Sitting of 2 July 1971

Preamble
The House met at Eleven o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORDERS OF THE DAY

  HOUSING BILL
  Order for Second Reading read.
  Mr. Speaker: I have not selected the Amendment in the names of the hon. Member for Manchester, Ardwick (Mr. Kaufman) and of his hon. Friends—
  On Second Reading of the Housing Bill, to move. That this House declines to give a Second Reading to the Housing Bill, on the ground that it excludes from its provisions the city of Manchester and other areas of serious housing need.
  Of course, if the hon. Member or any of his hon. Friends catch my eye it will be in order for them to put the arguments which they might have used if the Amendment had been called.
  11.5 a.m.
  The Minister for Housing and Construction (Mr. Julian Amery): I beg to move, That the Bill be now read a Second time.
  The object of the Bill, as the House will know, is to step up, in the development and intermediate areas, though for a limited time only, the help that is already given towards house improvement. The Government's proposals for the reform of housing finance may, in due course, give rise to some controversy, but I would hope that what I am proposing this morning will command the support of hon. Members and right hon. Members on both sides of the House.
  Grants in aid of house improvement were first introduced in 1949 when Mr. Aneurin Bevan was responsible for housing. They received a notable stimulus 20 years later in the 1969 Act
  790
  introduced by Lord Greenwood. We seek to build on these foundations.
  We believe, as I think the previous Government did, that house improvement is one of the most important elements in our national housing policy. It makes it possible for local authorities and private owners to bring older houses often up to, and sometimes even above, Parker Morris standards, and to do so for a fraction of the cost of building a new house. It thus reduces the burden on the taxpayer and the ratepayer.
  But even more important than the economic are the human considerations. We are dealing, after all, not with units of accommodation but with homes and people. Where a dwelling is clearly unfit, those who live in it have to be decanted, to use the jargon, and rehoused elsewhere. At the end of the day they will, of course, get better homes, but the process can be a very painful one. They are uprooted from the surroundings they know; separated from their neighbours; taken away from the shops, pubs and clubs which have formed the background to their daily lives. Objectively looked at by sociologists the end result may be better, but, in my experience, it has often meant frustration and loneliness for the people especially for the older ones.
  How much better, therefore, if, where a house is still structurally fit, through improvement grants and the declaration of general improvement areas we can bring people's homes up to modern standards and at the same time let them go on living in familiar surroundings.
  The Government have, therefore, put their full weight behind the house improvement campaign and stepped up the funds available for it. My hon. Friend and I spend a substantial proportion of our time opening house improvement weeks. This does not seem to have done the campaign any serious harm. Indeed, the response to our pilgrimages has been on the whole encouraging.
  In 1970 approvals of all grants in England and Wales for house improvement work were 45 per cent higher than in 1969. Approvals in the first quarter of this year show an increase of 42 per cent. over the first quarter of 1970. Initially the bulk of this was taken up by private house owners, but latterly local authorities have seen the opportunity and have been taking up improvement grants

  791
  for their own houses on a substantial scale. The take-up of improvement grants has, of course, varied from one part of the country to another.
  Applications and approvals are by no means always in proportion to an area's needs. I have not been too concerned about this hitherto. A home, after all, is an individual family dwelling; and what matters is to get as many individual homes improved as possible. All the same, our researches show that in the development and intermediate areas of England and Wales the increase in grant approvals in 1970 was quite dramatically below the general increase of approvals. It was about half.
  There are, no doubt, many reasons for this; some material, some psychological. Money is tighter in the development areas. Local authorities and individual owners find it harder to put their hands, even given loan facilities, on the cash contribution which they have to make themselves towards a grant. Perhaps even more important is the psychological factor. Uncertainty about the future of the area in which they live may well have led people to put up a little longer with the sub-standard conditions in which they have been living.
  We have accordingly decided to give the improvement campaign in the development and intermediate areas a shot in the arm. Our hope is that those who live in those areas will now take up the increased grants offered in the Bill at least to the same extent as the rest of the country is taking up the existing grants.
  The broad lines of the Bill are simple. We propose that private owners or local authorities in development or intermediate areas should be eligible for the increased grants described in the Bill. These grants are, first, the discretionary grant for modernisation or conversion; second the standard grant for installaling basic amenities like bathrooms and indoor sanitation; third, the special grants for additional work in multi-occupied houses.
  Broadly speaking the public sector contribution to the grants will be increased from 50 per cent. to 75 per cent. The Exchequer contribution to local authority grants will be increased from 75 per cent. to 90 per cent. The
  792
  grants will be available on condition that applications for them were made on or after 23rd June of this year and that the work is completed before 23rd June, 1973.
  There are arguments for and against setting a rigid time limit to the grants. But I am sure the House will agree that to leave them open-ended in time would give little inducement to authorities or individuals in the development areas to bring forward the work of improvement required. A meeting I had recently with representatives of local authorities and the building industry in the northern area confirmed me strongly in this view. Nor would it be fair to the rest of the country if we set no time limit. People living outside development areas will, I think, readily accept that special inducements should be given to get the improvement campaigns going inside the development areas. But they would rightly resent it if the preference were given for an indefinite period.
  So far I have spoken about individual home improvement grants. But we are no less concerned, and indeed in the development areas perhaps more concerned, in stimulating applications for general improvement grants. All our experience shows that people are much more likely to put their own money into improvements if they have confidence in the future of the area in which they live. Nothing helps so much to build up their confidence as evidence that their local authority is itself spending money on general improvements. The Government will, therefore, increase their contribution to general improvement areas from £50 to £75 a house in the designated area concerned.
  The Bill, which applies to England, Wales and Scotland is a short one—five clauses in all. Clause 1(1) says that the works which qualify for grant under the 1969 Act will qualify for the increased grants now proposed. These works have to be carried out in a local government area which on 23rd June, 1971–the relevant date—is wholly or partly within a development area or an intermediate area. The application for grant must have been made on or after 23rd June, 1971. The works themselves must have been completed before 23rd June, 1973.
  Subsection (2) allows the Secretary of State, by order, to direct that any local

  793
  government area which becomes part of a development or intermediate area, after the introduction of this Bill, should also qualify for the increased grants.
  Subsection (3)—
  Mr. Frank Allaun: On subsection (2), before the paeans of praise become too deafening, may I, as one of several Labour Members of Parliament who has pressed for improvement grants over the last 16 years, ask this question? Is the Minister aware that Members all over the country are receiving letters from tenants in their constituencies who dearly want bathrooms and lavatories but are now resisting them because their rents are being trebled in consequence. Moreover, they are being compelled to undergo this unless their income is below £10 a week single or £12·25 married. I therefore give the Minister advance notice that we intend to put down an Amendment to the effect that if the landlord, in accordance with Clause 1(2), gets such a huge bonanza the rent officers must take this into account when subsequently fixing the rent.
  Mr. Amery: I am grateful to the hon. Gentleman for giving me notice of the Amendment which he and some of his hon. Friends will put down. I will not anticipate discussion of it until I see it.
  Subsection (3) provides that a local government area need not still be part of a development or intermediate area when the works eligible for grant are completed,
  Clause 2(1) sets out in a table the increases that can be made in the rate of grants by local authorities to house owners. These, as I have explained, rise from 50 per cent. to 75 per cent. An increase from 75 per cent. to 90 per cent. is made in the rate of Exchequer contribution to annual loan charges arising from local authority expenditure on grants. This is to ensure that no extra burden falls on the local authority. Here I must emphasise that if a local authority makes an improvement grant of less than 75 per cent. of the approved cost, it will receive the present rate of contribution only from the Exchequer. Government contributions towards annual loan charges for local authority expenditure will be raised from three-eighths
  794
  to three-quarters. Subsection (2) increases the cash limits for standard and other grants and contributions.
  Under Section 22 of the 1969 Act the Secretaries of State have powers to make an order varying the contributions that the Exchequer makes towards house improvement generally in England and Wales. Clause 2(4) of the Bill ensures that such an order could maintain the preferential treatment extended to local government areas in development Areas and intermediate areas as expressed in the Bill.
  Clause 3 is concerned with the changes in the provisions of the Scottish legislation, corresponding with those which I have described in the legislation for England and Wales.
  I commend this measure to the House, first and foremost as a means to stimulate the take-up of improvement grants in the development and intermediate areas. I do so because I believe it will encourage local authorities to get more houses improved and generally create a better-built environment for their people. But then, as well as being Minister for Housing, I am Minister for Construction, and I welcome the opportunity to put a little new work in the way of the small and medium-size builders in the areas concerned. They have not had an easy time in recent years. They are not yet sharing in the revival which the industry is beginning to experience in other parts of the country. Here is a great opportunity for them. But if they are to take full advantage of it they must not sit back and wait for the work to come to them. They must go out and look for it. Of course, finance is a problem for their clients and for them, but most local authorities are now prepared to make loans for house improvement. So are many building societies.
  The House will also have seen that the National Federation of Building Trades Employers has recently arranged with a finance company, Forward Trust Limited, to make building loans available to their customers specifically for house improvement. Private owners and landlords therefore have a number of sources of finance to which to turn. I would hesitate to try to estimate with any accuracy the value of additional work for the building industry which this Measure may provide. But I am advised that, extrapolating from past figures, It could

  795
  well be of the order of £50 million over the two years ahead. In purely material terms expenditure on this scale would make no decisive difference to the situation in the development and intermediate areas. But the condition of people's homes has a profound impact on their morale.
  I commend this measure to the House, therefore, not just as an instrument for improving the nation's housing stock, but even more as a means of reviving self-confidence in those parts of the country which have suffered most from the recession of recent years.
  11.20 a.m.
  Mr. Reginald Freeson: Anything which will make housing improvements policy more effective is to be welcomed. And anything which will ameliorate, even to a minor degree, the economic depression in the development and intermediate areas must be done. Therefore, the Opposition will support this Bill. Nevertheless, the way in which the Bill was launched, and some of its ambiguities, omissions and even contradictions, raise some misgivings and questions which those of us who originally fathered the Housing Act, 1969–which we consider to be a most important piece of legislation—will wish to put to the Minister for a reply.
  The Minister in opening the debate was not very informative on figures. As I understand him, and judging from reports which have appeared in the Press when the prospect of the Bill was recently announced, the case for the Bill in its present form is that the response to the Housing Act, 1969 has been less lively in development and intermediate areas, which have some of the worst housing conditions, than in the more prosperous areas of the country. Therefore, the new scales of grant are meant to counterbalance this situation.
  Is this the true situation? The Minister gave only scant figures. During the past week I have been trying to get up-to-date information on the level of grant take-up on a regional basis. Understandably, the Ministry has not been able to give this information right up to the last week or so covering the first six months of the year, but I have checked the figures so far as they are available
  796
  and they flatly contradict what the Minister said and what has appeared in the Press.
  The next issue of the Government's quarterly housing statistics show in the table on improvement grants approved on a regional breakdown basis for the whole of 1970 the following figures—I must weary the House with them because they are important to my point. In the Northern Region 14,069 grants were taken up last year; Yorkshire and Humber-side, 21,893; the North-West 17,198; East Midlands, 12,983; West Midlands, which is almost entirely excluded from the Bill's provisions, 16,739; East Anglia, wholly excluded from the Bill, 7,533; Greater London, wholly excluded, 17,022; South-Eastern Counties, excluded, 10,500; the South-West, 14,597; Wales, 10,420; Scotland, 23,400–a record figure for the country.
  These figures show that the take-up of improvement grants is broadly the same in most regions within a reasonable bracket, except in Scotland where the take-up is outstandingly good. In fact, with the varying disposition of population, in terms of take-up the regions covering the development and intermediate areas have done rather better than the more prosperous areas. I do not understand how researchers in the Ministry could show the position to be other than I have stated, unless there has been some mysterious drastic change in the situation during the first few months of this year. No evidence of such a change has been announced so far or has been indicated by the Minister today.
  The truth behind the Bill is that the Government are in a mess over the regions and development areas. They have been busy dismantling policies developed by the Labour Government, but they have not thought through their own policies other than by veering towards Powellite economics. There is, consequently, growing depression, unemployment and fear for the future in these areas.
  At the same time the country is now feeling the full impact of Tory municipal housing policies of recent years. The Tories took control of most of the town halls in 1968. In 1967, the last year of Labour control, 178,000 new homes were started and nearly 78,000 slums

  797
  demolished; and these efforts were not enough. They should have been increased. Instead, after three years of full-scale Toryism, the housing effort dropped to 105,000 starts last year, and 67,000 slums cleared. It will be some time before the fresh plans of the new councils elected in May will show themselves in terms of bricks and mortar. Meanwhile, the number of local authority houses started this year will drop still further. I estimate the figure will fall to about 95,000, and in terms of slum clearance to 60,000. If I am wrong on these figures, I ask the Minister to give us his official estimates. We are now half way through the calendar year and, despite constant questioning in the House, we have failed to get the Ministry's own estimates of local authority housing starts in the current year.
  The present position is that there is serious under-spending on the Government's allocation of public expenditure in this category. This is the truth of the matter. Hence, this Bill is a minor piece of ad hoc panicking to deal with the twofold situation I have described. They under-spend on slum clearance and on building new homes, and then put a bit more money into improvement grants and pretend that some great extra benefit is being given by the Government to the housing effort.
  A number of specific questions arise to which we should be given answers. Is the whole of the £46 million quoted in the Explanatory and Financial Memorandum to the Bill extra Government spending? If so, extra on what? How much was originally allocated for improvement grants within the figure of public expenditure on housing for 1971–72 in last January's White Paper on public expenditure? The total expenditure on houses for the current year was given in the White Paper as £1,144·4 million. Does that figure now become £1,159·7 million, with the addition in the Bill spread over three years, or is the £46 million to be included in the original figure? If the figure is to be included in the total expenditure laid down in the White Paper in January of this year, this will mean that there will be a further reduction, rather than an increase, this year in the building of homes by local authorities. If he Finan-
  798
  cial Memorandum means what it says that it
  "will result in increased public capital expenditure of the order of £46 million spread over the three financial years ending 31st March 1974"
  it means that this is to be extra money over and above the level previously planned and published in the Government's White Paper on Public Expenditure.
  Table 2.11 on page 30 of the White Paper gives the following figures of estimated expenditure; I am afraid I must weary the House with these figures as they are important to my argument. The estimated expenditure for 1971–72 is £1,144·4 million; for 1972–73, £1,167·5 million; for 1973–74, £1,129 million. Will the Minister confirm that with the passage of the Bill these estimates will become for the three years in question covered by the Bill £1,159·7 million, £1,182·8 million and £1,144·3 million respectively? We need that confirmation in order to meet the suspicion that the less charitable of us towards the Government have—that once again the public are being conned and that the promise should not have been taken seriously.
  Mr. Frank Allaun: My hon. Friend is putting a most important question which I hope will be answered. May I ask a related question, to which I hope also to receive an answer? How much of the figure of £46 million announced for expenditure on improvements will go into putting bathrooms and lavatories into ordinary houses, and how much—I suspect that it is a very high proportion—will be going to luxury houses, which was not the original intention of the proponents of the scheme?
  Mr. Freeson: Perhaps researches within the Department will be able to indicate such a breakdown. I am unable to give the information about the present position, whatever it might have been a year or more ago.
  Does the £46 million include expenditure out of the rates as well as from the Exchequer? The Bill does not spell out the position. Nor have we had any observation by the Minister on this point. If the Bill includes rate expenditure, what is the real estimate of so-called extra Government spending? When the Housing Act. 1969, was introduced, it was estimated that it would give rise to public

  799
  expenditure approaching £40 million annually by 1972, which is less than six months away from us. Is that level of investment in improvement grants still planned by the Government for next year onwards? What progress has been made so far towards the £40 million annual target? What is the Government's estimate of expenditure in the current year? As far as I am aware, no figures have been given to the House on this point and the Minister did not give any information on it today.
  May we take it that, with this Bill, the Government plan an annual expenditure of £55·3 million on improvements in the next two years—that is, the original £40 million estimated in the 1969 Act's Financial Memorandum and the share of the £46 million per year over the three-year period ahead of us? These figures are most important if we are to get at the realities of what the development and intermediate areas may actually expect, not just in increases for percentage contributions towards improvement expenditure but in terms of housing effort, of which this is an inseparable part.
  I turn now to the basic intention of the Bill, which is to discriminate in favour of certain areas of the country suffering economic and related difficulties. I do not quarrel with such positive discrimination. It was undertaken on a considerably bigger scale by the last Government. Nor do I quarrel with the idea of linking other social policies, such as housing, with the regional development area and intermediate area policies. On the contrary, this lies at the centre of Labour Party thinking, and did so when we were in office. What I quarrel with is the narrow approach of the Bill.
  What needs to be done is to apply such positive discrimination to all areas of housing stress. Yet the Government have deliberately excluded some of the major conurbations with the worst and most expensive housing problems, from the provisions of the Bill—for example, London, Birmingham and Manchester and some other areas which could be named. When the last Government left office, the Ministry of Housing and Local Government, as it then was, had in hand a major review of housing finance. Central to that review was the concept of applying increased public funds primarily
  800
  to those areas and people in greatest need. The Conservatives inherited the study and we are soon to see how they have handled the work put in hand towards the policy of positive discrimination in this sector of public affairs.
  We had also established in the Department a rough list—I accept that it was rough because it was put together to deal with an immediate situation—of housing priority areas, where local authorities got more favourable treatment on housing investment, subsidies and programmes. This housing priority area list was subject to review to make it a more accurate instrument to deal with areas of housing and social stress. Again, the idea was more effective and positive discrimination. I do not know what the present Government have done with that review, but the omission of major stress areas from the Bill goes counter to all recent progressive thought on housing policy. It cannot be sensibly justified and I hope that the Government will think again.
  The level of obsolescence is so high in the three cities I have mentioned and in similar areas that extra help must be given if the problem is to be more speedily tackled. I will not quote statistics for London and Birmingham. The figures are available to the Department, however. The Department knows what the level of obsolescence is in Greater London. The figure is broadly in the region of 250,000 in addition to prospective slum clearance properties. The figure for the West Midlands is in the region, taking slums and obsolescent properties together, of about 700,000. In my own London Borough of Brent there are 20,000 obsolescent properties.
  No one can tell me that these areas are better off in this respect than the kind of areas listed in the memorandum attached to the Press release in connection with the Bill. I make it clear that I do not question the intention so far as the development and intermediate areas are concerned, but that I am quarrelling with the exclusion of several major areas of housing stress.
  It must be central to our policy—and I say "our" advisedly because I mean all of us who are public representatives—to get this problem more speedily tackled in the worst areas of housing

  801
  stress. This becomes even more essential with the recent rapid decline in the value of the grant figures set down in the Housing Act, 1969, and, indeed, in the figures in this Bill. The building industry has recently pointed out that costs are going up at the rate of about 1 per cent. per month. The value of the £ has dropped nearly 10 per cent. in the past year. This means that, by the end of this year, the original £1,000 grant limit in the 1969 Act for improved dwellings will be worth about £800 in real terms, and that the £1,500 under this Bill—the increased grant limit—will be worth about £1,200 by the time the Bill expires.
  With the sharp decline in the value of the £—I do not say that it is going on only now; it has been going on since the 1969 Act was introduced—and which is now going on at an increasing rate, it Amendment of Section 5 of the Housing becomes essential to pay attention to the Act, 1969, in order to bring it into line with Section 37(5), which laid down that the Minister could, with the consent of the Treasury, change the amount of £100 per dwelling in general improvement areas for environmental grants, subject to the decision of Parliament on the basis of an Order presented by the Government.
  By the end of this year the £100 will be worth about £80 in real terms. Therefore, I trust that we may soon see the necessary Order to increase the figure placed before the House with the consent of the Treasury. I wish good luck to the Minister in the negotiations which he will no doubt wish to have with the Treasury in this respect. I trust that we shall get that Order before the value of the grant, whether increased percentage-wise or not, drops so low as to lose its incentive value in environmental improvements. I urge the Government to seek power speedily—I should wish it to be done by Amendment of the Bill—to increase the amounts of improvement grants generally in place of the fixed limits laid down by the original Act. Increased percentage contributions by the Government, while welcome in the Bill, are not good enough. It is the loss of the value of the cash figure limits in the original Act which will inhibit the growth
  802
  of the housing improvements campaign which we all wish to be a success.
  An alternative to what I am suggesting would be to include powers in the Bill—the Government could perhaps put down their own Amendment on this score—whereby it could be extended beyond the present time limit laid down in the Act. I do not suggest that they should be automatic powers. Orders could be placed before the House to extend the provisions of the Act beyond 31st March, 1974. This would be a second-best. I do not think that the percentage increases are the real issue when we have a sharply declining value of the £. The important thing is to take powers to increase the limits in the original Act from time to time as costs go up.
  We cannot afford to tinker with the problem of obsolescence. We are all agreed on this point. There are about four million substandard homes in Britain, many of them veering towards joining the estimated 1½ million slums. This means that even the present increased take-up of improvement grants, which was to be expected in the first year following the 1969 Act, is by no means good enough. If we are to solve these problems within the coming decade, our rate of slum clearance needs to be about 150,000 demolitions a year, the rate of improvements about 350,000 to 400,000 a year, and local authority house-building about 200,000 a year. We are in fact running at well below half these figures by and large. It may be that, apart from the financial incentives, we shall soon have to look searchingly and urgently at the way that we organise to deal with urban renewal.
  We have yet to see the White Paper on Housing Finance within the coming month, but, no matter how well reformed housing finance and housing financial incentives are, if we do not get ourselves organised administratively to handle this problem in our urban areas it will not be tackled effectively. I was convinced of that when I was in the Department. I remain of that view today. However, this matter is not to be pursued in detail today.
  I urge the Government meanwhile to accept that, welcome though the increased financial help to development and intermediate areas is, the Bill is but tinkering with a serious problem. We should seek

  803
  to amend and extend its scope so that housing improvement policy is not undermined by the constant erosion of money values and so that all areas of housing stress as well as the particular areas dealt with in the Bill get the extra help they need.
  11.44 p.m.
  Mr. Norman Tebbit: My initial reaction to following the hon. Member for Willesden, East (Mr. Freeson) is one of sadness. His example was not so much how to look a gift horse in the mouth as to how to kick it in the teeth whilst patting it on the back. The hon. Gentleman spent more time kicking it in the teeth than patting it on the back.
  I give general support to the intent and purpose of the Bill. Its purpose is to bring our existing stock of houses up to modern standards of amenity comfort. It not only expands the help given to private owners but it doubles the grant aid to local authorities. I should have thought that the Opposition would have gone out of their way to emphasise that point.
  The Bill goes further towards discriminating in the payment of benefits. I cannot make sense of the figures given by the hon. Gentleman by way of comparative increases. How one can make a judgment on comparative increases of one year's figures I do not know, and I do not think that he does either. I wonder whether the discrimination in favour of the intermediate and development areas, solely on the basis that financial reasons prohibit all the take-up there directly, is the whole story.
  In some parts of London there is a fine stock of attractive late eighteenth and early nineteenth century housing. This kind of housing has given a great deal of take-up, but there is not nearly such a good stock of it in the intermediate and development areas. Indeed, there is not the fashionable housing which has attracted so much support for the grants, in those areas. The magazine House and Garden has not penetrated Manchester yet in some respects.
  Mr. Gerald Kaufman: A few houses in Manchester have gardens.
  Mr. Tebbit: We have a much better take-up in some areas because the houses are very attractive. In the intermediate and development areas there is not so much of this extremely attractive housing.
  Mr. James Bennett: That is not true of Scotland.
  Mr. Tebbit: This point may be true of Scotland. Perhaps that is why the take-up has been good on the hon. Gentleman's figures. This is part of the story, apart from the financial aspect.
  I turn now to my points of criticism. I hope that my right hon. Friend will deal with the cases which sometimes arise where a house is improved with the benefit of the grant and, shortly afterwards, is demolished because planning consent has been obtained for a profitable development. It seems wrong that public money which has been invested should, shortly afterwards, go to waste when a house is demolished.
  Mr. Frank Allaun Mr. Frank Allaun indicated assent.
  Mr. Tebbit: I note the nod of approval from the hon. Member for Salford, East (Mr. Frank Allaun). We should consider this matter.
  I turn now to the two-year limit. Will my right hon. Friend consider what can be done in that respect? Could he not amend the requirement that the work should be completed within two years to one that it should be approved within two years? When I owned a house in fashionable nineteenth century Islington I applied for and obtained an improvement grant with the great co-operation and help of the officials of the London Borough of Islington. They were extremely good in processing applications. Everything went charmingly until the building operations started. It was then a different story. The completion date was set back by a multitude of misadventures and unexpected snags and difficulties. That is normal with this kind of work. It would be most unfortunate if the two-year limit on completion meant that when jobs encountered these unexpected snags the applicants found that they were running out of time and had committed themselves to expenditure which they could not afford. This could happen due to late delivery of materials. The proposal with a two-year limit on completion would in such cases be a temptation to botch the job to get it

  805
  done in time. The effect on the budgeting of local authorities in these areas where a long delay is perhaps encountered can be quite serious. With these reservations—I believe we should look again at the two-year limit, and I believe my right hon. Friend would help if he could give some firmer indication of the thinking beyond the end of the two years—but without any carping meanness on my part, I welcome the Bill.
  11.50 a.m.
  Mr. Gerald Kaufman: My hon. Friend the Member for Willesden, East (Mr. Freeson) has a signally charitable disposition. He welcomed the Bill with what seems to me to be characteristic benevolence. I am afraid it is not possible for me to be so amendable. I regard it as a furtive little Bill, smuggled into this House by means of a planted Question from the hon. Member for Tynemouth (Dame Irene Ward). Now it has received a muffled launching on a slack Friday and a cursory speech of 15 minutes from the Minister who introduced it.
  Furthermore, it is a phoney Bill. The help it holds out is largely sham. It is a political version of the "Bunny Club", seeming to promise everything and delivering hardly anything at all. It pretends to do something for assisted areas. The Explanatory and Financial Memorandum talks of £46 million over three years. Indeed, it might be interpreted as an act of contrition for the abolition of investment grants, but it will almost certainly do very little for the assisted areas. We shall expect, in March, 1974, from this Government or from the incoming Labour Government which may have replaced them, figures to show how much of this £46 million has been spent.
  The Bill pretends to do something about housing improvement, but the areas of real and serious housing need are mainly excluded from the ambit of the Bill. The Press notice issued last week by the Department of the Environment listed, among the main items which could be installed as a result of the provisions of the Housing Act and this amending Bill, a new bathroom, a water closet and a hot water system. Using the findings of the 1966 Census—since when there have been some changes but it is still largely reliable as a guide about households which have the exclusive use
  806
  of hot water, a fixed bath and inside water closet—we find that there are five major areas in need of housing improvement. These are Manchester, Birmingham, Liverpool, London and Glasgow.
  Of these, Manchester, Birmingham and London are excluded from the provisions of the Bill. Liverpool and Glasgow are included. Still using the same criteria from the 1966 Census, if we take the 50 Parliamentary constituencies in Great Britain with the greatest housing improvement need in terms of hot water, fixed bath and water closet, we find that of these 50, only 16 are included in the provisions of the Bill. More than two-thirds, 34, are excluded.
  There is an even more nonsensical aspect if we take the 52 constituencies of least housing need. I take the 52 because there are three constituencies which tie for fiftieth place. Of the 52 constituencies where housing is in the best condition in the entire country, with the best amenities. 20 qualify for aid under the Bill. We have the lunatic situation whereby more areas which do not require aid qualify for it than areas which desperately need it.
  The hon. Member for Epping (Mr. Tebbit) was able to speak—and we know of his interest in housing matters—as a representative of one of the top 20 constituencies in the country in terms of housing standards. It is an interesting fact that of hon. Members in this House today who have come because they have a particular interest in housing, there is no one on the Government side, with the exception of the Under-Secretary of State for Scotland, whose constituency is affected by the Bill. There is only one of my hon. Friends in addition to my hon. Friend the Member for Greenock (Dr. Dickson Mabon) whose constituency is affected. This is the ludicrous distortion involved in the Bill. That is why I say that a great deal of this £46 million will never be spent; that is why I believe the Bill is a piece of cynical charlatanry and that a wooden spoon should be awarded to whoever dreamt it up.
  Was it ever submitted to the Central Capability Unit? Was Lord Rothschild ever asked what he thought about it? We are told he is an expert in spermatazoa. Perhaps he could have used his microscope to see whether there were

  807
  any traces of embryonic life in the provisions of the Bill.
  To those relatively few areas of need which qualify under the Bill, I say "Good luck". But for Manchester, part of which I represent, the Bill is doubly hurtful. It is hurtful first because its provisions apply to intermediate and development areas and Manchester is involved at the moment in the general plea of the North-West region to be given intermediate area status. So far that plea has been turned down. The Prime Minister has twice refused even to meet the North-West Industrial Development Association to discuss its request and has taken his time even to reply to its letters. If he would step ashore for a moment he would be told the facts, and how ominously the unemployment situation in Greater Manchester has deteriorated since "at a stroke" day a year ago.
  If we take the figures from June, 1970 to June, 1971 in the Manchester travel-to-work area the total of unemployed in the area is up from 15,017 to 22,084. The number of wholly unemployed is up from 14,884 to 21,207. The number of male unemployed—breadwinners out of work—is up from 13,212 to 19,839. The total unemployed is up 47 per cent., wholly unemployed by 42 per cent. and unemployed men by 43 per cent. We have had an increase in June in the figures not just the percentages.
  Mr. Tebbit: Even on a Second Reading debate, to get on to the unemployment figures for the Manchester area, for the benefit presumably of local papers again this week, seems a little far away from the discussion.
  Mr. Kaufman: With respect to the hon. Gentleman, I would guess that not only is his constituency one with the least housing needs, but it is also one of great prosperity and employment. The Explanatory and Financial Memorandum talks in its first paragraph about local government areas wholly or partly within development areas or intermediate areas. I have been claiming that the intermediate area status should be accorded to Manchester for unemployment reasons in addition to it qualifying under the Bill. I am sure that Mr. Speaker would have called me to order had I been out of order.
  808
  Our unemployment situation is getting worse. Redundancies are being declared regularly. Men in their early twenties to the late fifties are affected and the shadow of Irlam is hanging over the whole situation, as the hon. Member for Stretford (Mr. Churchill) would agree. On our unemployment record we submit that we qualify for intermediate area status. If Manchester were granted intermediate area status it would qualify for the benefits of the Bill—and we in Manchester desperately need the extra aid that the Bill will give, in some cases to areas which do not need it.
  The housing situation in Manchester is desperate. That is not an understatement. On Wednesday, in answer to my Written Question, the Under-Secretary of State—the hon. Member for Southend, West (Mr. Channon)—gave a remarkably slovenly answer which, among other things, put Hitchin in Humberside. The answer contained a number of other errors which, I trust, the hon. Member will have corrected for the bound volume of the OFFICIAL REPORT. His answer shows that 228 constituencies are covered by the Bill, of which only 14 are in a worse situation than the least needy of Manchester's worst housing areas. Yet although these 214 areas receive help under the Bill, Manchester—including my constituency, which is one of the worst stress areas of the city—does not.
  Mr. Frank Allaun: I support the case that my hon. Friend is making, but do I take it that he wants to see help under the Bill extended not to inner Manchester alone but to the greater Manchester conurbation, including such cities as Salford, Oldham and Stockport, which are probably the worst-housed areas in the country? I take it that my hon. Friend is willing to extend his request for those areas to be included.
  Mr. Kaufman: Certainly. My hon. Friend will recall that in the Amendment which Mr. Speaker, in his wisdom, saw fit not to call, I mentioned not only the City of Manchester but other areas in serious housing need. My constituency is one of the worst-housed in the country, partly because of the slum situation. We have many slums to be cleared—four years of Conservative control of Manchester have left a terrible legacy of heartbreak and neglect for the new Labour council to clear up—but many

  809
  other areas in my constituency are not scheduled for slum clearance, although they are in dire need of help and improvement.
  I want to take three different categories which would qualify for help and give specific examples from the many hundreds of housing cases that form a predominant part of my postbag. I want first to deal with the owner-occupier category. In one house about which I have been in correspondence this week, in the West Gorton area of my constituency, four people, ranging from a woman aged 41 to a small baby, are all sleeping in one bedroom. There is no bathroom, and no indoor toilet. The report of the Medical Officer of Health refers to the house as being "in poor repair generally". The report talks of
  "some bulging of the front main wall"
  and other defects, but goes on to say that it is
  "not in such a state of disrepair as to warrant demolition and rehousing of the occupants."
  That house is not affected by the clearance proposals. It is regarded as being good for at least another 15 years. An increased grant of the kind provided in the Bill might help the owner to make improvements.
  The next category comprises private tenants. There are two houses about which I have been negotiating with the landlord for more than two months. They are without an indoor lavatory, and without hot water. In one of them an arthritic old lady lives. I am making no progress, although the house qualifies for improvement under the Housing Act, 1969. In another house, where a woman lives with 10 children, the rain comes in through the roof into bedrooms and on to the landing. The bath is in very bad condition. The children are constantly ill. But that house is basically sound, if only its defects can be dealt with, and it is possible that better improvement grants of the kind provided in the Bill to other areas would impel the landlord to deal with this house.
  My third category comprises local authority property. I have in my constituency three vast blocks of flats, each of which is about 40 years old—Brook House, Greenwood House and Heywood House. I have been in correspondence
  810
  with Manchester Corporation about one or other of these blocks of flats ever since I came into the House. They are dilapidated and in desperate need of repair, both in respect of living accommodation and environment.
  Whenever I visit these blocks of flats—as I do frequently—the tenants bombard me with new complaints about them. The water closets are unsatisfactory, as are other sanitary arrangements. Inadequate parking facilities lead to great hazard for the many children living in the blocks of flats, and there is a chronic lack of play space. Yet the housing manager of the Corporation told me, with regard to one,
  "This is one of a number of pre-war blocks of flats which the housing committee wish to improve. It is likely to be a very costly programme and the Housing and Works Committee are hoping shortly to carry out a pilot scheme in the north area of the city to ascertain costs and what grants may be available and what other difficulties may be encountered."
  There is to be a pilot scheme in the north area of the city: my constituency is in the south of the city. It brings little comfort to my constituents to hear of a pilot scheme, with possible good results, being carried out at the other end of Manchester. The extra grants provided under the Bill could make all the difference in improving the quality of life for the many hundreds of people who live in these three blocks of flats.
  I wish good luck to all who can obtain some benefit from the provisions of the Bill, but the exclusion of Manchester—Salford—to which my hon. Friend the Member for Salford, East referred—Bristol, Leicester, London, Nottingham and Birmingham is an affront to the people to whom this Bill could bring aid and hope but does not.
  This Government must have brought home to them the fact that for millions of people throughout the country, and thousands in my constituency, the improvement of housing conditions should not be the excuse for a glib public relations exercise. It is an urgent daily need.
  12.8 p.m.
  Mr. A. P. Costain: I welcome the Bill and the way in which it was introduced by my right hon. Friend. I am quite amazed that

