm. Nonetheless, equally obviously, a much higher ratio than one-to-one would be consistent with thorough supervision, through training and the most responsible relationship between master and pupil. It was, therefore, a matter of great surprise, and one which caused consternation when the regulations became known in the summer of this year, that this rigid ratio of one-to-one had been laid down. I shall give examples presently of the devastating impact which it could have upon firms to the probity of which I believe that no one could raise objection.
  My hon. Friend the Under-Secretary, who is presently to reply, in a letter to my hon. Friend the Member for Brierley Hill gave the ground on which he believed that the ratio of one-to-one could be defended. He said that the object of the legislation and the regulations
  "would be frustrated if unregistered and unqualified instructors could still operate freely under licence. The ratio",
  he continued,
  "has therefore been imposed to prevent driving schools from being run mainly by unregistered instructors."
  I concede that if, after the scheme had been running for a substantial time, it was found that in driving schools there was a high proportion of probationer instructors to fully-qualified instructors, that would be an undesirable outcome and would not reflect the intentions of those who framed the legislation. That, however, is not the period to which the regulations, made in July and coming into force last month, relate. Being the first regulations governing this part of the Act, they relate to a transitional phase in which firms, many of which have been operating quite satisfactorily, have to bring themselves within the terms and intentions of the new legislation. It is in

  955
  this period that, I submit, the ratio of one to one operates unreasonably and is oppressive.
  May I, first, give an example from a firm in my constituency through which this matter first came to my attention. The head of the firm wrote that as regards the past, his method has resulted in at least 15 instructors obtaining A.D.I. qualifications, 12 of whom have become self-employed.
  "My immediate problem",
  he continued,
  "is that although I have five trainee instructors, all at various stages of the Ministry of Transport examination, as from 1st October I will no longer be able to employ them, for I will be the only A.D.I."
  Here is a firm which obviously, in course of time, would have no difficulty in bringing itself within the intention of the regulations, but upon which the impact of the introduction of this ratio straightaway has been severe.
  Let me take another example, almost at random. Here is a school of motoring in Reading whose director states, in a letter dated 6th November:
  "Our instructors who applied in midsummer of this year to be examined are still awaiting the results of their examinations. Others are still awaiting examination dates applied for weeks and weeks ago."
  It will be evident what chaos is created in the transitional phase for driving schools such as those which I have instanced by the imposition of the one-for-one ratio in the July regulations, operating as from 1st October.
  There is a good deal which is unclear in the operation of that ratio. From Coventry, a driving instructor, who was himself one of the moving spirits in the establishment of the register on a voluntary basis at first and then in its being made statutory, draws attention to the uncertainty of the position:
  "for example, should a trainee instructor be discharged or suspended if the A.D.I. to whom he is apprenticed falls ill, is on vacation or suddenly decides to withdraw his services?"
  No doubt, these are matters which over the months and years will be ironed out. The point which I want to make clear to my hon. Friend the Parliamentary Secretary is the impact which the regulations are having at this stage on driving
  956
  schools with whose operation, I believe, no one would wish to interfere.
  My hon. Friend the Under-Secretary, in the letter to which I have referred, stated that it had been known for a long time that registration would be compulsory by this autumn. So it had indeed, but what had not been known for a very long time—it became known only in June or July of this year—was what ratio would be required or that so patently harsh a ratio as one-to-one would be required between the probationers and the fully-qualified instructors, at least during this transitional period.
  The motive throughout behind this legislation and the making of regulations under it has been concerned with road safety. I am not sure that the logic of this has been thought through. The prime requirement of road safety is that no one should go on the road with a driving licence, other than a provisional driving licence, who has not been properly trained to drive a car and who has not proved that he or she is properly trained to do so.
  It is to the effectiveness of the Ministry of Transport examination that we look for the maintenance of the standard of driving of licence holders. If that standard is right, if it is properly applied, there is the guarantee of road safety from the point of view of the competence of the substantive licence holder.
  The driving school which seeks to prepare people for the examination will stand or fall by the results which it achieves in the examination. If the examination be sound, if it be properly administered, the competence of the profession which prepares people for the examination will follow of itself from those requirements. No firm will long survive whose pupils constantly fail when they face the examination of the Ministry of Transport.
  There is, however, another aspect. It may well be said that road safety is also involved in the case of the holder of a provisional driving licence. So it is; and the law requires that an L-plate driver shall be accompanied by the holder of a full driving licence. That is what the law considers to be necessary to secure road safety in the case of the provisional licence holder.
  No doubt, as my hon. Friend the Member for Brierley Hill said, the safety

  957
  of the provisional licence holder in a motoring school car and accompanied by a competent instructor will be much greater than that of the same driver with just anybody in the passenger seat beside him. But neither the present law nor the regulations deal with that. The law does not say, and the regulations cannot say, that an L-driver shall go on the road only when accompanied by an approved or licensed instructor. The law merely says that there shall be a passenger who is the holder of a valid driving licence.
  I am prepared to argue quite seriously that the effect of the harsh ratio imposed in these regulations will be contrary to road safety. It is bound to reduce the number of instructors and it will probably reduce the number of schools. The consequence of that is bound to be that it will take longer and be more expensive for provisional licence holders to be brought to the stage of going in for their Ministry of Transport examination; and an inevitable consequence of putting up the cost and lengthening the time for qualification through a driving school is that more learners will learn from unqualified instructors, from friends and members of the family, and relatively fewer will learn from driving schools and from qualified instructors. So far from road safety being improved, the effects of the regulations on road safety will be adverse.
  I am delighted that my right hon. Friend the Member for Yeovil (Mr. Peyton) has attained office as the Minister for Transport Industries and yet my gratification is tinged with one regret. Those of us who remember him on the back benches remember him as the flail of bureaucracy. How he would have revelled in being on the back benches tonight, in taking these regulations to pieces, in dissecting their bureaucratic superfluity. Nothing my hon. Friend and I have said or could say would rival the vituperation and the scorn with which characteristically he would have torn to pieces regulations contrary in their effect to the intentions of the underlying legislation. Indeed, I suspect that his irony and his invective would not have spared the grandmotherly legislation itself, which, having established the standard for the attainment of a licence, proceeds with great elaboration and in great detail to prescribe the standards of those who are to bring the
  958
  learners to the prescribed standards. It is a pity that my right hon. Friend is in the Ministry and not on the back benches tonight.
  One must make the best of it and I want to make the best of it in this way, and I hope that I shall not be disappointed. It is by asking my hon. Friend the Under-Secretary to give an assurance on behalf of his right hon. Friend that the working of the scheme and its impact on the motor schools will be watched by the Minister personally. There could not be anyone better to invigilate over the process. There could not be anyone more suspicious when investigating bureaucracy, more impatient of unnecessary red tape. If my hon. Friend can assure the House that my right hon. Friend is to give his personal attention to the working of the scheme and the impact of the regulations, something will have been gained by my hon. Friend the Member for Brierley Hill bringing these regulations to the attention of the House.
  8.5 p.m.
  Colonel Sir Harwood Harrison: My hon. Friend the Member for Brierley Hill (Mr. Montgomery) and my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) are justified in moving the Prayer, but their arguments surprise me enormously. I wish that my right hon. Friend the Minister for Transport Industries were here, because he would tear holes in their argument and demonstrate its paucity. As it is, they will have to put up with my efforts to deal with it.
  I am surprised that they should have moved the Prayer, because over the seven years that it has taken to get to the present position with driving instructors neither of them has shown any interest in the subject. Instead of listening to the advice of the good driving schools, they have listened to those whose owners have failed, for instance, or to the many who have not been able to bring their pupils to the necessary standard.
  Mr. Powell: No.
  Sir H. Harrison: My right hon. Friend spoke about qualified instructors, but he meant approved driving instructors. He and my hon. Friend have forgotten that the object of the regulations is to improve

  959
  road safety, to reduce the loss of life and the number of accidents.
  I have been greatly interested in the subject of improving the standard of driving. I have moved Motions in the House and I have tried to get Bills through. I played a large part in helping Mr. Will Owen, then a Labour Member, when he introduced what is now the Road Traffic (Driving Instruction) Act, 1967, under which the regulations are made. Perhaps I should declare an interest. As a result of my activities, some two years ago I was approached about and accepted the presidency of the Motor Schools Association. I hasten to add that this is purely an honorary post.
  There has never been any party division about the subject of driving instructors, and hon. Members from both sides of the House have contributed over the years. The original idea was that the regulations should come into operation on 1st August this year, but the General Election intervened and they were brought in two months later, and so there has been an extra two months' notice.
  My hon. Friend the Member for Brierley Hill complained that the regulations would mean that more people would not go to approved drivers who in future would be the only people able to take payment. I believe that that is a good thing. I believe that when people go to a driving school, they want to know that they will get an instructor who is of a certain standard. They have a right to that assurance. I do not believe that the regulations will result in more unqualified teachers.
  Mr. Montgomery: It may be that I did not express myself very well, but my hon. and gallant Friend has missed my point. I was arguing that if we have great difficulty in getting fully qualified instructors and if some driving schools have to close down so that it takes longer for people to get a course with a driving school, people will get their friends or relatives to teach them, and that will not make for road safety.
  Sir H. Harrison: My hon. Friend displays an even greater ignorance of the matter. The Act was passed in 1967, but it was not until three years later that it was thought that there were sufficient approved driving instructors to permit the
  960
  regulations to be brought into force—and I see in his place the hon. Member for Newcastle-upon-Tyne, West (Mr. Bob Brown), who was the Parliamentary Secretary to the Ministry of Transport in the Labour Government and gave much help in this matter.
  My hon. Friend talked about dual-control cars. I feel that he has mistaken the large number of well-conducted driving schools which want their standards to be improved and to employ approved driving instructors. There has been heaps of time for these men to take the test. My hon. Friend and my right hon. Friend are now talking about the new entry into the driving schools. These regulations were made after consultations with representatives of bodies such as that of which I am president. It may be that not every driving school is a member of an association which has been consulted. Because of their mushroom growth—anyone can set up a driving school—many may not have been consulted.
  Mr. Powell: Is my hon. and gallant Friend able to tell us when the one-to-one ratio was first proposed and known to members of the profession?
  Sir H. Harrison: The one-to-one point was fully discussed with all the representatives of the profession. I believe that four or five were called to the Ministry. I am sure that my hon. Friend the Under-Secretary would rather make the reply than that I should make it for him. It is perfectly fair. There were many meetings. I cannot speak for others who were at meetings with the Ministry. The hon. Member for Newcastle-upon-Tyne, West—I hope that he intervenes in the debate—and the Under-Secretary know what happened at these meetings. No one can ever be completely happy, least of all Members of Parliament, that anything that we pass is perfection; but four-fifths of a loaf is far better than no loaf at all.
  At the moment no one is allowed to instruct unless he has become an approved driving instructor and passed the high standards set by the Ministry. The status of driving instructors in the past has been low because they have been up against a lot of cheap competition by men or women who knew nothing about instructing. It is not only being able to drive;