  811
  the hon. Member for Manchester, Ardwick (Mr. Kaufman) should complain that the Minister made a concise speech explaining his Bill and then himself make a rambling speech complaining about the inadequacies of the Bill. He complained that only some services were accepted for priority grant. It seems to have escaped his notice that the Bill is in much the same terms as that which his Government introduced when in office. I accept the need for modernisation of property, but I emphasise that the situation has been made more urgent because, in spite of their promises, once they got over the success of the provision of Conservative Government starts the last Government allowed the housing programme to run down.
  The hon. Member takes great delight at all times, both night and day, in referring to my right hon. Friend's "at a stroke" speech, which he often misquotes. I want to quote something to him. Even with only one year of Conservative Government we have seen an uplift whereas we saw a decline during the Labour Government's period of office.
  Mr. Kaufman: The hon. Gentleman might care to accept an invitation to come to my constituency, where he will see what a combination of one year of Conservative Government and four years of Conservative control has done to the living conditions of many of my constituents, some of which are literally appalling.
  Mr. Costain: I am always willing to come to the hon. Gentleman's constituency. Indeed, I was recently invited to attend a meeting of Manchester Corporation to hear about the problem at first hand. The hon. Gentleman may not be aware that I was born in Liverpool and have close connections with both Liverpool and Manchester. I recall from my schooldays the old rivalries that used to exist between the two cities. One was always trying to get the better of the other.
  We welcome the Bill and appreciate the uplift it will give to small builders and others, as my right hon. Friend explained. It will give them ample opportunity to resuscitate their businesses, which were run down under Labour rule. Hon. Gentlemen opposite have a bee in their
  812
  bonnet about small businesses. They see no reason to support them.
  It is in this connection that I should, perhaps, declare my interest as being a builder. I am a director of a building company—
  Mr. George Cunningham: But not a small one.
  Mr. Costain: I am a director of a small building company in Liverpool. I am also a director of a larger building company in London. I can, therefore, speak with knowledge of both types of organisation. I can also speak with experience of the difficulties encountered in altering and modernising houses. My hon. Friend the Member for Islington referred, from practical experience, to these difficulties as a result of modernising his own property.
  Mr. George Cunningham: His hon. Friend, whoever he may have in mind, does not represent Islington, a part of which I represent.
  Mr. Costain: I apologise to the House. I was referring to my hon. Friend the Member for Epping (Mr. Tebbit).
  Hon. Members who recall the debates some years ago about the alterations to 10 Downing Street will appreciate how difficult it sometimes is to be aware of all the snags that are likely to crop up when beginning to modernise property. However, the snags encountered when modernising a terrace house are usually the same as those that crop up in other terraced houses. It is, therefore, cheaper and faster to have a run at modernising properties and, if possible, alter a whole street as part of one exercise.
  My hon. Friend the Member for Epping referred to the two-year period laid down in the Bill, and I hope that the Minister will not limit his powers to that period. The trouble with such a limiting period is that while many people will be anxious at the outset to make a start on improvements and alterations, because they are anxious to get the grant—which is probably what my right hon. friend has in mind—towards the end of the period there is a drastic slowing up, with people being reluctant to start for fear of not completing the alterations within the time schedule laid down in the Bill. I hope that a provision will be

  813
  inserted in the Bill giving the Minister power to prolong the two-year period.
  Hon. Members will be aware of the difficulty of giving a completion date for the carrying out of this sort of work. A ridiculously small item might not have been completed—for example, an electric light switch might not have been affixed—and it could be said that the work on the house as a whole had not been finished and that the grant should not be paid. May we have an assurance that the payment of grant will not be delayed by Treasury officials saying, "The work has not been completed" when it is obviously virtually completed?
  Shortly after the war I had experience of modernising 12,000 houses overseas. The problems we encountered were not precisely the same as those found in this country, but they were similar enough to make the cases comparable. We found that we could reduce the cost of alterations by 50 per cent. if we could get a clear run at the work. In other works, if the people living in the houses were moved out while the work was being done we could modernise a whole street of houses in half the time it took to do the work with the people living in them.
  Hon. Members will be aware of the difficulties faced by builders when people are living in the houses on which they are working, not to speak of the danger to children, and this particularly applies to properties in multi-occupation. I appreciate what my right hon. Friend said about people wishing to live where they have always lived and wanting to be near their local pubs, fellowships and churches. However, we must do what we can to get this work completed in the quickest possible time.
  I suggest that we look upon the whole question of modernising property as a military exercise and approach it in the way we dealt with bomb damage immediately after the war. In other words, we should find temporary alternative accommodation for the occupiers of the property being modernised. If we think of this on a short-term basis, many alternatives can be considered.
  I hope that one suggestion I wish to put before the House will not be misunderstood. Some empty docks and surrounding dock land could be made available for this purpose. We might establish
  814
  transit camps to which local authorities could send people while their homes are being modernised. These camps could be used time and again. I had even thought of the possibility of berthing a ship or two at, say, Surrey Docks for this purpose. All the necessary facilities would be available.
  Mr. James Hill: Is my hon. Friend aware that what he is suggesting was done as part of a general improvement scheme in Southampton? One of the first projects to be completed was a block of flats. Elderly people and others were able to live in them on a temporary basis while their homes were being modernised.
  Mr. Costain: That seems an excellent idea, except that one denies immediate occupation of the flats to those who will eventually occupy them. My idea is to provide extra accommodation without interfering with the building effort. I am sure I have said enough to give the Minister a few ideas, and I trust that he will give the matter due consideration.
  I was delighted to hear my right hon. Friend refer to the effort which the National Federation of Building Trade Employers has made to enable builders to have finance to go ahead faster. Most of the people about whom we are talking are small landlords, possibly widows who have been left a bit of property, who do not have the ready finance to pay for this work.
  When they hear that the hon. Member for Salford, East (Mr. Frank Allaun) has intervened, to say that while tenants want these improvements they are not prepared to pay extra rent for them, these small landlords, who are very often no better off than their tenants will not be greatly encouraged to undertake the work.
  Mr. Frank Allaun: I can take the hon. Gentleman to rows of houses where, under the old scheme, a bathroom and lavatory were put in at a cost to the tenants of 8s. a week, something in which the tenants rejoice. But if we are to tell tenants, "Your rent is to be taken out of control, and trebled," there will be the strongest objection from them. I agree very much with some of the schemes which the hon. Gentleman has suggested, but I do not think that private landlords

  815
  can do this work. This sort of improvement will need a military operation conducted by the local authority which can put people temporarily in other houses while whole streets are improved in this way.
  Mr. Costain: We are having such a number of interjections from the hon. Gentleman that I can hardly wait to hear his own speech: he cannot have left much to say. But, again, hon. Members opposite always show this political bias which makes them believe that if such an operation is put forward it can be put forward only by the local authority. If they really want to see houses made available to rent they must learn from the years of their folly, when private landlords were reduced in numbers because of just that attitude.
  The hon. Member for Salford, East, must realise that if we want houses to rent we must keep in mind the effect on the private sector. My own group had to go abroad to build houses to rent because of the threats that were always being made by hon. Members opposite that when they got back to power they would see that there was not a fair deal for landlords. I thought that during their years of office hon. Members opposite were beginning to learn how wrong they were—there were some indications that the light was dawning—but I was a little worried to hear the hon. Member for Willesden, East (Mr. Freeson), who was an Opposition Whip before going to the Department of Housing and Local Government under the former Administration, say that he would turn the housing policy on its head.
  If we want houses to rent we must support this operation in all sectors. What would be wrong for a widow with perhaps two houses saying, "I can alter these now, thanks to the finance which has been arranged by the National Federation of Building Trade Employers"? Would it be a terrible crime for the local authority to say: "We have this transit arrangement, please use it for your tenants"? But the hon. Gentleman's interruption rather makes me believe that the party opposite does not want to do that.
  Reference has been made to the fact that a number of us here today do not
  816
  represent development areas affected by the Bill. What better example could there be to hon. Members opposite of the great anxiety we in the more fortunate areas feel to do all we can to help those in the development areas?
  Mr. Kaufman: I was not casting a reflection on the scheme, but making the point that hon. Members opposite who were interested in housing, or who had housing problems, and who were listening to or taking part in the debate, did not include many from the development areas, because the problem there was not as great as the Bill would imply.
  Mr. Costain: The hon. Member has had so many years training in the Press that he just has to treat any statement with some political bias. He must learn that he as a Member of this honourable House is making a speech and not writing a biased political leader. He seems to think that a debate here is merely an occasion for making a speech fit for the hustings. I suggest that some of his interventions would be more constructive if he left his political bias in his constituency, except at the weekends.
  This is a really progressive Bill, but if my right hon. Friend will, after the "chopper" date, see that his Department gets busy and effective in producing a transit scheme, we will see a great increase in building.
  12.25 p.m.
  Mr. James Bennett: I welcome the Bill—I make no bones about it—because it will lead to improved housing for Scotland. I can understand my hon. Friends criticising the Measure more for what is left out than for what is in, but I make no apology for being parochial. I welcome the Bill in the hope that something which is very badly needed will be done for Scottish local authorities. I welcome it also because it is an extension of a principle introduced by the Labour Government.
  I, too, am concerned about the two year limit. In my constituency in Glasgow, at a very conservative estimate, 60 per cent. of the houses are substandard, and whilst I should like to see improvement on a national scale, I cannot see anything being achieved to meet the needs of even that one constituency within two years, bearing in mind that

  817
  Glasgow's shortage of land is so serious that the building of new houses is almost prevented. That means that there is ample scope for the improvement of old houses.
  In this connection, it is nothing short of tragic that the city's previous Tory administration has run down to a mere token the direct labour force which would have made the Bill even more effective. Unfortunately, that Tory administration did not have the foresight to realise that as a result of lack of ground for new houses there was ample scope for the improvement of old houses.
  The standard grant is £200, and the Bill lays down that it covers the provision of such things as inside toilets, fixed showers or baths, hot water supply at bath and wash hand basin and sink with hot and cold water supply. The maximum improvement grant is £1,200. I believe that because of the change in money values those maxima should be increased. Although the percentages to builders and local authorities are being increased, I believe that if the present maxima obtain the Bill can have only a limited effect on improvements. I welcome the increases, but I would welcome them even more if a more realistic approach were taken by the Government to present day costs. A maximum standard grant of £200 fixed in 1969 has hardly any relationship to 1971 costs, nor has a £1,200 improvement grant fixed two or three years ago. Therefore, the right hon. Gentleman should give much more cogent reasons than merely saying that the two-year period has been fixed to stimulate local authorities. I should prefer it if he would look at the picture of what is so badly needed in these development areas, again referring to Glasgow, and realise that the period of two years imposes a limitation on such local authorities. If a local authority embarks on any improvement scheme but fails to complete it within two years, what happens? Will the local authority be involved in a penalty clause? What additional cost will fall on ratepayers if that is so? Again, it will have a limiting effect on what the local authority tries to do.
  I hope to have an opportunity of improving this Measure. I began by saying that I welcomed it, but I recognise its limitations. In my brief remarks I have
  818
  tried to be fair in that respect. I welcome what is being attempted, although I have doubts as to what it will achieve. Therefore, together with my hon. Friends, I look forward to a later opportunity when we can seek to improve the Bill to meet the conditions existing in our own areas.
  With its tremendous problems, Glasgow has often been referred to as the worst housed city in Europe. I get tired of hearing that because tremendous strides have taken place in the city—to my cost, I add. The development of the city under the Labour administration has done something that the Conservative Party never managed to do. It has unseated me. The Labour administration in Glasgow have been so successful in their rehousing policy that this has led to an elimination of two constituencies, one of which is mine. But I do not mind that. It is an example of the progress made by the Labour administration in the provision of new homes.
  Although there is a lack of ground, there is tremendous scope for the improvement of old houses. I trust that the Scottish Under-Secretary will agree that a great deal more could be done if we deal with the fabric of buildings as well as the interiors. There are many old properties in Glasgow that, possibly with a new roof, could be given 10 to 15 years' additional life. But the amount of grant involved at present could never extend to the provision of a new roof. I should like the Minister to bear these points in mind.
  I hope to have an opportunity of taking part in the further deliberations on the Bill and of seeking to amend and improve it.
  12.34 p.m.
  The Under-Secretary of Slate for Health and Education, Scottish Office (Mr. Edward Taylor): Following the excellent contribution from the hon. Member for Glasgow, Bridgeton (Mr. James Bennett), perhaps the House may forgive me if I briefly refer to the relevance of the Bill to Scotland. All of us were interested to hear the hon. Gentleman commenting so forcibly on the housing situation in Glasgow. It was particularly interesting to hear his reference to the rehousing of his constituents and the removal of a constituency. As far as I can see, most of those rehoused have

  819
  been moved to my constituency. To that extent, I will try to look after them as well as the hon. Gentleman has looked after them. It is true, as the hon. Gentleman said, that the Bill will be of real help to Glasgow and to other parts of Scotland.
  Broadly, the present improvement grant arrangements in Scotland are the same as those in England and Wales, and the changes made by the Bill will be the same. There are a few minor differences, as the hon. Member for Greenock (Dr. Dickson Mabon) will be aware, mainly of procedure, which I need not go into at this stage. The effect in Scotland, as in England and Wales, will be to increase from 50 per cent. to 75 per cent. the maximum proportion of the improvement grant and standard grant payable by local authorities to private owners; to increase from 75 per cent. to 90 per cent. the Government's contribution to local authorities towards the cost of making these grants; to double—that is, from three-eighths to three-quarters—the Government contribution towards the approved cost of improvement work done by local authorities, development corporations and housing associations; and to increase from 50 per cent. to 75 per cent. of eligible costs the Government contribution towards expenditure on improving the amenities of residential areas.
  The scope of the application of the Bill is the same in Scotland, covering the two-year period from June of this year to June, 1973. But, since all districts in Scotland had development area or intermediate area status at 23rd June, the Bill will apply throughout Scotland.
  Improvement of the existing stock of houses can make a very valuable contribution to meeting the housing need, and nowhere more so than in Scotland. There has been a substantial and very welcome increase in improvement activity since the 1969 Act. By a substantial publicity campaign and in discussions with local authorities, my right hon. Friend has been giving every encouragement to improvement in all its aspects, particularly to bring houses which are basically sound up to modern standards for an extended life.
  It is interesting to note that in 1970, the number of discretionary grants approved
  820
  in Scotland increased by 60 per cent., and the number of standard grants approved increased by 21 per cent. over the number approved in 1969. The number of public sector houses in improvement proposals approved increased by 59 per cent. This was a reflection of the increases in grant provided for in the Housing (Scotland) Act, 1969, in which I know the hon. Gentleman played a very big part and he has taken a very great interest in the development of this improvement work. On top of that improvement, the Bill will provide a further substantial stimulation to the improvement of Scottish houses.
  On the particular points raised by the hon. Gentleman, these apply to the whole of the country and I know that my hon. Friend will be endeavouring to deal with these points in his speech.
  What I have said shows that the Bill will be welcomed in Scotland, and because of our development area and intermediate area status throughout Scotland, it will be a real help throughout our nation.
  12.38 p.m.
  Mr. George Cunningham: In principle, I have great sympathy with the purposes of the Bill because in my part of London, Islington, there is a great need for the improvement of old accommodation along with the building of new accommodation. But I find it odd that the Government, after more than a year of cogitation, should find it possible to come forward without shame with this Bill, called the Housing Bill, as their first Measure to deal with the housing situation. I shall have to say to those in my constituency, "Although it is widely recognised that you suffer from one of the worst housing situations in the country in all respects and the worst housing situation in some respects, after more than a year in office the Government are not bringing forward in this their first housing Measure anything which has any relevance to the situation in London."
  I should have thought that the Government would have put more speed into their activities on the housing front generally and then brought in a Measure like this as part of a general Measure or as a consequential Measure after

  821
  getting on with the infinitely more inportant matters of the future of housing subsidies and the rebate scheme for private tenants, two things which we have been respectively threatened with and offered, but on which we still know none of the details.
  I agree with my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) that the Bill would provide assistance to some of the areas of least housing need and would refuse it to some areas of greatest need. If we are calling this a Housing Bill and providing up to £46 million for housing, it is incumbent upon the Government to offer that money to those areas which are suffering most from housing stress. The Bill is certainly not doing that.
  I should like to comment on the general value of improvement grants as experience has shown that value to be since 1969. There are many houses, certainly in the London area, where improvement grants used by private owners, local authorities, or housing associations, greatly benefit people who have long been waiting on a housing list, but I should like to see the figures for the take-up of improvement grants as between private owners continuing to occupy a whole house for their own purposes and private owners letting their houses.
  It is my impression that in my area improvement grants to a large extent, I cannot say mainly, have been used for the benefit of owners who are in no need of help from anyone. The effect may have been to produce an environmental improvement in the area, and it may have been to make houses look better and be better in some respects, but it has not been that flats in multi-occupied houses have been improved. For every case which I come across of a landlord letting to private tenants using improvement grants to improve the quality of the flats and their facilities, I come across probably ten when tenants want the landlord to use the improvement grants for that kind of purpose, but when in fact he has not used them.
  It is time that we thought about the possibility, when improvement grants are offered in a Bill of this kind, of giving an additional incentive towards their use in those houses where there are private tenants and a disincentive for those houses occupied by the owner. In so
  822
  far as the owner has this facility available, it adds to the support which he receives from the State in the way of tax relief on the interest on money borrowed for property, and that kind of person normally does not need assistance from the State. If we want the thousands of private tenancies in London and elsewhere to be improved, we will have to find some ways of providing additional incentives to landlords to improve their flats, or some degree of compulsion.
  I should like there to be an examination of the possibility of providing local authorities with a power similar to that which they now have when a landlord does not put a house into a fit condition by health standards, so that they could take upon themselves, if necessary, the job of improving the accommodation, making use of the funds available through this kind of Measure. If we had that kind of provision in the improvement grant system, it would be an assistance throughout the country for persons most needing help. At the moment, many thousands of people, certainly in my area, regard the improvement grant system as yet one more facility available to people who do not need it, while it is not available to many who do.
  12.44 p.m.
  Mr. James Hill: Most hon. Members will probably recollect that it was on 10th February, 1969, that the then Minister of Housing and Local Government, moving the Second Reading of the 1969 Act, said that there were 1¾ million unfit houses in England and Wales and 4½ million which, although not unfit, were clearly in need of repair, and lacking basic amenities. We are all agreed, therefore, that it is a gigantic problem.
  I have been dismayed this morning by some of the churlish remarks from Opposition Members, who have suggested that the expenditure of £46 million was a confidence trick or a public relations exercise. I do not think that since I have been in the House I have ever heard that said about the Housing Act, 1969, from which all this stems.
  I was chairman of a housing committee in Southampton when the 1969 Act came into operation. It was implemented in August of that year by the local authorities and the first allocation of

  823
  money from the Government, intended to last 12 months, had gone in two. It was an extremely good Act, but there was little money provided to implement it. We had tremendous local problems, because there had been massive publicity, even ahead of the implementation of the Act, so that we were flooded with applications and many people had to get in line.
  Mr. Freeson: Would the hon. Gentleman elucidate that a little further? I was in the Department at the time and I do not recall any attempt to impose any limitation on any local authority in this respect. In practical terms, it would have been impossible to do so in October, 1969, quite apart from any objections in principle.
  Mr. Hill: That may have been the view of the then Government, but we were restricted and our allocation was completely taken up in the first two months, with the result that there was a bottleneck.
  We have now all studied that Act, and several of the initial flaws have been mentioned this morning. One has been the fact that anyone who had taken up an improvement grant before the coming into force of the Act was barred from getting a discretionary grant.
  On 2nd March, I asked the present Minister of Housing and Construction whether he would take steps to increase the number of items in the list for standard grants by including, for instance, obsolescent and dangerous fittings, such as gas geysers, the replacement of perished or non-existent damp courses, roof repairs and faulty electrical wiring. Unfortunately, I did not get the reply I should have liked. He said:
  "Discretionary grants are available for more comprehensive schemes of conversion or improvement and for any necessary repairs and replacements carried out at the same time."—[OFFICIAL REPORT. 2nd March, 1971; Vol. 812, c. 402.]
  My whole point was that if the original improvement grant had been taken up, the applicant would have been excluded from a discretionary grant. But a house with a poor roof, or with faulty wiring, or without a damp course, would not and could not last for 15 years.
  General improvement areas, transit camps and so on, have been mentioned.
  824
  In this respect the present legislation is more generous to the local authorities. However, I should like my right hon. Friend to look again at the limit of £100. It is within his discretion to increase it and in present-day terms £100 per dwelling in a housing development area of some 500 houses, for instance, could not possibly go far towards closing roads, planting trees, making additional car parks, providing car parking space at the backs of terraced houses, and making all the other provisions required to bring an area up to the desired standard.
  Again, I asked a question of the Secretary of State for the Environment, whether he would increase the amount
  "from £100 to £300 per dwelling so that local authorities can expedite all the provisions of the Act concerning improvement areas"
  He quite categorically said:
  "I have no proposals at present for increasing the Government contribution …"—[OFFICIAL REPORT, 2nd March, 1971; Vol. 812, c. 402.]
  Perhaps later he may look at that again. One of the greatest problems in general improvement areas is not so much the improvement of the houses as improvement of the environment, and one of the worst aspects of the environment is that of factories, dumps and scrap yards built up over the years in these run-down areas, and yet there seems to be no Government contribution to local authorities for resiting of these unsightly things outside of general improvement areas. I may be wrong about that and I shall be only too pleased to be corrected.
  In conclusion, I would put out that Southampton is not one of the intermediate areas and I cannot say that Southampton has a serious housing problem. Nevertheless, I would have thought that in the not too distant future this excellent Housing Bill could be enlarged to cover the rest of the country.
  12.51 p.m.
  Mr. Michael Meacher: I join this debate as one of those who, like my hon. Friends the Members for Salford, East (Mr. Frank Allaun) and Manchester, Ardwick (Mr. Kaufman), who spoke so eloquently about the Manchester conurbation, represents an area which outside some parts of London and Glasgow, has probably the worst housing in the country, and at which it might have

  825
  been expected that the Bill would have been pre-eminently directed, and that area is South and South-East Lancashire. The various special housing survey reports undertaken by the Ministry in 1969 show that South-East Lancashire has the highest proportion of unfit housing in the country, a proportion which, at 15 per cent., is one-seventh of the total and more than a quarter above the national average level.
  Nor is it merely a matter of downright unfitness. The lack of amenity is just as serious. Oldham, which is part of my constituency, has the dubious distinction of being almost top of the league in terms of the proportion of houses which lack a fixed bath, a hot water tap or an inside lavatory. Less than four-fifths of the families in Oldham have a hot water tap. Only 11 other districts in the country are worse off in this respect. Only two-thirds of the families in Oldham have a fixed bath and only 10 other areas out of 1,500 or so are worse off. Only just over half of the households in Oldham have inside water toilets, and only 13 other areas are worse off. As many as 6 per cent. of the families in Oldham are still obliged to put up with a shared outside toilet, and the only other areas in the country with even half that proportion of families in this situation are all in South-East Lancashire.
  The people of South-East Lancashire, therefore, had every reason to expect that top priority would be given to them by a Bill of this kind. What is so shameful, as was so eloquently said this morning by my hon. Friend, is that that area is utterly excluded from all the benefits of the Bill because it is outside any development or intermediate area. Yet it is precisely this neglect and terrible legacy of bad housing in the North-West which makes it so difficult to attract developers and industrialists to obtain that take-off as a growth area without which the only alernative is a slow but remorseless decline.
  The Government have missed a golden opportunity to leaven the granting of aid in such a manner as to spread the distribution of the limited resources available over a much wider spectrum of grey areas than at present encapsulated by the narrow definitions under Section 1 of the Local Employment Act, 1970. Yet the chance was certainly there be-
  826
  cause all the statistics of housing stress, of unfitness, of lack of amenity, are all available on a regional and local basis. Yet it is these direct pointers which have been ignored and it is the indirect criteria of unemployment levels which have been used instead, clearly because this Bill is less a serious and committed means of obtaining the purported objectives than a piece of ad hoc-ery to rejig the local economy in the more stagnant regions.
  If the Bill were really addressed to remedying the inadequacies, the uneven-ness, in house improvement work its measures would be much more closely geared to the asymmetries which exist. It would aim to reverse the anomaly whereby the average number of grants per 1,000 of population is almost twice as high in the Yorkshire-Humberside region as in South-East Lancashire, although the incidence of housing inadequacy runs to some 25 per cent. greater in the latter.
  The Bill should also have been much more closely aimed at redressing the unjustifiably large local variations. What is being done about the fact that one local authority with a high and very commendable slum clearance record averaging 7·1 per 1,000 population achieved a rate of only 0·35 in improvement work while a nearby local authority with a similar slum clearance record averaging 6·89 attained a rate of improvement work of 1·48 which is four times greater though very much less than the national level? Achievement in improvement grant work has varied nationally, according to the official statistics, between 0·3 and 4·3 per 1,000 population with an overall mean of 1·45 and a probable minimum requirement on the national scale of at least 5 and preferably 10. What is being done to iron out local variations of this quite enormous degree?
  Surely it is this shortfall below the level of national requirements even of the best authorities which is a crucial yardstick for judging the adequacy of this Bill. Judging from the euphoria of the Minister one might have been excused for thinking that we were in the midst of a break-through in remedying the appallingly low standards of so much of our housing. It is not immediately obvious that the reason why the Minister is so anxious to pedal faster is that the

  827
  house improvement machine is still, if not in reverse gear, at least moving backwards.
  This is not the impression he seeks to convey by his statistics. He said that 156,000 improvement grants were made last year compared with 109,000 the previous year, an increase of 45 per cent. in the year. The April figures alone, for one month this year, have been set at a Press conference at 14,600. What the Minister did not add was that even if this best month's record were maintained for a full year the annual rate of 175,000 would mean only a 12 per cent. increase over last year; in other words, an increase very fast levelling out.
  Like all statistical magicians, the Minister lacks perspective, or at least he shuns it. He conceals that the annual increase he so proudly proclaims is built on a base that is absolutely minute in relation to the size of the problem. The national survey of housing conditions undertaken by public health inspectors in February, 1967, showed that there were 4½ million houses which, whilst not classed as unfit, nevertheless needed at least £125 spent on repairs, or lacked one or more of the basic amenities. This means that, even if last year's record level of grants were maintained, it would take at least 30 years to remedy these substandard properties but, in the meantime, many more properties would have been falling into disrepair. Some G.L.C. projections have assumed a compound annual growth of unfitness of 10 per cent. and even if, modestly, we allow a rate of deterioration of only half that rate, this would imply a pace of obsolescence 50 per cent. in excess of the pace yet achieved in the annual rate of improvement work.
  The same point can be made in terms of cost. It was stated at the Press conference held by the Secretary of State that over £80 million was spent last year on grants. By restricting the upgraded cash grants to householders only in the development and intermediate areas, it is hoped that the extra cost of £46 million will actually double the outgoings on improvements in these areas. This again appears impressive until it is related to the official estimates of the overall national housing repair bill. The figures
  828
  given on page 26 of the 1968 White Paper, "Old Houses into New Homes" indicate that comprehensive repair to the stock of fit housing in England and Wales would cost about £3,450 million. So far from justifying the enthusiasm of the Minister, these figures suggest that the boost to the improvement drive that has apparently so sparked his imagination is doing little more than seeking to inflate a set of flatulent tyres with a bicycle pump.
  This is a little Bill, a puny Bill. Whilst even little and puny Bills are not necessarily for that reason entirely unwelcome, one hopes that the Minister will in future show the courage of his declared conviction and bring forward new measures which are significantly related to the real objectives of house improvement, which this Bill certainly is not.
  1.3 p.m.
  Mr. Robert Redmond: Some of the points I intended to make on the subject of what I call the "grey areas"—I remember the Hunt Report even if the members of the former Government do not—have been made for me by the hon. Member for Oldham, West (Mr. Meacher), perhaps at greater length than I should have done. Arising from what he has just said, if in Bolton, which is my main concern, there is a better situation than in Oldham, I put that down largely, without knowing anything about Oldham Corporation, to the activities of Bolton Corporation. That is why it is a great pity that the hon. Member for Willesden, East (Mr. Freeson) showed such venom against Tory-controlled councils which have been doing so much to implement the improvement grant legislation.
  The hon. Member for Manchester, Ardwick (Mr. Kaufman) spoilt quite a good case by overstating it in one of the poorest speeches I have heard in my time in Parliament. The hon. Member should go back to writing other people's speeches for the Labour Party conference; they would go down much better there. He showed great interest in where we live. I come from the north-west of England, I have lived there all my life, and I am jolly proud of it.
  I give a general welcome to the Bill, which I regard as a step in the right direction, but I hope we shall soon have

  829
  another Bill which will deal with the grey areas, which include Bolton. In Bolton there are a large number of good houses which could be given a new lease of life, which is what the people who live in them want. They do not want to be moved out to housing development areas, corporation property and so on. It is therefore no good saying, as the hon. Member for Ardwick said, and as he put down in the Amendment that has not been called, "If we cannot have something nor can you". That is why I support the Bill, but, nevertheless, give notice to my right hon. Friends on the Government Front Bench that I shall keep on pressing for Bolton until they give us the aid to which we are entitled.
  I was impressed by the practical speech made by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). He is a man with years of practical experience in the building industry, and he told us some of the facts of that industry. He made me think of the terraces of Bolton houses and the problem that can be created by the improvement of one or two of them with the result that the rest of the terrace looks pretty grim. Often, as I have seen in my constituency, two or three houses dotted along the terrace have been improved with the aid of improvement grants, whereas the rest of the houses in the terrace have been so neglected that the whole terrace has to come down. This problem should be examined by the Government and measures to deal with it included in the future legislation for which I ask.
  Hon. Members opposite have asked the Government to say that the two-year limit is not meant seriously. It would be fatal for the Minister who is to reply to answer that point. If he were to say that the two-year limit had been imposed to make local authorities get a move on, but when the two years was up we should renew the provision, that would put local authorities back where they started and they would have no incentive. I hope that he will not reply to that point. It is far better that what I have said should come from the back benches than from the Front Bench.
  In debating this type of legislation hon. Members opposite adopt the posture that profits are immoral and the wicked landlord must not make a profit. That is the
  830
  attitude that has created the slums and the need for improvement grants. If we could get rid of that posture the whole country would be better off. I support the Bill within the limitations of what I have said.
  1.07 p.m.
  Dr. J. Dickson Mabon: I congratulate the hon. Member for Bolton, West (Mr. Redmond) on his wonderful circus performance of riding two horses going in opposite directions. It was a treat to hear him doing this. He is probably, though he may not know it, the most formidable opponent the Government have to face on this Bill. He spoke of a Bill still to come, an urgent Bill, very much needed in Bolton and other important places. That is the great sorrow of this Bill. It could have been a great Bill, well thought out and just as significant as, if not more significant than, the 1969 Acts on which it is founded.
  Mr. Redmond: My point was that we should not be making speeches about the grey areas if the former Government had taken notice of the Hunt Report which they commissioned and which they threw away before the ink was dry. If we had had action on that Report we should not now be asking for legislation on the grey areas.
  Dr. Mabon: That is where the hon. Gentleman is wrong, but I will come back to that point in a moment. He is, as I say, one of the most formidable opponents of the Bill, because this should have been a substantial Bill and not a fly-by-night Bill. He said that because the aid will be given for two years local authorities and everyone concerned will make a wild dash to get the money before it is cut off. That is an attractive debating argument, but not true.
  The best answer to that was given by the hon. Member for Folkestone and Hythe (Mr. Costain) who was no doubt arguing on behalf of the National Federation of Building Trade Employers. I do not detract from that at all, he is not the only hon. Member associated with the building industry. I am myself associated with a building company which designs many more houses than it builds directly in the United Kingdom.

  831
  The hon. Gentleman was arguing that within the next two years what the Minister seeks to achieve would not be achieved because there was not enough elasticity in the legislation. He thought that the word "approved" might be better than the word "completed" and I agree. But why stick at a period of two years? Why not three or more years? The 1969 Acts passed by the Labour Government became operative only in August, 1969. The present Government are rightly seeking to improve on those Acts but are not seeking to go beyond a period of two years.
  Could we not have had a comprehensive piece of legislation which would have appealed to the hon. Member for Bolton, West and other hon. Members who complain about the exclusion of their own areas from the Bill? None of them can be charged with exaggerating the needs of their constituencies and yet they are excluded from these provisions. Salford, for example, has been cut out of the Bill, yet we all know the housing need in that area. Manchester, Oldham, Southampton, and even London, are cut off from the benefits of the Bill. It is surprising that it is called a Housing Bill at all. It should be called more accurately the "Unemployment (Building Trades) Bill since it is designed to deal with unemployment in the construction industry. To that end we should look to see what the Bill really does.
  If the Minister wishes to dispute that this is an unemployment Bill, he should examine the Written Answer given by the Secretary of State for the Environment on 30th June about the so-called winter works programme. The Minister then acknowledged that the increase in the roads programme and this Bill were the answer to the winter works problem. The cat is out of the bag, and it proves that this Bill is designed to deal primarily with unemployment. Let us look to see how the Bill seeks to achieve a cut in unemployment.
  Mr. Costain: Surely the point made by the Secretary of State was that because the work could be carried out under a roof, it was perfect work to be carried out during the winter.
  Dr. Mabon: Although the hon. Gentleman is still a loyal ex-P.P.S. to the
  832
  Minister, he cannot be allowed to get away with that one. That is not what the reply meant, as he will see if he looks at it. It is set out in the OFFICIAL REPORT on 30th June in c. 123. The Minister was not arguing strictly in terms of a winter works programme.
  Mr. Costain: I thought that is what the hon. Gentleman said.
  Dr. Mabon: No; the Secretary of State was answering a Question. He was answering a question. He was comparing the present Government's winter works programme with the programme of the former Administration.
  I turn to the figures. The hon. Member for Folkestone and Hythe, among other hon. Members, deplored the high level of unemployment in the construction industry in May, 1970. I have the figures before me and they show that the total number of unemployed in May, 1970, embracing all the trades and professions in the construction industry, such as carpenters, joiners, shutterers, bricklayers, painters, electricians, steel erectors, and so on, was 99,779. In May, 1971, one year later, the figure is 119,450. Therefore the unemployment situation in the construction industry which was so deplorable last year is now 19,671 higher. So much for dealing with unemployment at a stroke! Perhaps this Housing Bill is now part of "the stroke".
  It is interesting to break down the 19,671 increase in unemployment figures since May, 1970. My hon. Friends from Scotland will not be surprised to know that of that figure of 19,671, some 7,885 are to be found in Scotland. This is to be compared with the situation in May, 1970 when the present Under-Secretary of State for Health and Education was denouncing the Labour Government for having so many people unemployed. The hon. Gentleman is now faced with a figure of 7,885 additional unemployed in the construction industry in Scotland and carries that on his conscience. Since this is an unemployment Bill which will seek to deal with the unemployment in Scotland, and indeed is comparatively speaking generous to Scotland, I do not complain on that account.
  To turn to the North-West of England, the unemployment figure for building workers is some 3,036.
  Mr. Redmond: Does that include Merseyside?
  Dr. Mabon: It includes the whole of the North-West. It is a classification laid down by the Department of Employment. It is strange to me therefore that the Bill should seek to apply only to those areas which come within the Local Employment Acts. It is a foolish contradiction. Since there is an unemployment problem in the building trades in, for example, Manchester, and there is surely a need to improve houses in that area something should be done for this city. If the intention of the Bill is to relieve unemployment, why cannot the Bill be modified to take in areas such as Manchester and others which are affected?
  The hon. Member for Bolton, West suggested that because Manchester had such a difficult problem, my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) was suggesting a rejection of the Bill as a whole. If the hon. Gentleman had been longer in Parliament, he would know that what my hon. Friend had done was to employ a parliamentary device of Amendment to draw attention to his own constituency problem. The meaning of what he sought to do was not clear to the layman from the wording of the Amendment, and when the hon. Gentleman has been in Parliament a little longer he will know that. I am not being patronising to the hon. Gentleman, but it is wrong that he should put forward an argument of the kind he used without knowing the true situation. Perhaps the hon. Gentleman himself might have to employ a similar device on a future occasion in regard to his own area. If he seeks to do so, I hope that he will not be accused unjustly by our side of the House of behaving in a way he did not intend.
  My hon. Friend the Member for Ardwick most surely wants this Bill to be enacted, but he wants it to be more effective, to cover a greater period of time, and to embrace more money.
  Mr. Redmond: If I wanted to make a speech in support of a Bill, I certainly would not make the sort of speech that was put forward by the hon. Member for Manchester, Ardwick (Mr. Kaufman). It sounded to me like venomous opposition, and I thought from the terms of
  834
  the Amendment that he opposed the Bill. I am usually honest in the way I approach a Bill.
  Dr. Mabon: There are certain parliamentary conventions and my hon. Friend's was a legitimate form of protest to make his points on the Bill. The test is whether my hon. Friend opposes the Bill when it comes to a vote.
  Mr. Redmond: He certainly sounded as though he was opposed to it.
  Dr. Mabon: The only true answer to this argument, quite apart from what anybody says, lies in the Division Lobby. [Hon. Members: "Oh."] And when we come to entry into the Common Market, we shall see into which Lobby the Under-Secretary of State for Health and Education goes.
  In the Northern Region there are 2,093 more employed than in May, 1970 but they are rightly brought into the Bill. What about the West Midlands area? We see from the figures set out in the table that the rise in unemployment in the building trades in the West Midlands was 2,180. In other words, the unemployment situation in the West Midlands in terms of building trade workers is more or less equal to that in the Northern region and in some other sections of the country, and is close to the situation in the north-western area in terms both of unemployment and of housing improvement need. Yet how much of the West Midlands is included in this Bill? Well, there it is The bottom two inches, as Leslie Hale once said, of the hand-out. Only North Shropshire and Oswestry.
  Mr. Kaufman: I will amplify what my hon. Friend is saying about the West Midlands. In an answer about the parliamentary constituencies affected, I was informed that the only constituency in the West Midlands is Oswestry—the hon. Member for which is totally against any regional discrimination of aid.
  Dr. Mabon: It is one of the ironies of parliamentary life that that is so. If that is the result of the Bill, then it is wrongly cast. I ask the Minister to look at this again because I know that he has a certain flexibility of mind. I hope that he will take into account unemployment among building trade workers wherever they are.

  835
  I hope that the hon. Gentleman will be able to tell us more about the two-year period. Is it the case that this unemployment is expected to fall within the two years? Is there something behind the Government's argument for two years? This is obviously a collective decision by Ministers influenced by the Treasury, but why two years? Is something interesting and wonderful expected to happen in those two years? If the Minister cannot be completely confident that the unemployment will disappear over the two years, he should amend the Bill and make the period three or four, or five years, rather than pretend that in two years he will be able to sort this problem out.
  We want to ask also about money, because we have had some rather obscure answers from the Secretary of State for Scotland and other senior Ministers. I do not expect the Under-Secretary of State for Scotland for Health and Education to answer on this matter, because he is not in charge of Scottish housing. Although he made grand speeches in Opposition he does not seem even now to know much about it. I never got any money answers out of him either. His colleagues are bound to know how anxious we are about this aspect. Is this money in additon to what is currently being spent on housing improvements? Can we have the Great Britain figures for housing improvements this year and the estimates for next year and the year after? Can we have a breakdown of this £46 million spread over the three years? And modestly, as a Scotsman, may I ask for the Scottish figures alongside them?
  What we are not sure about is whether these figures given already are simply a cover-up. If this £46 million is an additional sum, then we welcome it. If it is not, then we condemn the Government's decision. We want to see more money put into this work. I was told by the Under-Secretary of State for Development on 22nd June that there is no question of housing improvements being regarded as a substitute for new house building, and that in our view is the correct attitude. So I hope that this Bill is not regarded as a substitute for new house building by any Minister.
  What is to be the position in 1974, in view of the October budget, the
  836
  announcement of the Secretary of State for the Environment about housing subsidies in the future and the forthcoming White Paper? What will the situation of housing expenditure be in 1974? Is the Chancellor going to "save" £200 million from the housing budget? That is what he told us he would do when he brought in his mini-budget. Has the money in this Bill been affected by that statement? Are the Government still going for a reduction in housing? Are we being asked to vote for housing improvement money at the expense of new houses? We must know.
  If this were a good Bill and a well-thought-out Bill, the Government would not be rushing it through as they seem to be doing. The hon. Member for Glasgow, Hillhead (Mr. Galbraith) is an old Scottish parliamentary colleague of mine. He was a Minister in the Macmillan Government and a very good one in many ways, although at times I disliked many of the things he did. I remember him pleading with me in the Scottish Standing Committee, considering the Housing (Scotland) Bill on 20th May, 1969. He said then:
  "It is not only the Committee to which the Minister must pay attention. Each of the Bills that my hon. Friend the Member for Dumfries (Mr. Monro) has mentioned affects local authorities. Local authorities have points they wish to make. They have to discuss them in their committees, pass them to us, and we have to discuss the points with them. At the rate at which the volume and bulk of legislation is now being put before this House, it is not possible to do that with the care that the importance of the legislation merits. I ask the Minister to bear that in mind. It is not good government to proceed like this."—[OFFICIAL REPORT, First Scottish Standing Committee, 20th May, 1969; c. 4.]
  The hon. Gentleman was right. But we introduced that Bill, to which this is a successor, on 5th February, 1969. The Second Reading was in the Scottish Grand Committee on 18th and 20th March, and on 20th May the Bill went into Committee. Yet the hon. Member for Hillhead complained quite genuinely about that timetable.
  The time table for this Bill was announced in the Scottish Grand Committee before the English Minister made his announcement. It is understandable. The Secretary of State for Scotland has a hard time of it these days because of closures, unemployment and the falling

  837
  house building programme. We see in Scotland a drop in the Government's house-building programme of 14 per cent., over the last 12 months which is catastrophic. That is, I agree, quite unlike the situation in England. In an earnest to defend himself, the Secretary of State made his announcement about this United Kingdom Bill on 22nd June. Today is 2nd July and yesterday it was proposed on the Business Statement that we should dispose of all stages of the Bill by 9th July.
  It makes nonsense of any ideas we may have had of trying to reflect the points of view of our local authorities. We simply have not sufficient time to ascertain their views properly. The only represenation we have had has been, commendably, from the National Federation of Building Trade Employers. I have no doubt that there will be many comments after the Bill has left us, if we stick to the Government's proposed timetable, and that Parliament will regret having rushed the Bill through in this way.
  There is no need to rush the Bill through. The date has been announced. The figures have been announced. Surely the Government could not reduce the figures, but, hopefully, we might be able to increase them. This Bill is welcomed by the Opposition and we wish to improve it. Let us not rush into the actual legislation quite so fast. The builders put two very good points in their memorandum, one of which I have already mentioned. It would be better if builders, landlords and tenants and the public in general—for it is the public's money we are using—were entitled to comment on the Bill.
  I have had an interesting letter from a constituent who is not I believe a landlord and does not live in one of the properties which could be improved. He is generally commenting on the scheme we introduced in August, 1969. It refers to what is true of my constituency and many others—the wonderful homes we see inside crumbling tenements. The people look after these homes extremely well, but the moment they leave their doorsteps they emerge on to eroded stairs and beside festering walls. My constituent argues that we need a better scheme to improve property common to all but distinct from the individual habitations of
  838
  the families. It may be that there is provision in the previous Acts or in the Bill. If so, I should like to know more about it. It may be that we should improve it.
  It would be a great compliment if the Minister were to say: "The scheme which the Labour Government devised in 1969 is perfect. It is only a question of getting more applications in. There is nothing wrong with anything in that scheme. The administration is perfect." However, I could hardly believe that even the Labour Government were 100 per cent. perfect. Perhaps 99 per cent. or maybe at worst 90 per cent. But surely we could not have been 100 per cent. perfect. Surely there are defects in the system of administration, some of which may be born of the Statute, and therefore as Parliamentarians we must turn our attention to it.
  Should we not take more time over this matter? Should we not try to understand a little more of this process and look at what has been the outcome over the last year or so? Finally, I believe that a Bill of this kind should apply to the whole country. I understand from the Government that there must be priorities, but these are the wrong priorities. It would be better instead for the Bill to apply to the whole country, for it not to be for two years but for the foreseeable future. It would have been better had it been introduced earlier or, now that we have it, had we taken longer to discuss it than to rush through every stage in a matter of a few weeks.
  On the whole, while we welcome the Bill, we feel that the way that the Government have rushed it is deplorable. They have prepared the way badly for what could have been an earnest endeavour on their part.
  1.32 p.m.
  The Under-Secretary of State for the Environment (Mr. Paul Channon): I am glad that hon. Members on both sides have welcomed the Bill. The welcome has been somewhat muted from time to time, but in general hon. Members are in favour of the general principle of having such a Bill.
  I shall try to deal with some of the points which have been raised. If I omit any point, there will be opportunities in Committee when I shall have had the

  839
  advantage of reading what hon. Members have said and be better able to answer them.
  The first purpose of the Bill, which is common to both sides of the House, is to help the further expansion of improvements. That is a bipartisan policy which hon. Members on both sides welcome and will continue to welcome.
  Why are we so keen on improvement in general? The 1967 house condition survey figures are now a bit out of date. At that time about 4 million houses—nearly a quarter of our housing stock—were lacking one or more of the basic amenities. There were then 3 million houses lacking internal lavatories, slightly more than 2 million lacking a fixed bath, and 3 million lacking a wash-hand basin.
  As my right hon. Friend said, we spend a great deal of time visiting potential improvement areas up and down the country during "improvement months". I frequently recite these figures. Every time I recite them I am appalled at the thought that in 1971, after years of beneficent legislation by both political parties, millions of our fellow citizens are still living in appalling conditions.
  Mr. Frank Allaun: After the tremendous hand-outs to the landords, the problem still remains.
  Mr. Channon: The hon. Gentleman raises a particular point about which he feels strongly, but I think that he is wrong. Whether he is right or wrong does not affect the general argument that there are still millions living in inadequate conditions.
  It is a desperate task to increase the number of improved houses in this country. It is important socially as well. Often older people who have no wish to move from their houses are involved. It makes economic, social and housing sense to go in for a large-scale policy of improvement. I refute those few people—none in this House today—who suggest that improvement is a mistaken policy. I believe that most people are becoming increasingly aware of the need for improvement. The Bill will give a tremendous boost to improvement in certain parts of the country which have some of the worst housing and derelict land problems.
  840
  The main point that has been argued today, and it is understandable, is the noticeable absence of many hon. Members from the development areas. They are pleased with the Bill. That is why they have not bothered to attend today. Only those who are displeased with the Bill have turned up. I exempt the hon. Member for Glasgow, Bridgeton (Mr. James Bennett), who supported the Bill with great forthrightness, and many of my hon. Friends who have shown their usual farsightedness, for although the provisions of the Bill do not help many of their constituents, they see the great benefit which it will bring to other parts of the country.
  I will give some figures for improvement grants in England and Wales. In 1969 there were about 109,000, in 1970 there were 156,500 and in the first four months of 1971 there have been 55,500. The 1970 figure showed an increase of 44 per cent. over 1969, and the increase in the first four months of this year is 34 per cent. over the same period in 1970.
  Unfortunately the take-up in intermediate and development areas is not as good as in the rest of the country. In these areas taken together the total number of grants approved in 1970 was only 25 per cent. above that for 1969. It is not so much the numbers which have been given with which the hon. Member for Willesden, East (Mr. Freeson) was dealing in his speech; it is that the rate of increase has been much lower in the intermediate and development areas than in the country as a whole. Approximately 32,000 grants were approved in 1969 and just over 40,000 in 1970. That is little more than half the increase in England and Wales as a whole. I accept that the Scottish position is different.
  If we were to introduce a Bill to help housing in the development areas in England and Wales and excluded Scotland on the ground that the improvement figures were good, the hon. Member for Greenock (Dr. Dickson Mabon) would not take kindly to it.
  Dr. Dickson Mabon: The Government could have introduced a Scottish Bill. The two previous Bills were: one for England and Wales and another separate one for Scotland. If we had done that

  841
  today we could have given more money to the Scots.
  Mr. Channon: We could have done that. I think that the Scots get a lot of money. The hon. Gentleman can raise these points on another occasion with those more qualified than I to answer.
  I understand the feelings of hon. Members who say that housing conditions in their constituencies leave a great deal to be desired and therefore that they should be included. Any Bill of this kind is inevitably rough and ready. I believe that a sharp, short attack on poor housing conditions in these areas and their surroundings, which otherwise are not likely to be improved for many years, will pay dividends.
  Mr. Freeson: The Minister will no doubt accept that no one is objecting to such a sharp, short, or indeed longer, attack, which is what we would prefer. The objection is that that attack is not being increased in other parts of the country which have even worse housing conditions.
  Mr. Channon: I understand the hon. Gentleman's point. I shall deal with the London position later, because that is slightly different. I think that whatever area had been chosen there would inevitably have been criticism. Whatever time limit was chosen would also have been criticised. I can imagine that if we had suggested three years, hon. Members would say that it should be four, three, two or six years, or whatever suited them. We live in an imperfect world. Whatever period we choose may be wrong. But we must have a period, and I think that two years is reasonable.
  The hon. Member for Greenock referred to unemployment in the construction industry. It is inevitable that as a by-product the Bill is bound to be of some help to the construction industry in the intermediate and development areas, especially to the small builders referred to by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). It will have some effect in increasing, incidentally, the attractions to incoming industry.
  Hon. Members have asked whether the expenditure is extra. The Financial and Explanatory Memorandum says that on the best estimates the Bill will result in
  842
  an increased public capital expenditure of the order of £46 million. No one can be exact, it depends on the take-up. It can only be an estimate. This is the best estimate that can be made and it is in addition to the original announcements. It is not in substitution of anything, it is an extra item of expenditure.
  Mr. Freeson: Can I get it clear that the figure of £46 million spread over three years is in addition to the three figures for those years announced in the White Paper on public expenditure? Will there be an overall increase in the allocation made available by the Government irrespective of the actual take-up?
  Mr. Channon: Yes, I can give that assurance. That is the position. My understanding is that that is exactly the situation. It is an increase of £46 million on the best estimates that can be made.
  Mr. Kaufman: Would the hon. Gentleman give a commitment that at the end of this period his Department will publish separate figures showing what the take-up has been so that we may measure the success of the precise objects of the Bill?
  Mr. Channon: I would like to think about that. There are some difficulties in quantifying every development in the intermediate areas in view of the way in which the figures are arranged. I will look at that and give the hon. Member an exact answer in Committee.
  Hon. Members representing London constituencies have very wisely said a great deal about the extreme difficulties of the London housing situation. Other hon. Members have referred to the difficulties elsewhere. I wish that I was in a position to give details of the housing finance review and the discussions which have been taking place with local authorities over the past few months. I am not in a position to do that. My right hon. Friend has said on a number of occasions that he wants to make a report to the House of the fullest nature when the talks are concluded. As we have said repeatedly, one of the main purposes of the review is to divert resources to those areas and those people most in need. No one could deny that Islington is one of the areas most in need. I hope that hon.

  843
  Members will agree when the review is completed, that it meets the criterion we have set and gives extra help to those most in need.
  Mr. George Cunningham: Can the hon. Gentleman say whether we can expect the statement before the Summer Recess?
  Mr. Channon: I cannot give an absolute assurance about that. I am certain that my right hon. Friend is only too anxious to make a report at the earliest possible date but these are complicated matters.
  The Bill provides big incentives for people to get on and do the job fast. If people do not do the job fast, the take-up will not be successful. I believe that they will do things fast and that is why I agree with my hon. Friend the Member for Bolton, West (Mr. Redmond) that it would be no good having a short, sharp effect and then saying that we can go on with the grants for all time.
  Therefore, a time limit is necessary. Whether two or three years is right is a matter of opinion. I believe that two years will be a reasonable time. My right hon. Friend was in Newcastle last week and he has pointed out that the general reaction was that two years seemed a perfectly reasonable time. I went to Blackburn last week and found that two years seemed to be generally acceptable to the local authority representatives and builders whom I saw.
  Next week I will go to Liverpool, and I hope that again I will have discussions with local authority representatives and builders in that area. So far I have not found the general view to be against two years. There may be areas where that is the view, but that could be true of any time limit. So far, the reaction to two years has been reasonably favourable.
  My hon. Friend the Member for Epping (Mr. Tebbit) made a point about demolitions following an improvement grant when the building has a life of 30 years. There are occasions when a building may be demolished, but I do not understand the point about it being demolished shortly after the grant has been given.
  Mr. Tebbit: There has been a case in my constituency recently which gave rise to some concern, and I will bring this to the notice of my hon. Friend. Before he leaves the two-year point, will he deal with the question of those cases where an applicant genuinely thought that the work would be completed within two years but where, because of circumstances beyond his control, the work overruns that period? This will be a great difficulty towards the end of the period.
  Mr. Channon: At the end of the two years it will be for the local authorities to decide whether the work has been completed. We shall certainly have to give them some advice about the criteria to be adopted much nearer the time. I will bear in mind the point raised by my hon. Friend and other hon. Members. It is difficult to change the two-year period, but we will have to consider carefully what sort of advice to give local authorities.
  Mr. Thomas Cox: Would it not be easier to say that providing approval was given within the two years the work should be allowed to continue? I know from problems in my constituency that it can often take three or four months before final approval is given.
  Mr. Channon: I would be against a system in which the final date depended on approval rather than completion. It would be much better to have an end to the system when work is completed on a certain date. As for time and local authorities dealing with applications, the hon. Member for Greenock (Dr. Dickson Mabon) will be glad to learn that, although we warmly support the provisions of the Housing Act, 1969, we have found one or two administrative difficulties in its operation. Next week a Circular will go out to local authorities advising them on ways of speeding up the administrative arrangements under the Act. We do not think that there is any need to amend the terms of the Act, these will be administrative improvements. I will see that hon. Members who are interested have a copy of the Circular before the debate next week.
  Local authorities vary in the way that they administer the Act, but most are now beginning to speed up their procedures. This is something that can be

  845
  improved upon. I hope that in these matters local authorities will deal with applications very speedily. The Bill will not be a success unless local authorities, builders, builders' merchants and the applicants get on with the work as quickly as possible.
  I have found that people are only too anxious to get on with the work, and I believe that there will be a great many applications. Admittedly, this is a false figure to some extent, but in Liverpool, where the normal rate of inquiries is about 70 a week, it has boomed up to 600 since the announcement was made. My right hon. Friend has arranged special publicity, and there will be a great deal of advertising in local newspapers. There will also be door-to-door distribution of leaflets and visits by mobile exhibitions. My right hon. Friend has visited Newcastle and I shall be making further visits. We have already circularised local authorities about the Bill, and there is the other Circular to which I have referred which is going out next week.
  I am glad that the Opposition has not argued that because it cannot apply everywhere, it should not apply to some areas. No doubt we could devise other lists of areas and other arrangements, but there is no doubt that in the intermediate areas there is a high proportion of old buildings, which constitute an enormous problem that we must tackle. There are many other matters to be dealt with, and I welcome the chance of explaining the somewhat complicated Clauses in Committee.
  In conclusion, I want to say what changes are being made. It may be that not all hon. Members have taken them in. For example, the maximum amount of the discretionary improvement grant under the 1969 Act was £2,000. The person applying receives a grant of £1,000, or 50 per cent., of which the Government pays £750 and the local authority says £250. The applicant will now be able to receive a grant of £1,500, of which the Government contribute £1,350 and the local authority £150. That means that the local authority's share will go down from 12½ per cent. to 7½ per cent.
  There will also be an increase in the contributions to improvement work
  846
  carried out by local authorities in their own houses. The percentage that local authorities will have to provide will fall from 62 per cent. to 25 per cent. In terms of the cost of work, if £2,000 is spent there will be a Government contribution of £1,500. There will also be extra contributions by the Government towards the cost of the standard improvement grant.
  All in all, these are very generous provisions. I hope that they will have a dramatic effect in these areas, and in areas outside them. I am glad to say that there has been a considerable take-up of improvement grants—grants that are already generous. Some hon. Members have pressed for higher grants and some, such as the hon. Member for Willesden, East, want increases in the G.I.A. contribution. Local authorities can however spend more than £100 but they do not get a grant on the extra amount.
  There is no evidence that the upper limit of the discretionary grant has proved a barrier to people in terms of obtaining grants or being able to do the work. At present the average figure of grant given is very much lower than the maximum amount. There is provision for my right hon. Friend to take extra powers if necessary, and he will have no hesitation in doing so if it can be shown that there is a general need for a higher maximum. As I have said, there is no convincing evidence at the moment; there may be isolated cases.
  Mr. Freeson: I agree that powers exist in respect of amenity grants but I am not aware of a power to vary upwards the general improvement grant under the provisions of the 1969 Act. They are fixed figures.
  On the question of expenditure, may I press the Minister to answer an important point that I made in opening? May we now expect that the estimated expenditure allocated by the Goverment is running at £55·3 million, as compared with the £40 million originally estimated under the 1969 Act?
  Mr. Channon: The hon. Member is not right about the 1969 Housing Act, but I had better check the exact situation and get in touch with him later. My information is that the maximum may be raised by Order.

  847
  As to the amount of money in respect of improvement grants, individual figures of forward estimates of public expenditure are not published in detail. The housing statistics for February, 1971, showed that for England and Wales in 1970 £11·9 million was paid out in discretionary grants to private owners, and £7·2 million in standard grants. There is a general forward estimate for housing as a whole but it had not been the custom of Governments in the past to break these down into details and sections.
  I cannot give the hon. Member any further details, but I expect a great increase in improvements, because the figures are increasing constantly. I cannot give the hon. Member an estimate.
  Mr. Freeson: This is a very important point. If we are talking about extra expenditure we must know what it is to be expended on, otherwise we cannot know the facts of the position. There must be available in the Department in general—if not in breakdown terms—a figure showing the estimates for improvement grant expenditure by public authorities in the coming year. We cannot operate extra expenditure under the Bill unless we know what it is extra to.
  Mr. Channon: I can appreciate the point of the hon. Member's remarks. A general estimate for housing as a whole is provided, but it has not been the practice of successive Governments to break the figure down into specific items of expenditure. I shall look into the matter, but I do not think that the practice has changed. If there is any further information that I can give the hon. Member I shall have the opportunity to do so when we discuss the Clauses next week. I am advised that there has been no change in practice, and at the moment I cannot go further than that. If I can give the House any further particulars next Friday I shall do so.
  I understand the feelings of hon. Members who want the Bill to go further. It is right that they should press the Government on behalf of their constituents for further increases. I believe that the Bill will be of help to the intermediate and development areas. It will be a great help in terms of modernising and improving the stock of our old buildings—a task that hon. Members on both
  848
  sides of the House would like to see tackled. I hope the House will be good enough to allow the Bill to receive its Second Reading.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. Monro.]
  Committee upon Monday next.

  HOUSING [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to increase the amount of financial assistance available under Parts I and II of the Housing Act 1969, and under certain provisions of the Housing (Financial Provisions) (Scotland) Act 1968 and of the Housing (Scotland) Act 1969, as respects expenditure incurred in local government areas wholly or partly within development areas, or intermediate areas under section 1 of the Local Employment Act 1970, it is expedient to authorise any payment out of money provided by Parliament which is attributable to any provision which, as respects works or expenditure in such local government areas completed or incurred within the period of two years beginning with 23rd June 1971.

  (a) increases the Secretary of State's contributions towards local authority grants under Part I of the Housing Act 1969 by raising three-quarters to ninety per cent. in section 16(2) of the said Act, or by increasing such local authority grants,

  (b) increases improvement contributions, standard contributions and contributions to housing associations by raising one half to one hundred per cent. in sections 18(2), 19(3) and 21(4) of the said Act, and by doubling the limit in section 19(5) of the said Act,

  (c) increases contributions to local authority expenditure in general improvement areas by raising one half to seventy-five per cent. in section 37(3) of the said Act,

  (d) amends the power of varying contributions in section 22 of the said Act by authorising the making of orders making provision for such works or expenditure different to that made for other works and expenditure,

  (e) increases Exchequer contributions by raising three-eighths to seventy-five per cent. in section 14(1) in the Housing (Financial Provisions) (Scotland) Act 1968,

  (f) increases the Exchequer contributions towards local authority grants under certain provisions of the said Act of 1968 by raising

  849
  three-quarters to ninety per cent., and seven-eighths to ninety-two and a half per cent. in subsections (2) and (5) of section 35 of the said Act, or by increasing such local authority grants,

  (g) increases Exchequer contributions towards expenditure by local authorities or housing associations on the improvement of amenities in predominantly residential areas by raising one half to seventy-five per cent. in section 59(3) of the Housing (Scotland) Act 1969,

  (h) amends—

  (i) the power of varying the maximum amount to be determined for the payment of Exchequer contributions and to reduce such contributions in section 14 of the said Act of 1968;

  (ii) the power of varying the maximum amount of improvement grants in section 29(1)(bb) of that Act;

  (iii) the power of varying certain provisions in relation to standard grants in section 42(7) of that Act;

  (iv) the power of reducing Exchequer contributions in section 56 of that Act;

  by authorising the making of orders, or as the case may be, regulations making provision for such works or expenditure different to that made for other works and expenditure,
  and to authorise any payment into the Consolidated Fund attributable to the said Act of the present Session.—[Mr. Channon.]
  1.58 p.m.
  Dr. J. Dickson Mabon: In lines 8 and 9 the Money Resolution refers to
  "expenditure in such local government areas completed or incurred within the period of two years …"
  May I take it from the Minister that the word "incurred" does not debar amendment of the Bill in respect of the word "approved" to be inserted in the Bill, should the Government change their mind in relation to the points that we have been discussing in the Second Reading debate?
  I realise that towards the end of his speech the Minister said that the Government woud not change their mind, but I hope that they will have second thoughts next week and will change their view. In that situation I should not like them to be embarrassed by having to amend the Money Resolution. Does the word "incurred" within the Money Resolution imply that if the Government change their mind after representations being made from hon. Members on both sides of the House the word "approved" in the Bill could be used in the Amendment?
  850
  My other question arises from the Minister's concluding remarks. I do not want to harass him further, but he said that he would look the matter up. He said that he thought that there was power to vary the levels. If he studies the Bill he will see that the power to vary has been modified. I am open to correction about this, but I should like to be taken through it. Clause 2(4) is in italics, and refers to the power to vary, and in relation to that I should like the Minister to examine paragraph (h) of the Money Resolution which amends, by subparagraphs (i), (ii), (iii) and (iv) the amounts referred to in the Bill on page 5 by means of orders and regulations.
  I cannot follow the language. I realise that it is lawyers' language. It says that the order
  "may be a regulation or order making provision for expenditure to which this Act applies which is different to the provision made for other expenditure".
  Does this mean that the Money Resolution is confirming, before we have even debated the matter, that we will be amending the ability of the Minister and the Secretary of State to vary orders and regulations? If so, the Government could find themselves in difficulty over this in Committee, if we are able to convince them that the power to vary should be in the hands of the Minister.
  My hon. Friend the Member for Glasgow, Bridgeton (Mr. James Bennett) has pointed out previously that the builders estimate costs going up by about 1 per cent. per month, which in the context of this Measure is 24 per cent. That, in relation to the maximum of £1,500, is a lot of money and the Minister may want to vary in the way I have mentioned.
  Before we pass the Money Resolution, I hope we will be assured that the Minister is not hobbling himself—and, more important, is not hobbling Parliament—over this matter in the face of the inflation in building costs.
  Mr. Gerald Kaufman: I wish to register a protest against the narrow way in which the Money Resolution is drawn, because it inhibits amendment of the kind I had hoped would be possible in Committee. I had hoped to suggest at that stage the inclusion in the Bill of certain constituencies which are at present excluded.

  851
  The Minister said that hon. Members would be able in Committee to make the points which are particularly concerning them. My hon. Friend the Member for Greenock (Dr. Dickson Mabon) complained on Second Reading about the lack of time available for us to reflect the points of view of our local authorities. Now the Money Resolution imposes a lack of scope for making Amendments.
  The Amendment that I had hoped to submit would have been to Clause 1(1) to include the city of Manchester in the Bill, but this appears to have been made wholly impossible by the way in which the Money Resolution is drawn. I hope that in future the Government will pay closer attention to the scope of these resolutions to ensure that a fair discussion in Committee is not made impossible.
  I recall the protest made by my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) about the way in which the Money Resolution pertaining to the Coal Industry Bill had prevented important Amendments going forward. The same thing is happening to this Bill. I therefore hope that the Government and the Treasury will in future frame Money Resolutions in such a way as to allow a fair discussion of points of great concern to hon. Members.
  The Under-Secretary of State for the Environment (Mr. Paul Channon): My answer to the point made by the hon. Member for Greenock (Dr. Dickson Mabon) about the word "incurred" is that it is not for me to say what will or what will not be in order in Committee.
  I pointed out earlier to the hon. Member for Willesden, East (Mr. Freeson) that we already had power, either by way of order or administrative action, to increase the maximum grant. This power is included in the 1969 Act, during the passage of which the hon. Gentleman played a distinguished supporting part. I cannot offhand give him the precise provision in that Measure where this power resides.
  The hon. Member for Greenock will appreciate, as he was a Minister for longer than I have been in office, that a money resolution is simply designed to provide the money for the purpose of the Measure. Most of this Resolution deals
  852
  with what will happen in England, though sub-paragraphs (c) to (h) specify the corresponding increases in Exchequer contributions for Scotland, and I am advised that what is provided for in relation to Scotland in this Resolution is on all fours with the provision made for England.
  I appreciate what has been said about the merits of the Resolution. I assure the hon. Member for Greenock that he will be able to make the points he wishes to make and to ask any questions he has in mind when we debate Clause 2(4) in Committee. In other words, if the hon. Gentleman requires further clarification of any of the points he raised, he will be able to do so at that point. The Money Resolution provides us with the actual money, and if hon. Gentlemen opposite allow us to have the Resolution I am sure that any points they wish to raise in Committee will be dealt with then.
  Dr. Dickson Mabon: I gather that the hon. Gentleman is saying "We are still keeping the power to vary", and I am pleased about that. I raised this point because I could not understand why the phraseology to which I referred has been used.
  Mr. Channon: This is a technical matter which is covered by Clause 2(4) of the Bill. That deals with Section 22 of the 1969 Act, and that relates to the power of the Secretary of State to vary contributions. I would prefer to deal with this point when we come to, say, Clause 2 stand part in Committee, or when replying to any amendments that may be tabled on this subject. I promise a full answer on that occasion.
  The Money Resolution merely gives us the money to take this power. If hon. Gentlemen opposite think that we should not have it, then we can go into this next week and take a decision, and on that occasion I will, as I say, give the fullest explanation of the provision which the hon. Member for Greenock has in mind.
  I agree with the hon. Member for Manchester, Ardwick (Mr. Kaufman) that the Resolution is drawn rather tightly. It is normal for that to be the case with a Bill of this kind. Whether or not something will be in order in Committee is, of course, not a matter for

  853
  me, though I hope that all hon. Members will have an opportunity to raise any points they think should be raised. I am sorry if the hon. Gentleman finds the Resolution too tightly drawn. It is difficult to see how it could have been drawn in a different way and yet be as efficient. I am advised that it follows normal precedent for Bills of this kind.
  Question put and agreed to.

  HIJACKING BILL
  Order for Second Reading read.
  The Minister for Trade (Mr. Michael Noble): I beg to move, That the Bill be now read a Second time.
  If the Bill is enacted, it will introduce a new word to the Statute Book. The word is "hijacking" whose origin, according to the Oxford English Dictionary, is to be found in the shout of "Hi Jack" uttered by those about to steal illicit liquor being carried by bootleggers in the United States in the days of prohibition.
  Whatever its origins, however, it is commonly used and understood today to relate to what is more solemnly called the "unlawful seizure of aircraft" in the title of the convention concluded at the Hague on 16th December, 1970, to which I shall refer later.
  The hijacking of American aircraft to Cuba became a regular habit some years ago and since then it has spread throughout the world. The events of last September culminating in the horror of Dawson's Field are still fresh in our minds. I am sure that I need not take up the time of the House by saying what an evil and dangerous thing the hijacking of aircraft is. I only say that the threat is still with us.
  It may be of interest, however, if I say something about the international campaign against hijacking and other acts of violence against aircraft which is being conducted by member States of the International Civil Aviation Organisation. This may be said to fall into two parts, the first being the development of practical preventive measures—for example, detection devices at airports—and the second being the development of a framework of international law designed to deter the potential
  854
  offender by ensuring so far as possible that there is no place of refuge for him.
  It is this second aspect, the international legal framework, on which I should like to elaborate a little and, in order to give the full picture, say something about the three main instruments around which it is being constructed.
  First, there is the Tokyo Convention of 1963, which deals generally with crimes committed on board aircraft, setting out the jurisdiction and duties of States and describing the powers of the aircraft commander in relation to such crimes. The enactment in 1967 of the Tokyo Convention Act, introduced by the Hon. Member for Caithness and Sutherland (Mr. Maclennan) whose initiative has been fully justified, enabled the United Kingdom to be among the first to ratify the Convention, which is now in force between 40 countries.
  Second, we have a draft convention dealing with what are described as
  "… acts of unlawful interference against international civil aviation".
  This is specially aimed at sabotage and similar acts other than hijacking. Its preparation was put in hand largely at the instigation of the United Kingdom at the Extraordinary Assembly of the I.C.A.O., which was convened in June, 1970, especially to consider all these matters affecting the security of civil aviation, and we hope that it will be finalised at a diplomatic conference which is to be held in Montreal this coming September. Its general form is likely to be similar to that of the third instrument, the Convention for the Suppression of Unlawful Seizure of Aircraft, to which I now come.
  This Convention was, as I have already said, concluded at a diplomatic conference at The Hague on 16th December, 1970, and I will for convenience refer to it from now on as the Hague Convention. It was signed at the time on behalf of 50 countries, including the United Kingdom, and since then there have been another 15 signatories, making a total of 65. It has been ratified by three countries—Japan, Bulgaria and Costa Rica—and several other countries are known to be preparing for ratification. It will come into effect between ratifying countries 30 days after the tenth ratification has been deposited.