  961
  they have to learn to instruct. This is why they have to pass the Ministry's test.
  I have always wanted the status of driving instructors to be improved. Is my hon. Friend and his right hon. Friend satisfied—this meets the point of the objection—that there has been sufficient action and publicity to see that these regulations have been brought to the notice of all individuals or schools instructing for payment? I refer particularly to those schools for which my right hon. Friend speaks which have no approved driving instructors.
  We must see that value is attached to being an approved driving instructor and that no one escapes the net. For too long it was on a voluntary basis. Often one heard instructors who took the test earlier saying, "Is this worth while?" We have waited three years for these regulations. After warnings have been given to someone who has broken the regulations, will prosecution follow? I believe that this is the only way to bring everyone in. At least, this is the beginning of better driving instruction, but it is by no means the end. We want to abolish the friend, girl-friend, father and mother instructing.
  Mr. John Wells: No.
  Sir H. Harrison: We have not yet got enough instructors, but that is what we hope for. I want to see more done—
  Mr. Wells: Certainly not.
  Sir H. Harrison: I do not understand why my hon. Friend says, "Certainly not". He is entitled to his opinion. I believe that if a person has a lethal weapon in his hands he should be trained how to use it by a qualified instructor. I recommend the House to vote against the Prayer.
  8.15 p.m.
  Mr. John Wells: I intervene briefly in view of the appalling statement by my hon. and gallant Friend the Member for Eye (Sir H. Harrison) that he wants to abolish husbands, girlfriends and fathers. That was his phrase, but I presume that he meant something broader or, rather, narrower.
  Let us face it. Practically every hon. Member in this House has had in the past, or is about to have in the near future, the terrifying experience of having
  962
  his children growing up and becoming newly qualified drivers. The sensible, responsible parent allows his child to go to a driving school in the early stages and, indeed, in the latter stages as he is approaching testing time. But there is no doubt that far greater experience is needed by a young learner-driver—perhaps more by a middle-aged learnerdriver—than the average learner is prepared to pay for. Therefore, although he has had a number of set lessons, he seeks to gain experience with these husbands, girl-friends, and so on, whom my hon. Friend wants to abolish. I deplore this final sentence in my hon. Friend's speech which otherwise I had gone along with some way.
  I should like to put two specific questions to my hon. Friend the Under-Secretary. If these regulations are being set out to help establish driving schools, and assuming that my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) is correct that the Minister for Transport Industries will continue as the hammer of bureaucracy—I very much doubt that now that he has been Ministered—what will the Minister or the Under-Secretary do about the disgraceful carryings-on of the training board which is putting great inconvenience in the way of the smaller driving schools? I will not go too far up that avenue lest I offend you, Mr. Deputy Speaker. But the fact remains that if the object of the regulations is to help driving schools, let them be properly helped.
  Secondly, I understand that the regulations are aimed at putting out of business people who are not qualified to instruct others for reward in the art of driving. To illustrate my point, I take the case of the farmer with a sizeable farm who employs a foreman who in turn has a number of apprentices and other younger men under his general guidance. Some of those younger men are likely to be learning to drive a farm tractor. While doing it solo with an L-plate, that is fine. But when such a man is put in the farm lorry and sent to market with the farm manager or foreman sitting alongside him, what then? The foreman or manager or senior person is working for his employer for hire or reward. My hon. Friend shakes his head. The man is working for hire or reward. It is

  963
  a fact. The apprentice is doing the driving and the foreman is instructing him. Is the foreman to be penalised? I am glad to see that my hon. Friend is shaking his head. I hope that he will not be penalised.
  I have taken the typical case of the farmer because this is well known to me in my constituency. But there are many industrialists who have young men learning to drive their trucks with another employee who is responsible for them. For example, we often see little G.P.O. vans going about with a notice on the back, "Driver under instruction." Will every teacher in a G.P.O. van have to be qualified under the regulations? I hope that my hon. Friend can go some way to meet the points that I have raised.
  8.19 p.m.
  Mr. Bob Brown: I shall not detain the House for more than a minute or two.
  I should have thought that the Statutory Instrument deserved the full support of the House as a first-class road safety measure. I was more than surprised that the right hon. Member for Wolverhampton, South-West (Mr. Powell) got himself worked up into such a schizophrenic lather on something which I should have thought he would have supported fully, particularly as he mentioned so many times the need for road safety measures. Had the Statutory Instrument been foisted on the profession without adequate consultation by the previous Government, and had the Parliamentary Secretary come to the House simply in order to wallop it on the profession on behalf of the previous Government, I could have understood his lather and indignation. But if any Statutory Instrument has been extremely well discussed, this is it. As the hon. and gallant Member for Eye (Sir H. Harrison), who is the president of the Motor Schools Association, said, it has been discussed for three years.
  Mr. Powell: No.
  Mr. Brown: That is the minimum, because it is three years since the legislation was enacted. But long before that, and long before I became a Member, my colleague, Will Owen, was tremendously interested in this subject.
  964
  There is no question of there not having been adequate consultation, and I am astounded that this Prayer should have been tabled.
  Mr. Montgomery: What my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and I are trying to ascertain is how much discussion there was about the ratio between trained and untrained people and when it came into effect. Surely the hon. Member, who was Parliamentary Secretary to the Ministry of Transport in the Labour Government, could assure us on that point. I asked my hon. Friend the Under-Secretary of State about it, and he could not give me the answer.
  Mr. Brown: It is not for me to assume the mantle of the Under-Secretary of State. As one who was at the Ministry, I can say that there was ample and adequate consultation, and I am sure that the Under-Secretary will confirm that.
  8.21 p.m.
  The Under-Secretary of State for the Environment (Mr. Michael Heseltine): This has been a very interesting debate which has ranged over a large number of very small points, adding up to a formidable attempt to improve one facet of road safety. I am grateful to my right hon. and hon. Friends for raising this matter and giving me the opportunity to cover many of the points they have raised.
  It may be helpful if first I try to put the matter into the context of the historical situation which brings us here. The first attempt to bring about voluntary registration of driving instruction was made in the Road Traffic Act, 1962, when powers were taken to set up a voluntary register. The register came into being in 1964 and 2,000 people had their names put on it. As a result of agitation by hon. Members on both sides of the House, powers were taken in the Road Traffic (Driving Instruction) Act, 1967 to set up a compulsory register. That Act became law in 1967. By that time the number of registered instructors in the voluntary scheme had risen from 2,000 to 6,000.
  Orders under the 1967 Act were announced in February, 1969, by the right hon. Member for Greenwich (Mr. Marsh), then the Minister of Transport. He gave notice in February, 1969, that as from 1st August, 1970, registration would be compulsory. That is a very important

  965
  point. At that stage there was no agreement about the ratio, but the notice of compulsory registration was given early in 1969, with a period of delay running to 1st August, 1970. The question whether the ratio should be one-to-one, one-to-four or one-to-ten was irrelevant to the statutory fact that people would have to register by the middle of 1970. Therefore, they knew that they had to take steps to become registered.
  By 1st August, 1970, a very large number of people had acted precisely as they were intended and statutorily compelled to act, because by that date the number of 6,000 instructors registered in 1967 became 11,000.
  I have been asked when the details of the ratio were announced. In the consultative processes which the last Government undertook, it was originally intended that there should be a ratio of one-to-four. That would have created far greater hardship for the sort of people my right hon. and hon. Friends have spoken about than was created by the subsequent decision on a ratio of one-to-one. Nevertheless, the consultation took place against a background of a ratio of one licensee, or probationer, to four registered instructors.
  Then the proposals were discussed with the various associations, and there is not the slightest doubt that they were widely attacked by the associations on the ground of the hardship which would ensue, particularly for small firms, if a ratio of one to four was accepted. It was against this background that the last Government would have been expected to make up their mind, but the General Election intervened.
  My hon. Friend the Member for Brierley Hill (Mr. Montgomery) should not completely discount the part which the present Government have played in modifying the proposals, because it fell to them to decide whether they should go ahead with the one-to-four ratio or to change it. In fact, we changed it to a ratio of one to one.
  The current situation is that there are 12,600 registered instructors and 2,700 probationers or licensees. Taking the global position in the country, the practical effect of the legislation, which no one could have foreseen when the Act was introduced, was to produce a ratio of one
  966
  trainee to five registered instructors. It is against that background that we are asked to consider whether a ratio of one to one for the hardship cases is unreasonable. In my view, having considered the matter very carefully, the hardships about which we have heard tonight are not likely to be as long-felt, sustained or severe as my hon. Friends have suggested.
  The legislation was deliberately designed to improve the standard of driving instruction. No one can be sure about the precise contribution it will make to road safety, but it was generally felt on both sides of the House that if the standard of tuition could be improved it would produce better drivers. The figures, such as they are, are on the side of those who believe, as I do, that that is so.
  From 1964 to 1969 there was a steady decline in the pass rate. In 1964 the percentage of passes among people taking the driving test was 47·8. It had dwindled to 46·6 per cent. by 1969. It appeared that there was a need to do something to try to improve the general level of tuition. It is fair to say that there has been a very small but nevertheless perceptible improvement in the pass rate since the regulations and registration came into being. If it were a 0·2 per cent. improvement I would not make a great deal of it, but in the general context the move was in the right direction, and it does not bear out my right hon. and hon. Friend's suggestion that there could be a diminution in the level of road safety. I do not wish to make a great point of this except to say that what evidence we have is on our side and not on the side of my right hon. and hon. Friends. But we shall want to consider the evidence in a wider context when we review the regulations.
  My hon. Friend the Member for Brierley Hill and my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) made a great deal of play about the conditions which have been laid down for the registration of the probationary instructors. It has, of course, quite rightly been reported to the House that it is said that there must first of all on the licence be the name of the man who is responsible for the direction of the particular probationary person; there must also be the name of the establishment, and the name of the branch in which he works.