  855
  The considerable and growing number of States which have signed it suggests that the Convention has struck the right balance between two sometimes conflicting objectives which those who prepared it had before them. These were to produce a convention which had enough teeth to be effective and, at the same time, one which would attract widespread adherence.
  What the Convention does is, in brief, to require contracting States to make the hijacking of an aircraft an offence punishable by severe penalties. It includes provision for arrest, facilitates the extradition of offenders between contracting States and obliges any contracting State where the offender is found to take jurisdiction to prosecute him if it does not extradite him. We believe the Convention to be a valuable instrument, and it has been welcomed by all sides of the air transport industry in this country; that is to say, by airlines, airport authorities, the T.U.C. and the British Airline Pilots Association, many of which have pressed for its early ratification.
  The main purpose of the Bill is to enable us to do just this; to ratify the Hague Convention. Not all the provisions of the Convention need to be reflected in the Bill, since they can be given effect to administratively and no legislation is needed to implement them.
  The Bill is therefore splendidly short, although it covers two points which were excluded from the Convention, but for which we think provision should be made in our own law. These are first what I may call "domestic hijacking", where the offence is committed and ends in the territory of the State in which the hijacked aircraft is registered and, second, the hijacking of a military, customs or police aircraft.
  The Bill contains only seven Clauses, and I need not detain the House much longer if I mention the first three of these, which are also the most important. Clause 1 as is required by the Hague Convention, creates the offence of hijacking, and provides that anyone who commits it is liable on conviction on indictment to imprisonment for life. This is regardless of the nationality of the hijacker, the nationality, if I may so put it, of the aircraft, and the whereabouts of the aircraft at the time. This otherwise
  856
  all-embracing generality is qualified in the case of domestic hijacking and the hijacking of military, customs or police aircraft which are outside the scope of the Convention and where the extent of our jurisdiction must therefore be less.
  Clause 2 gives effect to the provision of the Hague Convention which requires each contracting State to ensure that its courts have jurisdiction not only over offences of hijacking but also over acts of violence against passengers or crew committed by the hijacker in the course of the hijacking. The object of this is to ensure that where another serious offence involving violence, such as murder, is committed, in the course of the hijacking, a State is not in the position of being able to deal with the hijacking but not with the other possibly more serious offence.
  Clause 3 makes those amendments to the law which are necessary in order to implement the provisions of the Hague Convention relating to the extradition of hijackers between contracting States. It does this by amending the Extradiction Act, 1870, and the Fugitive Offenders Act, 1967, so as to provide that hijacking is an extraditable offence under the 1870 Act and a returnable offence under the 1967 Act. It also provides that, where there is no bilateral extradition treaty with a State which is a party to the Convention, an Order in Council may be made under Section 2 of the 1870 Act as though the Convention constituted an extradition treaty with that State.
  I need not mention the remaining Clauses at this stage. I will say only that, having played a leading part in the making of the Hague Convention, which we believe will contribute to the safety of of international air transport, we are anxious to ratify it with all expedition. All sides of the House have followed the Convention's progress with interest and, I am sure, will welcome the Bill which is to give effect to it. I therefore commend the Bill to the House.
  2.17 p.m.
  Mr. Roy Mason: On behalf of the Opposition, I welcome the Bill. It is one of those Measures which I have watched through its whole gestation period. It is a good Measure, but I do not think that it will necessarily solve the problem. There are still gaps that need to be filled if we are to obtain effective international action which is

  857
  designed to suppress aircraft hijacking as a means of recognising revolutionary minority forces, fanatical nationalists, saboteurs and other like criminals—and gaps which may still remain whereby some States will still prove to be attractive havens for the hijacker himself.
  As the right hon. Gentleman said, the Bill flows from the Tokyo Convention, and it is a useful second stage towards establishing the special framework we desire to curb aircraft hijacking activities. The Tokyo Convention, introduced in the House in December, 1966, dealt with offences on board aircraft and acts which might jeopardise good order and discipline on board, and spelt out an aircraft commander's rôle and responsibilities, but an offender apprehended in a State of which he was not a national could, as soon as was practicable, proceed to any destination of his choice. Extradition could not be enforced, nor was this type of offence regarded as a returnable offence. Emphasis in the Tokyo Convention was placed on restoring the aircraft, in the event of its seizure, to its lawful commander, and returning it and the cargo to the person lawfully entitled to possession. This has been the understood international practice until, as the right hon. Gentleman mentioned, there was this epidemic of seizures at Dawson's Field.
  The first recorded hijacking of an aircraft occurred in Peru in the 'thirties, but it was not until the recent post-war years that it became a phenomenon of air travel. In the 'forties and early 'fifties, most hijackings occurred in Europe as political refugees from the Eastern European bloc used this technique to divert an aircraft and escape in it to West Germany and, in particular at that time, the American zone of West Germany.
  In the late 1950s the pattern changed. Many hijackings occurred on internal flights in the United States of America. Then the escapee, or political refugee, started using this technique again to flee from the United States to Cuba. In the late 1960s, the effectiveness of hijacking as a political weapon was ruthlessly exploited by extremist guerrilla movements, especially in the Middle East. So we have witnessed a spasmodic but global shifting focus of hijacking, as it moved from the East-West European belt across to the United States and Cuba, and finally
  858
  in its most ruthless and murderous form, into the Middle East area. Hijacking, combined with calculated acts of sabotage and the new dimension of using the hijacked passengers as hostages to obtain the release of guerrillas and other sympathisers held in other countries, reached its climax only last year.
  This, then, is the modern major threat to airline travel and airlines. But it is also a very real threat to the small and the young democracies whereby the hijacking of aircraft and hundreds of innocent passengers can be used as pawns in inter-State or inter-regional conflicts. It can now be used as an international tool to prise out of Governments demands by rebels and fanatical political minorities that otherwise would never be recognised.
  It is against that background that we must consider how best to legislate and to make this international legislation effective. To date, there have been recorded 273 hijackings, and 20 have occurred this year. We must not think that, because there is a lull in the worst form of murderous or blackmailing hijacking, it has ceased altogether; indeed, it still goes on. Air travel has always been, and always will be, vulnerable in the face of a determined lunatic, an armed criminal or a paranoic, but those are rare compared with the waves of serious hijackings which are premeditated and callously planned to hold airlines, passengers and nations to ransom. It is because we as a nation have been subjected to this type of blackmail, because the Tokyo Convention did not cover this crime and because there is no clearly understood international law dealing with hijackers and their punishment, that the Bill is before us.
  The Bill decrees that hijacking be an offence if a person seizes or exercises control of an aircraft; the punishment to be meted out, which may be equivalent to imprisonment for life; and extradition of the hijacker between Convention States. It introduces positive changes in our law to make hijacking an extraditable offence under the 1870 Extradition Act and a returnable offence under the 1967 Act. All this is to the good, and the quicker we legislate, the better.
  But, first, the problem is the time scale. Our last yardstick was the Tokyo Convention in 1963. Sixty-one States were

  859
  represented. It was not until 1966 that the Bill came before the House of Commons, and it was 1967 before it went before the House of Lords. The Convention could come into force 90 days after 12 of the signatory States had deposited their instruments of ratification with the Internation Civil Aviation Organisation. But this was not achieved until the end of 1969. Six years elapsed, flowing from the Tokyo meeting, to establish an international law.
  Changing the international law of the air is like changing the law of the sea. The Inter-Governmental Maritime Consultative Organisation has been busy in recent months, and we have been legislating in this House, with the Oil In Navigable Waters Bill, on civil liability for oil pollution. But we know that to change the law of the air and of the sea takes time. Conventions are slow to meet. Nations are slow to legislate, and international ratification is terribly slow.
  This Hague Convention met in December, 1970. Fifty-one countries were represented. This will enter into force 30 days after ten participants have deposited their instruments of ratification. The right hon. Gentleman said that already three have ratified, Japan, Bulgaria and Costa Rica. It is of paramount importance that we do not have to wait too long for the other States and have to suffer the elephantine gestation period which we suffered when the Tokyo Convention took place, and for the six years before that became the international law.
  While we are waiting, B.O.A.C., B.E.A. and the other international airlines, which have erected a screen of precautions, would be wise to maintain many of them. We may all have fears about the introduction of air marshals, frisking at the airports, separating luggage from passengers, security patrols and so on, but undoubtedly this collection of measures has helped to curb the easier type of hijacking operations. Airlines would be well-advised to maintain their guard. This international law may yet take some time to be effected and, in any case, it is not the absolute answer.
  Also in this context, we were impressed by the British Airline Pilots' Association and the International Federation of Airline Pilots at the height of this epidemic of hijacking. They expressed serious con-
  860
  cern. Theirs was the final responsibility, but they kept the airlines operative. They considered an international stoppage, which would have severely jolted the airlines and might well have forced the pace in reaching international agreement. But instead, their approach was considerably restrained and remained statesmanlike throughout the crisis.
  I have two other concerns about the Bill. Of the 51 signatories to the Hague Convention, only one Arab country attended—Iran. No other Arab country participated. Practically the entire Arab bloc ignored this conference, and it has not indicated that it is prepared to cooperate. This could be a serious omission, and could jeopardise the whole international plan to punish the hijacker and block his avenues of escape. Havens may still exist where this new style of air pirate can seek refuge. The right hon. Gentleman mentioned that there may be another international law being framed to block those avenues. Let us hope that that comes about quickly. Cuba, too, did not attend the conference, but that nation pales into insignificance compared with this vast segment of the Middle East.
  As I said at the outset, the Tokyo Convention was the first stage of establishing an international law of the air governing acts on board aircraft and seizures. The Hague Convention is a sensible, useful, urgently-required second stage. But there might have to be a third. If the Arab countries ignore this conference and the international law which flows from it, as they are members of the International Civil Aviation Organisation and most of them are members of the International Air Transport Association, if there is any repetition of the 1970 piratical acts emanating from their countries or of their nations being used as receivers of seized aircraft, criminals or guerrillas, then these two international bodies, the I.C.A.O. and the I.A.T.A., will have to consider freezing them out of airline operations, and this would be the ultimate sanction. This should be in the forefront of the minds of all who are now legislating with this Bill which flows from the Hague Convention. I hope that the Minister will comment on the seriousness of the Arab bloc's non-co-operation.
  My second concern is that within the Bill we agree to extradite. This has been

  861
  called for by many Members of Parliament. Indeed, it was discussed at the Tokyo Convention in 1963 and the United Kingdom was one of the countries that objected.
  This may cut across one of our time-honoured practices of affording political asylum to a political refugee. I take it though, that although we have opposed it previously, Her Majesty's Government are now agreed that, irrespective of the hijacker's cause, if he comes to Britain, he will be sent back to the nation from whence he came. I take it that, if he seeks political asylum by using the hijacking technique, the act of hijacking will have branded him an international criminal before his case for political asylum can be presented. This must be made clear. If there is to be international collaboration, all countries must honour their obligations, both East and West.
  Hijacking is not a political crime and therefore the hijacker cannot claim political asylum. By threatening the lives of many innocent people and contravening this new law of the air, he will be automatically forfeiting his claim to his desired political refuge. This is a major change, but if we are to stamp out piracy in the air, it seems necessary.
  Finally, having borne the brunt of the wrath of Parliament as President of the Board of Trade during the worst period of hijacking activity and pleaded time for an international agreement to be established, I am pleased that this Convention is now before most of the aviation nations of the world and doubly pleased that Her Majesty's Government are acting so quickly. The law of the air is urgently needed; this change is urgently needed; and the quicker it is made, the better.
  2.32 p.m.
  Mr. Norman Tebbit: The Bill I unreservedly welcome. My mind, too, goes back inevitably to the events of last September. I will not dwell upon them beyond saying that those who were most closely involved were my former colleagues and many of them my friends.
  When we have given the Bill its Second Reading, as I am sure we shortly will, I trust that we will not all return home imagining that everything will shortly be well. It is certain that there will be further outrages of this sort, of the sort that imperil the lives of so many people in such a spectacular manner.
  862
  Convention or no convention, law or no law, there will always be, too, those who would counsel surrender to violence. Some will advocate it because of sympathy with the political aims of those who commit it; some will do so because they are natural surrenderes.
  Just as surely, there will have to be Ministers who will have the courage to withstand the political and emotional pressures which will be put upon them, even if the Bill is passed, in order to protect the public. This is an abominable crime—hijacking it is now called, piracy, kidnapping, holding to ransom, whatever it may be called—and it has always been regarded as an abominable crime. We have to remind ourselves again that it is a crime with which only Governments can deal, though airlines, too, help by taking precautions.
  Above all, we should remember that the first responsibility of the captain of an aircraft must be the safety of his passengers at that time and that the wider issues of politics and resistance to terrorism must be for Governments, which will look at matters in the longer term.
  I hope that my right hon. Friend will reply and that he will make clear the position of Her Majesty's Government in its relations with other countries which do not adhere to this Convention, but with which we may have an extradition treaty. In particular, will Her Majesty's Government consent to the extradition of hijackers, particularly those asking for political asylum, from a country which is not a party to the Convention and which, it might therefore be argued, would be in a particularly special position as not having a similar method of dealing with those who hijack aircraft in different circumstances? I do not put it too well. Will Her Majesty's Government consent to the extradition of hijackers, particularly those asking for political asylum, if that request is made by a country not a party to the Convention which, it may be thought, might therefore not consent to the extradition of a hijacker of a British aircraft who went into that country?
  I do not, as has sometimes been suggested to me, act as a spokesman in the House for B.A.L.P.A. Nevertheless, I believe that I speak for all its members in thanking the right hon. Member for Barnsley (Mr. Mason) for what he has

  863
  just said of the conduct of the International Federation and the British Airline Pilots Association during last year. I know, because I asked B.A.L.P.A. officially its reaction to the Bill, that it gives it its wholehearted and complete approval. Officially, it would not change a word of it, although unofficially, I know, many pilots would like to amend life imprisonment to hanging, and I find it difficult at times to disagree with them. They express their anxieties, which are those which the right hon. Member for Barnsley expressed so well.
  This is an international matter, and I should like the Government when negotiating bilateral agreements about air traffic to make adherence to this Convention a condition of any bilateral agreement. I know that there are commercial and political pressures to make such agreements, but there is a heavy responsibility on the Government to do what they can in international aviation, which is still much of a jungle, to look after the safety of air traffic and the passengers of aircraft. This is one of the few levers which we can apply to the countries which would otherwise not play the game by the international rules. I welcome the Bill on behalf of all my former colleagues in B.A.L.P.A. and on behalf of the members of my former profession throughout the world.
  2.38 p.m.
  Mr. Percy Grieve: I hope that the House will forgive me if I take a few minutes, and I hope that it will be very few, on a Friday afternoon to congratulate my right hon. Friend and the Government upon this speedy implementation of the Hague Convention. I was present at the Plenary Session of the Council of Europe at Strasbourg last October in a year which saw an upsurge of these appalling acts of piracy in the air, at which the anxieties of all Western European nations were manifest and at which everybody looked to the then forthcoming assembly at The Hague to strike a blow for freedom of the air, as for centuries we had had freedom of the sea, and for the enforcement of international law in the air.
  The trouble about the Tokyo Convention was that it was wholly inadequate. It was a slight step forward, but it was wholly inadequate to deal with what had
  864
  become one of the most appalling manifestations of a descent into barbarism in international life. It failed very largely because Article 14 asked the State which found on its soil somebody who had been guilty of one of these acts to send him forward to continue his journey to the State of which he was a national, which was as good a let-out as could conceivably be found for an air pirate.
  The Bill which will implement The Hague Convention will go a long way to ensure that in all civilised countries—and I imagine that in due course all civilised countries will adhere to the Hague Convention and ratify it—people who put innocent lives, frequently the lives of women and children, in danger and who make a mockery of international law are speedily brought to justice. I welcome particularly the provision which extends the operation of the Extradition Act, 1870, to enable Her Majesty's Government to extradite offenders to countries with which we do not otherwise have an extradition treaty, because I believe that this will be an important and powerful sanction.
  The right hon. Member for Barnsley (Mr. Mason) mentioned that this year there had been a slight lull—I emphasise "slight", because there has still been a number of cases—in the number of hijackings, but the magnitude of the problem with which the civilised world has to deal can be illustrated by a brief consideration of the number and importance of the cases of hijacking last year and in the previous two years.
  In July, 1968, an Israeli airliner was forced to fly to Algeria and 12 of the passengers were kept as hostages. In February, 1969, 47 people died when there was a bomb explosion on a Swissair jet flying from Zurich to Tel Aviv. In September, 1969, Palestine guerrillas hijacked an American airliner to Damascus and held six Israelis prisoner. In April, 1970, there was the case of the Japanese Maoists hijacking an airliner to North Korea. In July, 1970, 47 passengers aboard a Greek airliner were held prisoner at Athens. Finally, there were the appalling cases last September, when four airliners were hijacked by the Palestine guerrillas and, finally, the airliners concerned were blown up at Dawsons Field.

  865
  In my view, those cases alone would be sufficient to show that we are facing today throughout the world very much the same sort of problem, although for different motives, as for several hundred years the civilised world faced in dealing with piracy on the high seas. It is time that hijacking in the air was dealt with with the same severity and the same degree of international agreement and that it became outlawed by the whole international community.
  I share the anxieties of the right hon. Member for Barnsley concerning the abstention of a large part of the Arab world and other States from the gathering at The Hague. I hope that Her Majesty's Government and all other Governments which ratify the Convention will bring all diplomatic pressure to bear upon those countries in due course to ratify the Convention and adhere to the ordinary rules of civilised behaviour in relations between nations.
  There are many ways in which diplomatic pressure can be brought to bear and in which countries can be told that they will not receive the ordinary consideration which is due to nations in the civilised world if they do not behave with ordinary elementary, civilised respect for innocent men, women and children going about their ordinary purposes in aircraft all over the world.
  2.44 p.m.
  Mr. Noble: I should like to answer some of the questions which have been raised and to thank right hon. and hon. Members, on both sides, for the way they have paid tribute to the speed with which we are trying to get the Convention ratified.
  As the right hon. Member for Barnsley (Mr. Mason) said, the Bill in itself, important as it is, cannot solve the whole problem. Although only three States have so far ratified the Convention, we happen to know that quite a considerable number of others are in process of ratification. We shall move as quickly as we can. I am told that even so, we are not likely to be in the first 10. We hope that, with luck, the whole operation will move fairly fast.
  Reference has been made to the Arab States. Three of them—the United Arab Republic, the Lebanon and Tunisia—
  866
  were represented at The Hague, and one Arab State, Iraq, has already signed the Convention. We all appreciate, I think, that at the time in question last year, there were rather obvious political difficulties in the Arab world. Nevertheless, I very much take the point made by my hon. Friend the Member for Epping (Mr. Tebbit) and my hon. and learned Friend the Member for Solihull (Mr. Grieve), as well as by the right hon. Member for Barnsley, that all possible pressure should be put not only upon the Arab countries, but upon the maximum number of countries, to make certain that this abominable offence is made at least a good deal more difficult.
  The other point on which I would like to say a word is the question of extradition. I am not a legal expert and I am, therefore, rather unnerved by the presence of hon. Members who understand these things a great deal better than I do, but I shall try to explain the position as I see it. The Bill makes hijacking an extraditable offence. Therefore, if somebody arrives in this country by a hijacking method, we can do one of two things. We can either try him in our own courts or, if we have an extradition treaty with the country concerned, we can arrange for his extradition. If we do not have such a treaty, there are special methods under the 1870 Act whereby he can still be extradited. If, however, that person claims that his action was in pursuance of trying to obtain political asylum, his case will be heard in our courts. If they so decide, we cannot extradite him, but we can still prosecute him in this country for his hijacking offence.
  I hope that in these rather simple words, although probably not very accurate legally, I have given the House a layman's picture of what the situation will be when the Bill comes into force. I am grateful to right hon. and hon. Members who have taken an interest and come here on this Friday afternoon, and I hope very much that the House will give the Bill a Second Reading.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Committee of the whole House.—[Mr. More.]
  Committee upon Monday next.

  MEDICINES BILL
  Considered in Committee; reported, without Amendment.
  Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time, and passed.

  CRIMINAL DAMAGE BILL
  [Lords]
  As amended (in the Standing Committee), considered.

  CRIMINAL DAMAGE BILL
    Clause 3

      POSSESSING ANYTHING WITH INTENT TO DESTROY OR DAMAGE PROPERTY
      Mr. Deputy Speaker (Sir Robert Grant-Ferris): There is a printing error on the Notice Paper of Amendments. The Amendment shown as No. 1 is, in fact, not No. 1. It reads: In page 2, line 5, leave out 'anything' and insert:
      'any inflammable or noxious substances or any dangerous or noxious thing'.
      The first Amendment is, in fact No. 2, in page 2, line 5, after 'who', insert 'without lawful excuse'. With it we can take Amendment No. 3, in line 6, leave out 'without lawful excuse'.
      2.50 p.m.
      Sir Elwyn Jones: I am most grateful for that information, Mr. Deputy Speaker, and it will indeed be convenient to discuss these three Amendments together.
      Mr. Deputy Speaker: Two.
      Sir Elwyn Jones: But all three Amendments could conveniently be discussed together for they all arise out of the same point.
      Mr. Deputy Speaker: Very well, if that is for the covenience of the House.
      Sir Elwyn Jones: I beg to move Amendment No. 2, in page 2, line 5, after 'who', insert 'without lawful excuse.'
      These Amendments derive from our concern about the wide terms and implications of Clause 3 as it is now drafted,
      868
      linked as that Clause is with the powers of search of homes and premises, powers provided for in Clause 6 in respect of which we have put down Amendment No. 4. In Committee we on this side expressed our anxiety about this Clause, and the Under-Secretary of State undertook to look at it again, and although he gave no undertakings that there would be any Amendments I am disappointed that nothing by way of Amendment has emerged from the consideration which he and the Home Office have, no doubt, given to this matter since Committee.
      Clause 3 provides that a person who has
      "anything in his custody or under his control intending without lawful excuse to use it or cause or permit another to use it—

      (a) to destroy or damage any property belonging to some other person; or

      (b) to destroy or damage his own or the user's property in a way which he knows is likely to endanger the life of some other person;

      shall be guilty of an offence."
      Clause 6 is linked with that in giving powers to search for things intended for use in committing offences of criminal damage.
      The Clause constitutes an extension of the power of the police to enter people's homes. That is only justifiable in the clearest and most serious circumstances. When an attempt is made in this way to provide powers to invade the privacy of one's home a heavy burden of proving the necessity to do so falls on the shoulders of the Government, and I am anxious today that the Under-Secretary should spell out clearly what he claims to be the justification for what is proposed. In our view, while a serious problem does exist in regard to petrol bombs, and while we see a case for punishing for the possession of substances or articles which in themselves are offensive or unlawful with intent without lawful excuse to use them to destroy property, the Clause as now drafted goes further than this. The word used in the Clause is "anything" and, as it stands, the offending object can be an object most innocent in itself—a box of matches, a milk bottle, a hammer, the sorts of things which one normally finds in anyone's home.
      Under the Clause the offending object does not have to be found on the offender's person. The Bar Council wanted

      869
      the Clause restricted to that. The criminal law already has provisions for punishing a person with potentially offensive things on him—a thing like a brick—when the person concerned is taking part in a disorderly demonstration involving a breach of the peace. The new powers are really not necessary to deal with that particular mischief. If the language of the Clause stands, "anything" in a house will do for that purpose of laying the foundation for proceedings. We on this side think that the Clause should be more restricted.
      In the Amendment which I think is now No. 2 we propose to leave out "anything" and to specify things the possession of which, in the circumstances envisaged in the Clause, could reasonably be declared to be criminal. In place of "anything" we propose to substitution of a precisely defined type of thing or object, namely,
      "any inflammable or noxious substances or any dangerous or noxious thing".
      As far as explosive substances are concerned, the Explosive Substances Act, 1883, contains two provisions prohibiting the making or possession of explosives. Those provisions carry very heavy penalties, and that will still remain part of our law. We think it right to spell out the object or thing in the way we propose in the Amendment instead of the generality of the word "anything" which the Clause at present contains.
      The other Amendment, replacing the position of the words "without lawful excuse", where they were originally in the Law Commission's Report, is frankly a further attempt to restrict the scope of the Clause. As I have said, the Clause as originally drafted by the Law Commission and published in its Report, contains the words "without lawful excuse" in the position in which the Amendment now proposes to place them. The Amendment in Committee in another place resulted in the change being effected. If the Clause were to read:
      "A person who without lawful excuse has anything in his custody or under his control intending without lawful excuse to use it … to destroy … any property belonging to some other person …"
      the prosecution would then have to establish that the custody or control of the thing in question was itself without lawful excuse. If that were established as the first matter to be proved by the prosecution, the prosecution would have
      870
      to go on to prove the intent, which admittedly is the essence of the offence.
      3.0 p.m.
      Was that what the Law Commission intended? If there has been a change, what is the reason for the change? The noble Lord, the Lord Chancellor, replying to the speech of the mover of the Amendment, said:
      "I tried very hard to make out whether the noble Lord is right or wrong in his Amendment. He is probably right, and therefore I propose to accept it."—[OFFICIAL REPORT, House of Lords, 30th March, 1971; Vol. 316, c. 1248.]
      Good stuff, if I may say so, from the noble Lord, characteristic of the man we used to know here.
      That was as far as discussion of this matter went in another place, and I do not think it went far enough. Accordingly, we on this side of the House feel that the Under-Secretary of State should explain why the drafting of the Law Commission was rejected and why the Amendment moved in another place was agreed to. After all, the fact that these proposals emanated from the Law Commission gives them enormous weight when they come before the House. Although my admiration for the Law Commission does not lead me to conclude that we should accept everything it suggests or brings forward to us, I should require good reason for departing from what it proposed on such an important matter. Therefore, I ask the Under-Secretary of State whether the intention was not originally to set greater limits on the proposed offence than we now find in the Clause, and what justification there is for broadening the matter as was done by the Amendment in another place.
      The other Amendment would be convenient for discussion later.
      The Under-Secretary of State for the Home Department (Mr. Mark Carlisle): I am sure the House is grateful to the right hon. and learned Gentleman not only for placing these Amendments on the Order Paper to enable us to look again at the wording of Clause 3, but also for the customary clarity with which he has explained to the House the difficulties involved in this Clause.
      In Committee I conceded that there was bound to be concern at the width of Clause 3 as it appeared in the Bill. On being pressed by the right hon. and

      871
      learned Gentleman and others in Committee I said that, in view of the right hon. and learned Gentleman's feelings, I would of course look at it again to see whether it required amendment, although I also said:
      "I shall look at the right hon. and learned Gentleman's suggestion but, on balance, I think that it is right to have this wider offence."—[OFFICIAL REPORT, Standing Committee D, 17th June, 1971; c. 37.]
      Having looked again at the Clause, I have come to the conclusion that, if it is to succeed in meeting the mischief which it is aimed to meet, it is impossible to see how one can achieve that end in words that are narrower than those used, or how it could be limited in a way which would still achieve the purpose, which the right hon. and learned Gentleman welcomed.
      I must probably take a high degree of responsibility for misleading the Committee when I talked about this as a rather novel feature of our law and said that I knew it was one which would raise concern to a lawyer. If one goes back to the Malicious Damage Act, 1861, one finds that, far from this being as I thought—and due to my incompetence in saying so led other people to believe—a new provision, it very nearly repeats in more up-to-date language provisions which have existed for more than 110 years in Sections 54 and 55 of the Malicious Damage Act.
      I do not think it can be suggested—and we at the Home Office have no evidence to suggest—that although a similar provision has been on the Statute Book for over 100 years it has during that period led to the abuse which it could possibly give rise to at first sight. There is no evidence to suggest that the power in Sections 54 and 55 of the Malicious Damage Act, 1861, which relate to making it an offence for anyone knowingly to have in his possession any dangerous or noxious thing or any machine, engine, instrument or thing with intent thereby or by means thereof to commit an offence, has in practice led to abuse.
      To turn to the Amendments, I wish to consider why the Government chose to accept the Amendment moved by the noble Lord, Lord Airedale, in another place which changed the position of the words "without lawful excuse" in the
      872
      Bill as originally drafted. The brevity of debate in the other place on that occasion should not be taken as indicating the amount of thought given to this matter in the Home Office before the recommendation was made that the Amendment should be accepted.
      The reason the Government decided to accept the Amendment was that we felt the new positioning of the wording would more clearly meet the clear intention of the Law Commission than the form in which the Bill was originally drafted. The Law Commission in paragraph 60 of its Report No. 29 said, when discussing this particular offence:
      "The essential feature of the proposed offence is to be found not so much in the nature of the thing—for almost any every-day article, from a box of matches to a hammer or nail, can be used to destroy or damage property—as in the intention with which it is held. The intention of the possessor to use the property himself for the prohibited purpose is straightforward. It is also necessary to include the intention of the possessor to permit or cause another to use the thing …"
      The Law Commission's view of the offence is that it is not possession of the article but the intention with which it is possessed that creates the criminal offence. The words "without lawful excuse" should be in such a place in the provision to make clear that they relate to the intended use rather than the basis of the possession of the article itself.
      Mr. Jeffrey Thomas: The real difficulty when somebody is in unlawful possession of an article is in proving the intention of the person in relation to its use. This is why the words were used in that particular place in the provision.
      Mr. Carlisle: With respect to hon. Gentlemen, I do not accept that. It is not a matter of the unlawful possession of the article, or the fact that the person has not lawful excuse to have the article. It is his intention to use it for an unlawful purpose. If the reverse is the case there is no point in the Law Commission saying, as it did in its report, that almost any everyday article, from a box of matches to a hammer or nail, can be used to destroy or damage. If there is intention to use an everyday article to damage something, then if the Bill were drafted as originally intended, it would have to be shown that there

      873
      was no lawful excuse to have in the possession of that person the hammer, nail or box of matches. That would be an impossible position and would be directly contrary to what the Commission argues in paragraph 60 of its report.
      Mr. Clinton Davis: Is there not a practical difficulty, with legislation drawn in such wide terms, in being able to obtain a conviction? I think that the difficulty with which prosecutions will be confronted is that the courts will be loth to convict.
      Mr. Carlisle: It may be a practical difficulty, but my answer would be that it would be very much more difficult to prove lack of lawful excuse for possession than it would lawful excuse for the intention of using the article.
      The effect of the Amendment would be that the mental element would be transferred not from the intention with which one uses the article but to the possession of the article itself. It would limit an offence only to where one could show that the possession itself was without lawful excuse. Therefore, if there was any innocent object which could, prima facie, be an innocent object and was held for the purpose of using it with intent, without excuse, to cause damage, one could never obtain a conviction because one could never show that the possession of the article itself was without lawful excuse.
      The effect of the Amendment could be to limit the possession to being without lawful excuse or, alternatively, it could be argued that one would then have to have, without lawful excuse, both custody and possession of the article and the intention to use it. If one had to show that the article was held without lawful excuse, then the person making the petrol bomb, for example, from a can of petrol which happened to belong to him, in his house, presumably would be committing no offence because he could say that he had lawful excuse to have a can of petrol in his house or garage. But if he had stolen a can of petrol for the purpose of making a petrol bomb, he would be committing an offence because one could say that he had no lawful excuse for having the petrol at all. It seems an extraordinary position that, where one is concerned with the intention with which the goods are being held,
      874
      the argument would then revolve around whether or not the person was in lawful possession of the article.
      Equally, it would mean that, if one had in one's house, without lawful excuse, limited purely to the possession, a stolen sledgehammer with which one was intending to damage someone's property, but perfectly lawfully doing so—in other words, knock it down at the owner's request—one would then be committing an offence under Clause 3 because one would then have no lawful excuse for having the article in one's house. It is clearly impossible to limit the words "custody or control" by the phrase "lawful excuse". What was clearly intended was that the lack of lawful excuse should limit the intention with which it was proposed that the article should be used. For those reasons it was decided that the Amendment put down by the noble Lord, Lord Airedale, met the intention of the Law Commission to make it an offence to have articles, perhaps of an everyday nature, in one's house without lawful excuse and with the intention of using them to damage or destroy another's property. In the opinion of the Government, the Bill, as amended, meets the intention of the Law Commission on this point.
      3.15 p.m.
      I now turn to the other Amendment which attempts to limit the scope of Clause 3 by removing the word "anything" and specifying in its place particular articles which it would be an offence to have in one's possession with the intention, without lawful excuse, of using them.
      It is impossible to find any definition which can limit Clause 3 in this way without breaching the whole purpose of the Clause. Surely what matters is not the inherent nature of the article, as would be the effect of the Amendment, the "inflammable or noxious substance", but the use to which it is proposed to be put.
      It is an extremely wide offence, but we are facing a situation where there is a need for a power of this kind because a potential group of extremists is prepared to attempt to use widespread destruction as a means of demonstration. It is far better to have a Clause which enables us to cover any article which may be

      875
      intended to be used for that purpose than one which is limited to a particular type of article and perhaps has to be repeatedly amended as different manifestations of this violence become apparent.
      Sir Elwyn Jones: Is not the immediate mischief with which we are concerned the petrol bomb? The Amendment spells out that mischief quite specifically. It would be helpful if the Under-Secretary would explain what wider mischief than that the Government have in mind in insisting on the broad generality that any object, however innocent. could be the basis of a prosecution.
      Mr. Carlisle: I accept that the petrol to go into the bomb would clearly be covered by the word "inflammable". The other articles used for the preparation of a petrol bomb presumably would not. Are we bound to assume that the danger must always be the petrol bomb? A recent example is the move from the petrol bomb to the nail bomb.
      Sir Elwyn Jones: It is a "noxious thing".
      Mr. Carlisle: The right hon. and learned Gentleman says that it is a noxious thing. The dictionary definition of a "noxious thing" is "unwholesome".
      Sir Elwyn Jones: Or "dangerous".
      Mr. Carlisle: Dangerous or unwholesome. The Pocket Oxford Dictionary definition is "harmful or unwholesome".
      Sir Elwyn Jones: It is "dangerous".
      Mr. Carlisle: We are considering putting into the Clause words which the right hon. and learned Gentleman would argue are so clear and precise that they cover the possible dangers without going wider.
      We must look to the definition: it is either a dangerous or noxious thing which is unwholesome or harmful. Is a nail or a box of studs a dangerous or a noxious thing? They may be being held there for the purpose of making nail bombs to cause damage and destruction. It is not possible in a provision like this to attempt to limit in advance the type of articles which might create the offence. What is inherent in this offence is the intent
      876
      concerning the use of the article and not the article itself. Although the Department will study the points made we have concluded that this type of attempt to narrow the effect of the Bill is not the right way and it is better to leave it as a wide offence in the way that the Law Commission recommended, remembering that the safeguard always lies with the necessity to prove that the articles were held with the intention of using them to destroy property.
      Mr. Jeffrey Thomas: The Clause as it now stands represents in our view a serious and far-reaching encroachment of individual liberty. If these Clauses had been introduced by a Labour Administration the dogs of war would have been unleashed and we should have been the victims of the kind of Press attack normally reserved for child beaters and abductors of orphans.
      It is indicative of a wholly new concept of law in that for the first time the articles and items which under previous legislation have been carefully described and confined within the terms of the titular Act of Parliament are unlimited. This is the part of the Measure to which we take the greatest exception. We think that many of the matters complained of by the Under-Secretary and particularly the mischief with which he is mainly concerned are more than adequately covered by other legislation.
      The only realistic illustration which we had from the Government of the kind of mischief which this particular Clause wishes to end is the mischief of the petrol bomber. Time and again the Under-Secretary when asked for an example of the kind of thing he has in mind simply referred to the petrol bomber or the individual who will take a milk bottle, a piece of cotton wool and so on.
      Matters of that kind are more adequately covered by other legislation. It has never been suggested that there is compelling evidence that the petrol bomber case is not covered by other legislation. The highest at which this has been put by the Government is that it may not have been covered by other legislation. That was the position in another place and when we discussed this matter on Second Reading. The other legislation which runs parallel with this Bill and which provides, in our view,

      877
      an illustration of the adequate coverage of this type of offence, is the Firearms Act of 1968. Apart from dealing with the general question of the possession of firearms and ammunition, Section 5 refers to the possession of
      "any weapon of whatever description designed or adapted for the discharge of any noxious liquid, gas or any other thing and any ammunition containing, or designed or adapted to contain, any such noxious thing".
      These are already offences.
      Section 1 of the Prevention of Crime Act, 1953, which deals with offensive weapons, says that
      "Any person who without lawful authority or reasonable excuse … has with him in any public place an offensive weapon shall be guilty of an offence."
      The important aspect of that offence and of offences under Section 8 of the Theft Act—being in possession of housebreaking implements—is that the offender must have such article in a public place. It must be strictly proved that the offender, at the time of the offence, was not at his place of abode.
      That is the danger of this Clause. It is one thing to be in possession of an article in a public place; it is a completely different thing for an offender to be in possession of an article—particularly an article of an ambiguous or equivocal kind—in his own home. In our view our Amendments would restrict the use of the Clause and, at the same time, ensure that the kind of mischief referred to by the Under-Secretary is catered for.
      Mr. Clinton Davis: I have no doubt that we are all at one in seeking to attain the same object. Nevertheless, I cannot help feeling that this legislation is extremely clumsy. It is obvious that society must protect itself against petrol bombers and the like, and that people are in fear of the sort of situations that have arisen with greater frequency recently, but we must also guard against giving the Executive powers which are capable of abuse. I support my hon. Friend's argument that there is a vast difference between the situation envisaged in the 1953 legislation and that with which the Bill is designed to deal, under which a relatively inoffensive article—on the face of it—may become the subject of a prosecution.
      878
      The Under-Secretary said that he was concerned with the intention of the user rather than the inherent nature of the article, and went on to cite the case of the nail and the matchbox. The point that I made in an intervention has some substance. What possibility exists of achieving the end that the Minister desires, namely, a successful prosecution, when we are faced with a prosecution based upon the possession of a nail or a matchbox?
      The purpose of the Amendment is to define what the law intends. There is a duty upon us to make the law specific in these matters. Sometimes, inevitably, hon. Members opposite are not prepared to admit that the Executive can abuse the law, especially if it is drawn too widely. I am sure that the hon. and learned Gentleman is as anxious as I am to avoid that.
      3.30 p.m.
      The enormous difficulties on the part of the prosecution in establishing guilt here will, in effect, be self-defeating. This series of Amendments—which, on the one hand would give some protection to civil liberties and, on the other, would make the offence more specific—would, therefore, create a situation in which it would be very much easier for the prosecution to undertake the burden which should rest on it.
      The hon. and learned Gentleman cited the Malicious Damage Act, 1861, and I confess not to have gone into that matter previously. However, the word "thing" in the provisions to which he referred is qualified by the preceding adjectives. That situation does not exist in Clause 3 of this Measure, and the word "anything" is, in my view, too wide.
      Mr. Carlisle: Both the hon. Gentleman and his hon. Friend the Member for Abertillery (Mr. Jeffrey Thomas) referred to the difference between this legislation and that of 1953. The earlier Act dealt with having various articles on one's person while outside one's house, and the Amendment is not aimed at that. Whether or not an article is a housebreaking implement or offensive weapon is decided by the intention for which it is proposed to use it. Exactly the same test has to be applied under this legislation.
      Mr. Clinton Davis: Experience has shown that there are considerable difficulties in getting a successful prosecution where one has something which is not inherently dangerous on the person, such as a nail. There is, of course, a difference between, say, a steel comb, which is capable of being used offensively—and there should be a burden on the defendant to show he has lawful use of it—and the everyday articles which the hon. and learned Gentleman cited and which are to be found in the home. This therefore gives draconian powers to the Executive which seem unnecessary in the light of the remarks of my hon. Friend the Member for Abertillery (Mr. Jeffrey Thomas).
      I come to the question of the power to search and here there must be the most stringent qualification—
      Sir Elwyn Jones: My hon. Friend might prefer to raise this matter on the next Amendment.
      Mr. Clinton Davis: I am obliged to my right hon. and learned Friend and I reserve my right to speak on this subject a little later.
      Amendment negatived.

    Clause 6

      SEARCH FOR THINGS INTENDED FOR USE IN COMMITTING OFFENCES OF CRIMINAL DAMAGE
      Sir Elwyn Jones: I beg to move Amendment No. 4, in page 3, line 20, leave out 'anything' and insert:
      'any inflammable or noxious substances or any dangerous or noxious thing'.
      This is the most important Amendment to be proposed by us and what has gone before has paved the way for this discussion. In Clause 3 we have the wide language of "anything". That is repeated in this Clause with the consequence that wide powers of search are being given, and this causes us a great deal of concern.
      The Amendment relates to powers to search for things used or intended to be used without lawful excuse. As the House will see, Clause 3 contains the broad provision that anything in the house will do, and we sought to restrict the scope. In our view, to grant new powers of search and seizure is of itself a very serious step, and we think that the powers
      880
      ought to be restricted to what is necessary for the protection of the public.
      There is always a danger of the Executive taking on powers slightly wider than the circumstances warrant, and that process tends to grow to the detriment of the right of the subject. In this Clause we are treading on the most delicate ground—the privacy of the home. The Englishman's home in his castle, and so, for that matter, as I ventured to say in Committee, is the Welshman's.
      The Clause extends the right of entry by the police into the home. That can be justified only in the face of the clearest need and to deal with a mischief and a problem of a serious character. It is dangerous for the law to be couched in such terms as to encourage fishing expeditions by the police into houses; enabling them to use these powers for a general look and search in the hope of finding something. That is not good enough, and it gives us great concern because that may well be a possible risk flowing from the generality of the language in the Clause.
      It is quite true that by the Clause the police will require a warrant from a justice of the peace before they can enter premises in order to search for and seize the thing in question, but, as was said in Committee, that safeguard is not always wholly effective. Before we part with this important Clause we would like the Under-Secretary to tell us why these important new powers are thought to be necessary. In my submission, he has not yet spelt out the mischief sufficiently. We want to know why these considerable powers are sought, and why they are sought to be used.
      It is not enough to deal with the practical inconvenience of limiting the category of things that can properly be searched for. To leave the matter in this broad way is something of concern, and it is not surprising that representations with regard to it have been made from outside the House.
      Mr. Carlisle: I must point out that this is not a new power, in that the Clause repeats to a large extent the power that existed in Section 56 of the 1861 Act. I do not believe that that Act has led to abuse over the 110 years of its existence.
      The reason for the power being repeated in the Clause is clearly spelt out

      881
      in the Report of the Law Commission. The very simple, logical fact is that if one decides to have an offence such as that created by Clause 3, of having in one's care or control any item with an intention to use it unlawfully to cause damage, it must be a necessary corollary, if that offence is to include items either in one's care or control in one's home, or on one's person when outside in the street, that there must be a power in the police to search. All that Clause 6 does is to give the police that power to apply for a search warrant when they believe that an offence under Clause 3 has been committed.
      It is very difficult, with respect, to have different wording in Clause 3, which makes it an offence to have in one's control "anything", and then, when one comes to Clause 6, to try to define the type of things in which circumstances a search warrant can be obtained. It is necessary that the wording of the one should follow the other.
      I do not consider that the right hon. and learned Gentleman's fear of a fishing expedition is justified, because it is not adequate for the police to say, "We think that he has something in his house which we wish to have a look at." They have to satisfy a justice, on oath, that they have reasonable cause to believe that the person has in his house some object which there is reasonable cause to believe he either has used or is intending to use, without lawful excuse, to destroy the property of another. Therefore, the protection, again, is the necessity to satisfy the justice, on oath, that there is reasonable cause to believe that he has it and that he has either used that article or intends to use it for an unlawful purpose.
      If the right hon. and learned Gentleman considers that the use of the words
      "reasonable cause to believe"
      lays this open to abuse, of course it is open to abuse, if people wish to swear informations which are not accurate; but equally, that abuse is open even if one substitutes other words for the word "anything". If it is to be said that it is open to abuse because the police officer might apply for a warrant without reasonable cause for believing that anything—the article—has in fact been used or will be used for an unlawful
      882
      purpose, if that is his intention, presumably he could equally apply for a search warrant on the basis that he had reasonable cause to believe that there was a noxious, a dangerous or an inflammable thing which would be used for an illegal purpose.
      We can say with pride in this House that the police do not abuse their power over search warrants in this way. I do not consider that delineating the type of article for which they can go in search would provide any defence against abuse if such abuse existed. The defence against abuse is the necessity to prove the reasonable cause of belief that the article is being used for a criminal, purpose and the trust that we put in the honesty of our police force in applications that they make to the court.
      We have to have the same wording in Clause 6 as that in Clause 3, because if we accept the principle, as the Law Commission did, of the need for the offence, we must have the similar power to apply for the search warrant. The only other matter that the Law Commission mentioned about Clause 6 was that it was parallel to Section 26 of the Theft Act. This concerns the power to search for stolen goods, having sworn on information before the justices that there is a reasonable cause to believe that a person has in his custody or possession stolen goods.
      This is a parallel power, so that whereas in the Theft Act we provided power to search where there was reasonable cause to believe that a person had stolen goods, this is power to seize anything which there is reasonable cause to believe is intended to be used for causing damage to property.
      3.45 p.m.
      I have been accused of saying all along that the Clause was aimed at the petrol bomber. My point has always been that whereas the petrol bomber was a good example, in future there might be other means of causing damage. I give the example of the person who has the proverbial spanner, who may have some simple article in his hand which he intends to use as a means of disrupting the whole of a major industrial concern by damaging plant in such a way as to bring the whole of the concern to a halt. One cannot necessarily foresee the type of situation with which one may be faced,

      883
      and that is why it is better to leave the wording wide than to limit it by defining the type of articles concerned.
      Mr. Clinton Davis: The hon. and learned Gentleman has merely highlighted the errors of the wording of Clause 3. It will be far too easy for a police officer to get a warrant in these circumstances, and it is not right that qualifying words would make no difference.
      There is a somewhat unhealthy development in the giving of wider and wider powers of search to the Executive. It is extremely dangerous and we ought to be careful about a possible erosion of our civil liberties in this regard. The words of the Amendment would give some protection and I ask the hon. and learned Gentleman to consider his argument, which I found most unsatisfactory.
      Mr. Jeffrey Thomas: I entirely agree with my hon. Friend the Member for Hackney, Central (Mr. Clinton Davis). The cause of our anxieties was illustrated by the Under-Secretary's example of the spanner, of the man who in his own home is in possession of a spanner with intent eventually to use it to cause enormous damage to property. In this event, the situation is more than adequately covered. I could not imagine a case of that kind being brought up under the Bill. It is far more likely that it would be treated as a conspiracy.
      We have two criticisms about the Clause: first, it is too broad; secondly, it is unnecessary. It is too broad because in the past, whenever there has been any question of police officers, the authorities, going into a man's home, the most stringent precautions have always been taken to see that it did not happen without every kind of inquiry and investigation beforehand.
      Power of search is given in the Firearms Act, 1968, in Section 46. Only if the conditions specified are satisfied can police officers carry out a search of premises. The warrant has to name the police officer concerned in the search. This is an elementary safeguard which Clause 6, although far more wide-reaching than Section 46 of the Firearms Act, does not provide. In the same way, Section 65 of the Offences Against the Person
      884
      Act, 1861, provides for the issue of search warrants, but only in certain circumstances as envisaged in Section 64 of the Act, which deals with the possession of noxious substances.
      It is quite wrong for the Under-Secretary to say that this is not a new provision and that it is in some way similar to the provision in Section 65 of the Malicious Damage Act, 1861. There, the circumstances are carefully circumscribed and laid down. The evil of the Clause is that it is far too broad. Having regard to the legislation already on the Statute Book, it is also unnecessary.
      Amendment negatived.
      Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
      Bill accordingly read the Third time, and passed, with Amendments.

  CANALS AND INLAND WATERWAYS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Speed.]
  3.52 p.m.
  Mr. Ray Carter: Over the past 10 years the call to improve our environment has grown to a point where the Government have had to recognise its importance by establishing a Ministry with the title "Department of the Environment". One hopes that during the lifetime of the Government this will have rather more than an aspect of public relations about it. Even though the Government have recognised that the call to improve the environment is a strong one and contains arguments which must be listened to and acted upon, there is still a great deal of dispute about how we should tackle the problems of improving the invironment and how we should order our resources. The Government can be sure that in the coming years the demand will grow from those living in the countryside and in the towns and cities for a better environment in which to live and to enjoy their free time.
  The rape of our country from the Industrial Revolution onwards must be remedied. We want slag heaps removed,

  885
  old broken-down factories knocked down and refashioned and the quarries filled in. We want new methods to be used in industry and in commerce and local government, so that the desolate state of the countryside and the cities can be remedied. In short, we want a better and a cleaner environment in which to live.
  However, some aspects of industrialism are worth retaining, and it is one part of them that I have been fortunate enough this Friday afternoon to bring to the attention of the House, namely, Britain's canal system. The canals have grown up over the past 200 years, principally in the first instance as commercial and economic undertakings. With the passage of time they have assumed other importance and other aspects which we shall be principally considering this afternoon.
  In my opinion they are of the greatest importance in our cities and large urban conurbations which are to be found throughout the length and breadth of Britain, and they are so important because they offer water space which, were it not for the existence of the canals, those areas would be almost totally without—and without the facilities and the amenities which canals provide.
  The most important part of our environment is, in my opinion, that part in which we live, and, frankly, I get rather annoyed with that section of the environmental lobby which seems to believe that it is only the countryside which is important. That is not the case. If in working out our priorities we have to come down on one side or the other, if only for economic reasons, I should come down very heavily on the side of putting our resources into that part of the environment in which we live. Any contribution which can be made to improving urban living I believe to be worth while, and the canals offer such a contribution. One can boat on a canal; there is angling in canals; along a canal one can observe wild life. I am not an expert in this, but I have seen the part which canals can play in the total design and structure of a city and urban life, and I have seen it particularly in Birmingham, a city which I have the good fortune to represent.
  There is nowhere in the country where the presence of canals is of greater importance than it is in the Midlands. We have
  886
  very little natural water; the rivers we have are very small and they are highly polluted. So it is essential, in my opinion and that of many others in the Midlands, that we retain as much of our canal system as possible. The Midlands, I think everyone would agree, have been more scarred by industrialism than probably anywhere else in the country, with pits and quarries and all kinds of industrial development over some 200 years, so that the environment for many who live there I regard as squalid. To go through the Black Country, and certain parts of Birmingham, through to Stoke is, if one takes the wrong path, a nightmare journey. I speak this afternoon principally for those people who have to live in that environment and to whom canals offer, if they are retained in sufficient number and are improved, a little bit of variety within an environment which probably for another 50 years or more will remain rather dull and not up to the standards which we expect, and know to exist in other parts of the country.
  The particular point I would put to the Minister is this question of the remainder of the waterways. In the Midlands there are more than 100 miles of waterway in a very poor state. Although I appreciate that negotiations are going on between the local authorities and the British Waterways Board to find a means whereby these canals can be brought into better use, I should like the Minister to tell us precisely what the Government's position is—
  It being Four 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. Speed.]
  Mr. Carter: For how long is the Minisster prepared to guarantee the future of these remaining waterways? Can the three years given by the previous Government be extended to ensure that nothing will be done to jeopardise the position of these waterways? Those who take a great interest in the canal system are waiting for a firm promise on this point.
  The negotiations are bedevilled by the question of money. Where does responsibility lie? If the British Waterways Board had all the money it required,

  887
  it would not be necessary for it to enter into negotiations with the local authorities. It could go about its business in the right way, and, given sufficient money, solve all the amenity problems. However, the Board does not have that money. From the Board's accounts one sees that since 1963 the grants from central Government have been sufficient only to cover the deficits. If the Government believe in the job that the Board is doing, they should make a careful review of the way in which the canal system is financed. While I am not ruling out the possibility of larger contributions from local authorities, I believe that central Government should provide the bulk of the cash required.
  One can understand the difficulties of the local authorities in working out how much each should pay when one realises that a canal will pass through the areas of several authorities. While one authority might be extremely generous, its neighbour might not be so generous. It is therefore essential to look at the problem centrally. The obvious body to look at this centrally is the British Waterways Board, which if it had enough money, could deal with the problem. I should like the Minister to look carefully at the way in which the Board obtains its finance and, having done that, to come forward next year with a bigger contribution.
  In considering solutions to the problem of the remainder waterways, I wonder whether, apart from the overriding environmental, amenity and recreational values of our canal system, the Minister will look closely at its hidden economic benefits. In the Midlands, local authorities would be put to considerable expense, running into millions of pounds, if they had to find the money to pay for the drainage which would be needed were the canal system to be run down or, at worst, closed. This is an important economic aspect in urban areas, and even in the countryside farmers gain a great deal of benefit from the land drainage facilities which are provided in connection with canals. If the cost is able to be quantified, surely those in receipt of the benefits should "cough up".
  I believe that central government should pay the lion's share of the upkeep
  888
  and improvement of our canal system, but there is also a part to be played by local authorities. A better solution would be provided if the authorities made their contributions to the British Waterways Board. There is also the possibility in future that our canal system will be called upon to play a bigger part in moving water from surplus areas to areas of deficiency. There is a big problem on the horizon in this respect and there is a need to retain an adequate water supply for urban areas. It is possible that the canal system can make a vital contribution.
  There must be some means of making an economic assessment of the situation and one hopes that central government will try to put a figure upon it. I urge local authorities to come to terms with the problem as quickly as possible. I should also like them to try to persuade industry to give assistance since at present industry gets a valuable service for next to nothing. The Parliamentary Secretary frowns at that, but one sees from the accounts of the British Waterways Board that industry does not make much of a contribution in return for the drainage and effluent facilities it gets from the canal system. This is the position as I understand it.
  I should like to ask the Minister this afternoon to deal with the problem of the remainder waterways and to look at the matter in the light of the great potential offered by the canals to the urban areas of Britain, and in particular the West Midlands which is probably a bigger problem area than any other since it contains such a considerable length of remainder waterways.
  Finally, I would urge the Minister to look closely at the relationship between the British Waterways Board and the function which it asked to perform and the attitude of the present and previous Government to the problems of the environment. If we sincerely wish to solve the problems of the environment, are we not wrong to ask the British Waterways Board to carry on the business of preserving this vital part of our environment and yet at the same time to ask it to run its affairs in a strictly businesslike way? Admittedly, it must to some extent be a commercial operation which looks at the profit and loss side of the

  889
  business, but I would ask the Government to concede that in regard to the urban areas any water which exists is worth preserving. The problem of the remainder waterways must be solved quickly. If we can be given an answer this afternoon that would ease the minds of those people who take an interest in the problem and would assist the people in certain areas who are in desperate need of improved facilities.
  Several Hon. Members Several Hon. Members rose—
  Mr. Speaker: Order. I understand that the Under-Secretary of State would like to get up at twenty minutes past four. Three hon. Gentlemen want to speak, which gives them three and a third minutes each.
  4.10 p.m.
  Mr. John Wells: I am grateful for your guidance, Mr. Speaker.
  I congratulate the hon. Member for Birmingham, Northfield (Mr. Carter) on his awakened interest in this most important matter, and declare my interest as a member of the Inland Waterways Advisory Council. He is right to stress the need for improvement to the remainder waterways, but one must look at the realities. Costs are going up the whole time very sharply while revenue is only creeping up.
  I am glad to say that the Board, by good management, has increased what one might call "pleasure revenue" by 9 per cent. last year, but the increase in revenue on estate management was well over 12 per cent. Sir Frank Price and his strong team of distinguished people—including people such as Colonel Siefert, a well-known architect—and all their employees, are doing their best in estate management. However, one or two activities of the Board are still worth re-examining.
  For example, is it wise that the Board should continue to run its hire cruiser fleet? I have grumbled at Ministers both in this Government and the last about this. It is impossible from the Report and Accounts to find out the true position of this fleet. I would like it abolished. It would be better in the hands of private enterprise. I do not complain about the "Lady Rose of Regents" and the larger pleasure boats, which do superb publicity work for our waterways, which is most important.
  890
  Speaking of the Regents Canal and Little Venice, it is worth congratulating Mr. John James on the twenty-first year of his tremendous success. He has made about five million trips and that is a tremendous number. They have been people from all over the world interested in inland waterways and he is deserving of congratulations.
  But we must look to the local authorities, particularly in the urban areas. When we were considering the Mersey Docks and Harbour Bill the hon. Member for Bootle (Mr. Simon Mahon)—I apologise that I have not warned him of this—and I had a disagreement. I said that the canal concerned was being used. He pointed out that I came from a constituency a long way away and said that the canal was not used. I have asked local boat owners to give me a report so that we can resolve our differences. The fact remains that an unused canal is a source of danger to children and the more people who can use it the better. Local authorities are responsible for safety, through local safety committees, and I hope that they will consider this matter from the point of view of safety.
  We must also look at the report and accounts in another aspect. The hon. Gentleman said that the remainder waterways were in urgent need, and I agree. But we must look at the great increase in tonnage dredged out of them in the past year. Dredging has increased nearly 50 per cent., so the Board is not dragging its feet. There are many other activities. I certainly congratulate the Board, but I believe that we must look to the local authorities to assist it and that we must urge the Government to give such aid as they can as soon as possible. Costs are rising and in addition, of course, the longer the canals are left the greater the costs become. The bull point is that the longer this situation is left the worse it will be.
  4.15 p.m.
  Mr. Nigel Spearing: I, too, congratulate my hon. Friend the Member for Birmingham, Northfield (Mr. Carter) on raising this very important subject. He has a special interest as a Birmingham Member, since the Birmingham canals are of great importance to

  891
  the urban environment. My interest is as a member of the Inland Waterways Association.
  My hon. Friend referred to the speech by the Lord Chancellor in the House of Lords. I understand that this was an undertaking not of the Government but of the Inland Waterways Board. I understand that I may quote a Member of the Government in another place. On 8th October 1968, the Lord Chancellor said that this three-year gap would provide time
  "for local authorities in the areas concerned to decide whether they wished to provide financial assistance for restoring these waterways in exercise of their new powers under Clause 111."—[OFFICIAL REPORT, House of Lords. 8th October, 1968; Vol. 296, c. 1027.]
  I emphasise "restoration". I understand that it means that a local authority could provide the capital sum required to bring the canal to an operating and satisfactory condition. It was not necessarily the whole sum; it was "assistance". There was nothing in the Lord Chancellor's speech about providing for its continued maintenance. This is important. If the restoration is done to a high level, which I understand it is, the extra cost of maintenance will be less. Unlike my hon. Friend, I think that the maintenance charges might best come under the British Waterways Board because one local area might have a lot of waterways from which a neighbouring area can benefit although it does not have many waterways.
  This is a national responsibility. Indeed, the last annual report pointed out that many of the remainder waterways provide water for other waterways which are now the cruiseways of today. Therefore, the whole network is, in hydro-logical terms at least, one unit. In my view, to break it up in terms of liability for maintenance would, from the management point of view, be very difficult to operate and would make local authorities less anxious to put in the capital because they would know that they had a continuing responsibility. That might slow things down considerably.
  I hope that the Minister will tell us about the future. I understand that there have been some difficulties on these points. It might be a good thing if the Minister allowed the Board another few
  892
  years for the schemes coming along, such as the one at Slough and the Kennet and Avon, which is an important link in the Birmingham canal navigation system. Quite a lot of voluntary work is done. We must not under-estimate the importance of voluntary help.
  I understand that the income from the sale and use of water is £898,000, of which the remainder waterways contribute £345,000. As their maintenance is not much more than that, sales of water almost cover their maintenance.
  I hope that the Minister will give us some assurance that this guarantee of a breathing space will continue while negotiations go on. We hope that the local authorities will be given every encouragement to contribute to the capital costs of these remainder waterways so that they can become an asset not only to the urban areas but also to the adjacent rural areas.
  4.19 p.m.
  Mr. Peter Rost: I, too, am grateful to the hon. Member for Birmingham, Northfield (Mr. Carter) for allowing me a brief intervention in support of his case, particularly for the remainder canals.
  I should declare an interest. I am a member of the Erewash Canal Preservation Society, which is one of the more formidable volunteer organisations created three years ago when the Erewash Canal, which runs between Trent Lock and Langley Mill in Derbyshire and Nottinghamshire, was declared a remainder canal. At that time it was derelict and unnavigable. This volunteer association has put in a tremendously enthusiastic effort. With the help of many workers it has again restored the canal into a good navigable condition and, with the co-operation of the local authorities and the British Waterways Board, has done a first-class job. It now holds rallies on the canal and is beginning to gather increasing local support.
  I therefore make a plea that, as the three-year period has now come to an end since the Transport Act, 1968, these remainder category canals are given a new lease of life. I suggest that those which have already done enough work to justify upgrading into the cruiseway standard canal or the amenity network canal system should be allowed to be

  893
  promoted and given every encouragement to continue the good work.
  We all appreciate that some of the disused canals are beyond repair. One such canal in my constituency is the Derby Canal. This will not be made navigable nor has it been in-filled. In the Long Eaton area it is causing a considerable annoyance and is a health hazard. Rats breed there in the winter and mosquitoes in the summer. This is a high density population area. I urge the Minister to examine this and cases when in-filling will obviously cost a great deal of money but when it is necessary to prevent health hazards and danger to children.
  The canals are a unique national heritage from the Industrial Revolution and I urge the Minister to get on with the job of restoring them so that as their popularity increases more people can take advantage of the leisure facilities which they provide.
  4.21 p.m.
  The Under-Secretary of State for the Environment (Mr. Eldon Griffiths): The House is grateful to the hon. Member for Birmingham, Northfield (Mr. Carter) for raising this subject. It is one in which increasing interest is being shown by more and more people. It is not one on which there is a great division between the two sides of the House.
  The canals were built 200 years ago, primarily for the carriage of freight before there were trains or lorries. Nowadays unhappily, perhaps, the rôle of the canals in transport is very small and rapidly diminishing. Even those waterways which were categorised as commercial waterways in the Transport Act, 1968, look in many cases less and less like commercial undertakings. It is plain that the main rôle of the waterways nowadays and for the future will primarily be connected with land drainage and water supply on the one hand and on the other with their use for recreation and amenity.
  The hon. Member has concentrated on the remainder waterways, as have other hon. Members. I want to say a word about these but I also want to mention the cruising waterways. As for the remainder waterways there was the so-called three-year undertaking by the
  894
  previous Lord Chancellor. As the hon. Member for Acton (Mr. Spearing) said, it was an undertaking given by the Waterways Board to the then Minister of Transport and it said in relation to certain remainder waterways that the Board would not, without the Minister's consent, take any positive action during a period of three years from the coming into operation of Part VII of the Act which would make impossible the restoration of these waterways for navigation.
  Its purposes as stated by the then Lord Chancellor were first, to allow ample time for local authorities to decide whether they wished to provide financial assistance for restoring them and secondly to allow local authorities and other bodies to decide whether they wished to put forward proposals for taking over some of the waterways. Thirdly, it was to give full opportunity for all these waterways to be considered by the I.W.A.A.C.
  I understand that the British Waterways Board has considered in detail, in conjunction with the local authorities concerned, all the remainder waterways covered by the undertaking. I understand that the I.W.A.A.C. is shortly to publish a report on all of these waterways. I feel that the undertaking has achieved its purposes. It has been possible for the local authorities to consider what they wished to do and I can assure the House that as soon as the I.W.A.A.C. report is available the British Waterways Board will be reaching some conclusions on that basis.
  I turn to the cruising waterways. It is primarily to assist the cruising waterways that a good deal of grant-in-aid is paid to the Board and is used by the Board—very well, as my hon. Friend the Member for Maidstone (Mr. Wells) has said—to maintain an extensive network of local waterways.
  On this subject it is right to record that a note of warning was struck in the previous Government's White Paper. This said:
  "Obviously the funds available for this are not unlimited and the grant, like any other Exchequer subsidy, will have to be kept under review as part of the normal process of national housekeeping."
  It went on to say—and I agree—that
  "What this means is that the future of the cruising network must depend pretty largely

  895
  on how far people take the opportunities for leisure and recreation which it offers."
  How far those opportunities have been taken up is best indicated by the figures of revenue received by the Waterways Board from amenity and recreational uses of its waterways. This revenue—as my hon. Friend the Member for Maidstone, with his great knowledge, said—has shown a fairly steady increase over the past five years, from £152,000 in 1966 to £228,000 in 1970. The Board has thus had a considerable measure of success in promoting increased recreational use of the canals.
  The canals, indeed, have shared in the current boom in all forms of water sport and recreation. I am glad to say that the Board reports an increase in the numbers of powered craft licensed on its network from 5,600 in 1966 to over 9,000 in 1970. I welcome this water sport boom, but at the same time we have to recognise that owing to the falling off in use of the commercial waterways the deficit incurred by the Board has wiped out many times over the modest increase in revenue which the Board has received from recreational users, so that its deficit overall has shot up from £940,000 in 1966 to £2·3 million in 1970–and that deficit is expected to be considerably greater in 1971.
  Even at this level of expenditure the Board is hard put to it to maintain its 1,400 miles of commercial and cruising waterways in the conditions required by statute. The Government grant-in-aid to the Board has now reached a level of £2·5 million for 1971. This situation must give rise to concern. I can assure the hon. Member and the House, however, that we are anxious to maintain the use of the waterways for recreation and amenity. But there must be some limit to the rising burden on the taxpayer.
  The greater part of the Government subsidy represents a contribution towards the unavoidable minimum cost of running the waterways—drainage, conservation and water supply. But there is with-
  896
  in it a sizeable element—a contribution towards the cost of maintaining the cruising network in a navigable condition. That subsidy must be recognised as substantial.
  On the basis of the calculations used by the Board in calculating the total extra cost of providing for pleasure cruising it is reasonable to suppose that in 1970 about £500,000 of last year's Government grant went for that purpose. I remind the House, because I have some wider responsibilities here, that the total amount of central Government grant for all sport and recreation in this country is about £3½ million. That is for all sports. From that total, the amount going to water sports of all kinds is a little over £200,000. There is the contrast; about £200,000 for all water sports bar pleasure cruising on waterways, and about £500,000 for pleasure cruising on waterways. The contrast speaks for itself.
  The Government wish to see the amenity and environmental advantages of the canals made use of, but there has to be some limit on the taxpayer's responsibility. I very much agree with my hon. Friend the Member for Maidstone that local authorities can play—and in my view should play—a larger part in this. I should like to see other cities and towns following the example of the hon. Member's own city of Birmingham, in the imaginative residential development schemes completed two years ago at Farmer's Bridge, where the Corporation and the Waterways Board collaborated in making the canal and its surroundings an attractive feature of the city centre scheme. To sum up, we are anxious to see the waterways continue to be used to the maximum extent for recreation and amenity.
  The Question having been proposed at Four o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at half-past Four o'clock.

  COMPUTERS (SALE TO U.S.S.R.)
  COMPUTERS (SALE TO U.S.S.R.)
  AGRICULTURE, FISHERIES AND FOOD
    European Economic Community
    European Economic Community
  Cereals and Meat (Marketing)
  Cereals and Meat (Marketing)
  Livestock Welfare Codes
  Livestock Welfare Codes
  DEFENCE
    Composite Rations
    Composite Rations
  ENVIRONMENT
    Yorkshire and Humberside (Regional Strategy)
    Yorkshire and Humberside (Regional Strategy)
  Rate and Rent Rebates
  Rate and Rent Rebates
  School Milk
  School Milk
  Route 225 (Bolton)
  Route 225 (Bolton)
  French Minister of the Environment (Discussions)
  French Minister of the Environment (Discussions)
  River Authorities (Display)
  River Authorities (Display)
  Driving Instructors (Registration)
  Driving Instructors (Registration)
  EMPLOYMENT
    Distributive Industry Training Board
    Distributive Industry Training Board
  Job-seekers (Private and Personal Data)
  Job-seekers (Private and Personal Data)
  Development Areas
  Development Areas
  Unemployment
  Unemployment
  Merseyside (Over-45s)
  Merseyside (Over-45s)
  FOREIGN AND COMMONWEALTH AFFAIRS
    European Economic Community
    European Economic Community
  Malawi
  Malawi
  HOME DEPARTMENT
    Prisoners (Category A)
    Prisoners (Category A)
  NATIONAL FINANCE
    Defence Expenditure
    Defence Expenditure
  Members' Salaries (Purchasing Power)
  Members' Salaries (Purchasing Power)
  European Economic Community
  European Economic Community
  Cost of Living
  Cost of Living
  SCOTLAND
    Hospital Scientific Council
    Hospital Scientific Council
  Housing Improvement Grants
  Housing Improvement Grants
  TRADE AND INDUSTRY
    Upper Clyde Shipbuilders Limited
    Upper Clyde Shipbuilders Limited
  Air Charter Flights
  Air Charter Flights
  Sugar and Rum (Exports)
  Sugar and Rum (Exports)
  Northern Region (New Factories)
  Northern Region (New Factories)
  U.K. Exports
  U.K. Exports
  Growth Rate and Productivity Increases
  Growth Rate and Productivity Increases
  European Economic Community
  European Economic Community
  National Council of Social Service
  National Council of Social Service
  Cities (Economic Performance)
  Cities (Economic Performance)
  Gas Boards (Reminder Letters)
  Gas Boards (Reminder Letters)
  SOCIAL SERVICES
    National Insurance Contributions (Self-Employed Persons)
    National Insurance Contributions (Self-Employed Persons)
  WALES
    Colwyn Bay (Collcon Proposals)
    Colwyn Bay (Collcon Proposals)
  Pedestrian Crossings
  Pedestrian Crossings
  EDUCATION AND SCIENCE
    School Meals (Frozen Foods)
    School Meals (Frozen Foods)
  Teachers (Wastage Rate)
  Teachers (Wastage Rate)

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

CIVIL AVIATION BILL AND CONSUMER INTERESTS
BARONESS BURTON OF COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they are aware of the dissatisfaction felt by consumer organisations and air line travellers in general at the lack of mention of consumer interests in the Civil Aviation Bill as at present drafted; and if they will make a statement.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF THE ENVIRONMENT (LORD SANDFORD): My Lords, the Bill provides that the primary objective of the Civil Aviation Authority shall be to secure that British airlines provide air transport services which satisfy all substantial categories of public demand. The policy to guide the Authority, which will require the approval of both Houses, will also oblige the Authority to consult as widely as possible those who are interested in consumer affairs and to set up whatever machinery it considers appropriate for safeguarding the interests of air travellers.
BARONESS BURTON OF COVENTRY: My Lords, I am quite aware of that; it is what the noble Earl, Lord Ferrers, told me last week. What I am really trying to press on the Government is this. Are they aware that I am not suggesting that any additional machinery should be set up; neither am I suggesting that the Authority, when it is set up, will not make these inquiries. What I am asking the Government to do
576
is to appoint a board member with responsibility for consumer affairs—not only for complaints—so that these matters can be presented adequately and expertly to the board. Can the noble Lord press that once more on his right honourable friend?
LORD SANDFORD: My Lords, I will certainly undertake to see that what the noble Baroness has just said is taken into account and fully considered. I have little doubt that it will already have been, because she has pressed it so eloquently on so many other, earlier occasions. But the noble Baroness will recognise that we are just about to debate the Civil Aviation Bill, and at each of its four stages she will have an opportunity to make the point again. She will also have an opportunity to make the point a fifth time if she is not by then satisfied, when the policy document comes before your Lordships' House for approval.
BARONESS BURTON OF COVENTRY: My Lords, may I ask the noble Lord whether he will ask his noble friend who is responsible for the Bill to realise what a wonderful gesture it would be if he could announce satisfaction at the Second Reading next week, and save my having to raise the matter four or five times?
LORD SANDFORD: Yes, certainly, my Lords. But, on the other hand, I think the noble Baroness will agree that there are purposes to be fulfilled in this Bill other than satisfying the noble Baroness.