  967
  It is necessary that the probationer should receive instruction in the early months for up to one-fifth of his daily working time. All this has the effect of restricting the use which the business can make of its probationary instructor, and this is deliberately introducing a system where that instructor is being trained; it is deliberately tying him to a particular branch of the driving school so that he is not moved around from place to place. This, therefore, is ensuring that he gets his training, probably with the same instructor, in settled conditions.
  I think it is very important that all hon. Members should understand that if they want to free these schools from this sort of restriction what they are saying is that the businesses can make their money by teaching people to drive and yet be allowed to use unqualified instructors, by using them part-time for tuition purposes when demands by people wanting instruction are heavy; what they are saying is that they want these people free to go from branch to branch and fill in when there is any sudden gap in teaching staff; what they are saying is that they want to allow a system where there is less attention to the tuition which the probationary people are getting.
  My hon. and right hon. Friends both quoted cases where there had been hardship in their constituencies, or which had been drawn to their attention from places throughout the country. I would not want to pretend for one moment that there have not been certain difficulties in the period registration has been taking place because there have been. When the regulations were mooted, nobody knew precisely how many instructors would come forward for registration, and nobody knew how many there were gaining profit and reward from giving driving instruction. Estimates had to be made on certain assumptions, and we had to make what we thought reasonable calculations as to the rate at which driving instructors would apply for registration.
  The result was that more driving instructors appeared than we thought would appear and that they left registration later than we imagined they would. It is true that the Department did not keep available a large number of civil servants against the contingency of an unexpected and unknown number
  968
  of applicants suddenly appearing, and there were large numbers when they did appear. I am sure I command the support of my right hon. Friend in saying that he would not have wanted us to keep a reservoir of spare civil servants just in case of that contingency. Therefore, there was a certain amount of delay, but this has been the responsibility not of our Department but rather that of the driving instructors, who simply did not get themselves registered anything like as early as they should, even though we had given widespread publicity to the matter and although they had ample time to do so.
  I believe that this is a perfectly reasonable explanation, but it would not be a situation which we could continue to tolerate. Therefore, I am able to give the House the assurances that candidates have received the results of all written examinations and of practical tests conducted up to the end of October, 1970, and licences or letters where applications gave rise to inquiries have been issued to all applications at headquarters up to 13th November. I hope this answers this point.
  I hope that now we shall not have to deal with anything like the situation which there was and in which we had to help earlier this year, and in which we were very pleased to help. I hope my hon. and right hon. Friends will be pleased with this assurance which I am able to give.
  My hon. Friend the Member for Brierley Hill mentioned the difficulties of one of his constituents who had been a driving instructor for some time but had not been able to pass the written part of his examination. The written part of the examination consists mainly of answering questions by putting ticks in boxes or saying "Yes" or "No". There is no literary skill required. It is the simplest of forms. I believe it is perfectly reasonable that anybody in driving instruction or traffic management should be expected to undergo some test of this sort and be able to pass it.
  My hon. Friend the Member for Brierley Hill also said he was concerned that there would be a large number of small schools closed as a result of these regulations; but then my right hon. Friend went on to say that someone he

  969
  knew had lost no fewer than 12 instructors who had become self-employed as a result of these registrations. There seemed to be a certain inconsistency in these two arguments—
  Mr. Powell: I think there is a misunderstanding; no doubt it is my fault. The reference was simply to the past record of the head of a driving school, twelve of whose former trainees were themselves now approved driving instructors running their own schools.
  Mr. Heseltine: I apologise to my right hon. Friend; I had misunderstood his point. I think he will sympathise with the point I want to make arising out of it, that in about a year's time we shall be able to review the way in which the scheme has worked and assess the hardships that are then continuing.
  It is important, however, to make it clear that, as we understand it at the moment, we do not see a relaxation in favour of improving the ratio from one to one to a position where there are two probationary instructors to one registered instructor. This would be to go back to schools being able to use unqualified part-time labour for giving instruction, which would be a bad deal for the public and not in the interests of road safety. The fact that there are now 12,600 registered instructors to only 2,700 licensees indicates that the ratios are more likely to go in the other direction. I do not say that we will change it, but, together with the trade, we shall look at the difficulties to which hon. Members will undoubtedly draw our attention when we make the review in the next 12 months.
  My right hon. Friend the Member for Wolverhampton, South-West asked specific questions about the difficulties that would ensue should a registered driving instructor—who is necessary to the set-up in order to maintain the licensed driving instructor—go ill. He asked whether the fact that the registered driving instructor was ill meant that the licensee could not go on being employed. The answer is, "No"; although he is ill, he should remain on the strength of the school. The same answer applies if he is on holiday; he again remains on the strength. If the registered instructor should withdraw his services or die, a different situation arises because the ratio is affected.
  970
  I have been concerned about any hardship that could arise and there is a perfectly tenable argument to put forward, certainly until we review the position in a year's time. There is no need for the licensed trainee to be dismissed. As long as he is not giving instruction he can still remain on the books. Secondly, he can take other forms of training whilst he is licensed and employed by that firm. Thirdly, he can take the examination. The situation does not present quite the degree of hardship which my right hon. Friend suspected and which I wanted to be satisfied about when first looking at this matter.
  My hon. and gallant Friend the Member for Eye (Sir H. Harrison) made a helpful intervention based on his considerable personal knowledge of the industry. He asked me whether the publicity given to the regulations had been sufficient. If 12,600 people have managed to get themselves registered by November this year, I am satisfied that there must have been effective publicity. Not only was there widespread Press comment when the former Minister of Transport, the right hon. Member for Greenwich announced the details in 1969, but detailed advertisements have appeared in all driving centres where the instructors go with their pupils. It was widely referred to in the trade Press, which is widely read. The answer is that it is quite obvious that large numbers of people saw the publicity because they registered at the time.
  My hon. and gallant Friend also asked whether there would be prosecution if the regulations were not met. He will appreciate that I cannot answer that question because it is not for my Department but for the police to decide.
  My hon. Friend the Member for Maidstone (Mr. John Wells) asked detailed questions which, if he will forgive me, I will answer in writing. My first understanding of the situation is that a farm manager who gave instructions to an apprentice would not come within the regulations, but I will give my hon. Friend a detailed answer to that precise point.
  In the light of this discussion and the detailed answers which I have given to hon. Members who intervened, I hope that my hon. Friend the Member for Brierley Hill will feel able to withdraw

  971
  his Prayer. I repeat the assurance that my right hon. Friend will consider this matter in about a year's time and that careful consideration will be given to what we can do to help if there is any genuine hardship. This is an assurance given against the background of a deteriorating situation on the roads. The graphs of road safety are beginning to deteriorate. This must be the subject of anxiety to us all, and I have not the slightest doubt that my right hon. Friend will also bear that in mind. Nevertheless, I do not want that qualification to invalidate the assurance which I willingly gave to my hon. Friend.
  8.40 p.m.
  Mr. Frederick Mulley: I apologise to the hon. Member for Brierley Hill (Mr. Montgomery) and his right hon. Friend for not having been present at the beginning of this interesting debate. It started even earlier than I anticipated. In view of the comprehensive reply of the Under-Secretary I do not think there is very much for me to say.
  My hon. Friend the Member for Newcastle-upon-Tyne, West (Mr. Bob Brown), the former Parliamentary Secretary, dealt with consultation. I would like to put on record my appreciation of his exceptional services to road safety during his term of office. I mention this in case hon. Members feel, after hearing the Under-Secretary, that the whole credit for the regulations goes to the present Government, although I congratulate them on their speed in making the regulations within a week of the General Election.
  I personally regret that there is no longer a Minister of Transport, but within two days of the then Minister of Transport being appointed the regulations were made—and this was before he had the undoubtedly valuable services of the Parliamentary Secretary, who, if my memory is correct, had not been appointed by 24th June. I take credit for having forecast in Standing Committee that if the Under-Secretary ever became a Minister, he would be a most effective defender of the status quo. He has discharged his obligation most admirably, and if there were to be a Division, I could not advise my hon. Friends to vote in favour of the Prayer.
  8.44 p.m.
  Mr. Montgomery: I should like to thank my hon. Friend for his helpful reply. I wish to make it clear that my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and I raised this issue tonight to ventilate the whole matter; we did not raise it out of any cussedness. We are interested in road safety, and I did not quite understand some of the hysterical interventions. I beg to ask leave to withdraw the Motion.
  Motion, by leave, withdrawn.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clegg.]

  WAR DISABILITY PENSION
  8.45 p.m.
  Mr. David Weitzman: I am grateful for this opportunity to raise this important matter involving one of my constituents. I do not mention his name because he was discharged from the Navy as being a psychopath and I hope that the Minister will agree that to mention his name might affect him in the future.
  I have referred to this matter as affecting
  "a constituent and his right to war disability pension"
  and although this is an extraordinary and possibly an exceptional case it raises important problems that might well affect pensioners who have suffered war disability. To appreciate these problems, it is necessary for me to deal in some detail with the background.
  The short facts are as follows. My constituent was born in 1926. There was evidence produced before the tribunal which showed that as a boy he attended school normally. His family and medical evidence showed that there was nothing abnormal about him. Indeed, as a boy of 13 his father paid £70 to place him in the Navy where he remained for about a year and where there was no question of any disability. Presumably he was examined then when he went into the Navy. During the war, in October, 1943, he enlisted in the Navy, saw service and was discharged from the Navy officially on 25th March, 1946, although the actual