ISRAELI-EGYPTIAN CONFLICT
11.9 a.m.
LORD BROCKWAY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will take the initiative in proposing to the Security Council that a Middle East Conference should be held under United Nations auspices with a view to reaching a settlement of the Israeli-Egyptian conflict.]
THE PARLIAMENTARY UNDERSECRETARY OF STATE, FOREIGN AND COMMONWEALTH OFFICE (THE MARQUESS OF LOTHIAN):
My Lords, Her Majesty's Government

577
remain seriously concerned about the situation in the Middle East, and we shall bear this and any other suggestions in mind. But we have to take account of the attitude of the parties to the dispute. If at any time we thought that such a conference would forward matters we would be very ready to propose it. That is not our view in present circumstances.
LORD BROCKWAY: My Lords, while thanking the Minister and appreciating his Answer, may I ask whether, in view of the virtual breakdown of the Jarring talks and of the Rogers' plan, there is not now a very dangerous vacuum in the Middle East which requires some new initiative? In the first instance, would not a conference on the Rhodes model, under the chairmanship of Ambassador Hambro of Norway, the Chairman of the General Assembly, followed, as proposed by the noble Lord, Lord Caradon, by a wider conference on the basis of the Geneva Conference, to which all Arab countries could be invited, be some way to break through the present terribly dangerous situation?
THE MARQUESS OF LOTHIAN: I agree, my Lords, that there is a danger of a serious situation, and the situation is serious enough as it is. I think we must still hope that progress might be made towards the interim agreement, which has been helped forward by Secretary of State Rogers. I have read the article by the noble Lord, Lord Caradon, with great interest and, as I said in my original Answer, of course it is something which Her Majesty's Government will bear in mind. But at the moment there seems to be very little prospect or hope that the participants in this dispute wish to come to the conference table.
LORD SEGAL: My Lords, can the noble Marquess say whether, in his opinion, very much is likely to be gained by treating the Israeli-Egyptian conflict in isolation from the wider considerations of peace in the Middle East?
TIIE MARQUESS OF LOTHIAN: My Lords, obviously the conflict between Israel and its neighbours is of the most serious potential nature, and is bound up in general with the peace of the Middle East. I was merely answering the noble Lord's question as to whether
578
a conference at this time would be a suitable way to solve it.
LORD BROCKWAY: My Lords, does the Minister recollect that I did not suggest this isolation, and that all I proposed was, in the first instance, talks between Egypt and Israel, who are primarily involved, to be followed by a wider conference to which all Arab countries and other Powers concerned would be invited?
THE MARQUESS OF LOTHIAN: My Lords, I will certainly take note of what the noble Lord has said.

MR. DAVID DELLINGER
LORD BROCKWAY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government on what grounds Mr. David Dellinger, an American pacifist, was refused admission to this country.]
THE MINISTER OF STATE, HOME OFFICE (LORD WINDLESIIAM): My Lords, Mr. Dellinger was refused admission because of his recent conviction in his own country of a serious criminal offence.
LORD BROCKWAY: Yes, my Lords, but is the Minister aware that Mr. Dellinger is a pacifist who has always advocated non-violent methods; and is he also aware that, while he was sentenced in the notorious Chicago Six trial, that conviction is under appeal? Is it not quite unprecedented for a Government of this country to refuse admission to this country to a respectable American citizen when a final decision about his guilt in that very doubtful trial has not been reached?
LORD WINDLESHAM: Mr Lords, Mr. Dellinger and six others, known as the Chicago Seven, were convicted in February, 1970, of inciting a riot and committing criminal contempt of court. They were each sentenced to five years' imprisonment and, as the noble Lord has said, were released pending appeal. The Home Secretary took the view that conviction of an offence of this nature made it undesirable that Mr. Dellinger should be admitted to the country.
LORD MACLEOD OF FUINARY: My Lords, is it not a fact that Mr. David Dellinger and others fell foul of the American authorities for revealing out of due season those very facts which the New York Times have proved to be true, and would Mr. Robert MacNamara, as an instance, equally be refused admission in the light of those revelations? If not, and in view of the fact that Mr. Dellinger, by reason of his appeal, has not yet been proved to be guilty, would the Home Secretary not reconsider, at least at the present time, the admission of Mr. Dellinger to this country?
LORD WINDLESHAM: My Lords, I do not think it would be right for me to comment on proceedings in the courts in the United States.
LORD BROCKWAY: My Lords, does the Minister realise that we are being more severe in regard to immigrants than the United States? Is he aware that, although I have been convicted and have been three years in prison, when I wanted to go to America to oppose the war in Vietnam they not only gave me a visa but gave me free entrance? Surely, with the traditions of tolerance and democracy in this country, we can at least be equal to what the United States of America does in these instances.
LORD WINDLESHAM: My Lords, the Home Secretary has a discretion in this matter. He has to consider what he believes to be in the public good, and in his opinion it was in the public good not to admit Mr. Dellinger.
LORD GRIMSTON OF WESTBURY: My Lords, is my noble friend aware that, as this case is sub judice in another country, the Home Secretary has acted with great discretion in refusing admission until the case is settled?
BARONESS GAITSKELL: My Lords, although I do not wish to get mixed up in this question of Mr. Dellinger because I know nothing about it, is it not illogical, perhaps, and ironic that we give asylum to a Communist defector but we do not allow people like Mr. Dellinger in? I just do not know.
LORD WINDLESHAM: My Lords, the two considerations are very different. What we are talking about here is the admission or otherwise of somebody
580
whom the Home Secretary has decided it would not be desirable to admit, whereas the issues of political asylum for those already here and who ask for political asylum are based on a different set of principles.

E.E.C. FISHERY REGULATIONS AND BRITISH PROPOSALS
LORD BOOTHBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, in the forthcoming negotiations about the fishery regulations of the European Economic Community, they will insist upon the maintenance of the present protection of our inshore breeding grounds such as the Minches, the Moray Firth, the Clyde, Cardigan Bay, Morecambe Bay, the Isle of Man, the Solway Firth, and the Wash, in addition to the establishment of a general six-mile limit.]
EARL FERRERS: My Lords, the proposals which we have put to the Communities would secure protection of the areas mentioned by the noble Lord, and those proposals remain on the Table. The Communities have recognised that reconsideration of their present policy would be necessary in the event of enlargement, and they have agreed to discuss the question in detail at Ministerial level in the week beginning July 12.
LORD BOOTHBY: My Lords, while thanking the noble Earl very much indeed for his most encouraging reply, may I ask him whether he and Her Majesty's Government would bear in mind that if we were to allow foreign trawlers to be based upon United Kingdom ports and harbours then our inshore fishermen would be denied protection of any kind? Therefore it really is necessary that we should prevent the foreign trawlers, with their damaging fishing gear, from being based on British ports and harbours.
EARL FERRERS: My Lords, I certainly take the noble Lords point, which is an important one; and this will of course be one of the matters which will be under discussion. I would merely point out to the noble Lord that, of

581
course, there is nothing in present legislation to prevent foreign fishermen from taking up residence in Britain. It is unlikely that the enlargement of the Community would result in greatly increased numbers of Community fishermen taking up permanent residence in this country, with all the fiscal and other obligations which this would involve. But the question of establishment is an important one, and it is one which will be discussed at the forthcoming meeting.
LORD DAVIES OF LEEK: My Lords, is the noble Earl aware that Welsh fishing may not be a dominant factor in the whole of British fishing, but, nevertheless, if there were a loophole after entry into the Common Market and we had no insistence on the size of the mesh in the nets, then quite a lot of damage could be done? Among all these suggestions, are we trying to standardise the size of the mesh, at the very least, whatever may happen about the Common Market?
EARL FERRERS: My Lords, under the Common Market arrangements as they at present stand, within the Community each member country has the right to make its own regulations with regard, for instance, to the size of mesh or to the size of horsepower of boats used.
LORD DAVIES OF LEEK: My Lords, while I am very grateful for that answer, and while not claiming to be an expert, may I ask the noble Earl whether he does not think that this can be a chaotic position unless we try to get some regulations which are roughly standardised should we enter the Common Market?
EARL FERRERS: My Lords, I take the noble Lord's point, which again is important. I know that there are fears that some people may use small size mesh. I was saying that the Common Market countries at the moment have jurisdiction over their own waters, and even if we were to join the Common Market with the existing regulations we should still have power over our own waters to stipulate, among other things, the size of mesh.

INVESTMENT AND BUILDING GRANTS BILL
11.20 a.m.
LORD SANDFORD: My Lords, I beg to move that the Bill be now read a second time. Last October the Government announced in a White Paper (Cmnd. 4516) a new system of investment incentives. This included a cut in corporation tax, the replacement of investment grants by new and improved writing down allowances, and improved grants for buildings in the development areas which give rise to additional employment. The cut in corporation tax was enacted in the Income and Corporation Taxes (No. 2) Act. Proposals for a second reduction announced in the Budget and for introducing improved capital allowances are contained in the Finance Bill now before Parliament. The present Bill deals in Clause 1 with the ending of investment grants, and in Clause 2 with the improvements in the rates of building grant.
I deal first with the way in which investment grants are to be ended. We took the view that the transition to the new system of capital allowances should be achieved as quickly as possible. None the less we fully accepted the need to avoid any retrospection in the arrangements, and therefore our proposals provide that expenditure incurred before the date of the Chancellor's announcement on October 27, 1970, should continue to qualify for investment grant on the same basis as hitherto. Payments of grant towards such expenditure are still being made. We also recognised that there would be firms who were legally committed by contracts made before the Chancellor's announcement to incur expenditure on or after that date. We felt it right that grants should also continue to be paid on such expenditure
We did not feel able in general to extend the arrangements to cover expenditure which was not covered by a contract on October 26 last. Clearly this may lead to certain firms receiving less in grants that they had expected when deciding to embark on a particular programme. However, I think it is right to draw a distinction between contractual

583
commitments on the one hand and other, less binding, arrangements on the other. The principle of confining grants on expenditure incurred after the cut-off date to contracted expenditure is the same as was adopted by the previous Government in 1966, when the transition from investment allowances to initial allowances was made on capital expenditure which was not covered by the Investment Grants Scheme. The only major difference between the arrangements made in 1966 and those embodied in the present Bill is that we have not sought to impose any time limit within which assets must be brought into use to qualify for grant. In other words, the present arrangements are rather more generous.
I turn now to the detailed provisions of Clause 1. The effect of subsections (1) and (2) is to preclude the payment of grant on expenditure incurred after October 26 last year unless the Secretary of State for Trade and Industry is satisfied that it consists of a sum falling due under a contract made on or before that date. There is established law relating to contracts, and this, together with the facts in each case, will provide the Department with an objective criterion against which to decide whether grant may be paid. Subsection (2) also prevents, with two exceptions, the payment of grant if the expenditure arises as a result of something done by the applicant after October 26, 1970. The aim of this provision is to restrict grant to expenditure which the applicant was on October 26 committed to pay. It rules out, for example, grant towards any additional work added to the contract after that date, or an option exercised after October 26, 1970, even where this may be provided for in the terms of the contract.
Subsection (3) departs slightly from the White Paper as issued last October. Circumstances may arise where an applicant, having made a contract before October 27, finds that his supplier is either unable to meet his obligations under the contract or wishes to transfer to another supplier the obligation to supply goods to the applicant for grant. In these limited circumstances we felt it right to allow a replacement contract to rank for grant. Before paying grant, however, the Secretary of State must be satisfied that the goods, works or services
584
supplied under the replacement contract are genuinely in substitution and of substantially similar description to those to have been supplied under the original contract. Grant will be paid only on the amount of expenditure which would have been incurred under the original contract and not on any increase above that figure. The subsection makes similar provision to deal with the case where a contract is varied after October 26, 1970.
Subsection (4) deals with the special position of the shipping industry. In recognition of the industry's special international trading position it was accepted in another place that grant should be made on a ship as an entity, provided that a contract for its construction had been placed before the cut-off date, and any extras ordered after that date are delivered not later than the time the ship itself is delivered.
I will not go through the remaining subsections of that clause, but will move on to Clause 2, which deals with building grants. This is at first sight a very lengthy and complex clause. I should therefore explain first of all that many of its provisions are not new. The basic provision for making building grants in the Local Employment Act 1960 was amended and expanded by the Act of 1963 and by Part II of the Industrial Development Act 1966. The present Bill restates the relevant provisions of these two amending Statutes, so as to bring them conveniently together and avoid unnecessary reference back.
The main purpose of Clause 2 is to increase by 10 percentage points the rates of building grant payable in development areas. Our proposal to make this increase was announced in the White Paper as one of a number of steps to provide more assistance to industry under the Local Employment Acts. The other improvements, including an increase in the administrative limits regulating the amount of assistance which can be made available in relation to the employment likely to be provided and greater flexibility in using the powers to provide loans in development areas, have been introduced by administrative action under existing powers. But the proposed increase in the rates of building grant requires legislation. The necessary provision is made in subsection (2) of this clause.

585
Our plans for applying the new rates of grant in development areas were explained by my honourable friend the Minister for Industry in another place on October 28 last. He indicated that they were intended to apply, generally speaking, to projects started on or after the date of the White Paper. This intention would be implemented by subsection (7) of the clause, which sets out the circumstances in which a building in a development area will receive only the old rate of grant. In most cases the new rates will not apply if work on providing the building was done on the site before October 27, 1970. But there are slightly different criteria for certain cases where the general rule might not be appropriate—for example, where the applicant is purchasing a new building.
My honourable friend also made clear last October that although implementation of the proposed increase must await legislation, firms which had previously received offers or payments of grant at the existing rates for buildings started after the relevant date would be able to benefit from the new rates in due course. Subsection (10), the last subsection, gives the Secretary of State a measure of discretion and would permit him to make adjustments in these cases.
Subsections (5) and (6), which deal with transitional arrangements in the event of future changes in the coverage of development and intermediate areas, are also connected with the increase in the rates of building grant in development areas. They replace the existing transitional provisions relating to building grants in Section 21(4) of the 1966 Act, which naturally did not contemplate a situation in which there would be different rates of grant in development and intermediate areas. These provisions do not affect the present powers to make changes in the coverage of the assisted areas. They are concerned only with the effect of such a change, taking place at some future time, on projects which had been put in hand while the site was still in a development or intermediate area.
The only other significant new provision in Clause 2 is one which is independent of the increase in development area rates. Subsection (1) alters the basis of calculation of building grants in both development and also intermediate areas.
586
At present the grant has to be based on the actual cost of providing the building after excluding certain specified categories of expenditure. The clause would remove the statutory obligation to exclude expenditure of specific types, which entails a great deal of detailed investigation of individual cases. Instead, the Secretary of State would be empowered to decide how much of the actual expenditure should be approved for the purposes of grant.
I can assure your Lordships that my right honourable friend has no intention of making any major changes in the range of costs which are taken into account in calculating the grant. The purpose of the new provision is to make it possible to define more precisely the expenditure which will be eligible for grant and in more generally applicable terms than at present. This will both clarify the basis of calculation for applicants and also enable the processing of applications to be simplified and expedited.
My Lords, with that explanation I commend the Bill to the House. I fully accept that not all noble Lords opposite agree with the decision to replace investment grants with new improved writing down allowances. I am sure, however, that your Lordships will all welcome the provision of improved building grants ill the development areas. I have no doubt that it is generally recognised that the new package as a whole will greatly encourage overall industrial investment, and investment in the development and assisted areas in particular. I beg to move.
Moved, That the Bill be now read 2a.—(Lord Sandford.)
11.31 a.m.
LORD BROWN: My Lords, I am grateful to the noble Lord, Lord Sand-ford, for his clear explanation of this Bill. If I may, I will deal with the Bill "upside down", as I should like to deal first with Clause 2 and then go on to Clause 1. In general, we welcome Clause 2 as it increases the assistance available to those who build factory premises in development areas; and it is an unexceptional clause in many respects. But I should like to draw attention to one matter which is of concern to us, and to use the occasion of the discussion of this Bill to make a point which may lie a little outside the ambit of the Bill.

587
In Scotland, England and, I believe, in Wales, we have industrial estate corporations. I have noticed in the past that there is a good deal of fear engendered in the minds of those who run these building corporations if there emerges a surplus of vacant factory capacity. This has been expressed in the past particularly by the English Estates Corporation. I would draw the attention of the Government to the fact that one of the greatest factors in encouraging companies to transfer some of their activities to development areas—which is now becoming more desperately necessary than ever—is the availability of vacant premises of a suitable kind in those areas. If they have to wait a year, 18 months or two years for such premises to be built it is common to see them make other arrangements.
Clause 2 refers to the building of factory premises in development areas, and I thought it would not be unreasonable to make that point and ask the Government to note that when the resurgence in activity comes, which I am sure they hope for—and which we devoutly hope for—and when more people are to be employed, more premises will be required; and if we get them in development areas the building will have to be available there. Otherwise makeshifts of a less desirable sort will be resorted to with a consequent loss of employment in these areas and the generation of over-employment in some other areas.
My Lords, having said that, may I turn to Clause 1. I doubt whether any clause in any Bill has ever had such wide economic implications as this clause has. All Parties in Parliament, I believe, want to see more industrial investment. Certainly they all want to see more industrial prosperity and this, therefore, is not a political issue. It is an argument about ways and means, but I am quite amazed at the argument used in another place in favour of Clause 1; and I am impressed by the fact that the noble Lord, Lord Sandford, did very little to support the purposes of the clause. What we heard was an explanation of how it would work out, and a mere assertion that it would encourage investment. I happen to hold precisely the opposite point of view and I want to talk at some length on this subject.
588
My Lords, the Government at present appear to be resting on the laurels gained by the previous Government for their export surplus. But they will not be able to go on doing that for ever. I should like to remind Her Majesty's Government that the really important sector of our exports which has supported us in the past and the sector with the greater potential for supporting the balance of payments in future is in our heavy industries—the technological industries, those which make heavy chemical engineering plant, machine tools, process plant and many other forms of plant. The homes of many of these industries is in the North, in Scotland and the North-East, and other places away from the South-East of England. These are the industries, or many of them, which for a century or more have been exporting 50 per cent. to 80 per cent. of their products. These are the firms which will be successful exporters in the years ahead when we shall not be able to go on exporting consumer goods in growing quantities because other countries can make such goods for themselves. But these are the companies which to-day, in the presence of something approaching 15 per cent. inflation in wages, are in a most appalling difficulty over making profits.
I wonder whether anyone to-day realises what it is like to run one of these industries and have to quote a fixed price now for a contract worth millions of pounds, without knowing where wages will stand by the time the product comes to be manufactured in a year, two years, or three years hence? It is an appalling problem for these firms. Many of them are making very little money, or none, and some are making losses. These are the firms which are included in the category referred to by the Minister of Trade and Industry as "lame ducks". These are the firms which ought to be investing very heavily to get themselves out of difficulty and to make themselves less dependent on employing so many people, in order that this fighting fund for the export drive may become efficient. Yet many of them are just those firms which will lose any help in their investments which was previously available under the investment grant system. Now, all they can do is to write off the allowances against profits, if they have any—and such profits are usually very small in

589
relation to operations to-day—or increase the apparent loss they are making by writing off the investment allowances and so enlarging the loss. So this very important sector of our economy, which is in a ghastly difficulty very often through no fault of its own, is now to be put under a further burden because investment grants, which were of very great assistance to them, are now not available to them.
Added to that is the stigma, quoted by Sir John Eden in another place during the debate on this Bill, that profitable investment is efficient investment and the other kind is not. The whole inference of his speech was that the firms making profit were efficient and any firm that was not making a profit was inefficient. This is the dogma of the Government at the moment. This is the stigma of "lame ducks". Those of us who have had experience in industry know very well that there are many highly efficiently run firms which, from time to time, make losses; and equally, there are many firms which are managed extremely badly but which make very large profits. If you happen to catch on in the luxury market with some absurd product it is not difficult to make profits, even though you may be of very poor calibre as a manager. If you happen to be in ship building or heavy engineering or machine tools, you have a job on your hands today, however efficient you may be. This is not to say that many managements could not do better—I do not want to overstate my case. But to suggest that all those who fail to make profits should not be helped, should be allowed to die, is totally absurd and highly damaging to the future of our economy, and selectively damaging to the part of our economy which is going to be of most support to us in the years to come.
It is on these grounds that I question the whole economic basis of the Government's change from investment grants to investment allowances. The effect on the transfer of firms to the development areas is going to be very serious indeed. I spent five years at the Board of Trade and know something about the effect of investment grant incentives. A large number of American and other foreign firms, who invested in Scotland, Northern Ireland and elsewhere, were attracted
590
there by investment grants. They were on generous terms, but they were in the interests of the community and particularly of the development areas. That has gone now. We all know that when a new firm is started, the first two, three or four years are unlikely to be profitable. It is a fact of business life. So at this early stage when one needs support, one does not get it under this new form of so-called investment incentive. The change from grants to initial allowances is an investment disincentive, not an incentive, and I think that the development areas are going to be gravely affected by this.
The effect on smaller firms is serious. Although the Government have paid a great deal of lip service, and when in Opposition paid still more, to the interests of small companies, the fact is that the director-controlled company is unable easily to go to the City and get money. The investment grants were a means of helping them to finance the expansion of their activities and very often they were attracted to the development areas by the 40 per cent. (at one time 45 per cent.) grant on capital expenditure.
LORD ORR-EWING: My Lords, is it not true that in the time of the Labour Government a Minister said that it cost £100,000 of the taxpayers' money to create one extra job in a development area? Therefore, though I do not disagree with many of the arguments of the noble Lord, that past solution was not an ideal way of creating extra jobs in the development areas. It was very expensive and not very productive.
LORD BROWN: My Lords, the noble Lord has not quoted his authority for saying that and has not said which Labour Minister said it. I do not know who said it and I should question the validity of the figure of £100,000, which seems to me enormous, because the average capital investment per head of people employed in British industry as a whole runs at something between £2,000 and £5,000. I very much question the figure the noble Lord is quoting. However, neither of us quotes authorities and we shall have to leave it at that for the moment.

591
This new investment system will, by and large, benefit those who are making the profits, so we are going to see most of the benefits arising from this form of investment accrue to those engaged in the luxury trades. If you are in breweries or newspapers or fashions or gambling machinery, commodities which are confined largely to the home market where there is less difficulty in getting profit margins, then you are more likely to benefit from this investment incentive than if you are involved in the much more serious work of earning the living of this country overseas.
If you couple with this new system other measures the Government have taken, such as the quite arbitrary increase in the rate of interest on credit from 5½ to 7 per cent., which they did at a stroke of the pen soon after they became Her Majesty's Government and which has now put our heavy industries in a non competitive situation with their overseas competitors and is going to make it much harder for them to get export contracts; if you add to this increase of the cost of credit, the effect of the inflation which the Government do not seem to be able to control, and add to that the reduction of the support for export missions recently announced and the abolition of the British National Export Council, it seems to me that the Government have turned their backs, temporarily at least, on the need to support and succour those industries which are earning our living for us overseas. They are going to see that those industries which trade in the home market and spend the foreign currency which the serious companies earn overseas, get the most benefit out of this system of investment allowances.
In my view, the Government stand accused of a very serious conceptual error. They have often accused the Party to which I belong, quite erroneously, of spurning profit. We do not; we never have. But this Government are now making a god of profit. They have gone so far as to imply that those who make profits are efficient and those who fail to do so, for whatever reason, are inefficient. This underlying motive, which is so seriously wrong, benights the economic basis of the Bill now before us. We do not like Clause 1 of this Bill. We think that it is going
592
to damage investment rather than encourage it and we would much rather have seen the investment grant system retained. If it were not for the custom of this House whereby we do not vote against Money Bills, I would have divided the House on this Bill, but of course I cannot do so. I hope that I have expressed my strong disapproval and have made it clear that I do so not on Party lines but on strictly business lines, based on economic facts and on experience of what this will mean to business.
11.48 a.m.
LORD TANLAW: My Lords, in following up what the noble Lord, Lord Brown said, with special reference to the development areas, I do not intend to take up more than a few minutes of your Lordships' time at the end of what has been a busy week. However, there are two points which I consider worth drawing to the attention of the noble Lord, Lord Sandford. The first is that, while commending the businesslike approach he has taken towards the whole problem of encouraging capital investment by means of the investment incentives outlined in the Bill, based on the White Paper presented in October last year, I feel that there still could be some misunderstandings about its intentions in those regions mentioned by the noble Lord, Lord Brown, farthest away from the Ministry of the Environment, which are in the greatest need of economic stimulus.
I mean by this, in terms of general accountancy, that both Government and industry can benefit by the Bill under review. On the Government's account, the table in Section 34 of the White Paper anticipates savings to the Exchequer of up to £150 million per annum by the year 1974–75; and for industry, profitable companies with good accounting systems should consider tax reductions and investment allowances as both fairer and more efficient than the previous device of investment grants. However, small companies operating in a development area, such as Scotland, may not have an accounts department and may be in need of advice and assistance as to their entitlements under the Bill, or indeed the one that has been in operation until now. An example of this has been brought to my notice from friends

593
in the other place. In this case the businessman concerned was unable to obtain advice locally in Scotland and entered into correspondence with what was to him a distant Ministry in a foreign land, which could not identify itself with the relatively small and local problem that he had raised. In the end, after a month of abortive letter writing, he resolved the situation by making a personal visit to London at his own expense.
The purpose of this simple illustration is to suggest that in the development areas instances like this are the rule rather than the exception. If a real stimulus is to be achieved and the investment climate improved in the areas where it is most needed, like Scotland, would the noble Lord, Lord Sandford, consider the setting up of regional offices to assist and advise such cases as I have quoted? Furthermore, I should have thought it quite practicable for such offices to be empowered to improve incentive plans of up to, say, £50,000 per annum, with a minimum of delay and without reference to London. The Bill, as it stands, is, I believe, a fine piece of fiscal machinery to help the Government balance their books; but if it is also to improve the investment climate in the development areas, as is intended, then some form of local identification with this aim is in my opinion essential.
This brings me to my second and last point, which is in effect an extension of my first one. In Paragraph 23 of the White Paper it will be seen that the application of these proposals will be discussed separately with the Government of Northern Ireland, presumably because of the different fiscal arrangements that exist over there and not because of the chronically high rate of unemployment. Scotland and Wales have many similarities with Northern Ireland in respect of the need for economic stimulus, but have little to say, as yet, as to the manner in which this is to be best brought about. I do not in any way mean to begrudge the capital sums already spent in those areas; I am merely hopeful that there may be ways of securing a better return on the capital invested in them. For example, according to the Annual Report on Investment Grants, covering the year April 1, 1969, to March 31, 1970. Scotland received investment
594
grants totalling more than £66 million, yet the latest figures in the June issue of the Department of Employment Gazette indicate that out of a total of 1·56 million male population in Scotland between the ages of 15 and 64, 98,013 are registered as unemployed. It is my contention that the fiscal machinery, however efficient and however well-intentioned, cannot alone reduce unemployment or provide economic stimulus to the poorer areas of Britain unless it is linked with some local agency which can ensure that the capital provided is used to the best advantage.
11.54 a.m.
LORD SANDFORD: My Lords, I am grateful to both noble Lords for their wholehearted welcome, at any rate of Clause 2, and the welcome from the noble Lord, Lord Tanlaw, for the whole of the Bill. I would confirm that, as he knows, there are regional offices all over the country, both of my own Department of the Environment and of the Department of Trade and Industry. But if the noble Lord has in mind instances in which their advice and assistance has been less than satisfactory, perhaps he will get in touch with me and I can have the matter looked into. The noble Lord, Lord Brown, opened his remarks by mentioning his concern about vacant capacity in factories. I would certainly confirm that it is our view that it is not considered any failure or error of judgment if there is a certain amount—a small percentage—of the total space available left vacant at any one time, because it is necessary for that to be so. About 4 per cent. of the factory space directly owned by the Department of Trade and Industry is in fact vacant at this moment.
When we come to Clause 1, it is no surprise to me, or I think to any other noble Lord, that we come to a sharp divergence of opinion. It was because I thought that to be so well known that I did not seek in my opening speech to rehearse the philosophy underlying the White Paper that was issued last October. We have to face the fact that on this matter the views of the noble Lord, Lord Brown, will not be my views, the views of the Benches opposite will not be the views of the Benches behind me, and the views of his Party will be quite different from the views of my Party. Therefore in my short speech

595
on this little Bill on a Friday morning I sought not to bring about any change of heart among the Party opposite, but just to explain the way in which the Bill would operate. I thought I should be better engaged in doing that than covering the wider field. But as the noble Lord has mentioned the point, I think it would be right for me to rehearse what the Government are doing over a rather wider field.
To date, there has been no reduction in the investment grants paid to industry: indeed, we have accelerated the rate of payment of grants. This is in the calendar year 1971, the year in which two cuts in corporation tax will also take effect. It is estimated that these cuts alone will increase company liquidity by a gross £150 million (or £135 million if the effect of the change from grants to allowances is included). But this is not all. In addition to that help, we have in recent months cut income tax by 2½p in the pound, and we have halved S.E.T.—that is taking effect next week—thus halving the forced loan which manufacturing companies make to the Government and halving the unrelieved burden carried by the service sector.
LORD BROWN: My Lords, the noble Lord suggests that cutting corporation tax helps incentive. It helps only those who are making profits. He refers to cutting income tax. It is the shareholders who pay that. He suggests that the Government are helping industrial development by cutting S.E.T. Industry has not paid S.E.T. These are strange arguments to use.
LORD SANDFORD: My Lords, I made it quite clear that the effect of cutting S.E.T. is halving the forced loan which manufacturing companies make to the Government and halving the unrelieved burden carried by the service sector. I am only going wider than the Bill because the noble Lord in his speech did so, and if he brings in such facts as he did, it is only right that I should bring in these other factors which are relevant, though not precisely, I would agree, on the Bill itself. In addition to the facts that I have already mentioned, on April 1 we cut the bank rate from 7 per cent. to 6 per cent. Having said that, I fully acknowledge that we are not helping industry in the way that our
596
predecessors sought to do. But my noble friends and I do claim that we not only are helping industry but are providing more help and, in the long term, in a better way.
On Question, Bill read 2a: Committee negatived.

LICENSING (ABOLITION OF STATE MANAGEMENT) BILL
12 noon
LORD WINDLESHAM: My Lords, I beg to move that this Bill be now read a second time. The Bill is short and simple, but not, perhaps, entirely uncontroversial. Its purpose is to abolish State management in the three districts of Great Britain where it now operates: Carlisle, Gretna and Cromarty Firth. My Lords, State management was started in 1916 as a counter to drunkenness in the First World War. It was continued after the war as something of a social experiment, the idea being that drinking abuses could be controlled by providing congenial surroundings in which people could drink without being pressurised to do so. The social purpose of this experiment now lacks any validity. If it did not, it would surely have been extended elsewhere in the country. We must now accept the fact that State management no longer has any social justification. The people of Carlisle and the Scottish districts are no more or less drunken than people in the rest of the country. And the standard of public-houses throughout the country has so much improved since 1916 that State management houses, though adequate, are no longer superior to those elsewhere.
State management has operated under a law which permits the Secretary of State to brew beer and sell it within the State management districts, and which virtually prohibits anyone else from selling liquor in these districts except with his authority. Without this monopoly power it has been generally held that State management could not operate. The effect of his monopoly power is that the licensing justices, or the licensing courts in Scotland, are reduced to mere ciphers. They can grant a licence, but it has no effect unless the Secretary of State gives his authority. The Government see no reason why the licensing justices and the licensing courts in these areas should not

597
now have the same responsibility as those in other places for determining the issue of licences.
The other effect of these monopoly powers is to restrict the consumer's choice in these areas. One of the features in recent years has been the growth in the number of new off-licences, particularly in general stores and supermarkets. These have had the desirable result of keeping prices competitive. The consumers in the State management districts have been denied these advantages, and the Government see no reason why this state of affairs should continue. We have, therefore, decided that the Secretary of State's monopoly powers ought to go, and they will be repealed by Clause 1 of the Bill, with effect from the date of Royal Assent.
I have said that State management no longer has social justification. Nor has it any economic justification. We must be clear about this. This is not to say that it does not make a profit. It has always made a profit, albeit a modest one—of the order of £200,000 a year in the case of Carlisle. This is the net trading profit on assets which at last year's provisional valuation were worth about £4 million. The corresponding figure for the Scottish districts was about £40,000 on assets provisionally valued at £700,000.
LORD DAVIES OF LEEK: My Lords, I do not want to prolong this debate, but would not the noble Lord agree that profit depends on the price of a pint of beer? They brew good stuff in Carlisle, I can assure you. Has the noble Lord comparative figures for the prices of beer? These houses were not after profit: they were after comfort and succour for the tired warrior who had been working.
LORD WINDLESHAM: My Lords, I have come armed with the fullest possible information, including lists of the prices from a number of breweries in the North of England, of draught mild, draught bitter, keg, and so on. Depending on how the debate goes I may draw on that information but let me continue now with my exposition of the reasons for presenting the Bill to your Lordships, so that you may see the design, scope and breadth of the Government's plan in full perspective. We agree with the noble Lord that prices count—obviously they do; and they have an effect on profits,
598
though not quite in the direct relationship that the noble Lord might claim. We speak in the presence of a former Professor of Economics, Lord Robbins, who will be able to guide us, if he remains, during the later stages of the debate.
On the basis I have described, the rate of return on capital employed has been just over 4 per cent., and slightly more in the case of the Scottish districts. But when we look at the figures of the un-appropriated profits, we find that capital expenditure has been running at the rate of about £150,000 a year, which means that the real return on capital (corresponding to the distributed profit in the case of a commerical company) has been only about 1 per cent. And of course the scheme pays no corporation tax. A comparison has been drawn with the average return on capital in the brewing industry as a whole, which is about 10 per cent. before tax. But even more telling is the comparison with the rate at which the Government have had to borrow money, which is between 8 and 9 per cent. This is why we say, with some confidence, that State management has no economic justification. It may be argued—indeed, it has been argued—that profits show an upward trend, and that the capital value of the assets is likely to appreciate. I do not dispute these facts, but they are not arguments for the State's holding on to the properties. The increased profitability and the growth potential of the properties will be reflected in the market value when we come to sell them. These, then, are the reasons why the Government have decided to abolish State management: it has no social justification; it has no economic justification; it is a wholly anomalous activity for the Government to be engaged in.
I should like now to deal briefly with the method of sale. This is a matter of considerable importance and interest, and I think your Lordships may like to have a brief description. Having reached our decision, we naturally considered whether there was any practical alternative to outright sale of the assets. Among the possibilities the Government considered was one which my noble friend the Lord Chancellor, when in Opposition, said we would consider. This was,
" any viable proposal for transferring the ownership and management of the State Scheme to a suitably constituted local body such as a trust ".