  973
  date of his leaving the Navy was 18th January, 1946. For his service he was awarded the appropriate medals: the 1939–45 Medal, the Burma Star, the Italian Star, the French and German Star and the War Medal. He was discharged as permanently unfit for any form of Royal Navy Service in consequence of being a paranoid psychopath—that was the wording on his discharge.
  In February, 1946, soon after his discharge, he applied for a pension, which was refused. He applied again in 1951 and there was a hearing before a tribunal. The tribunal dismissed the appeal on the ground that his condition was not caused by or aggravated by his naval service. He approached me as his Member in 1966 and I then took up his case. I had considerable correspondence and a number of personal interviews with the then Ministry of Defence for the Royal Navy and various Ministers of the Department of Health and Social Services, as it then was. I was stonewalled by refusals to do anything. The answer was that the tribunal had made their finding and that the Minister must adhere to it.
  Fortunately at that time, or very soon after my interviews, the legislation appointing the Parliamentary Commissioner was brought before the House and I had the opportunity to refer to this case both on Second Reading and in Committee. I succeeded in getting the ruling that although the Parliamentary Commissioner had no power to deal with what was an appeal from a tribunal, he could deal with the matter if it were shown that all the relevant documents were not before the tribunal. Therefore I referred the matter to the Parliamentary Commissioner.
  It was then found that certain documents were not before the tribunal. One of these was a vital document in the form of his attestation paper, which showed that a medical examination had taken place on enlistment in the Navy in October, 1943, and that he was perfectly fit in all respects. That document was missing and was not placed before the tribunal in 1951. As a result, the hearing before the tribunal in 1951 was declared a nullity and a new hearing was ordered.
  I thought it right personally to represent my constituent at the hearing, which
  974
  lasted two days. In the result the tribunal found that his condition was not caused but was aggravated by his naval service and that he was entitled to a pension. I must accept the finding of aggravation and not causation, although frankly I would have thought it a clear case on the evidence of his condition on discharge having been caused by his service. On that finding of aggravation he was fully entitled to payment of his pension.
  He was paid his pension, and the first thing the Minister did was to pay it back to 1951, the date of the first tribunal. It was for a 20 per cent. disability. I was indignant about this and wrote to the Minister of State for the Department of Health and Social Security and saw him personally. I raised three points with him. One was that it was wrong to date the pension from 1951 and that it should have been from the date of discharge, 1946; secondly, that the pension was at the rate of 20 per cent.; thirdly, that nearly 24 years later my constituent was being paid the arrears at the rates current in 1946, 1952, 1955 and so on. After argument, the Minister conceded the first point, that the pension should be back-dated and paid from 1946, the date of his discharge. But the Minister refused to give way on the other two points. My plea tonight is on those two matters, and I shall deal with them in a little detail.
  First, there is the question of the correctness of the assessment of 20 per cent. disablement. On enlistment, my constituent was medically examined and found fit in all respects. He was medically examined before his discharge, and the statement of case which was submitted to the tribunal contains details of that examination. I should like the Minister to listen carefully to this. It contains no reference whatever to any assessment of disability. The Minister has said to me, in a letter, that it is not the practice to refer to the assessment. But—I emphasise this—it contains this report by the medical officer in charge of the case:
  "Question: How does the disability affect his capacity for work in comparison with a normal healthy man of the same age?
  Answer: Will not be affected more than formerly in civil life."
  There follows a statement that the invaliding medical board confirmed the findings of the medical officer in charge. The reply was that he would not be affected more than formerly in civil life, in answer to the question:
  "How will his disability affect his capacity for work in comparison with a normal healthy man of the same age?"
  In view of that, how can the Minister say that there was an assessment of 20 per cent. disablement on discharge? It is not shown on the statement of case. How can the Minister say that and, at the same time, say that my constituent would not be affected more than formerly in civil life?—except, of course, upon the assumption, wrongly made at that time and found later to be wrong by the tribunal, that his condition was not aggravated by his naval service. In other words, the Department begged the question. It assumed that the aggravation was not due to naval service, and it was wrong, as shown by the finding of the tribunal.
  Moreover, the history of the man during the years that followed, well known to the Ministry, and set out in a statement of case, showed that he suffered considerably. Immediately on his discharge, he got a job for two weeks, and he was discharged because of his condition. Later there followed numerous jobs, and considerable spells of unemployment because of his condition—depression, headaches, illnesses. His history showed clearly that, during the 24 years which followed his discharge, considerable variations in his condition and, therefore, in his disability had taken place.
  The remarkable thing is that although there had been a medical examination on his discharge in 1946, it was not until after the finding of the tribunal in 1969, nearly 24 years later, that a medical examination was held. He was then examined and, presumably, assessed at a 20 per cent. disability. How on earth the Ministry can say that it must take 20 per cent. disablement as correct during those 24 years I do not know. It passes my comprehension, particularly when I bear in mind the variations shown in the man's history. At times, of course, there was improvement, but there was certainly a decline in his condition over a considerable period. There was no medical examination by the Ministry, through the
  976
  Ministry's fault, not his, during the whole period.
  How, therefore, having made no examination whatever during that period, can the Ministry argue with any sense of justice that this man's disability, the result of aggravation, remained steadily at 20 per cent.? Frankly, I believe that what the Ministry has done in this case has been to take the assessment of 20 per cent. at the end of 1969 and assume that it was correct all through the years. This will not do.
  I come to my second point. The scales of pension from 1946 for a 20 per cent. disability varied as follows: 9s. a week in February, 1946, rising to 11s. in May, 1952, to 13s. 6d. in February, 1955, to 17s. in January, 1958; and then, after other variations, it became 34s. a week in November, 1969. So what was considered a proper allowance of 9s. in 1946 became 34s. in November, 1969.
  Obviously—I suppose that the Minister will agree on this, at least—what could be bought for 9s. in 1946 has no relation to what could be bought today. Yet this man, now shown to be entitled to payment of his pension, is paid in 1969 arrears of pension at the old rates. Plainly, if he had been paid 9s., 11 s., or 13s. 6d. at the proper time, as he should have been, he could have bought what he needed at the prices currently obtaining.
  When I raised this question, the Minister of State at the Department of Health and Social Security, in a letter dated 8th June, 1970, said:
  "I accept that the pension arrears he is getting will buy less now than would have been the case had his pension been in payment at the dates to which it relates, but this is a problem which, to a greater or lesser degree, affects all pensioners who get arrears. To suggest that arrears should be paid at a higher rate than that appropriate for the period they cover would confer an advantage on pensioners who get arrears over pensioners whose pensions were applied for and paid at the due date. Payment at the rates appropriate to the period in question is, as I am sure you know, a feature common to the whole field of social security benefits, and I am afraid that I cannot contemplate any change of this practice."
  A delightful answer!
  Of course, if a person is at fault in not making a claim at the time, he ought not to have what the Minister suggests would be an advantage. I do not dispute that for a moment. Here, the Ministry is at fault. My constituent applied for his

  977
  pension in 1946, and he should have been paid then. He was not paid then because the Ministry erred. The Ministry, not my constituent, was wrong.
  It is a well-known canon of our law that no one should be allowed to benefit from his own wrong doing. The Ministry should not be entitled here to benefit because of its wrong doing, because of a mistake which the Department itself made. Moreover, if my constituent is paid arrears at the proper rate, he will have no advantage. He would be paid such sum as will enable him to purchase things which he could have acquired in the former years at the prices current then.
  It is not just that, having been shown to be wrong, the Ministry should, more than 20 years later, take advantage of its own mistake by making the payments in the way it has. I press upon the Minister the gross injustice in the two matters which I have raised. There were three. The Minister has been good enough to rectify one. I urge him to rectify the other two. I ask only for justice to my constituent. At the very least, I want the hon. Gentleman to say that he will look again at these matters and give further consideration to them.
  9.0 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Paul Dean): One of the glories of the House is the careful attention which is paid to the problems of individuals. I am sure that the House is grateful to the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) for raising a personal case today. It is a complex case involving the extent of disability where it cannot be attributable to service but is acceptable as having been aggravated by service.
  I fully admit that, in spite of the best efforts of the Department, things went wrong, particularly in the early stages. As the hon. and learned Gentleman said, much has been done to try to put it right. I hope that the hon. and learned Gentleman and the House will agree that in complex matters of this kind the Department has an immensely good record and that our war pensioner service is one of which we can be justifiably proud.
  I turn to the main points that the hon. and learned Gentleman raised with regard
  978
  to his constituent and, in doing so, I express my sympathy with his constituent in the difficult medical situation in which he finds himself. Before turning to the particular points raised by the hon. and learned Gentleman, I want to paint the background with regard to assessments.
  The normal method of arriving at an assessment is to determine by medical examination the loss of faculty resulting from the accepted disablement by comparison with the condition of a normal healthy person of the same age and sex. During the continuing course of disablement the pensioner will undergo further examinations, usually at two-yearly intervals, if there is any doubt about the continuing correctness of an assessment. The pensioner may himself at any time tell us that in his opinion his disablement has been under-assessed or that his condition has deteriorated. Where necessary, a further medical examination will be arranged.
  If the Department is satisfied that the assessment should not be altered, except in certain past cases where a pension has not been in payment for two years, the pensioner is told that he has an immediate right of appeal on assessment to the Pensions Appeal Tribunal. In these ways there is an assurance that where there can be any doubts about the level of assessment these doubts can be resolved on the basis of full and recent medical knowledge of the case.
  Where a claim is made or admitted many years after disablement, the Department and the pensioner are denied this means of arriving at a correct assessment on the basis of proper medical informations. Where a claim is late there is normally no question of back-dating an award. This is a counterpart of the Department's willingness to accept belated claims. Back-dating arises, however, in exceptional cases like that of the hon. and learned Gentleman's constituent where it is accepted that the Department has been guilty of relevant error or misdirection.
  Mr. Weitzman: The Under-Secretary read out the regulations, which I appreciate, with regard to periodic examinations. He must appreciate that there was a refusal in 1951 by the tribunal and, for that matter, in 1946. There was no question of any examination or of any right

  979
  on the part of the claimant to claim an examination. The only time that his right to claim an examination arose was after the tribunal's finding in 1969.
  Mr. Dean: I will come to that point in a moment. I do not entirely accept the hon. and learned Gentleman's argument. I will complete the background to the picture before coming to the detailed points.
  Where arrears are to be paid, the Department is committed to doing all that it can to obtain suitable medical and other evidence on which an opinion can be formed about an appropriate assessment for the past period. This will involve obtaining information from the claimant's doctor and from hospitals. The claimant's sickness and employment records will also be obtained where necessary. These facts and the medical records during service and the current medical board's findings are then viewed as a whole, and may be supplemented by a specialist medical report before an opinion is arrived at on the correct assessment for the past.
  There is often a tendency for a pensioner or his representatives to argue in such circumstances that the current assessment must always have applied to past periods. This clearly will not be so in the case of progressive diseases and will equally not be so for disablement which improves in time.
  There is, too, the need to be fair to other pensioners. If too generous a view is taken of the likely past degree of disablement, it could properly be charged that there was advantage in delaying a claim. In such circumstances, our doctors are not faced with an easy task. It is one which must not only be fair to the claimant but must also be seen to be fair to other pensioners.
  Mr. Weitzman: The hon. Gentleman talks of delay and of the need for justice to be done in not allowing an advantage to persons who have delayed their claims. In this case there was no question of delay. The Ministry was wrong and it was only after many years that this claimant established his right. Nobody is suggesting that there was a delay or that advantage was gained as a result of it.
  Mr. Dean: Before coming to the case which the hon. and learned Gentleman raised I was giving the background against which this type of difficult and complex case must be judged in relation to the claims or possible claims of other pensioners or likely pensioners.
  The hon. and learned Gentleman referred to the 20 per cent. rate. As he mentioned, the then Minister of State wrote to him about this. On the last occasion he wrote, on 8th June of this year, he defended the Department's assessment and the main points that he then made—and which I am bound to repeat—were that while there were difficulties in assessing disability for past periods, there was an assessment by a Service medical board at the beginning of the period—namely, in 1946; that our doctors were familiar with the progress to be expected in the case of a disablement like that suffered by the hon. and learned Gentleman's constituent; and that the medical examination in January, 1970, and the psychiatrist's report were consistent with the conclusion reached by our doctors.
  It was also pointed out that the tribunal had found that the disablement had been aggravated by service but was not attributable to service. The then medical officer had again confirmed the 20 per cent. award as appropriate. The assessment by the medical board in 1946 was concerned with the whole disablement, including the aggravation by service of the hon. and learned Gentleman's constituent's condition. The assessment of 20 per cent. was for that part of the disablement accepted as aggravated by service, and that was all that could be taken into account, not any worsening due to natural progress of the disease. That was how the then Minister wrote to the hon. and learned Gentleman; and, having looked very carefully at the case, I am bound to say that I agree with the conclusions which were then reached.
  Mr. Weitzman: The hon. Gentleman has read out a prepared answer to the case I made. I appreciate that the Ministry must present a prepared brief. However, since I dealt in detail with the arguments against the very points he has been raising, I hope that he will do me the justice of considering my arguments, which were made in answer to the very