599
Having done so, we came to the conclusion that, because of the very low return on capital which I have mentioned, no public trust would be viable and that we should not be justified in the use of public funds for this purpose. The Bill, therefore, provides for outright sale. Clauses 2 and 3 require the Secretaries of State to dispose of the properties on such terms as appear to them expedient in the public interest. That is all the Bill says, and that is all it needs to say. I shall explain in a few moments how we propose to set about the disposal of the properties, but let me make it clear now that we see no need for any detailed scheme of disposal to be set out in the Bill.
We propose that the valuation and sale of all the properties shall be conducted by outside independent professional estate agents. These agents will be appointed on the recommendation of the President of the Royal Institution of Chartered Surveyors, in the case of England, and of the Chairman of the Scottish branch of the Royal Institution and the President of the Institute of Auctioneers and Appraisers of Scotland. For Carlisle, agents recommended by the President of the Royal Institution have been approached, and have agreed to act, subject to negotiation of appropriate terms. Messrs. Sidney and Graham Motion, of London, and Messrs. Storey Sons and Parker, of Newcastle, have agreed to act jointly in the disposal of the licensed premises and the brewery, and Messrs. W. L. Tiffen and Sons and Messrs. Gibbings and Johnston, both of Carlisle, have agreed to act jointly in the disposal of the unlicensed properties. For Scotland, the Chairman of the Scottish branch of the Royal Institution and the President of the Institute have been asked to recommend suitable agents.
In determining the method of sale we shall rely heavily on the professional advice of the agents who have been approached in this way. Subject to their views, we propose that in Scotland the licensed properties should be advertised individually for offers. The unlicensed properties would first be offered to sitting tenants, where appropriate at or near valuation. In the Carlisle District we propose that the 170 or so unlicensed properties should again, in general, be offered to the sitting tenants before being
600
put up for sale individually by public auction. The 11 hotels will also be sold individually by public auction. We propose that the 40 or so smallest public-houses—the precise number and criterion to be determined on the advice of the agents—should be offered for sale to the sitting tenant where appropriate, before being offered for sale individually by auction. The sale of the remaining premises will be on the basis determined on the advice of the agents.
My Lords, we shall also expect the agents to advise the Government as to the best way of selling the brewery at Carlisle, and this does present particular difficulty. Small breweries are being closed up and down the country, and there can certainly be no guarantee that the brewery will be sold to someone who will be willing to keep it in production. All we can say is that we shall do all we can to find a buyer willing to keep it going. This is one of the considerations the Home Secretary will have in mind in determining the public interest.
Another consideration for both Secretaries of State—the Home Secretary and the Secretary of State for Scotland—will be the need to secure the best overall return to the taxpayer. A third will be the need to avoid replacing a State monopoly by a local private monopoly. A fourth will be the interests of the tenants and the staff.
LORD STONHAM: My Lords, may I interrupt the noble Lord? He mentioned that some 40 small licensed houses will be offered to the sitting tenants. What about the other 100 public-houses? Will they also be offered to the sitting tenants?
LORD WINDLESHAM: My Lords, this is exactly what we want to discuss with the agents. We do not think it right to tie ourselves down at this stage, before we have received professional advice, to the exact method of sale for the other houses.
LORD PARGITER: My Lords, I should like to be clear about this. Supposing someone, a brewer or one of the organisations, makes an offer for the brewery—it may be a very good offer; perhaps more than the licensed premises could be sold for individually—is it proposed that it would be considered?
LORD WINDLESHAM: My Lords, the Home Secretary will consider any offer, having taken the advice of the agents, who will be acting for the Government. The matter is far from straightforward. It is one on which professional advice is needed but if the advice was on these lines it would certainly be considered by the Home Secretary.
LORD DAVIES OF LEEK: My Lords, would the club and institute union, which was started by a parson have the right to come to the auction sales to buy some of these pubs? And if they did would the Government not bar it?
LORD WINDLESHAM: My Lords, I am not sufficiently familiar, I fear, with the subject to know to what bodies the noble Lord is referring.
LORD DAVIES OF LEEK: My Lords, the club and institute union, the working men's clubs as they are known throughout Britain, are sometimes very lush; the carpet is almost up to your collar stud. I would suggest to the noble Lord and to the Government that this is not a "lame cluck" by any means, and the Government would be doing justice if the club and institute union were allowed to come in on this deal.
LORD WINDLESHAM: My Lords, anyone will be free to bid for any of the properties; and if these admirable bodies, lush up to the collar stud, wish to come and bid, I am sure the agents and the Government would be very pleased to have them.
I must say something about the time table. We expect the process of sale to start soon after the Bill receives Royal Assent, and we hope that it may be completed in about a year from then. But we are not tied down to any fixed period, and there will be no question of having to sell at less than market price in order to complete the sale within a given time. We must retain flexibility on this. The Bill imposes no time limit, and provides in Clause 5 for trading powers of the Secretaries of State to be repealed only when the sale is complete and the retention of powers would serve no useful purpose.
I have said that one of the considerations which the Secretaries of State will have in mind will be the interests of the State management staff. The Explan
602
atory Memorandum on the Bill states that the saving in public service manpower will be about 1,200. In fact, the total number of staff in the English and Scottish districts is almost 1,500 individual employees. I emphasise that these are savings in posts in the public sector, but we hope that the great majority of staff, many of whom are part time—bar maids, bar men, cleaners and so on—will be taken on by the new owners, and that the number of those who do not find other jobs will be a small proportion of the total staff.
All the staff, however, are civil servants, and the position is that if alternative Civil Service work cannot be found, they will receive compensation under the Superannuation Act 1965, or the Redundancy Payments Act 1965, whichever is the more favourable. More than this I can not say at this stage. Everything will depend on who the new buyers are, whether they are willing to take on the existing staff and whether the staff want to stay. What I can say, on behalf of the Government, is that we shall use our best efforts to secure suitable arrangements for all our staff, and to deal sympathetically with individual cases. These, my Lords, are the principles of the Bill and the reasons for its introduction. It ends a 55-year-old anomaly, it restores a measure of freedom to the people of three districts and it will benefit the taxpayer to the tune of about £4 million. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(Lord Windlesham.)
12.18 p.m.
LORD STONHAM: My Lords, I am sure that the House is grateful to the noble Lord, Lord Windlesham, for his clear explanation of the Bill and his valiant attempt to justify it. This is a deplorable Bill for which there is no justification whatever. The noble Lord said that this system had no validity, that there was no longer any social reason (but he himself has given us some of the social reasons) and that there is no economic reason. But, my Lords, there is only one reason for this Bill; namely, that the State management scheme is publicly owned. Moreover, it is efficient, it is well run and it is profitable. Therefore it is completely anathema to Conservative doctrine and is to be abolished, put out of the way. If that was not the case why

603
have not the Government waited for the reports of the Committee which is looking into the licensing laws and of the Committee which is considering tied houses? Because if there were any recommendation regarding tied houses owned by the brewers, then the whole position of the Carlisle scheme would be altered.
Ironically enough, in my view, the Bill imposes on the Home Secretary, as the noble Lord said, the duty of selling the property on such terms as appear to him, the Home Secretary, expedient in the public interest. This is an impossible task, because by every objective criterion it is manifestly in the public interest that the property should not be sold, but should be continued to be managed in the the public interest. It is curious to reflect that it was the conception of what was then the public interest over 50 years ago that caused the scheme to be started. There was considerable public concern about excessive drunkenness in a few areas of the country adjacent to munitions factories. It even affected the war effort, so something had to be done. In 1916, the Central Control Board was set up, with wide powers to control liquor. In the Carlisle area, and in two small areas in Scotland, it was decided to set up an experiment in what was called "disinterested management". In the financial sense, one cannot have disinterested management, but in the terms of the remit of the scheme disinterested management was started and still operates today. I suggest that that is one of the social purposes which is still being fulfilled.
The scheme was charged with the task of not allowing too much beer to be sold and, despite the unlikely situation, it has succeeded magnificently. In 1916, it was thought that some publicans—good businessmen, no doubt—were encouraging excessive drinking to their own profit; so the State management areas were designated. The Control Board acquired all the five breweries in Carlisle, and all but a few of the pubs in the three areas, and prohibited the sale of liquor by anyone else. Out of the five breweries in Carlisle all were closed down except one, which still continues and operates very efficiently. Hundreds of pubs were shut, and today, in addition
604
to the one brewery and the hotels which the noble Lord mentioned, there are 147 pubs, 10 off-licences and 200 unlicensed premises, which are mostly let to business concerns—who, incidentally, are very worried about this matter.
There is an annual turnover in excess of £3 million, and some £300,000 of that represents off-sales to private traders outside the area of the scheme; and they, too, are extremely concerned about what is going to happen. The staff, according to the way you compute them, number between 1,350 and 1,500. By any standards this is a very valuable property. Although it is a small business, compared with the big, national breweries, it is a sound business, efficiently run, which has made, and is making, its contribution to the Exchequer every year.
An analysis of brewery costs published by the National Board for Prices and Incomes in 1966 showed that the cost of production labour at the Carlisle brewery was 20 per cent. less than the average for commercial breweries. Further, the net profit of the Carlisle business was 70 per cent. of their wholesale selling price, compared with the 15 per cent. average for the other breweries. The condition of the scheme's properties is kept under constant review. In the past five years, as the noble Lord has indicated, but did not quite spell out, a great deal of money and much thought has been spent on the properties. Some five hotels and 33 of the public houses have undergone major reconstruction and rebuilding. This is the complete answer to the noble Lord, Lord Windlesham, saying that it is not economic. It is really something when you can decide in advance what the figures are going to be!
The beer is the cheapest in Britain. If you put up the price by a penny a pint, or twopence a pint, this alters the figures, as it did last year. But the other important matter concerns what is spent on maintaining the properties. On the figure of 4 per cent. return on capital, which the noble Lord gave (which was an average of three years selected by the Home Secretary, and they were low years) this is not the criterion by which the scheme is run. It is the many sided success of this scheme which has ensured its continuance for more than 50 years,

605
long after the initial cause for setting the scheme in operation had gone because the drunkenness was cured overnight. As soon as the scheme started the drunkenness was wiped out. But the experiment in disinterested management has continued.
The scheme is a business enterprise and is operated as such. It has problems which are much the same as others that similar businesses have to contend with. But its first priority is and has been quality, not profit. I do not know whether the noble Lord looks at the scheme in the Home Office, or whether things have changed, but that was the case when I or my noble friend Lady Bacon had anything to do with the Home Office. Mr. George Thomas was also involved—one of the country's leading teetotallers, and the nation's brewer as he was at that time. That indeed was disinterested management! The scheme always considered the customer first, always regarded improving the properties as much more important than putting up prices. It produces a wide range of malt, draught and bottled beers; it bottles Guinness, Bass, Worthington, Tennants and lagers; it blends its own whisky and bottles its own wines. So private enterprise is very well looked after within the scheme. If you go into one of the Carlisle pubs you are immediately assailed with every advertisement for the big proprietary brands. They are all over the place—Whitbread, Guinness and so on—advertising things that I have never heard of. The one thing you do not see is any advertisement for the State beer. If you want it you have to ask for it. The locals ask for it because they like it and because it is much cheaper. So that is the point about the economy.
I remember the chief brewer, a charming man, showing me some modest advertising signs which he had drafted and painted himself in his office. He asked whether he could put those in some of the public houses. He was justifiably proud of his product. We had to say "no" because it would have been pushing the sale of our products to the detriment of the inferior and more expensive proprietary brands. I know that it sounds "out of this world", but this is the case.
However, what is important, to me at least, is that throughout the scheme I found among all those on the staff the
606
same interest as was shown by the chief brewer—among pub managers, barmaids, and the members of the Advisory Committee, unpaid, honorary. They are really fightable about the scheme. They were all dedicated to the job and firm in their belief, which I shared and still share, that they were doing a good job in the public interest. We are talking about the Home Secretary's taking steps which are expedient in the public interest. It is expedient in the public interest to ensure that this scheme goes on. Yet this is what the noble Lord, Lord Windlesham, is asking us to destroy. If the Government insist on using their majority to force this Bill through, they will do so, but I believe that they will in due course regret it.
Although the noble Lord has given us, and I am grateful for it, considerable information which I did not know before, and which I do not think has been disclosed before, there are still one or two matters I should like to know about. As I say, the Home Secretary has a duty to sell the property on such terms as appear to him expedient in the public interest. The noble Lord says that highly reputable professionals have been appointed to negotiate the sale, and that the Government have been advised in the appointment of those professionals by the heads of the professions. I question very much that they are starting in the right way. For example, it is said in the Explanatory and Financial Memorandum to the Bill—and the noble Lord has repeated it as if it were still valid:
" There has been no very recent or detailed valuation of the assets, excluding stocks, of State Management in England and Scotland, but a provisional estimate in 1970 suggested that their value then was not less than £4·7 million."
That is very provisional. It is an admirable suggestion; but the historic value of the assets was £3½ million over fifty years ago, and most of them were property. Well, my Lords, this valuation is very provisional indeed! If the value was £3½ million in 1916, it must be at least four times that now. So this is something we must challenge, and we must ask what kind of advice has been given by these professional people.
Still on that point, I recall that in 1953, when steel was denationalised, the Government did not put the responsibility on one Minister; one man did

607
not have to decide the price. They set up the Iron and Steel Realisation Holding Agency, and as regards all persons appointed to it the Treasury had to be satisfied that they had no financial or other interest in steel. That body was charged with the duty of the negotiations which eventually resulted in the realisation. This is a much smaller job, a much simpler job, but why cannot that procedure be adopted? Why cannot we have this clinically clean? When this Bill was discussed in another place, detailed references were made to the fact that leading breweries had made major contributions to Conservative funds, and inferences were drawn that the Home Secretary might be influenced by them in his decision. I mention that only to reject it utterly. No Minister could or would be influenced by such matters. We know it, my Lords. But do the brewers? Do the newspapers? Do the people? When suggestions of this kind are made we are all involved—Parliament is involved—and it would be a great factor if means could be found to relieve the Home Secretary of the very onerous duty of making these decisions. I do not quite know how it could be worked out.
I am very glad to hear from the noble Lord that the forty smallest pubs are going to be offered in the first instance to the tenants. I presume that the Government will be moving an Amendment to that effect at a later stage. It is the small pubs which have been the greatest concern. This is the social purpose of the scheme. Very often there is in an area a pub and only two or three houses—it is just a hamlet. The pub cannot possibly be financially viable with just a handful of people living in the vicinity, but it is the only place where the people can get together for a social hour. When I was connected with this question it was a matter of considerable concern to me, because manifestly the tenant's job was not a full-time job. I do not know how far the arrangement has progressed, but we then arranged that each year eight of such pubs should be offered to tenants so that we created tenancies for them. I take it that these are the chaps who will be given the chance to buy their own pub. I am very glad that that is so. I hope that the scheme will be taken much further so
608
that over a period—and I fully accept that this cannot be done in a year; it requires sufficient time—everyone who has worked in this way, certainly if he has done so for a good many years, should be given an opportunity of buying.
LORD ROBBINS: My Lords, I wonder whether the noble Lord could enlighten me, and possibly other Members of the House, on an historical point. Were these small public houses, whose virtues he is extolling, in existence before nationalisation, or have they been brought into existence by the Control Board?
LORD STONHAM: No, my Lords; they were not brought into existence by the Control Board. They were all taken over and are part of the 147 pubs. But I have no doubt that they were kept going for the very reason for which they seem desirable to me; namely, that they were doing a very good job in a small community, and it is desirable that they should so continue. If they are sold individually I have no doubt they can be carried on, and of course they will be viable because, as with so many other small country pubs, they do not represent a full time job; the man runs a smallholding, or something of that kind, as well. These men have invested a considerable part of their lives in the scheme. It is impossible for me to think of them as civil servants. They are just pub managers, and very keen on their job. So if the property is to be fragmented in this way and we write the necessary changes into the Bill, these people will have a fair chance.
But since almost certainly the brewery will be closed, I should like to know what will happen to the redundant brewery employees who have grown old in our service. They are civil servants, but I think it is impossible to find them employment in similar jobs as civil servants. How will they be compensated? Will their pensions be adequately safeguarded? If, as seems likely, they have to remove, will full removal grants be paid? I do not expect these questions to be answered to-day, but perhaps the noble Lord will write to me about them.
In the meantime, it seems that if the Government are obdurate in this measure the lives of these good, loyal people will be utterly disrupted, and I think the

609
least that Parliament can do—and will do—is to see that the most generous provision is made for them. No present or former Home Office Minister will dissent from that.
In my opinion the Bill is a sorry business and it has created distress and ill feeling in the Carlisle area—and distress not confined to members of the Labour Party. The volunteer chairman of the State Scheme Advisory Committee, a gentleman named Mr. Jim Aspey, who is a Conservative councillor or alderman, declared—and I quote:
" It is disgusting treatment. The State sells the best and cheapest beer in Britain and they are just about to announce the highest profit ever of £269,000 for last year."
That was a Conservative, speaking in anguish the blunt truth. I have no doubt he has been suitably admonished for his indiscretion, but not too heavily admonished, I hope. However the truth of the utterance stands, and I hope that the Government will note it.
More important is the view expressed by the noble and learned Lord the Lord Chancellor, to which the noble Lord, Lord Windlesham, referred. The present Lord Chancellor, who was then speaking as the Shadow Home Secretary, in January, 1970, said:
" It is increasingly obvious that it is throughly inappropriate for the Home Office to be directly concerned in a commercial operation of this kind."
Fair enough, I would say. I think that is right. He went on:
" We shall therefore be ready to consider any viable proposal for transferring the ownership and management of the State scheme to a suitably constituted local body, such as a trust."
That, so far as this scheme was concerned, was the only mandate given to the Government by the electorate. It would have satisfied Mr. Jim Aspey and all the locals, and I think it would have satisfied every Member of this House.
The noble Lord, Lord Windlesham, has said that since the scheme was not making enough profit on capital it would not have been suitable to offer to a trust. If the Home Office had searched around I think they would have found means of meeting that objection, or would have found that the objections were not valid, instead of which we have this Bill decreeing that the Home Secretary has to haggle over the price. Because, my
610
Lords, welcome as the intervention of these professionals will be, it will still in the end be a Minister who will have to say "Yes, we will accept" or "No, we will not accept". It still has to be the Home Secretary. I believe that, with all that is to be said against the scheme and all that is to be said for it, the Government should withdraw the Bill and should bring in another embodying, so far as is practical, the suggestion made by the noble and learned Lord, the Lord Chancellor, because in effect, in rejecting this suggestion you are saying that the Government's principal Law Officer made an irresponsible suggestion, a view which I do not accept. We cannot leave it there; we must know more about it.
There is one other matter with which I would trouble the noble Lord, Lord Windlesham. It will not arise with these individual sales but it could, or probably would, arise if there were a single buyer, or two or three buyers, for a large area of the property. A lot of the pubs have run much prized sporting activities. For example, there is a bowling green attached to one. As a bowling green it does not make much money: people take a Hint of beer and sit out there and forget all about the pub, and obviously the land would be much more profitably disposed of for use in other ways. Can the Home Secretary find some way of keeping those facilities for the enjoyment of the people?
My Lords, for 56 years the State scheme has been run for the customers, not primarily for profit. It has sold a good product at a low price. It has also made good net profits, and all the time it has been spending a lot of money and much thought on making the establishments better places in which people may enjoy themselves. By these standards it has been a considerable success and is a credit to successive Home Secretaries, Liberal, Labour and Conservative, and to the civil servants who have served them. I hope it is not going to be unhappily ended today, steam-rollered by an implacable Conservative majority on the altar of private enterprise. My Lords, I am sure we can look to the noble Lord, Lord Windlesham, to help us to ensure that something is saved from the wreckage.
12.50 p.m.
LORD HENLEY: My Lords, we have listened to a very long and interesting

611
speech from the noble Lord, Lord Stonham, with almost all of which I entirely agree, although I hope that I shall be able to say so in rather shorter time. I, too, am very sorry to see the State management scheme go, and I hope that, whatever else 'he 'says, the noble Lord who is my neighbour and who is going to speak afterwards will agree with me that it has served us in the Carlisle area extremely well.
The reasons why I disagree with the winding up of this scheme are the exact opposite to what the noble Lord, Lord Windlesham, I think, would put as the most important point. The noble Lord and his friends feel that the present set-up is an anomaly; that the State should not engage in this kind of activity. It is for this particular reason that I should like to see it continuing to engage in this activity. It seems to me that in a mixed economy, such as ours is, there is room for this kind of State activity. There is not only room for the proper nationalised activities like the Coal Board or British Rail, or even other activities like British Petroleum, in which the Government owns half the equity, 'but there is opportunity, and indeed room, it seems to me, for certain things of a much smaller nature like the State management here.
I am far from being one of those who wish to see the means of production, exchange and distribution nationalised altogether. I think that the over mighty State is just as evil as the over mighty corporation, or the over mighty subject. But I foresee an extension of the kind of State activity of which the State management we are discussing, and which operated extraordinarily well over half a century, is a very good example. It seems to me to be a pity to unwind this—I will not say experiment, because quite clearly, it was no longer an experiment, in the sense of the drink trade, but it was still in some measure an experiment in the sort of smaller activities which I believe the State should run, and I am very sorry to see it ended.
I see no reason at all why it should be a monopoly. I agree that in some measure it was a monopoly, but that was something that could easily be remedied; indeed, in some part it had already been remedied. The noble Lord suggested
612
that such an activity as this could not go on unless it was a monopoly. I do not agree. It could go on perfectly well as it was, but unloading some of those aspects of monopoly which it had.
LORD WINDLESHAM: My Lords, I should be interested to hear the noble Lord develop that point, because those who have been very close to this scheme have always advised the Home Secretary not to authorise the justices to grant licences to compete with the scheme, on the ground that if they did so the scheme would not be able to operate profitably. This is the advice given to successive Ministers, and if the noble Lord has arguments to the contrary I am sure the House will be interested to hear them.
LORD HENLEY: My Lords, I am not sure that I have arguments to the contrary, but I have questions and I say that it seems to me a most unlikely statement. I cannot understand why an enterprise which I have always regarded as a perfectly viable one (and I will come on later to question the noble Lord's financial figures) should not be able to operate without being a monopoly. It does not seem to me to make sense.
LORD WINDLESHAM: My Lords, it would lose trade presumably, would it not?
LORD HENLEY: My Lords, it would certainly lose trade, but if it was trading properly and profitably it would also encourage trade to itself. This seems to me a perfecly reasonable proposition. I cannot understand why a State enterprise must be a monopoly, in order to operate. This seems to me tantamount to saying that those lieutenants of the Government who run it do not know their business, and I would not for a moment want to accept such a proposition.
Nor do I feel that State enterprises of this kind should be only in what can perhaps be too narrowly defined as a public service. I see State enterprises of this kind operating in a field in which they can, as it were, keep private enterprise up to the mark. I am not sure that this is not one of the principal reasons why the drinks trade, if I may use that rather pejorative term, is anxious to see it unwound. It is a fact that the present scheme has produced what is universally

613
agreed to be extremely good beer at an extremely low price in competition with other brewers. I need not draw your Lordships attention to examinations by Which?, or examinations by a daily newspaper not very long ago, in which I think it was demonstrated that the quality of the beer—I do not speak about the taste; that is a subjective judgment—but the quality, its gravity and price, came out virtually higher than anywhere else.
May I say something about the public-houses themselves? They seem to me to be very attractive places and to measure up very well to any other public-houses in the land. The noble Lord, Lord Stonham, mentioned this question of advertising. One of the things I find most attractive about them is the restrained nature of the advertising; they are not covered with advertisements from top to toe outside. It does seem to me that in some measure the drinks trade is afraid of this competition and would like to see it unwound. This is only one of the reasons. I also think there is profit there to be had, and I cannot accept statements which seem to me to be the contradictory of those who wish to see the scheme unwound. On the one hand, it is said that the scheme is not making a proper return on its capital.
The noble Lord, Lord Stonham, said something about this. The capital the noble Lord, Lord Windlesham is talking about is the capital as it is at this moment, or at any rate last year; but the capital that one has to take into consideration (and I think the noble Lord, Lord Stonham touched on this) is what it stands the public in at.
It has been going on for 56 years. The return of capital invested over those 56 years is, I suspect, very much better than the noble Lord and his friends suggest. I cannot challenge the figures. All I can say is that it seems to me surprising that we have not heard more about what this figure is and what the return on it is. At the same time, it is suggested that it is being subsidised by the taxpayer because it is so cheap. Those two statements do not tie up. The noble Lord, Lord Stonham, when he was at the Home Office, had considerable experience of this, and it seems to me that his figures do not tie up with those the Government produce. It looks to me
614
very much like a classic example of what a takeover situation looks like before the financier pounces.
Another argument heard, as well as the argument that the State should not engage in this kind of trading, is that the State should not engage in the kind of trading which is based on, and makes a profit out of, something which inherently might be damaging those who use it. I refer to the State making money out of gambling, out of tobacco, out of drink itself. Well, my Lords, I know that this is an argument which was much used many years ago, but I doubt whether it means anything very much now. I would go rather the opposite way and say that the State ought to engage in those very trades that are of the kind I mentioned. The patent medicine trade, I strongly suspect, is one in which Governments should engage as a public service. One need go no further than the example of the thalidomide drugs' being pressed on the public by advertising without proper examination. The advertising trade itself, I think, the Government should engage in, not as a monopoly but in part as a public service. So much for the argument that Govments should not engage in trading of this nature.
It is also said that if it was as valuable as I maintain it would have been extended. I think this is a fair argument up to a point, but I think that those people who are engaged in the manufacture and distribution of beers, wines and spirits have always taken very active steps to see that it was not extended. Even as long ago as the old days of local option, which is long before the Carlisle experiment, the brewers as such took very good care to prevent local option becoming a practical proposition. Similarly with regard to the New Towns. When there has been any suggestion of local authorities trading, the brewers have been very active in preventing it coming about. In any case, I do not necessarily want to see the practice spread over the whole field. All I am saying is that this was something which worked very well in a small field, and it seems to me a pity to abolish it—if for no other reason than that which I said before, that the State ought to engage in those sorts of small activities, and I see a great future for the extension of that kind of thing.

615
This proposition that the state management scheme should be abolished has been advocated for a number of years. It was not part of any Election Manifesto. It has nothing to do with that. It has been advocated in the district in which I live for a long time, and as I say, I am quite certain that the reason is that there is a handsome profit to be made. That being so, I hope that the Government will take very special note of what the noble Lord, Lord Stonham, said with regard to the method of its disposal. So far as I am aware, what the noble Lord, Lord Windlesham, told us to-day is new. These arrangements for the disposal, for the valuation, have not been made public before. I welcome them and hope very much that they will work, because I think it is greatly in the interests of the Government—and I do not necessarily mean only this Government, I mean any Government—that when something like this is done, it should be patent for all to see that it is not a "job". It is not merely that it has been subject to innuendo; it has been openly suggested that the Government have not clean hands in this matter. The noble Lord, Lord Stonham, rejected that suggestion utterly. I too reject it utterly but, as he said, it is very important that the public should be able to reject it utterly, too.
One other small point was made by the noble Lord, Lord Stonham, which I want to touch on. That is, that he disagreed with the point that the noble Lord, Lord Windlesham, made that a public trust could not have been employed here because the profits would make such a scheme unviable. I do not accept that. This is an extraordinary statement. It is tantamount to saying that no trust can operate in those fields where there are not profits to be made. The noble Lord may dispute this, and I hope that he will when he winds up, but it seems to me to be a statement which goes against any idea of a trust at all. I know that some trusts are in grave financial difficulties. One has only to look at the National Trust—not that it is a Government body, but it is a quasi-public institution. It may be that many of these organisations have grave financial difficulties, but that does not mean that they cannot set up.
LORD WINDLESHAM: My Lords, the noble Lord would not suggest setting up a trust if the estimates indicated that it would make a loss, would he?
LORD HENLEY: My Lords, in certain circumstances, yes, I certainly would. That is what I was trying to say.
LORD WINDLESHAM: My Lords, would the circumstances of running public houses in one small district of the country be such that the noble Lord would feel that the argument was strong enough that a trust should be operated, with public funds, to make a loss in one area of the country, whereas in all the rest of the country that particular activity, brewing and selling beer, was operating profitably and at no cost to the public?
LORD HENLEY: My Lords, I would agree with the noble Lord that if in a certain small area a case of this kind was patently making a loss, and a grave loss, then there would possibly be good reasons for not setting up a trust unless there were other circumstances. But all the indications are, as I understand them, and as noble Lords on the Labour Benches understand them, that this organisation is making a good profit already, and could make a very much bigger profit if it was handled in a certain way. I do not necessarily want it to make greater profits because then it would cease selling such a good beer in the attractive circumstances it does.
LORD WINDLESHAM: My Lords, I hesitate to interrupt the noble Lord again, and I will give some figures on this when I wind up, but the essential point is that to begin with the State management scheme does not pay corporation tax. A trust, or any other undertaking, would have to do so. The monopoly would not continue, so therefore the conditions would be totally changed. However, I can give some further details on that.
LORD HENLEY: My Lords, I hope that the noble Lord will do so. I have not said the last word on this, and it is very important that it should be demonstrated beyond all possible doubt that a trust is not possible. On the face of it, the noble and learned Lord the Lord Chancellor once thought that it might

617
have been possible, but his noble friends have apparently now decided on examination that it is not, and I want to know why. I do not want the information now, but I should like to know chapter and verse. I am quite certain the noble Lord would not wish to go on now with that, but at any rate it is something that we want to know.
Lastly—and again this was touched upon by the noble Lord—it is very important that to allay the fears of the staff—both the people who actually serve the beer and the people who manage the public houses in the area—they should be kept closely informed by the Government as to exactly how the Government are going to make good those obligations which any good employer should have to its staff. The noble Lord has mentioned things which are new with regard to pensions and redundancy and so on, but it is very important not only that these matters should be in the mind of the Government, but that the Government should make sure that they are well known to those in the Carlisle and Scottish State management scheme.
1.6 p.m.
LORD JACQUES: My Lords, first I would express some regret that it has been found necessary to take the Second Reading of this Bill on a Friday. In the other House it was recognised that this Bill raised questions of principle, and that there were people living at a long distance from London who had knowledge and could make a good contribution to the discussion on the Bill. Consequently, they took all the stages in the middle of the week, and the Bill received far greater consideration than it is likely to receive in this House.
The noble Lord, Lord Windlesham, and the Government speakers in the other place, have between them given four reasons for this Bill. I want to deal with those four reasons quite separately. The first reason they have given is that it was a war-time experiment, and that the need for it has long since gone. It was, of course, originally a war-time experiment, continued until 1921. In 1921, Parliament looked at all the arrangements for the sale of liquor which had been in force during the war, and they decided that some of those arrangements should be regarded as temporary and should go. They also de
618
cided that other arrangements which had been made during the war should remain a permanent feature of our system of the sale of liquor. This venture was one that Parliament thought should be permanent; and it was not the only one. The same Parliament did away with the apparatus of control of war time, and in particular it abolished the Central Control Board, and vested the control of this venture in the Secretary of State for Home Affairs and the Secretary of State for Scotland. Both the Southborough Committee of 1927 and the Royal Commission on Licensing of 1933 commended this venture on economic and on social grounds.
I concede at once that the original purpose of this scheme has now become much less significant. But we live in a changing society, not a static society. Our economy in 1971 is vastly different from the economy we had in 1916. We live to-day in a mixed economy, and an economy in which there are huge corporations which have considerable powers and which can often be checked by way of example. Consequently, the purposes that can be served by such a scheme are not static; they change as society changes. In introducing the Second Reading of this Bill in another place, the Home Secretary acknowledged that by its example this scheme had done much to improve the standard of licensed premises in the period between the two wars. He could have gone further. He could have said that in the inflationary period since the last war it has kept down the prices of liquor. We on this side of the House do not accept that this is a war-time experiment. It was an experiment for five years, but for the last fifty years it has been part of our whole process of the sale of liquor. We do not accept that the need is any less than it was originally. It is different, but not necessarily any less.
The second reason which has been given is that the present system prevents the licensing justices from exercising their proper function in the control of liquor. It is true, of course, that under the present system the respective Secretaries of State can either consent or object to a licence which is granted by the justices, and they have done both. It follows from that that it would be possible to make the changes required by a simple alteration