  981
  points put by the then Minister in that letter.
  Mr. Dean: I shall certainly consider the hon. and learned Gentleman's arguments. I have merely been pointing out that an assessment was made in 1946, at the beginning of the period, which is a point about which we are in dispute.
  May I turn to the second main point which the hon. and learned Gentleman raised, on the payment of the arrears. The arrears of the 20 per cent. pension have been paid for the period 1946 to 1970. These, together with additions for the family, have amounted to about £1,200. The arrears were calculated on the rates appropriate to a 20 per cent. pension which had been in force at different times during the past 24 years. In other words, the hon. and learned Gentleman's constituent has in effect been paid the amount he would have received had he been receiving his 20 per cent. pension during those years, the amount he would have received at the rates which would have applied had his pension been in payment during those years which we are now considering. Successive upratings have raised the 20 per cent. rate of the basic pension from the 9s. a week in 1946 to which the hon. and learned Gentleman referred to the present level of 34s. a week.
  The hon. and learned Gentleman asks that the arrears should be substantially increased to reflect the current purchasing power of the earlier rates. But the object of war pension payments is to provide in some measure current compensation for the limitations which disablement puts upon a full enjoyment of life. In common with all other social security payments, arrears are always paid at the rates current during the periods to which they refer. When uprating increases are introduced, they are not given retrospective effect, and there is no power to make payments for an earlier period at the higher rate. Any different arrangements which applied current rates to earlier periods would be wrong. First, war pensions are paid out of taxation, and it would be irresponsible to accept virtually open-ended liability for payments.
  But there would be other serious effects. For example, a premium would be placed on late claims. There would be a strong
  982
  inducement to claimants to delay making a claim or to protract inquiries, especially during the period immediately before a likely uprating, in the knowledge that inflated arrears would result. This would lead to serious inequities between pensioners. An equally serious result would be the need to re-examine our policy towards late claims, and it might lead to the application of rigid time limits for making claims and appeals.
  Mr. Weitzman: I said at the outset that it would be wrong to pay other than what was then the current rate on a late claim. But this is not a late claim. This claim was made in 1946, and the Ministry is at fault for not having paid during the years. How can it take advantage of its own wrong-doing by paying now a rate then current which cannot possibly now buy the things which it could have bought then?
  Mr. Dean: Though I fully understand the hon. and learned Gentleman's point, I must still tell him that it would not be right to pay the rate which is not applicable to the time involved in the claim period. I think that the arguments stand. I think that the hon. and learned Gentleman will agree that we have done our utmost to deal with the difficult situation which arose in the earlier part when he first raised the case. I shall naturally study carefully the points which he made in this debate, but it seems to me, having looked carefully at the history of this sad case, that his constituent has had all to which he is entitled.
  Mr. Weitzman: I am loath to interrupt the hon. Gentleman, but it is vital to my constituent that these matters be considered. The Minister read out—I do not complain about this for a moment—a prepared answer to me, not having heard the arguments I put forward, which criticised—
  Mr. Speaker: Order. Interventions must be brief. The hon. and learned Gentleman has exhausted his right to speak.
  Mr. Weitzman: I shall try to be as brief as I can. I am merely suggesting that the hon. Gentleman read a brief which does not answer my arguments. My arguments criticise the hon. Gentleman's case, and I hope that he will give them the most careful consideration.
  Mr. Dean: I assure the hon. and learned Gentleman that I shall do that but, equally, I assure him that, having studied the case with great care, the arguments that he put forward this evening are familiar to me. I have read the history of the case, but I assure the hon. and learned Gentleman that I shall study with care what he said. However, as I understand the situation, there is no other benefit within the war pension arrangements to which his constituent is entitled.

  INDIAN OCEAN (BASES)
  9.16 p.m.
  Mr. Tam Dalyell rose—
  Mr. Speaker: I understand that the hon. Member has given notice to the Minister concerned that he wishes to raise a matter on the Adjournment.
  Mr. Dalyell: Yes, Mr. Speaker.
  I have already had the indulgence of the House this afternoon, at some length, on Rolls-Royce, and therefore in raising the issue of a possible base at Diego Garcia in the Indian Ocean I shall seek merely to inquire about facts rather than to raise wider issues of strategy. An Adjournment debate is not the moment at which to raise wide strategic issues, and I shall therefore be brief and stick to the facts and ask factual questions.
  I had the good fortune earlier this month to be in the United States for six days in Maine with Senator Ed Muskie. Rather to my astonishment I heard from a member of that conservationist senator's staff that his country and mine were involved once again in considering the possibility of staging posts or bases in the Indian Ocean. Let us not quibble about definitions. When I heard about that in Maine, I was doubtful, and I thought that there was a mix up with a past controversy over Aldabra Atoll, which I thought had been buried in history.
  Having heard what I considered to be a rumour in the United States, I came back to Britain and found that it seemed to be confirmed by a short article in The Times of last week. I therefore put down a series of Questions, and on Thursday of last week I had down a Question to the Minister of State for
  984
  Defence, and one to the Prime Minister. The right hon. Member for Barnet (Mr. Maudling) replied on behalf of the Prime Minister, who was absent at General de Gaulle's funeral. I asked the Prime Minister at Question 16
  "what discussions he has had with President Nixon about a joint British-United States base at Diego Garcia in the Indian Ocean."
  The right hon. Member for Barnet replied:
  "I have been asked to reply.
  The details of my right hon. Friend's exchanges with President Nixon are confidential."
  Those who are connoisseurs of Prime Ministerial answers know that that is a fairly Delphic answer, and I should have thought that had there been nothing in the proverbial wind there would have been an outright denial by the Deputy Prime Minister.
  I also had down a Written Question to the Ministry of Defence. I asked the Minister of Defence
  "what plans he has for building bases in the Indian Ocean territory."
  The hon. Member for Hertford (Lord Balniel) replied:
  "None."
  He then went on to say, as if to cover himself:
  "The British Indian Ocean territory remains available for the construction of defence facilities by the British and United States Governments under the Agreement signed with the United States Government in 1966 (Command 3231)."—[OFFICIAL REPORT, 12th November 1970; Vol. 806, c. 239, 255.]
  The purpose of this short Adjournment is to ask the Government frankly to say what they are up to in the Indian Ocean. It will be within the recollection of the Department that I was deeply interested in the issue of Aldabra, and, without going into too much detail on the Aldabra situation, I should like to say to the Minister tonight that it was my information from the former Minister of Public Building and Works, now the Opposition Chief Whip, that my estimate of the cost of a staging post at Aldabra of £100 million was much nearer the mark than the estimate given by my right hon. Friend the Member for Leeds, East (Mr. Healey), then the Secretary of State for Defence, of £20 million.
  Granted the nature of coral limestone and granted the difficulties of currents in

  985
  the Indian Ocean—I have been only to Mauritius, but I know something about these matters from a number of people, Dr. Stoddart and others, who have been to Aldabra—any kind of staging post or base in the Indian Ocean is an extremely expensive construction, and we are talking here about many millions of £s.
  I would like to know first, therefore, what is in the wind between Britain and the United States of America. Secondly, what costs will accrue to Britain? Has any realistic estimate been made either by the former Ministry of Public Building and Works or by the Defence Ministry? Thirdly, I restrain myself from going into the strategy of this, but I would like to know what consultations have taken place with neighbouring Governments, because nothing infuriates the Governments of the developing world so much, as we know from Indonesian confrontation and from many other conflicts in which this country has been involved, as the fact that no one in London has consulted them.
  I had a Question today to ask the Secretary of State for Foreign and Commonwealth Affairs
  "What discussion he has had with the Government of Madagascar on British/United States bases or staging posts in the Indian Ocean."
  The Foreign Office answer was, "None." I say to the Government that if we are indulging in what I regard as ludicrous propositions of this kind, at least it might be wise to consult Governments such as those of Malagasy, Tanzania and other neighbouring countries.
  I ask the Government in these matters not to rely on quibbles or on the details of absolutely literal Parliamentary Answers.. Mr. Macmillan, when he was Prime Minister, said that he had had the habit of very often trying to help hon. Members by assisting them to frame the right Questions. If the Questions are wrongly phrased, I hope that this will not prevent the Government Front Bench from being very frank about these matters.
  I serve notice here and now that until we get the truth of this matter and it is thoroughly discussed, I will go on endlessly putting down Parliamentary Questions to the Government Front Bench and to the Prime Minister asking him to make an official visit to every
  986
  conceivable atoll in the Indian Ocean. We can go on doing this in December, January, February and March on the Prime Minister's Questions until we know exactly what the Government are up to.
  9.23 p.m.
  The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Kershaw): The hon. Member for West Lothian (Mr. Dalyell), who was good enough to give notice of this Adjournment debate, has raised some important points. I regard with a great deal of trepidation his final threat to put down a lot of Questions. I remember with some anxiety that he put down, I think, 60 Questions about Aldabra to his own Government, which, no doubt, had a lot to do with the General Election, and I very much hope that I do not find myself answering a similar number from him about these other matters.
  The hon. Member has asked two specific questions: what would be the cost of a hypothetical operation and what consultations have taken place? I will try to answer these questions during the course of my remarks, because I thought that I would give a short review for the benefit of the hon. Member, who said that he wants a factual statement about what is going on in the Indian Ocean, rather than a defence survey, which in any event I am not competent to give.
  May I tell the hon. Member and the House that we already have in the Indian Ocean the staging posts of Gan and Masirah. No doubt, the hon. Member has been to both.
  Mr. Dalyell: Only to Gan.
  Mr. Kershaw: Masirah, too, is well worth a visit.
  As the House is aware, the previous Government announced in July, 1968, that in order to maintain a number of route options across that area, they planned to keep the use of Gan and Masirah as staging posts in the Indian Ocean area after the withdrawal of British forces from their stations in Malaysia and Singapore at the end of 1971. As the House knows that policy is now in question, but these two staging posts remain, and at the moment they are the only staging posts which we maintain in the Indian Ocean. They are of continuing

  987
  importance. In the light of the Government's decision to make a military contribution to Five-Power defence arrangements in the Malaysia-Singapore area after 1971, the importance of these staging facilities to Her Majesty's Government hardly needs to be questioned.
  They are also relevant to the fulfilment of our continuing responsibilities to our remaining dependent territories in the Far East and the South-West Pacific, notably Hong Kong, and nor can their importance be overlooked in relation to the rapidly expanding Soviet naval presence in the Indian Ocean.
  The hon. Gentleman will have seen in today's newspapers reports of the Prime Minister's reply to the Archbishop of Canterbury in which he said:
  "During the last decade the Soviet Navy has grown into a modern and well-equipped force, second in size only to that of the United States, and now operating as a politico-military force on a global scale. We have seen the threat it has been able to pose in the Mediterranean. We have seen its influence extending to the Indian Ocean and to parts of the African littoral. With the closure of the Suez Canal, a large part of all our trade in both directions, including about half our oil supplies, is borne over the sea routes round the Cape."
  As the hon. Gentleman knows, because of the political siutation in the Suez area and because of the size of tankers today, the amount of oil going round the Cape cannot be calculated to diminish to any important degree in future.
  The facilities to which I alluded are in Gan and Masirah and they are by no means new, at least not in Gan, for we used that as a staging post in the 1939–45 war. We revived its facilities again in 1958 and it was subsequently the subject of an agreement in 1960 between Her Majesty's Government in the United Kingdom and the Government of the Maldive Islands. We now have facilities on Gan as a result of a further agreement concluded with the Maldive Government in 1965. Article 4 of this agreement stipulates that these facilities are for the purposes of Commonwealth defence. The facilities have been constructed and are maintained solely by the British Government.
  As for the cost of constructing such facilities on islands made from coral, I am not charged at the moment, because of having had rather short notice of the
  988
  debate, to give the exact cost, but I can assure the hon. Member that in my brief time at the Ministry of Public Building and Works I had the opportunity to observe the experimental station at Cardington where the necessary research has been satisfactorily completed into making very good cement out of the coral, which is the only natural mixture to be found in that part of the world. As the hon. Gentleman said, one would not choose coral for making a runway, but, nevertheless, the technical problem has been overcome.
  The previous Government created, under an Order in Council in November, 1965, the Crown Colony of the British Indian Ocean Territory by the transfer of certain small islands previously administered as part of Mauritius—Chagos Archipelago, including Diego Garcia, and the Seychelles—Aldabra, Farquhar and Desroches. This was with the full agreement of the Mauritius and Seychelles Governments to whom compensation was paid.
  The hon. Gentleman referred to consultation with developing countries in the neighbourhood. Those most closely concerned, Mauritius and the Seychelles, were not only consulted but were part of the agreement. How far one extends this consultation beyond that must be a matter of judgment. In the last resort the ultimate consultation is the interests of this country, and those we have consulted as best we can.
  As has been explained to the House on many occasions by the previous Government, the British Indian Ocean Territory has always been envisaged as providing potential sites for transit, communications, and support facilities.
  The hon. Gentleman will know, as a consequence of his Question to my hon. Friend the Minister of State for Defence, that under an exchange of Notes with the United States Government of December, 1966, published in April, 1967, Cmnd. 3231, the territory was made available for a period of 50 years for the defence purposes of both the United States and British Governments.
  Turning to Aldabra, with which the hon. Gentleman was previously so busily concerned, the previous Government proposed at one time to establish

  989
  an air staging facility there. This proposal was abandoned in November, 1967, as a result of the United Kingdom's defence cuts following devaluation of the £.
  In June, 1968, permission was granted for the Royal Society to establish a research station on the island, which has since been classed as a nature reserve by the British Indian Ocean Territory Administration.
  Diego Garcia is a different island from Aldabra. There have been scientific surveys of that island since the colony was established. It was visited by an Anglo-United States survey party in July, 1967. Two British scientists—Dr. Stoddart of the Department of Geography at Cambridge and Mr. Taylor of the Department of Palæontology at the British Museum—accompanied the Diego Garcia survey party. Dr. Stoddart's report on the visit, which he submitted to the Southern Zone Research Committee of the Royal Society, states that, unlike Aldabra, the ecosystem of Diego Garcia had been much disturbed by man and was, therefore, not of such scientific interest as Aldabra.
  I turn to the present position regarding the use of the British Indian Ocean Territory for defence purposes. The islands of the British Indian Ocean Territory remain available for development for defence purposes by Her Majesty's Government and the United States Government under the exchange of Notes of December, 1966. Whether or how we shall use them is a matter which is kept under constant review by both countries.
  There is nothing further that I can add at present.
  Mr. Dalyell: The hon. Gentleman says that it is kept under constant review. May I ask whether the article by Mr. Ross Mark, Dateline Washington, Saturday 14th November, in the Sunday Express, which said that discussions were actually taking place on site plans for Diego Garcia, is as yet somewhat premature?
  Mr. Kershaw: I have no comment to make about a newspaper article. To say that it is premature implies that it will arise. I have no comment at all to make about the article.

  DEVELOPMENT AREA POLICY
  Mr. Speaker: Order. For the record, I understand that the hon. Member for The Hartlepools (Mr. Leadbitter) has informed the Minister that he wishes to raise a topic on the Adjournment. Mr. Leadbitter.
  9.34 p.m.
  Mr. Ted Leadbitter: I thank the Under-Secretary of State and the officials in his Department for the courtesy which they have accorded me during the evening in making arangements for this Adjournment debate. One cannot predict the time when a debate will start when other hon. Members have indicated that they wish to raise other subjects. I am, therefore, particularly grateful to the hon. Gentleman and his Department.
  This is the first opportunity which those of us in the House directly concerned with development area policy have had to challenge the Minister on matters of deep concern to us arising from a lack of knowledge of the Government's policy, a confusion of statements and hasty visits to areas, in particular mine, in the Northern Region of Ministers who appear not to have stayed long enough to be able to give a comprehensive account of their visits.
  It is easy to make party political points, and I do not suppose that in the past I have resisted the temptation to do so, but we must try to address ourselves to the issues involved and to analyse the problem, because at the end of the day it is not we in the House who must bear the brunt of various measures but the people who work and live in the areas. For perhaps far too long people have been deprived of the information which has been essential in order to get at the root causes of the problems affecting their working lives. It is not an exaggeration to say that every Government, particularly since the war, has made some attempt to solve the problem, but the inescapable dilemma of increasing and improving rates of development not keeping pace with the decline in the basic industries has confounded us all.
  Not many years ago a considerable number of miners were working in the

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  Northern Region. In 1965, there were about 92,000 men working in the mines. By the end of 1969, the figure had been cut to 51,650. In other words, there was a loss of about 39,000 jobs. Although new jobs were found, not for the same number of men but for some of them, this remained a difficult problem for the last Government, as it would have been for any Government. That is one basic element in the problem of the Northern Region.
  There is, however, another element, and that is the inability of politicians and of Governments to ensure that the development areas are made a part of the national economic and social fabric. For far too long our psychology and thinking has been that the regions are separate and, because we have not understood that they are part of the national fabric, it has not been realised that unemployment levels in the development areas which are above the national levels have meant a loss of about £150 million per annum in terms of the gross national product. As a nation, we cannot afford that loss.
  I have described briefly one element of the internal problems of development areas and the need to think in terms of development areas as being part of the national fabric. I will not propound that any further, but the Labour Government tried to learn from tentative measures which had been adopted before to deal with the basic problems of the development areas and they produced a system of investment grants, allowances, initial allowances, subsidies for development of the infrastructure in the areas, school-building programmes, hospital programmes, construction works and road works, the removal of dereliction, and all this in the short period between 1964 and 1970. Those of us who have studied the question of industrial and social development know only too well that for this work that is a very short period of time.
  Without developing the theme, I can say that the hard fact is that the result of that policy between 1966 and 1969 was to produce 97,000 new jobs in the northern area. No one can deny that that did not happen. However, I must remind the House that on the other side of the balance sheet there was a loss of jobs due to the decline of the basic industries.
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  Between 1964 and 1969 the policies of the Labour Government found 116,000 new jobs. In that period there were put on the ground some 49·5 million sq. ft. of factory space arising out of the use of industrial development certificates, and in addition to that we had some 60 new advance factories from 1964, and the jobs in prospect at the end of last year were some 43,300. In addition to that we had public expenditure on new and construction works of about £70·7 million in 1965–66, and this was increased to £163 million at the end of last year. Road works in the northern region were at about £50 million last year.
  When I asked a Question in the House only last week I discovered, much to my surprise, that 186 miles of motorway had been built in the Northern Region between 1964 and 1969, whereas none had been built before. [An. HON. MEMBER: "Oh."] This is an answer from the Minister. I presume that the hon. Member is not trying to suggest that his right hon. Friend has not told the truth. I accept what his right hon. Friend said.
  As an hon. Member of this House and responsible for a constituency which has suffered a great deal, I have to say that by the end of 1969 we had still not cracked the nut, because the North-Eastern Economic Development Planning Council calculated in 1969 that, even so, 281,000 new jobs were required by 1981 before we could claim that we were on what might be called a viable footing.
  This caused me to pose a question which I have posed before in the House: if the policies which I have just briefly enumerated produced 116,000 new jobs in five-and-a-half years is it likely that the same policies, provided the same circumstances and economic conditions persist, will produce 281,000 new jobs in 10 years? If it is likely, that means that we must pose another question. Will any new policy be likely to invite a change in that result?
  It is because a new policy is now before us that we have a right to seek from right hon. and hon. Gentlemen opposite answers to some specific questions. Right hon. and hon. Gentlemen opposite have got rid of the investment grants. We on this side of the House claim, and the North-Eastern Economic Development Planning Council still claims, the need to have cash grants,

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  because it has only been by the use of the carrot that we have been able to persuade industries to come to the Northern Region, and to some locations there to which they would not otherwise have come without that cash inducement. If there is no cash inducement, is it likely that allowances—the policy of the new Government—will produce the result that has been experienced during the past few years?
  How can an industry in its infancy be expected to establish itself in the west part of Durham, for example, where there is unemployment, when it has not established the profitability base upon which it qualifies for the new allowance? It will not be done. I challenge the Under-Secretary of State to say something more than the old claptrap about value for money. There is an arrogant presumption by the Government that it is necessary only to promise people that they will get better value for money. Who do they think they are? Do they think they have the monopoly of public money and a new insight into the use of public money so that they can give to private enterprise as well as to nationalised industry? Do they presume to have better judgment than the Opposition? No politician in charge of a Government Department wants to argue that the officials who are scrutinising applications for Government grants are fickle and negligent when Labour is in control but wise when the Tories are in control.
  Last week the Secretary of State for Trade and Industry, in his great speech, referred to "lame ducks". I have a question to ask the Under-Secretary of State which the Secretary of State would not be prepared to answer. The Under-Secretary of State has more experience in the House than has the Secretary of State, and I do not see why I should put this question to the new boy who makes such big errors. Is it not time that the Conservative Government named the "lame ducks", and stopped kidding the people of this country along and using "lame ducks" as an excuse for not putting into the development areas the money which is required?
  Let the companies who have misused Government grants be named. If Rolls-Royce is named and given £42 million of the taxpayers' money, the companies who
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  have misused the money should also be named. If the Under-Secretary cannot accept that challenge, he should take a tip from this side of the House and tell the Secretary of State for Trade and Industry to shut his mouth.
  Those of us who represent the Northern Region are determined that the people there shall have work, and we have a right to ask the Government how, within their proposed public expenditure cuts, they expect to help the development areas. Industrialists will not come to the Northern Region, where so much remains to be done, if instruments which were created by the Labour Government are snapped out of their hands. The Government have abolished the Industrial Reorganisation Corporation. As the Leader of the Opposition said last week, the Secretary of State for Trade and Industry will soon regret that action, for the I.R.C. was important to the development areas.
  The Regional employment premium is to be abolished. The Secretary of State for Trade and Industry should listen to the Chairman of Swan Hunter—a man who knows his own business, albeit he has enjoyed the taxpayers' support in the past—when he says that dangers will arise in that industry from the loss of R.E.P. There is to be a cut in expenditure on technology of £16 million by 1971–72, and a further cut of £70 million by 1974–75. What about getting rid of the British Productivity Council—a measly trick? What about getting rid of the Consumer Council—a niggardly trick? Those organisations are important to my region. They are not unrelated to development, or to inflation which my region feels more harshly than does the rest of the country. How will industry be attracted to that area now that the carrot has been taken away?
  Investment grants have been discontinued completely from 27th October. Road transport is being cut by £23 million between 1971 and 1972, and by £58 million between 1974 and 1975. In housing there is to be a cut of £100 to £200 million by 1974. [Laughter.] That is no laughing matter, but the hon. Member for Leicester, South-West (Mr. Boardman) laughs. Get on your feet if you want to enjoy a laugh in this House—
  Mr. Speaker: The hon. Gentleman must say "The hon. Gentleman must get