619
in administrative policy. This Bill is not required to do that, nor is other legislation required. A change in administrative policy is all that is required, if it is desired that the justices should have more liberty.
The third reason which has been given is that the venture is a monopoly and ipso facto is objectionable. If the Government really feel strongly about monopolies, they should spend their time chasing the big fish rather than the small fish. In 1969, the Monopolies Commission pointed out that the tied system of the private brewers was against the public interest. The Government did not propose to do anything about that until, during the discussions on this Bill in the other House, there was such pressure that they decided to refer the question to the Erroll Committee. In the meantime, I would remind the noble Lord that the State licensed houses are not tied houses. They sell twenty kinds of beer in addition to their own brand, and in the outer perimeter of Carlisle they have competition from other licence holders.
The fourth reason which has been given by the Government is that the return upon capital is only 4 per cent. and is inadequate; that, on the average, brewers make 10 per cent; and that the criterion for nationalised industries is 10 per cent. This is the core of the problem and I want to deal with it in some detail. First of all, the efficiency of the State venture has not been questioned by anybody. The Secretary of State for Scotland, speaking in the other place on the Second Reading of the Bill, said that he was very pleased to tell the House that this organisation was well run. As my noble friend Lord Stonham has stated, in 1966 the Prices and Incomes Board showed that its costs were lower than the average for other brewers and that, as a percentage of wholesale prices, the profit of the brewery was greater. So its efficiency has not been questioned by anybody, and in this kind of organisation it is efficiency that counts. The benefits of efficiency in this kind of organisation can be used either to make profits or to benefit the consumer, or they can be used for both. In this case they have been used to benefit the consumer in a big way. On March 21 of this year, the Sunday
620
Mirror published detailed results of an investigation which it had made into the prices of medium beer, and it listed 27 breweries and their prices. It showed that the price of Carlisle bitter at 10½p was by far the lowest price in the whole country, and that the highest price of 16p was being charged by several of the leading brewers.
LORD WINDLESHAM: My Lords, I do not want to interrupt, but the noble Lord must not leave the House under a mistaken impression. I have the prices as at July 2 of five draught bitters in the North of England: Carlisle State Management, 11p; Workington Brewery, 11p; Jennings of Cockermouth, 11p; Scottish and Newcastle, 11p; and Bass Charrington, 11½p.
LORD JACQUES: My Lords, that does not get away from the figures that were published by the Sunday Mirror.
LORD WINDLESHAM: My Lords, it certainly does not tie in with them, but that is the information I have from my officials as at July 2. There have presumably been price movements and those are the prices in the area concerned.
LORD PARGITER: My Lords, may I ask the noble Lord whether those are all the breweries operating in the area, or have they been specially selected?
LORD WINDLESHAM: No, my Lords; those are the five. The noble Lord will see that two of them, Workington and Jennings, are fairly small local breweries, while two others, Scottish and Newcastle and Bass Charrington, are large national groups.
LORD STONHAM: Yes, my Lords. But all five are brewers operating and selling in the immediate vicinity of Carlisle. Therefore the effect of the competition of the State management scheme would he felt. They could not sell for higher prices.
LORD WINDLESHAM: My Lords, that may be so. I do not want to interrupt for too long the flow of the noble Lord's argument, but I do not think one can make a case in quite the way he was making it; namely, that the price of a pint of draught beer produced by the Carlisle scheme is so very much lower than prices in the North of England generally.
LORD JACQUES: My Lords, my prices were not a selection of five. The Sunday Mirror took 27 breweries and showed that the State beer was by far the cheapest at 10½p, and that the highest price of 16p was charged by several of the major breweries. That was in March, and it may well be that as a result of the publicity given by the Sunday Mirror some of the prices had been changed by the end of June. It would appear from the prices at my disposal that there would have been no practical difficulty whatever for the State scheme to increase its prices by 10 per cent. and on the basis of the figures published by the Sunday Mirror, had it increased its prices by 10 per cent. it would still have been selling at considerably below the market prices. It has a turnover of £3 million, and 10 per cent. of £3 million is £300,000. It had already made a profit of £269,000 so it could have made a profit of £569,000, which is substantially more than 10 per cent. of the capital sum of £4·7 million mentioned in the Bill, more than the 10 per cent. made by the brewers, and also more than the criterion laid down for nationalised industry.
What the Government are really complaining about is that the prices of beer in Carlisle have been too low. If there has been anything at all wrong with the State scheme, it has been its lack of policy direction. If it was desired that the prices should be nearer to the market prices so that there should be more profit available, that direction should have been given. If it was not given, that was not the fault of the management, of the staff or of the customers—and they are the principal human elements involved in this venture. If this state of affairs had existed in private industry the company would not have been wound up; the directors would have been replaced—and that is exactly what should happen here.
The State venture has been so successful it should be handed over to a local trust, a trust appointed by the Minister. That trust should have three clear instructions. The first instruction should be that capital is interchangeable with labour, and that, in the same way as the cost of labour is a cost of production, so the cost of capital is a cost of production; in other words, that interest should be charged as an expense in
622
exactly the same way as wages are charged as an expense. Secondly, the trust should be instructed that it should sell at or just below the market price. Thirdly, it should be instructed that all profits made after meeting the cost of the capital should be retained in the venture, so that ultimately the venture would become independent of the Treasury. The past records of this venture indicate very clearly that within a very few years it would be completely independent of the Treasury.
Before leaving this part of the subject, I should like to comment on the valuation of capital, because the Government have made so much of the point that the return on capital is inadequate. The facts are that you can seldom rely upon the comparisons which are made when they are calculated as a return on capital. In this industry, and in most other industries, there are basically three ways of valuing capital. First, there is the historic cost, which at least is a fact. Second, there is the current market value, which at best is somebody's estimate and is likely to be widely different from somebody else's estimate. Thirdly, there is the notional value of the capital to the business. Many companies decline to value their assets at the current market value for the very good reason that the properties are not being put on the market. They value them at the value of the property to the company as a going concern. In this case, that kind of valuation would be a value calculated upon the profits likely to arise from the ownership of the property, assuming that it was used as licensed premises. That is a basis which is used by many of the brewers outside the State scheme. Therefore, there are so many variations in arriving at the capital that any ratio of capital which is going to be compared with some other ratio is likely to have fallacies behind it. In passing, I should like to point out that taking the 20 years of the State scheme from 1950 to 1970, it will be seen that the lowest profit it made on the historic cost of its capital was 8 per cent. and the highest was 18 per cent.—not such a bad performance for an undertaking which was selling both the cheapest and the best beer in the country.
In conclusion, I should like to deal with the question of whether or not the

623
Government have a mandate for this Bill; and, if they have not a mandate, what the consequences are. It is true, of course, that the manifesto addressed by the Conservative Party to the electors of Scotland said that if the Party were returned to power they would abolish the State monopoly. On that, I would say two things. First, I have already shown that it is not necessary to have this Bill to abolish the State monopoly. All you need is a change in administrative policy. But, secondly, I would remind the Party opposite that they did not get a majority of the votes or of the seats in Scotland, and anything which they put in the Scottish manifesto cannot be proclaimed as a mandate to do things in Scotland. That is just untenable. Their manifesto was not accepted by the Scottish electors, and the Government have no right to claim it as a mandate. In the case of Carlisle, what happened? The Conservative candidate at the last Election, and his supporters, were praising the State scheme. They were shouting the advantages of the State scheme to the consumer, and they said that if the Party were returned to office they would make only two changes: first they would be a little more liberal in the granting of licences, which would be more convenient to the consumer; and, secondly, they would transfer the control of the State scheme to a local trust. That was all they promised the electors.
If the Government are bringing forward this measure without a mandate—and I believe they are—there are two consequences which cannot be denied. The first is that we on this side of the House would be entirely justified in voting against this Second Reading. This is a matter for my noble friend on the Front Bench, but I would hope that he would divide against the Second Reading of this Bill—a Bill without a mandate. The second consequence is that if the Government act in this way without a mandate, then the Opposition have the right to say that when we come back to power we reserve the right to re-acquire these assets and we shall not feel bound by the conventional methods of assessing compensation. That was said by my right honourable friend the Shadow Home Secretary in the Second Reading debate in the other place, and I hope that it will be carried out.
624
My Lords, in an industry in which we have large corporations that are semi-monopolistic, to decide to close down a small but successful socialised sector of that industry, without a mandate, is petty, mean and vindictive. It is not likely to sweeten relations in British politics. It leaves a sour taste. I conclude as I concluded at Question Time on Monday. I believe that this scheme has been so successful that the friends of the Government feel that it is a dangerous precedent, and have called upon the Government to destroy it without delay.
1.28 p.m.
LORD INGLEWOOD: My Lords, my reason for intervening in this debate to-day is because I live near the area concerned. I am sorry that this issue has been blown up into something which is far bigger than it deserves. Carlisle is neither the desert nor the paradise that some speakers here, and more so in another place, have tried to represent. We have heard that this scheme started as a system of wartime control of drunkenness; and I should like to think that most of those who offended came from a distance, and were not good, law-abiding natives of Cumberland. When the war was over, in line with liberal thinking at that time, the suggestion was that this scheme should be continued as an experiment in disinterested management; and it was accepted that the local magistrates would have to be put in an invidious position. I would agree with the noble Lord on the Liberal Benches to this extent: that as the wartime controls were in existence there was some justification for continuing the scheme in peace-time, at least for a short time, to see what results might emerge. It has now been in operation for something like fifty years, since the end of the First World War; and to the best of my belief no serious conclusions have ever yet been put on paper, nor have the people of the country ever been told specifically of what great advantages have in fact emerged. Those who know the area will agree with me that many of the premises about which we have been talking have edged nearer and nearer towards the style of the ordinary pub in other parts of the country, and the distinction which used to be drawn between Carlisle and other parts of the country is now less marked.

625
Why has no action emerged over the last 10 years from Governments either of the Right or of the Left? I would suggest it is because this has never been a pressing issue. It has over the years absorbed a certain amount of political content, and Parliamentary time is very precious. The noble Lord opposite spoke about the greater opportunities for discussion if this Bill had been introduced in the middle of the week instead of on a Friday. In another place they managed to fill a whole volume with discussion during the Committee stage. I hope that we may manage to find a way to discuss this Bill fully but not at quite the same length.
Another reason why other Governments have taken no particular action is that we Britons excel in the art of compromise; and the particular compromise is that there has grown up in Carlisle, alongside the State management scheme, a much more highly developed system of club life than in most other cities of the same size. I am sorry that Lord Davies of Leek is not here; for it is true that Carlisle has a very large number of clubs, some maybe with plush carpets up to your collar stud and with large reserves of capital. It is even said that the turnover of those clubs exceeds the turnover of the larger numbers of State management pubs in the city. So you have two separate systems working side by side. The club system has not been built up because of the cheapness of the beer, but because people liked to have more freedom and more choice, which is a factor which deserves to be mentioned during this debate. I heard, too, during the earlier stages that one or two barrels had been sent from Carlisle to the other place, for the delectation of the Refreshment Department or of the Members of the Committee, but I have heard of nothing similar happening here. That is clearly class distinction. The unpaid House might have been allowed the same advantage.
LORD STONHAM: My Lords, I cannot say whether it is true but I understand there was a nine-gallon barrel, that it was sent to the Kitchen Committee and that the Chairman would not allow it to be consumed.
LORD INGLEWOOD: My Lords, that does not say that the same objection would be raised here if it were sent to Miss Wilson. I suggest that as we are not a very large number we might enjoy this with our lunch, and perhaps our judgment would then be improved. It is a great pity that so much politics has been injected into this issue. I do not want to expand on this, but I am quite sure that Labour organisations in Carlisle think that there are votes in this; and that is why the discussions have been so long and in many ways so repetitive.
The principal point that I want to make—and it is a new one; I do not think it was discussed in the other place—concerns the interests of the tourist industry. Here I must declare that I am President of the English Lake Counties Tourist Board and was associated with a smaller organisation which preceded it. We are greatly interested in developing facilities not only in the Lake District proper but also in the area around which includes Carlisle and the country up to the Roman Wall. It is beyond question that the facilities in Carlisle are far less good than they ought to be, and far less good than those of other towns similarly placed and of comparable size. I am not offering any bouquets to the few premises in Carlisle which are not within the State management scheme. I am not making any distinction; I am taking the whole lot together. But it cannot be gainsaid that the pace-setter in this must be the State management scheme which owns and controls the largest number of properties in that town.
The State management scheme are associate members of the Tourist Board. I do not think it is unfair to say that their Hotels Manager is keen, and would do more if he had more money and, maybe, if his Board allowed him to. I do not want to make trouble between him and his Board. But the work has not been done. The hotel facilities in Carlisle are proportionately poor. Unlike the rest of England, where the practice is spreading, there are few pubs which have bedrooms, all too few with bathrooms. There has been very little additional hotel building over recent years.
I do not want to start quoting figures of building since 1939 or 1949; but I

627
would claim that the number of hotels with bedrooms or with private showers is deplorably small for such a city. Three public houses have been built since the war and I can certainly commend the State management scheme for their choice of name for one of them, the "Inglewood Forest". But apart from that, any visitor to Carlisle would bear out the general tone of what I have said. This comes about not because the people at the top have not realised that something should be done but because, not being open to the same free competition as in other areas, they just have not done it. Further, they have not had the resources. The profit figures quoted have not been sufficient to find the capital necessary to invest if premises were to be brought up to date as others in the Lake District are.
No great problem should be presented in the hotel industry and the tourist industry (expanding as it is to-day in this country and particularly in the tourist areas) to the majority of the staff about whom reference has been made. The managers, I think, have done extremely well, within the limits of what they were allowed to do. In an expanding tourist area other staff who are part-time—ought not to meet any great difficulty. In many cases the change could result in an increase of pay. One group for whom I hope my noble friend will have special regard are the elderly members of the staff of the small brewery. It is unlikely that the brewery will have a very long life ahead and it will not be as easy for them to find alternative employment as it will be for those working in the different hotels and pubs.
Lastly, as to the question of disposal. Here my noble friend may not feel that I am quite so much on his side as I might have appeared so far. There is undoubtedly the feeling in Carlisle that, above all, a straight transfer to one or two of the big brewery chains should be avoided. This is not political; it is the nature of the neighbourhood and Lake District, where the whole essence is the small family business. But this is not to say that there is not room for others. I think that it would be a pity, when we have seen small breweries disappearing from various parts of the country, that we should effect a major transfer here to
628
one of the bigger chains. But my noble friend has said that that is not the Government's intention.
My Lords, I am a member of the Royal Institute of Chartered Surveyors and I still pay my dues, although I have not practised for many years. Putting myself in the position of those firms from whom he has said he is seeking advice, I do not see how they could do other than show him different ways whereby these properties could be broken up and sold, and underlining the way where there could be the biggest return. I should like him to say here and now that he is not absolutely wedded to accepting what would appear to be the biggest offer, because an immediate cash gain may mean some future social loss. As I have said, the tradition in that part of the country is for small breweries and family businesses, and I should like to see that continue.
Like many over the years, I have hoped to see the State monopoly broken. I have never thought there was any great force in the argument which the Home Office always produced, that if the experiment was to be of any use at all, the monopoly must be retained and the justices in Carlisle kept in this invidious position. I could never see force in that argument, and I wish that either an earlier Government who disliked the monopoly could have broken it and let things work out in their own way, or else noble Lords opposite, who appear to set such great store by continuing this scheme, had had the courage of their convictions and extended it to other areas, with or without modification. In fact, my Lords, the great heat and fury which they have expended on this issue over the last few weeks is not so very convincing since, over the whole of the last 50 years, they have done nothing to amend, approve or extend the scheme which they now represent as so full of merit.
Since time has been allowed to go by, it could well be that now, if we just broke the monopoly and let things in Carlisle continue, with competition between State management and the others, the assets that we have spoken of—and not least the brewery—would drop quickly in value and the loss to the taxpayer would be too great for any

629
Government easily to contemplate. So as a result of lost time it may be that the solution which the Government are now proposing is the right one. My Lords, I think we have to look at this matter somewhat differently from the way some noble Lords opposite are looking at it. There are other issues besides beer, important though that is. People want to spend a night in Carlisle; they want to eat in Carlisle, and the tourist industry is extremely important in that area. There is no doubt that over recent years chances have been missed in Carlisle.
1.43 p.m.
LORD LEATHERLAND: My Lords, this is a Friday, an unusual day for us to meet, and I hope it will not be suggested that we are "only here for the beer". I rise to support my noble friend Lord Stonham in his opposition to the Bill and it may be thought that I am a somewhat incongruous ally. I have never touched a drop of beer in my life, and for the middle 25 years of my life I was an absolute teetotaller. In order to complete the record, I should add that in later years I have developed a taste for an occasional glass of wine; and if noble Lords are inclined to doubt that, I would invite them to put me to the test.
I have, my Lords, a liberal kind of mind with regard to the philosophy of drinking and no prejudices which would be likely to give me a jaundiced view of this Bill. Mind you, but for a strange turn of fate just over fifty years ago I might to-day have been one of the Bill's most enthusiastic supporters. It happened like this. At the tail end of 1918, when we were advancing through Belgium into Germany, my old Colonel, who was the chairman of a brewery, had to be sent home. We were very good friends—within our proper stations of course—and the last words he said to me were, "Leatherland, if you ever want a job when the war is ended, just come round to the brewery." That brewery was a very progressive one in a rapidly expanding and prosperous town. It took over many other brewery companies and its final merger made it one of the leading breweries in the land, although not one of the giants.
630
It so happened that my pre-war job with the Birmingham Corporation was kept open for me and I had no need to go to the brewery. But had it been otherwise, my Lords, just visualise the situation. Here I might be to-day, a wealthy brewery director—because, bear in mind, the chairman was a friend of mine—presiding with great dignity over a constituency Conservative Association and handing out great bags of brewery profits to the Conservative Party funds. But it has not turned out like that. I do not intend to say anything about the £150,000 which it is alleged that breweries have handed to the Conservative Party. I believe there is a sense of decency to be observed in politics in this country; and anyhow, I think that our politicians, by and large, are men of integrity. But I must say that if it should happen that these pubs and the brewery in Carlisle are sold to one of the brewery firms which made a big contribution to the Conservative Party funds, it would look very bad indeed. That is all I want to say about that aspect of the matter; henceforth my lips are sealed on that subject.
My Lords, I think it just as important for us to pay regard to the way in which the Government have judged their priorities. What are the real problems facing the country to-day? They are unemployment, with dole queues in every town in the country; with prices rising in the grocery shops every week; with our national production sagging and with signs that the balance of trade is not going to be so happy-looking in the year to come as it was in the year that has passed. Those are the real facts that this country, this Government, this Parliament and the public ought to be facing to-day; not "fiddling while Rome bums"—though I use the word "fiddling" in its strictly musical connotation.
There is no need for this Bill; no one wants it. My noble friend Lord Jacques has mentioned that the Carlisle experiment was not even given a line in the English Conservative Manifesto. Furthermore, a few weeks ago, during the municipal elections in Carlisle, the question of the sale or otherwise of the State management scheme was the main issue. And look what happened. The Tory mayor was defeated; one of the safest Tory seats proved a Tory defeat; the

631
safest Tory seat in the town had its majority reduced from 1,000 to 100 and another safe Tory seat was won by Labour for the first time. My Lords, I think it is clear that the people of Carlisle want to carry on with the scheme as it has been for the last 56 years.
I wonder whether it is some death wish on the part of the Tory Government that makes them want to interfere whenever they see people fairly contented; that makes them want to sack people from their jobs; to send up the cost of living; to send up prescription charges and to increase rents. Why cannot they leave well alone? They could well do so in the case of the Carlisle scheme, which has been running satisfactorily for 56 years. Out of its profits, in the first 11 years it paid off the whole of the capital money that had been borrowed to purchase the original houses, and during its existence £11 million has been paid over to the National Exchequer. It is making close on £300,000 a year with the prospect of a still bigger profit during the latest year; it has accumulated profits of £1½ million and even the Monopolies Commission spoke well of it. At the same time, it is producing a better beer at a cheaper price than some of the other breweries in the country. What is wrong with that? I hardly know how I should develop my criticism. Is it to be mild or is it to be bitter?
One of the reasons that has been adduced for the selling off of this State management scheme is that the profits are smaller than those of privately owned breweries. Is that a sin? As a matter of fact, there is a handsome profit made, in spite of the fact the better beer is sold at a cheaper price. We have heard it said that their profits are only 4 per cent. on working capital, as against 10 per cent. in the case of private breweries. But I should like to see far more evidence than has been so far adduced to convince me that that comparison is made on a really comparable basis. We know that in the last 15 years an enormous amount of juggling has taken place in connection with the capital structure of many of our privately owned and publicly owned breweries.
Again, we have to consider that a better quality product is being provided
632
by the State breweries and public-houses at a lower price. As the profit rose considerably last year; and is due to rise again this year, and as the price has been put up, I presume under Government instructions, the 4 per cent. that has been quoted may prove to be considerably out of date when the next lot of the Board's accounts are published. Then we have to look at the conditions of sale. The first thing that will happen, on the very day that this Bill receives the Royal Assent, is that the monopoly powers of the State Board are to be broken. I do not want to enter into an argument about monopolies, but there cannot be any sliding scale of morality; if it is wrong to have a monopoly here, it is equally wrong to have it in the tied house system, a system which has been roundly denounced by the Monopolies Board as contrary to the public interest.
Let me get back to the main line of my argument. If the monopoly power of the State is broken, then equally this reduces the capital value and the potential selling price of the properties. I think it is our duty to see that we get the best sale price we can when these properties come to be disposed of. What does the Explanatory Memorandum on the Bill say about the financial aspects of the matter? We have had the figures, but it will not hurt to have them again. First of all it says:
" There has been no very recent or detailed valuation of the assets…"
So something has to be done there to write up the assets.
Then there is a provisional estimate. Those of us who read prospectuses and study takeover bids know what "a provisional estimate" is really worth. But last year, we are told in the Memorandum, it was:
" suggested that their value then was not less than £4·7 million."
But we are not going to get all that for the taxpayer, for the people, when these properties are sold. There is to be a "rake-off"—or rather, I will say, reduction—of £900,000 which will include the "rake-off" of estate agents and the compensation that will properly be paid to the people who are displaced. But why sack them at all? Why not keep them on as they are now, and so save

633
all that money that will have to be paid out in compensation. The Explanatory Memorandum says:
" The ultimate saving in posts will be about 1,200,…"
I realise that all these 1,200 are not going to be sacked, but it well may be that several hundreds will have to be paid the dole every week. Let us get it clear that this £4 million, or whatever is realised by the sale, is not going to benefit the taxpayer except in a very indirect way. It is going to be applied to the reduction of the National Debt, and the effect of that upon the demands made on the taxpayer will be small indeed.
Let us now have a look at the balance sheet. It goes up to March 31 of last year. Again I see that many of the figures on this balance sheet will need to be altered. First, there are figures for land and buildings, mostly freehold, on page 10. The original cost of the Carlisle properties is put down at just under £2 million, but in the Accounts this is depreciated to just over £1 million. Do freeholds really depreciate by 50 per cent. in fifty-six years? I have been connected with some freeholds in my time, and I find that they are now about seven times higher than they were fifty-six years ago. So the value of that property should be multiplied, rather than reduced. That is the case with regard to the Carlisle properties; and a similar story holds good with regard to the Gretna and Cromarty properties. There is an item in the balance sheet for goodwill. What is this goodwill? It is shown, on page 8, as just under £170,000. But is this realistic? We are told on page 12 that it is a figure representing the compensation that was paid to the tenants fifty-six years ago. That figure needs to be multiplied by half a dozen to bring it into line with present-day values.
There is another factor to consider when we are looking at this balance sheet. We have to bear in mind that soon after this brewery and the public-houses are sold the Erroll Committee will be reporting, and as a result we shall be having longer licensing hours; more beer will be sold and the value of all public-houses will go up—after the State has parted with them and the brewers have got their hands on them. We have also
634
to bear in mind that the population is increasing, so there will be more customers after the sale and the properties will be more valuable. We have a specific case of that at Cromarty, where the Invergordon smelter is going to bring a considerable body of workers into the district. And I believe that the people who work in smelting have pretty good thirsts.
So, my Lords, the brewers look like being able to buy at present values and are being given a big present of a considerable potential profit increase. What we must bear in mind is that we have here a very valuable property, most of it freehold; and we know that freehold values go up year by year. That is within the experience of all of us. We have often been told that in considering our daily political affairs we must pay attention to the best interests of the nation, and I feel that if there is to be a disposal of these assets, then in the best interests of the nation that disposal should be entrusted to an entirely independent and non-political body. A realisation agency, on the lines of that set up for the steel industry, immediately comes to mind. I say nothing about the eminent experts who are being brought in under the Government's proposal, but I do say that, having regard to the very close affiliations between the Conservative Party and the brewers, it would not look well in the public interest if the Government themselves and the brewers were allowed to conduct these negotiations, even through experts as the intermediary. In order that the country can be satisfied on this question, there must be, in my view, an absolutely independent authority.
There is only one other feature about this sale that worries me; that is the Government's intention that it shall be wound up within 12 months. I know that it may run to 13 months, or maybe only 11; but 12 months is the target. What is to stop the brewers getting together and deciding that during those 12 months they will not make any bids? Brewers can cling together. I remember that 30 years ago that it was the brewers who publicised the song:
" The more we are together, the merrier we shall be."
If the brewers hold back during these 12 months, then many of these properties

635
may have to be sold off at considerably less than they are worth at this moment, quite apart from the increased potential value to which I have already referred.
My final words, my Lords, are by way of a friendly warning to the Minister, for whom we all have a high regard. I am wondering whether he has pinned a little note at the head of his bed saying, "Crichel Down". What is to be the position if he fails to offer to the original owners, with the first option, the opportunity of buying back these properties? I may there be barking up the wrong tree, but I am only anxious to help the noble Lord to keep out of trouble. Looking at the Bill as a whole, I think it is a bad Bill. It is unnecessary; it is not in the public interest: it is brought forward from petty political motives, and I sincerely hope that the Government will have second thoughts and save us the trouble of dividing against it.
2.2 p.m.
BARONESS GAITSKELL: My Lords, I shall be very brief, particularly as I did not put my name down on the list of speakers. I always feel extremely incensed by the mean attitude of the Conservative Government to nationalised industries. I agree with my noble friend Lord Stonham and other speakers that this Bill is decidedly not justified as being in the public interest. The scheme has been going on for years in a perfectly satisfactory way, and all honour is due to the Liberal Party who introduced it so many years ago. Why meddle with it and dismantle it now? We can only deduce, as my noble friend Lord Leather-land said, that this change is a sop to the brewers, not only for benefits receceived but, more important, for benefits to come.
I agree almost entirely with Lord Henley's arguments. I am no rabid nationaliser, but I intensely dislike rabid denationalisers. The meanest part of Tory doctrine is this hiving off of profitable bits or denationalising certain industries for no good reason. The noble Lord, Lord Brown, in the previous debate this morning said that the Tories made profit into a god: I suggest a very jealous and covetous god of profit. A small point was made in the debate about justification for certain bits of a nationalised scheme not being profitable. I think that
636
this is perfectly justified for social reasons in certain respects—for instance, for a pub in an outlying district. It seems to me, finally, that the Bill does not help the taxpayer, for this scheme has been profitable: the Bill helps only the brewers.
2.4 p.m.
LORD WINDLESHAM: My Lords, we have had a spirited debate. Strong feelings have been expressed and I accept that there is an issue of principle between the two sides of the House on this matter. We have had the benefit of listening to people with special knowledge and experience. The noble Lord, Lord Stonham, was in charge of this scheme for some years at the Home Office, and I know what a close interest he took in it. The noble Lord, Lord Henley, and my noble friend Lord Inglewood both live in the area, and although they came to different conclusions in their attitude towards the Bill they spoke with special local knowledge. I think the point made by my noble friend about tourist facilities is a new one. I have not seen it raised in previous debates, and it is an important consideration which we should keep in our minds as we debate the Bill. I can say to my noble friend, as I said in my opening speech, that my right honourable friend is conscious of the need to avoid replacing a public monopoly by something approaching a private monopoly; and the staff considerations, especially the staff working in the brewery, will be very much in our minds.
Seeking what agreement I can, I should also like to welcome what a number of speakers, including the noble Lord, Lord Stonham, said about the appointment of the independent professional agents. The Government had previously announced that it was our intention to approach the presidents of the professional institutes concerned in England and Scotland, but he is quite right in saying that my statement to-day is the first full statement that the agents have been nominated, have been invited by the Government to work in this way and have agreed to serve in the case of England. The consultations in Scotland have not yet been concluded.
Several speakers said—and perhaps this was one of the main themes of the

637
debate—they thought the State management scheme at Carlisle should be handed over to some local trust. Perhaps the noble Lord, Lord Jacques, was the one who spelt this out in most detail, but the noble Lord, Lord Henley, also spoke on these lines. I am not sure that noble Lords have really come to grips with this particular proposal. It is one that has been discussed in another place. My honourable friend the Parliamentary Secretary explained why the Government had come to the conclusion that a proposal on these lines would not be viable, but I think I should do it again now. If we take the most optimistic estimate of current profitability, the figure would be about £300,000; and even if this sum could be maintained, one would also have to take into account 40 per cent. corporation tax. This is a central point: the scheme at the moment does not pay corporation tax, whereas any public trust which took its place would be liable for corporation tax. Then there would be the expenses of running the trust, and a substantial sum for the maintenance of capital investment, about which I shall say more in a moment or two, before any allotment could be made for the purposes of the trust as such. If the trust had, in addition, to pay interest on the purchase price on a loan from the Government to purchase the property, it seems to us doubtful whether it would make any profit at all. I think that noble Lords who favour this particular proposal must take these factors into account in the arguments which they put forward.
The question of the profitability of the scheme has run through our debate, and I want to say a word or two about how we should look at this question of profit. The accounts for the year ended March 31, 1970, show that for Carlisle the amount transmitted to the Consolidated Fund during the year—and this is the amount which corresponds broadly to the sum distributed in profits by a commercial company—was only £19,346. The rest of the profit was unappropriated and was used for capital expenditure.
LORD JACQUES: My Lords, surely this is not fair criticism. If this had been a private company, it could have borrowed money and could have appropriated the whole of its profit. The
638
noble Lord also used that argument in his introductory speech. It is quite unfair criticism.
LORD WINDLESHAM: My Lords, I should like to go on with it, because I think it has some validity. The remainder of the profit was unappropriated and was used for capital expenditure. The figures for capital expenditure for the five years ended March 31, 1970, are that the annual profits totalled £920,000, and the capital expenditure over five years totalled £713,000. In other words—and let us have these figures clear in our minds if we are to debate this in a knowledgeable way—the contribution made by the scheme to the Consolidated Fund over these years was only about £200,000 over five years, an average return in that case of about 1 per cent. The noble Lord cannot accept this, but I think it is a fact that we ought to take into account, when we are talking about the return to the public, to the taxpayer, from this particular scheme. The Consolidated Fund has benefited over five years by a sum of about £200,000.
LORD JACQUES: My Lords, whether a trading concern invests in any one year more than its profits, or whether it does it in several years, is not relevant. This has no validity at all. It need not have borrowed money from the Consolidated Fund; it could have borrowed elsewhere.
LORD WINDLESHAM: My Lords, it could have borrowed it elsewhere; but when we are talking about the viability of the scheme, if money is borrowed elsewhere then the interest charges on the borrowed money must be taken into account. I do not think we are even going to reach agreement on the profitability or otherwise of the scheme. In any event, as I said earlier, this is secondary to the Government's purpose in disposing of this scheme.
The question of prices was raised. The noble Lord based his argument on that fount of original and accurate wisdom, the Sunday Mirror, in, I think, March, 1971. Since then prices have gone up in the Carlisle and District State Management Scheme. The figures I gave are the current figures for a pint of draught bitter, which is the beer that he chose; and they show that prices are almost exactly level at 11p in the North of

639
England. But I am told that his argument is correct to the extent that there is at the moment an average price differential of approximately ½p. That is the figure—a half of one new penny—and let us keep it in our minds when we discuss the relative cheapness of Carlisle beers.
The noble Lord, Lord Jacques, went on to question whether the Government had a mandate for this particular Bill. He referred to a "Manifesto undertaking" in Scotland, and went on to argue that because the Conservative Government did not win a majority of seats in Scotland this undertaking had no validity. He received support from noble Lords opposite, and I think that they ought to know better. He is on the weakest constitutional ground that I have heard for a long, long time. He must know that the Parliament of Westminster is the Parliament of the United Kingdom. There is no separate Parliament for Scotland: the Members of Parliament for Scotland sit as Members of the Westminster Parliament, and he really must not use arguments of this sort.
The noble Lord also indicated that he had been tempted to consider voting against the Bill. I hope very much that he will resist this temptation. It is easy for people who feel strongly about particular measures in this House to vote against them; they feel strongly about a particular measure and they feel entitled to express disagreement. But I hope that in doing so they will consider the interests of the House as a whole. We have had to address ourselves to this issue very recently on two major Bills: the Industrial Relations Bill and the Immigration Bill, two of the principal issues before Parliament. On both occasions a number of noble Lords, despite the advice give from both Front Benches, felt that they must record their vote against the Bill. I think that, by their actions, the position of a non-elected Chamber is called into question. This is a very profound issue, and one which I hope any noble Lords considering this course to-day will keep in mind.
My Lords, the comparisons made in the course of the debate, when references were made to other nationalised industries and other arguments were used, are
640
not, I think, valid. Coal, steel, power, transport and so on, are all in public ownership because of public policies; but for various reasons, mainly economic, the State has assumed control in these sectors of economic life. This is not true of public-houses. If a man landed from Mars and found that the Home Secretary, of all people, owned a brewery in a not very large town in the North of England and was responsible for the management of a group of public houses, again in a relatively small part of the country, he would be a very surprised Outer Space man.
Another factor is that State management is not conducted by any public corporation. Both the policy and the operation of the scheme are the direct responsibility of Ministers. I have said, and I believe this very strongly, that there are no justifications on the economic plane, and I hope we shall agree on that. In any event, that is the position. But the social justifications that may have existed 50 years ago no longer apply to-day. This Administration is concerned, as a positive policy for which no one could argue that it did not have a mandate, to disengage itself from those areas of activity where government has no need to be; and in our view, brewing beer and running pubs is just such an activity. Everywhere else in Britain outside these three small schemes, people get along very well with the licensed trade, and for the life of us we cannot see why it should be different in Carlisle, Gretna or Cromarty. There is also the fact, which there is no getting away from, whatever noble Lords opposite may feel, that over £4 million in public money is tied up in this scheme. I think we are seeing once again—
LORD STONHAM: My Lords, I did mention this figure of £4·7 million, which we utterly repudiate. It is nonsensical, ridiculous and indeed shameful to have that printed in the Bill. I hope the noble Lord will not keep on referring to it.
LORD WINDLESHAM: My Lords, I am afraid that I must disappoint the noble Lord. I am going to keep on using that figure, and I must correct him, since he raises the matter again. He said that in 1916 the Carlisle assets were valued at £3 million. I am afraid that is quite

641
incorrect, and the House must not carry that impression away in its collective mind. The book value of the Carlisle assets—namely, the historic cost, and subsequent additions at current values—appears in the Annual Report as something over £1 million. The £4·7 million valuation was arrived at in May and June. 1970, just before the last General Election, at the time of the previous Adminitration. It was based on a paper upgrading of known values in the light of known trading figures. The valuation was carried out by local valuation officers of the Inland Revenue, and I do not think that the noble Lord should discredit the officers who carried out this valuation in the way he has done.
I do not want to delay the House any further on this Bill; we shall discuss it further at the Committee stage. But I think we are seeing here—I do not want to criticise them for this, and one sees it in all Parties—the intense conservatism of noble Lords opposite. We saw it with the Industrial Relations Bill and we are seeing the same thing here. They do not want a change to be made, mainly be
642
cause things are as they are. There may be a better way, but they do not really wish to see a change made. We do not think a Government can accept that. We think that the situation can be improved, for the reasons I have given, and we think that this Bill is the way to do it.
LORD JACQUES: My Lords, may I point out that we do want change, but there are changes and changes. We want the right kind of change.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

GREATER LONDON COUNCIL (MONEY) BILL
MERSEY DOCKS AND HARBOUR BOARD BILL
Brought from the Commons; read 1a, and referred to the Examiners.
House adjourned at twenty minutes past two o'clock.