  995
  on his feet". He must not ask me to get on my feet.
  Mr. Leadbitter: What about the cuts in shipbuilding grants? I pose these questions because I and my hon. Friends as Members for the Northern Region are concerned about them, and we hope that the Minister will give some specific answers.
  Mr. Tom Boardman: Since the hon. Gentleman referred to housing cuts, perhaps he would elaborate how the Government's policy will adversely affect his area? Does he not agree that it will help his area?
  Mr. Leadbitter: I will announce that in six or seven months' time when the results will be known.
  Mr. Speaker: Order. A number of hon. Members still wish to speak. There will be time for them to do so if speeches are brief.
  9.54 p.m.
  Mr. George Lawson: I compliment my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) on his diligence in recognising the fact that the business was likely to fold up early and that there was a chance to raise this important matter on the Adjournment. I should also like to thank the hon. Gentleman the Under-Secretary of State for coming to the House, since we all know how inconvenient it is to learn suddenly that there is to be an Adjournment debate on a particular subject and to have to speak at short notice.
  I wish to confine myself to a specific question, and if I expand on it in trying to make clear what is in my mind I know that the House will understand. I am seeking information. I understood at one time that both the Board of Trade and the Ministry of Technology were engaged in studying in depth the relative merits of investment grants as compared with investment allowances.
  The first Report of the Estimates Commitee in the year 1968–69, which was published on 22nd January, 1969, says in paragraph 27, referring to the investment grants scheme:
  "Your Committee asked what steps have been taken or were contemplated to find out
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  how far the scheme was succeeding in its objects".
  In commenting on this Report the Winter Supplementary Estimates for 1968–69, dated April, 1969, stated that preparatory work had been put in hand some while ago and that the Government had decided to undertake a study with which industry would be associated.
  I was a Member of the Select Committee on Scottish Affairs in the 1969–70 Session and we heard evidence from representatives of Government Departments. A document dated October, 1969, was submitted to sub-Committee A of the Select Committee on Scottish Affairs and stated that after consultation with industry a questionnaire was being circulated to a number of firms, and that it was hoped to complete the survey by the summer of 1970. The Board of Trade said that until the results of this survey were available, it would not be known how far it would be possible to provide the information requested by the Committee about the effectiveness of grants compared with tax allowances as an investment incentive. But in subsequent evidence on 4th February, 1970—and I quote from page 309 of the Report Question 310—the Ministry of Technology witness said:
  "The Government announced some time ago that they had started a study of the effectiveness of the grant scheme as a whole, and it is one aspect of that study that a survey will be made of firms. This is something which was put in hand by the Board of Trade last year and the Ministry of Technology have now taken it over. It is hoped that the survey will give some practical information about the effect of grants on firms."
  I have quoted those extracts in an attempt to show that we are entitled to take it that over a lengthy period a thorough survey has been undertaken into this matter. I should like to know how investment grants compare with tax allowances in their effect as a means of inducing firms to go to development areas. We were told that the matter was gone into in considerable depth, that many firms were examined and that a Report was to have been published, it was hoped, by the summer of 1970. We are now well past the summer of 1970, and we know that the Government have replaced the grants system. I realise that the grants paid for projects already set on

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  foot are still to continue, but no new work is to be regarded for investment grant as from the Chancellor's announcement on 27th October.
  It being Ten o'clock, the Motion for the adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fortescue.]
  Mr. Lawson: In the new White Paper, Cmnd. 4516, dated October 1970, we have in paragraph 14 the statement:
  "A thorough-going study of regional development policy has been put in hand."
  I may be wrong, but it seems to me that that is a statement about a different project having been put in hand. My question is, did the Government take their decision on the scrapping of the investment grants without considering the Report which ought to have been in their hands from, first, the Board of Trade and, then, the Ministry of Technology? Is there such a Report now? Shall we see that Report or has that Report been scrapped? What is this new project, or is a continuation of the other one?
  We are surely entitled to know what has happened to that study. What are the results of it? It is not a question of giving us some little details which it might suit the Minister to give. We ought to have access to that study, which ought to be published in full. It may be that what the study says will be contrary to our ideas about the effectiveness of the grants as distinct from the allowances, but we certainly ought to know the result of the study.
  The Minister has had ample warning about this because the subject has been raised in several Questions to him or his Ministry. It was raised, for example, by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). There should now be the means of telling us precisely when the Report will be published and whether it is to be published in full.
  10.2 p.m.
  Mr. Tom Boardman: I did not intend to intervene, but the hon. Member for The Hartlepools (Mr. Leadbitter) made such sweeping and inaccurate statements and was
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  so provocative in his presentation that I feel bound to comment on his generalisations. He referred, first, to investment grants and suggested that they were having a particularly adverse effect upon the regions.
  Mr. Leadbitter: That is exactly the opposite of what I said.
  Mr. Boardman: The abolition of the investment grants and their replacement by investment allowances was, he said, having an adverse effect upon the regions. No supporting figures were given, because that is just not so. One cannot generalise in matters like this. The calculations of cash flow and so on depend upon the particular circumstances. I am sure that if the hon. Member will consult industries in his region, he will find that many of them are better placed under the new system than they were under the old. That sort of comment has nothing to do with the issue which he originally raised. It is general attack, which is irrelevant to the argument.
  He will find also that the investment grant, which went to those who were profitable or unprofitable, was wasteful of resources, whereas the investment allowance which is now introduced will follow the maxim of supporting success, supporting those industries which are profitable and which will bring growth and further prosperity to the region, instead of paying the grants regardless of the merits.
  Mr. Gavin Strang: What about Rolls-Royce?
  Mr. Boardman: The hon. Member may have the opportunity of catching Mr. Deputy Speaker's eye later. Secondly, the hon. Member referred to the I.R.C. and suggested that the abolition of the I.R.C. would adversely affect the regions. Of course, he cited no case because there is no case to cite. He will know that the I.R.C., in its combined rôle of a marriage broker or mortgage broker, or whatever might have been its correct designation, brought no successes but put together and subsidised with public money companies which did nothing and made no contribution to the success of the regions.
  Mr. Leadbitter indicated dissent.
  Mr. Boardman: The hon. Gentleman may shake his head, but, if he could

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  cite one case, I should gladly give way. He cannot, and neither do I expect him to do so.
  The hon. Gentleman referred, finally, to housing and the effect of the Government's housing policy on the regions. Under some provocation, I intervened to ask in what way the new housing policy was hindering the regions, and I suggested that, in fact—this will prove to be the case—it was helpful to the regions. Time forbids me to elaborate on that point, but I am sure that that is so. In reply, the hon. Gentleman made a lame response to the effect that, perhaps, he would see in seven or eight months' time. We shall see in seven or eight months what the truth of the matter is, and the hon. Gentleman will see that his criticism was unfounded, as was every other point which he made on investment grants, the I.R.C. and housing.
  10.6 p.m.
  Mr. Ernest Armstrong: I express my appreciation, also, to the Under-Secretary of State for coming to listen to the debate. The first point which I put to him, with all the seriousness that I can muster, is that there is great need to give confidence to those industrialists whom we are trying to attract into the development areas, and into the Northern Region, in particular.
  I commend to the hon. Gentleman's study an article in this morning's Northern Echo by Mr. Bill Campbell, the business editor. This article reflects the general lack of confidence in the Government's change of policy as it affects the bringing of industry into the area:
  "The North-East cries out in the dark for more jobs. No one yet knows what will come next. No one knows when it will come. Some would say the new Government itself has not a clue what its step should be to help the regions like the North-East. But that might just be malicious."
  The article goes on to quote the view of the North-East Development Council. The Council has already seen the Secretary of State for Trade and Industry, so it is not, as it were, talking off the cuff. Its representatives were received at the Department, and they had a long interview with the Secretary of State. This is the Council's view:
  "The North-East Development Council says:' Due to the uncertain outlook over the past
  1000
  six months the number of industrial inquiries received in the region has fallen considerably'."
  That is not airy-fairy opinion. It is a comment by a non-political body which has had the news, so to speak, from the horse's mouth, having been received at the Department only two weeks ago.
  I stress that there is a lack of confidence. In a Question last week, I asked the Minister about two industrial estates in my area. At Meadowfield and Crook there have been developments over the past five years—we now have two advance factories completed, and I know that there have been several inquiries—but the uncertainty over Government policy is preventing industrialists from coming to the area. I urge the Under-Secretary of State at least to persuade his right hon. Friend to make a definite announcement so that the sort of article which he can read in this morning's northern newspaper may appear no more, and so that we shall know what the Government's policy really is.
  I shall not argue now about grants as opposed to allowances and so on, but the truth of the matter is that the new policy for the regions is conceived by a Government who have as their first priority the reduction of public expenditure. We have heard about the importance of obtaining value for money and about the lack of success of the old policy. Industrialists in the north, representatives of the C.B.I., and the Shipbuilders' Association, which regards the phasing out of R.E.P. as a direct blow at its interests, know that, whatever the Government may say, their real aim is to reduce public expenditure. This Government see the massive resources pumped into these areas by the Labour Government as an ideal target in their efforts to reduce public expenditure.
  In the special development areas we had a rolling programme for advance factories. In setting up the special development areas, which were particularly related to the difficulties caused by pit closures, the Secretary of State stated that, when a tenant was found for a new advance factory, under the rolling programme immediate authorisation would be given for the building of a new advance factory.
  The whole of my constituency is in a special development area, because pit closures have been severe there. We are anxious that the policy introduced by the Labour Government, which meant a

  1001
  great deal to my constituency, shall be continued. We hope that the commitment given by the previous Government will be honoured by this Government.
  The North-East Development Council—a non-political body in the area—says that we need 18,500 jobs a year. People who seek to criticise the efficacy of the investment grant system should first examine what has happened. From January to March of this year, 64 projects were authorised, which created 3,500 jobs. From April to June, 77 projects were authorised, creating 10,300 jobs. Thus, in the first six months of this year, 13,800 jobs were created. The Development Council now forecasts that, because of the uncertainty and the lack of confidence which I have mentioned, the target of 18,500 jobs will not be achieved, which means a dismal performance in the first six months of the new Government.
  I urge the Government to end the widespread apprehension in the North-East and give us details of definite policy as quickly as possible. I ask the Government to remember that the special development areas still have an urgent need for special attention, and the rolling programme for advance factories will be a great reassurance for my constituency.
  10.13 p.m.
  Mr. David Watkins: I compliment my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) on his diligence in seizing the opportunity to initiate this short debate. Also, I add my thanks to those which have been expressed to the Minister for coming to the House at short notice to reply to the debate.
  My hon. Friend and constituency neighbour, the Member for Durham, North-West (Mr. Armstrong), spoke about the special problems of the special development areas. My constituency like his, falls into that category. The provision of advance factories—that is, factories which were built in development areas in advance of any industrialist taking them over as a tenant—was one of the important aspects of the Labour Government's regional policy which the present Administration have inherited. Hon. Members will readily call to mind instances of advance factories having been built but having remained devoid of tenants for a long time.
  1002
  Strenuous efforts had to be made to find appropriate tenants. Many advance factories are now not standing empty—I understand that virtually all such factories are now occupied—but nevertheless present a problem. I refer to advance factories which are almost completed or are otherwise under construction. Will every effort be made to find tenants for them? I appreciate the overriding consideration which the Government have to cut expenditure, rather than to utilise it for this type of intervention, but we need a firm assurance that the most strenuous efforts will be made to find tenants for these factories.
  Time is short, and I cannot develop this point as much as I would like. In Leadgate in my constituency we are building a trading estate to include advance factories. In an age when we are continually being told of the necessity to cut Government expenditure, it would be ludicrous if these factories and similar factories in other development areas were built but strenuous efforts were not made to find tenants for them.
  It is no good leaving these matters to so-called market forces because when this theory of economics was put into operation areas like the north-east of England suffered immensely because of the concentration of industry in other parts of the country. Geographically, areas like the North-East are at a disadvantage. For this reason the Labour Government made strenuous efforts to improve communications.
  In this connection, I regard the refusal of the Secretary of State to permit loan sanctions for the necessary expansion of Newcastle Airport as a shocking blow against the communications which are so badly needed in this region.
  I stress with all the power at my command that it is no good advance factories being built if, at the same time, tremendous efforts are not made to provide tenants for them. I reiterate that tenants cannot be found purely by the play of market forces. I therefore hope that the Minister will give an assurance that every effort will be made to tenant these factories.
  10.19 p.m.
  Mr. Bob Brown: I do not apologise for returning the House to the question of

  1003
  investment grants. Thanks to these grants, I have in my constituency a factory of the Ever-Ready Company. It began with virtually no employees in 1968 and now it employs 300. Within the next 12 months it expects to expand and employ 650 people. We are sadly in need of employment of this kind, and without investment grants we would not have had this development in Newcastle, West.
  We are constantly told by Ministers of the need, particularly in development areas, for improved communications and a better infrastructure. We have heard what hon. Gentlemen opposite consider to be the justification for many of the Government's measures—the fact that money saved will be money available to go towards improving the infrastructure of the development areas. This is absolute claptrap and hypocrisy. My hon. Friend the Member for Consett (Mr. David Watkins) mentioned the decision on Newcastle Airport. Could any form of communications in this part of the country be more vital?
  The Government say with some pride, "We have made no cut in the motorway programme, nor in the trunk road programme." What they do not mention is the intended cut in the principal road programme, which is the most important part of communications for the county boroughs, particularly in development areas. In my city the eastern ring road and the western ring road are both principal roads, paid for 75 per cent. by the Government and 25 per cent. by the local authorities. These are the type of roads which are to be cut. This is deplorable. I hope that the Minister will convey my views to his right hon. Friend the Minister for Transport Industries. I wish we still had a Minister of Transport.
  10.20 p.m.
  The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant): I, too, should like to congratulate the hon. Member for The Hartlepools (Mr. Leadbitter) on his ingenuity in securing this Adjournment debate. He will appreciate that if we had had a little more notice my reply might be more acceptable and more detailed.
  Because of the late hour I propose to confine myself to answering the points made so far as I can and indicating quite broadly the views I take on this
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  very important subject. I thought it right to allow as many hon. Members as possible to have their say, so far as time permitted, because I know that they all come from development areas and have a particular interest in the subject. Having relatively recently undertaken my present responsibility, I find it extremely helpful to hear the views which are put forward.
  The hon. Member for Newcastle-upon-Tyne, West (Mr. Bob Brown), former Parliamentary Secretary to the Ministry of Transport, may rest assured that what he said will be drawn to the attention of my colleagues in the Environment Department, and my hon. Friend the Minister for Local Government and Development is sitting beside me for that very purpose.
  I have recently been to the North-Eastern Region on an all-too-short visit. Admittedly, it was almost entirely in connection with exports rather than with regional development. But at least it gave me an impression of a lively, very brisk community of delightful people with a delightful climate and delightful countryside. It was also borne upon me, precisely as the hon. Member for The Hartle-pools said, that the region, like so many other development regions, is going through the traumatic experience of having to change from old and basic industries which are dying to new industries. That is precisely where development policy comes in.
  Let me make it absolutely clear that I and the Government are wholly committed to a development area policy. We have set this out quite clearly in our speeches and manifestos and I believe that it is absolutely essential in the interests of the country.
  Where the two sides of the House differ is in the ways in which this can best be achieved. Progress has been made in many aspects of infrastructure. But let us never forget where this all started. If we are to make a party political point, it was initiated by the Government of which I was not a member, when my noble Friend the present Lord Chancellor had responsibilities for these matters. Let us be quite clear on where praise and blame lies. [An HON. MEMBER: "Helping lame ducks."] I shall not indulge in ornithological metaphors. That is not my way.

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  What is important on the issue of investment grants or investment allowances is not how much is spent but how well it is spent. The error of the previous Administration was that they took the view that one had only to hand out grants indiscriminately, and inevitably vigorous projects would appear in the development areas.
  Mr. Leadbitter: On a point of order. I do not want to interrupt the Minister, because he has been so kind to us, but can you protect us, Mr. Deputy Speaker, from a misstatement of the kind which the hon. Gentleman has just made, which is so wrong?
  Mr. Deputy Speaker (Miss Harvie Anderson): Order. That is not a point of order.
  Mr. Grant: I was really giving the philosophy of the matter. The hon. Gentleman raised the question of investment grants as opposed to investment allowances, and I was telling him what I thought was the delusion in the minds of the previous Administration. Let us be fair in respect of investment grants. I recall many complaints from these excellent regions about the development policy, whichever method was used. I am merely advocating that we should try, as we have set out clearly not only in speeches but in the White Paper, what we believe is a new and vigorous policy which is particularly geared to encouraging the sort of employment that we all want to achieve.
  No doubt I could continue this great philosophical debate on investment allowances and investment grants at considerable length, but the fact, as was stated clearly in the House and in the White Paper, is that the package announced by the Chancellor is intended to encourage employment because it will encourage the sort of firm that has growth potential. It is firms of this kind that will attract employment in the areas where it is so necessary.
  The hon. Member for Motherwell (Mr. Lawson) raised the question of the study carried out within the Department some time this year. A certain amount of work has been done on the effectiveness of the investment grant system, and the evidence of that study was taken into account in the change in the pattern of incentives.
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  However, the evidence of the study that is so far available is not particularly conclusive. Only about 300 firms were sampled, and it is difficult to draw too many conclusions from this study which was, after all, an internal one. Nevertheless, the evidence that it has produced so far has been taken into consideration.
  The hon. Member for Durham, North-West (Mr. Armstrong) mentioned the fall in the number of inquiries in the North-East due to a lack of confidence. I am sorry about this, but it reflects the general economic state of affairs, for which this Administration does not accept full responsibility. I hope that the situation will change. I hope, too, that hon. Gentlemen opposite will not spend all their time decrying the new package but will do everything they can to let it be known to the industries in their areas that substantial assistance is being given to firms to create employment in the regions. I believe that if they do that, as we shall by the widest possible publicity and advertising, it will attract into the regions precisely the sort of firms and growth that it is necessary to encourage.
  The hon. Gentleman also raised the question of advance factories. If I may accept his offer, I will write to him about the provision of advance factories in his constituency.
  The hon. Member for Consett (Mr. David Watkins) also raised the question of advance factories. A large number of these factories is in the pipeline. Demand for them has been less brisk than we should like, but this, again, is a reflection of the state of the economy generally, and I assure the hon. Gentleman that we shall seek vigorously to find tenants for factories which have not yet been let.
  Let me next say a few words, because it will be my responsibility to deal with them, on the question of I.D.C.s. I have no doubt that within six months I shall be the most unpopular Minister in this House, both for granting I.D.C.s and for refusing them. Nevertheless, my policy will be to grant them as freely as possible in the development areas. What is more, I shall do everything I can to encourage firms to go to the development areas.
  I have found this short debate very helpful. We believe in the regions. We have a development policy which we

  1007
  believe is a much better and less wasteful than the previous policy. We believe that investment allowances will encourage the best firms and provide the best employment, and that they will be better than the wasteful investment grant system which they are to replace. By these investment allowances we shall stimulate long-term growth by increasing the basic economic attractions of the areas concerned. I hope that if there is an oppor-
  1008
  tunity to debate these matters in six months' time, hon. Gentlemen opposite who are present today will find that there is a lot more employment, "go" and enthusiasm in their areas than there is in the situation that we have inherited from the previous Administration.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes past Ten o'clock.

FOREIGN AND COMMONWEALTH AFFAIRS
  Passports and Visas
  Passports and Visas
  N.A.T.O. (South Atlantic and Indian Ocean)
  N.A.T.O. (South Atlantic and Indian Ocean)
  United Nations (Register of Place Names)
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  Industrial Consultative Committee on the Approach to Europe
  Industrial Consultative Committee on the Approach to Europe
  Persian Gulf
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  Nuclear Defence (Anglo-French Co-operation)
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  Nassau Agreement
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  Tanzania (Aid)
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  Mr. Benjamin Ramotse
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  Middle East
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  Israel (Arms Supply)
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  United Nations Specialised Agencies
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  Hijacked Aircraft
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  Mr. James Cross
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  Anglo-Eire Trade Agreement
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  European Economic Community
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  East Africa (Naval Facilities)
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  Madagascar (Anglo-American Bases)
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TRADE AND INDUSTRY
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  Bank of Wales
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  International Airport (Yorkshire and Humberside)
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  Westminster Touring Association Limited
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  Electricity Generation (Cost)
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  Electricity Council (Fuel)
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  North Humberside (Intermediate Area Status)
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  Steel Industry (Industrial Deafness)
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  Pig Farming Industry
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  Fuel Oil Prices
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  Wales (Regional Employment Premiums)
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AVIATION SUPPLY
  Space Programme
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  Airship (Re-evaluation)
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EMPLOYMENT
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NATIONAL FINANCE
  European Economic Community
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  Taxation
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HOUSING AND CONSTRUCTION
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TRANSPORT INDUSTRIES
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LOCAL GOVERNMENT AND DEVELOPMENT
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ENVIRONMENT
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SCOTLAND
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EDUCATION AND SCIENCE
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  Open University
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HOME DEPARTMENT
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POSTS AND TELECOMMUNICATIONS
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SOCIAL SERVICES
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AGRICULTURE, FISHERIES AND FOOD
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  Farm Safety
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  River Sence (Leicestershire)
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